We’re pleased to bring to you a guest post by Varsha Jhavar, analysing a recent trademark law decision (Anil Rathi v. Shri Sharma Steeltech), whereby the Delhi High Court rejected the plea for usage of a surname in the course of trade, on the ground that the use was not in a bona fide manner.
Varsha is a 5th year student at Hidayatullah National Law University, Raipur. She recently won the second prize for the 1st Shamnad Basheer Essay Competition on IP Law that was conducted by us earlier this year.
Bona Fide or Not?: Usage of Common Surnames as Trademarks
Varsha Jhavar
Introduction
The usage of one’s surname in the course of trade cannot be restricted even by a registered proprietor, provided the use is in a bona fide manner. But, there are certain exceptions to this exception. One such exception was recently dealt with by the Delhi High Court in Anil Rathi v. Shri Sharma Steeltech (“Anil Rathi”). In this case, a single-judge bench rejected the plea for usage of a surname in the course of trade, on the ground that the use was not in a bona fide manner. What makes this case different is the existence of a family agreement governing the use of the trademark in question and the fact that the defendant was a beneficiary under it. This case brings further clarity with regard to the usage of surnames as trademarks in the course of trade. This post analyses the Anil Rathi judgement with the intention to comprehend the scope of Section 35 of the Trade Marks Act, 1999.
Factual Background
The plaintiff and defendants are engaged in manufacturing of steel products. The Rathi Foundation (the Foundation) is the registered proprietor of ‘RATHI’ trademark (the impugned mark) and the plaintiff is one of its trustees. An MoU and Trust Deed regulate the usage of the impugned mark between the members of the large Rathi Family. Defendant No. 8 (the defendant) belongs to the Rathi family and had granted licenses for the use of ‘RATHI/RATHI TMT’ mark to third parties. The plaintiff filed a suit for the infringement of the impugned mark, requesting the court to grant an ex-parte ad interim injunction restraining the impugned mark’s unauthorized use, as well to restrain the grant of licenses by the defendant. The plaintiff based his claim on the Foundation’s statutory right as under Section 28 of the Trade Marks Act as the registered proprietor to exclusively use the impugned mark and also the defendant’s contravention of the MoU and Trust Deed.
Court’s Decision
The court held that the defendant’s act of issuance of licenses in his personal capacity for the usage of impugned mark amounts to infringement, as the issuance is ultra vires the MoU and Trust Deed. The court observed that only the trustees have a right to issue licenses for use of the impugned mark and the defendant being a beneficiary of the Foundation has no right to deal with it. The defendant claimed that since his surname is ‘Rathi’, he has a right to use the impugned mark under Section 35. It was pronounced that Section 35 cannot be invoked, as it is restricted to personal use of marks and does not to extend to the grant of licenses or use by artificial entities. The use of the impugned mark by the defendant was found not to be in a bona fide manner as he not only granted licenses for its use, but the entities that it was granted to were engaged in an identical area of business as the Rathi family. The court noted that the defendant being a beneficiary cannot plead ignorance concerning the terms of the MoU and Trust Deed.
The court reiterated the well-settled principle that protection under Section 35 cannot be sought for a mark that has acquired distinctiveness, and cited this is as another reason that Section 35 could not be invoked. Additionally, the court identified the defendant’s argument of licensing of the mark with a suffix to be without merit and held that it constituted an infringement of the impugned mark. The court also clarified that the members of the Rathi family can only register individually, the prefix or suffix that they use with the ‘RATHI’ mark for their companies’ products, otherwise if registered together it would amount to infringement.
Analysis
The Anil Rathi judgement seems to be a step in the right direction. This ruling is significant as it clarifies that bona fide use requirement cannot be applied against a legally binding agreement. Section 35 of the Trade Marks Act, 1999 entitles a person to use his surname in the course of trade, it provides that:
‘Nothing in this Act shall entitle the proprietor or a registered user of a registered trade mark to interfere with any bona fide use by a person of his own name or that of his place of business, or of the name, or of the name of the place of business, of any of his predecessors in business, or the use by any person of any bona fide description of the character or quality of his goods or services.’
The Delhi High Court in Precious Jewels v. Varun Gems, averred that the term ‘bonafide governs the entire provision’ of Section 35. The meaning of bona fide was not discussed properly in Anil Rathi and this issue was decided based on the facts. In Skipper Limited v. Akash Bansal, the Calcutta High Court quoted with approval the interpretation of ‘bona fide’ as stated in Baume v. Moore. The court stated that bona fide means ‘honest use by a person of his own name’ with no intention to deceive or encash upon the goodwill of another trader. This interpretation could be helpful in determining the scope of Section 35.
The court also discussed the relevance of the Supreme Court’s decision in Precious Jewels v. Varun Gems (Precious Jewels) and found its facts to be different from that of Anil Rathi. The court observed that in Precious Jewels the use of the surname was bona fide in nature, as it was used as ‘part of the full name’ and the parties were engaged in the same area of business. In differentiating between the cases, the court highlighted the existence of a MoU and Trust Deed in Anil Rathi. Agreeably, the facts are different, but the reasoning in Anil Rathi seems to be lacking. In Precious Jewels, the defendants’ use of the mark ‘Rakyan’ was considered bona fide, as it was being used as a part of the full name and in Anil Rathi also the defendant licensed the use of mark ‘RATHI’ along with a suffix ‘TMT’. Thus, the ‘full name’ reasoning could work in favour of the defendants as it is similar to the facts of the present case. A point of distinction between the cases is that Anil Rathi deals with grant of licenses and not personal use.
According to the defendant’s submissions, two companies of the Rathi Family had registered the impugned mark in their names in 1975 and 1980 respectively, and later had assigned it to two trusts – the Rathi Foundation and Rathi Research Centre respectively. The defendant had raised the issue that the impugned mark could not be exclusive to the Foundation as the Trade Mark Registry had allowed it to be registered by two different entities. The court did not consider this fact in its decision, however a clarification on this issue would have been beneficial. The presence of two identical ‘RATHI’ marks on the Trade Marks Registry might have worked in favour of the defendant.
One of the arguments raised by the defendant was with regard to his granting of licenses of the use of the impugned mark with a suffix, the court did not properly address this issue and held that it was infringement. Interestingly, in 2013 the Delhi High Court decided a suit filed on behalf of Rathi Research Centre for the infringement of its mark ‘RATHI’. In this case, the defendants had used the words ‘GOLDEN RATHI’, i.e., the mark ‘RATHI’ with a prefix, for their steel products. Additionally, they had used the relevant mark as part of their corporate name. Relying on Greaves Cotton Limited v. Mohammad Rafi, the court stated that the word ‘RATHI’ forms an essential part of plaintiff’s mark and held that the it cannot be used by the defendants with prefixes or suffixes. The use of the impugned mark for the defendants’ products as well as the corporate name, was found to be constituting infringement and passing off. The plaintiff could have cited this judgment in his submissions, as the same issue was raised in Anil Rathi with regard to the infringement of the same ‘RATHI’ mark.
The Anil Rathi case helps evolve the jurisprudence on interpretation of Section 35, but the court could have further elaborated upon certain issues. This would be helpful in preventing erroneous application of the case in the future. However, this conclusion is tentative and the final decision is awaited.