M/s. Arjies Aluminim Udyog v. Sudhir Batra, New Delhi

M/s. Arjies Aluminim Udyog v. Sudhir Batra, New Delhi

1997 (17) PTC 187 (Del)

Brief Facts:

Appellant was using the mark ARJIES for aluminium door and window fittings. Respondent was using the mark ARCHIS for identical goods. Respondent might have addressed a legal notice to the Appellant asking it to restrain itself from using the mark ARJIES as the same amounted to infringement of Respondent’s trade mark ARCHIS as well as passing off. Appellant filed a suit before the Court of District Judge, Delhi under Section 120 of the Trade and Merchandise Marks Act, 1958 for damages and for restraining groundless threats of legal proceedings instituted by the Defendant.

Later, the Respondent filed a suit in the High Court of Delhi for permanent injunction against the Appellant seeking to restrain the Appellant from using the mark ARJIES as the use of the same would amount to infringement and passing off.

Appellant filed an application under Section 10 of the Code of Civil Procedure, 1908 for stay of the subsequent suit until the suit of the Appellant before the Court of District Judge, Delhi under Section 120 of the Trade and Merchandise Marks Act, 1958 is decided. The said application was dismissed by Learned Single Judge of the Delhi High Court.

Learned Single Judge of the Delhi High Court opined that the previous suit was suit of a limited scope governed by Section 120(1) of the Trade and Merchandise Marks Act, 1958 and sub section (2) of Section 120 permits suit of the nature subsequently filed by the Respondent.

Aggrieved by the said order, Appellant filed the present appeal before the Division Bench of the Delhi High Court.

Appellant’s Case:

Issues arising for decision in the suit before the High Court are also directly and substantially in issue in the suit before the District Judge and thus the subsequent suit ought to be stayed.

Court’s observations:

“Ordinarily a legal action may not lie against a mere threat for it may not even provide a cause of action to proceed against. However, in the commercial world of trade marks a person may be threatened by another person with an action or proceedings for infringement of a trade mark-registered or alleged to be registered Such threats may be hollow but they are sure to cause an injury to the person threatened because a person issuing threats has registered trade mark or at least claims it to be registered. In such a situation the person threatened may feel aggrieved. He may be a registered proprietor or the registered user of the trade mark or may not be so. The threats issued to him may occasion loss of mental peace or business stability to him. Section 120 permits a suit being filed for a declaration that the threats are unjustifiable. In addition an injunction may be sought for against the continuance of the threats. If the threats have resulted into any damages, the person suing may also claim the damages. Such a suit having been filed the defense available to the person sued within the meaning Section 120 must satisfy the twin test to be a valid defense : (i) that the defendant has a registered trade mark; and (ii) the acts in respect of which the proceedings were threatened amount to an infringement of the trade mark.”

“An action for infringement is founded on the exclusive right to the use of a trade mark in relation to certain goods conferred by registration on the proprietor of the mark. The proprietor has an exclusive right to use the trade mark which right is infringed if another person uses in relation to the same goods a trade mark which is deceptively similar therewith and hence is likely to deceive or cause confusion to the customers. A mere prior user (without being registered) would not entitle an action for infringement being initiated though an action for passing off would lie. Thus a threat for initiating an action or proceeding complaining of passing off merely in relation to an unregistered trade mark does not attract applicability of Section 120.”

“Section 120 would not apply also if a registered proprietor or registered user does not stop merely at having issued threats for an action or proceeding but also commences and prosecutes an action against the person threatened for infringement of the trade mark. The commencement of the action must follow the threat and show the quality of due diligence. Prosecuting the action should also have the quality of due diligence. In short, the threat followed by duly diligent commencement and prosecution of an action for infringement of the trade mark would exclude applicability of Section 120 and disentitle the person threatened from initiating an action thereunder.”

“A suit filed under Section 120 of the CPC would be liable to be dismissed the minute the defendant has been able to satisfy the Court that his trade mark was registered and the act of the plaintiff (occasioning the threat) amounts to infringement of such trade mark. There may be several other relevant pleas and defenses legally permissible in a trade mark action but they will be beyond the scope of inquiry in a suit under Section 120. Once the Court is satisfied that the threats were neither irresponsible nor unjustified they cease to be ‘injury’ so far as Section 120 is concerned and the person threatened cannot be said to be a person aggrieved. The action under Section 120 would be liable to be dropped. The parties shall be left free to seek adjudication of their rights in an otherwise duly constituted suit.”

“In the case at hand ARCHIS is a registered trade mark. An action for infringement has been initiated by the plaintiff. The rights of the parties would be adjudicated therein. The scope of the two suits is different. The ‘present suit’ which is latter instituted suit is wider in its sweep. It cannot be said that the issues arising for decision in the ‘previous suit’ — the earlier one which has a limited scope and limited object are the same as arise directly and substantially for decision in the latter instituted suit. That being the situation and keeping in view the underlying object behind sub-section (2) of Section 120 of the CPC, the ‘present suit’ cannot be stayed.”

The appeal was consequently dismissed.

Author’s Comments: The present case pertained to interpretation of Section 120 of the Trade and Merchandise Marks Act, 1958. Trade and Merchandise Marks Act, 1958 was subsequently repealed and Trade Marks Act, 1999 came into force in September, 2003. Section 142 of the new Trade Marks Act, 1999 is verbatim to Section 120 of the Trade and Merchandise Marks Act, 1958 and hence the decision and observations in the present case will also apply to Section 142 of the Trade Marks Act, 1999. Section 142 of the Trade Marks Act, 1999 is reproduced herein:

“142. Groundless threats of legal proceedings —

(1) Where a person, by means of circulars, advertisements or otherwise, threatens a person with an action or proceeding for infringement of a trade mark which is registered, or alleged by the first-mentioned person to be registered, or with some other like proceeding, a person aggrieved may, whether the person making the threats is or is not the registered proprietor or the registered user of the trade mark, bring a suit against the first-mentioned person and may obtain a declaration to the effect that the threats are unjustifiable, and an injunction against the continuance of the threats and may recover such damages (if any) as he has sustained, unless the first-mentioned person satisfies the court that the trade mark is registered and that the acts in respect of which the proceedings were threatened, constitute, or, if done, would constitute, an infringement of the trade mark.

(2) The last preceding sub-section does not apply if the registered proprietor of the trade mark, or a registered user acting in pursuance of sub-section (1) of section 52 with due diligence commences and prosecutes an action against the person threatened for infringement of the trade mark.

(3) Nothing in this section shall render a legal practitioner or a registered trade marks agent liable to an action under this section in respect of an act done by him in his professional capacity on behalf of a client.

(4) A suit under sub-section (1) shall not be instituted in any court inferior to a District Court.”