Defence to trademark infringement

In the last few years, we have had the opportunity of witnessing very interesting intellectual property cases and more importantly, case involving interpretation of intellectual property rights in consonance with other laws. The Delhi High Court recently decided an application to stay the proceedings for a case of trademark infringement till they obtain permission from the Board for Industrial and Financial Reconstruction (BIFR).

Brief facts

The plaintiffs (company manufacturing and selling TIC TAC) filed a suit for permanent injunction against defendant (company manufacturing and selling TIT BITS). The plaintiffs have been using the mark for fresh breath mints since 1969 and launched their products in India in 1999. The defendants have been using the mark since 1984 for mouth fresheners.

Arguments

Defendant

It is the case of the defendant that they’ve been using the mark in India since 1984, which is prior to that of the plaintiffs. That in 1993, the net worth of their company became negative and they had to approach BIFR to formulate a rehabilitation scheme, however once it came into effect it failed since “wide range of products getting trampled upon by competition”. The defendant contended that the new scheme, which was in the final stages of implementation, was funded by the promoter’s contributions, effectively from the sale of mouth fresheners. For these reasons, the counsels for the defendant stated that grant of temporary injunction against the defendants would adversely affect the implementation of the scheme. Further, that only if the BIFR concluded that the injunction would not affect the implementation of the scheme, the Court could deal with the present suit.

Plaintiff

The counsels for the plaintiff disagreed with the submission made by the defendant. The brief points put forth by the plaintiffs are as follows:

  • That the sole intent of the application was to evade liabilities accruing from illegal activities carried out by the defendants behind the veil of being “sick industrial company‟
  • That the defendant is trying to cause inordinate delay in the suit by filing this application
  • That the BIFR scheme did not dictate or extend to the design, shape, overall get up and layout of the TIT BITS mouth fresheners to be sold by the defendants.

Courts’ findings

The Court finally found that the provisions of Section 22(1) of the Sick Industrial Companies Act cannot be invoked for the reasons of theft, piracy or imitation and also that BIFR schemes cannot be used to carry out illegal activities. Interestingly, the Court held that injunction granted by this Court will not affect the rehabilitation scheme since the defendants would be free to sell and promote mouth fresheners in a manner which does to not affect the goodwill and reputation of the plaintiff.

Thoughts

These issues highlight the importance of laws to be read in consonance with each other and how one cannot get past a one law under the guise of protecting rights under another law. It is definitely of great interest to people working in the field of intellectual property laws to see that the a number of other laws are crossing  paths with intellectual property rights and these are issues that one would never have not imagined even a couple of years ago!

This article has been authored by Nikita, an IP Law practitioner.