On August 20, 2024, a single-judge bench of the IP Division of the Madras High Court (MadHC) issued an Order (pdf) with notable observations about the feasibility of allowing a counterclaim in a trademark rectification petition filed under Sections 47 (cancellation of trademark on the grounds of non-use) and 57 (rectification of trademark) of the Trademark Act, 1999 (“TM Act”). The case involved the trademark “Solidare” (Trademark No. 1574746 in Class 9). In this post, I’ll examine the precedential value the order may set out to re-evaluate the interaction and timeline between Sections 47, 57, and 124 (stay during suit of infringement)—a trio often seen together in the context of rectification petitions (discussed here and here).
An Analysis of the Order
Firstly, for context, a rectification application must be filed under Sections 47, 57, 68, or 77 (as applicable) of the TM Act read with Rule 92 of the Trade Marks Rules, 2002. Now, the current matter pertains to Sections 47 and 57. An analysis of this order requires a two-pronged approach, as follows:
- A Lack of Provision in TM Act for Counterclaims in a Rectification Petition
Sections 57(1) and (2) provide for the powers related to modifying or cancelling trademark registrations on grounds of failure to comply with the trademark’s registration rules or conditions, presence of errors, incorrect entries, or missing entries in the Register. Parties affected only by these issues can approach the High Court or Registrar to make appropriate modifications. With respect to this, the MadHC held that a counterclaim is not maintainable in a rectification proceeding owing to a lack of a provision in the TM Act providing for such an action. [To avoid any confusion, a ‘counterclaim’ is when the defendant makes a positive claim against the plaintiff in response to the plaintiff’s lawsuit on a certain cause of action under the CPC, and is distinct from the ‘counter statement,’ which is filed as a response to the initiated rectification proceedings] Moreover, the Petitioner’s counsel had also claimed for this end that the Madras High Court Intellectual Property Rights Division Rules, 2022 also do not provide for such a counterclaim. On a search, I also could not find anything on a counterclaim being accepted during the rectification proceedings per se in the Manual for Trade Marks by the Office of Controller General Patents, Designs & Trade Marks (CGPDTM). The MadHC commented that while the Code of Civil Procedure (CPC) [under Order VIII Rules 6A to 6G] expressly provides for a counterclaim and also sets out an elaborate procedure for dealing with the same, the TM Act neither provides for nor deals with counterclaims at the very outset (Para 8).
From what I researched, it appears that this is the first occurrence of a counterclaim being made in a rectification petition. Older cases mostly have counterclaims filed after the rectification petitions have been dismissed and the suits for infringements or passing off are concerned presently. For instance, in the case of Vivek Kochar v. KYK Corporation Limited (2022) where the counterclaim in a passing-off suit was much after the rectification had been ordered by the court). Another case could be that a counterclaim in the suit for infringement, passing-off, etc. is ongoing and the party makes an application for rectification thereafter. For instance, in Roland Corporation vs Mr Sandeep Jain (2021), the rectification petition was filed after the counterclaim was filed for confusion of trademarks. Another variation of such scenarios can be witnessed in the case of Mandom Corp v. Fem Care Pharma Limited & Ors. (2020) (discussed on the blog here), counterclaims in an infringement suit were filed by the Applicant after the rectification petitions had been disposed of, be it by rejection in the first instance, or acceptance in the second instance.
- Wide Powers vested in the Court under Section 57(3) and (4)
Another aspect that was brought up in the order was the utility of Sections 57(3) and 57(4) to call upon the discretionary powers vested in the court to decide any question or take any rectification action suo moto when the situation demands. The counsel for the respondent originally contended that the powers conferred on the Court under Section 57 are so wide that the MadHC can embrace the power to rectify the trademark of the petitioner if a counterclaim were to be made. The counsel relied on the order of the Delhi High Court (HC) in Nadeem Majid Oomerbhoy v. Gautam Tank (discussed here) with respect to the exercise of the powers under Section 57(4) when the party had failed to comply with section 124(1)(b) of the TM Act before challenging the validity of this registration when a trademark infringement suit was already pending. Moreover, with regard to the powers under Section 151 of the CPC, the counsel relied on the Supreme Court judgement of Rajendra Prasad Gupta v. Prakash Chandra Mishra.
While not exactly falling in line with what the counsel was asserting, the Court did allow the counterclaim to be treated as a petition for challenging the validity of the Petitioner’s mark. The MadHC noted that while sub-section (3) grants broad powers, it is specifically for resolving issues related to the rectification of a trademark register. As for sub-section (4), it allows for broader considerations but requires notice and an opportunity for all parties involved. However, in this case, the counterclaim is filed by a party already involved in the proceedings, so Sub-section (4) does not affect the decision on whether this counterclaim is maintainable. The MadHC noted that despite the observation that counterclaims are not maintainable under the TM Act since the respondent submitted the counterclaim with the requisite fee and it was followed by a written statement from the petitioners, it should be treated as a petition instead. MadHC assigned an original petition number to such a counterclaim. The main ground in the counterclaim in itself is rather interesting as it claims that the Petitioner himself has copied its mark from a third party and therefore his mark is not supposed to remain in the register.
A Re-look At the Confluence of Sections 47, 57 and 124 of the Trademarks Act
To understand the scheme of Section 124 a bit better, the section provides for a stay of the suit for infringement where either the plaintiff or the defendant has raised an issue of invalidity of the defendant’s or the plaintiff’s trademark registration, respectively. In this matter, one of the contentions raised by the petitioner’s counsel was even in a civil suit, if the validity of the trademark of the plaintiff is challenged by the defendant, the remedy would be to file a rectification petition in compliance with Section 124 of the TM Act and no other way. The MadHC, however, has not commented on this contention in any of its analyses. That leaves us to analyse how far this assertion goes in light of the MadHC’s decision to treat the counterclaim as a new petition.
Moreover, the fundamental principles established by the landmark judgment of the SC in Patel Field Marshal Agencies v. P.M. Diesels Ltd (2021) (discussed here, here, here, and here) find relevance. The case laid to rest several doubts regarding remedies under Sections 47, 57 and 124 of the TM Act,1999 in an infringement suit. The SC clarified that the right to seek rectification of a trademark under Sections 47 and 57 is restricted by Section 124 of the Act when an infringement suit concerning the trademark is ongoing. It is required that the party not only raise the issue of invalidity within the infringement suit but also ensure that the Civil Court frames this issue before they can file a rectification petition.
This was followed by the DHC’s Anubhav Jain v Satish Kumar Jain (2023), a judgement that raised a lot of eyebrows at its seeming diversion from Patel Field Marshal (discussed here). Here, the DHC ruled that Section 124 of the TM Act, which allows for rectification during an ongoing infringement suit, does not override the rights under Sections 47 and 57. Both Section 124 and Sections 47 and 57 can be used concurrently when invalidity is raised as a defence. Not just this, several judgments existed before Patel that asserted that Sections 124 and 57 are both independent of each other in their application. For instance, Data Infosys Ltd. & Ors. vs. Infosys Technologies Ltd. (2016) held that Section 124 does not limit a party’s ability to seek rectification of a trademark registration. Similarly, Wonderful Developers Private Ltd. vs. Impresario Entertainment and Hospitality Private Ltd. held that neither Section 124(1) nor 124(2) precludes a party from applying to the Registrar or IPAB under Sections 47 or 57 for the removal or rectification of a trademark at any time. However, these had already been overruled by the Patel Field Marshal case.
Anubhav Jain asserts that Section 57 of the TM Act operates independently and allows for direct rectification, while Section 124 applies procedurally when a trademark’s validity is challenged during ongoing litigation and deemed valid by the court. On the other hand, Patel Field Marshal, which is the precedent, says that Section 57 will come into application after an issue on invalidity is framed by the court in the infringement suit. The interpretation in Anubhav Jain was likely to bring about a multiplicity of proceedings, yet this has been avoided given the fact that the case has been stayed.
Another interesting thing that has happened recently in the context of this discussion is the MR Amrish Aggarwal Trading vs M/s Venus Home Appliances judgement, which has overturned Sana Herbals Pvt. Ltd. vs. Mohsin Dehlvi, which held that no conflict would arise if rectification and infringement suits were tried simultaneously. With respect to this, Amrish Aggarwal emphasised that under Section 124 of the TM Act, a court must stay suit proceedings if rectification proceedings are initiated before the suit, as this avoids multiplicity of proceedings. The trial court must evaluate the merit of any plea of invalidity during the suit and stay proceedings for 3months if the plea is tenable. The court confirmed that the obligation to stay suit proceedings remains in place if rectification or cancellation actions are pending prior to the suit’s institution.
In the extant matter, however, this has no implication as the role of Section 124 never came into play in the first place. The MadHC has now directly converted the counterclaim to an original petition as would have been done when complying with Section 124, without requiring the parties to undergo the costs and efforts again, which is appreciable for ensuring expediency. It seems that the rectification petition will now be addressed before the infringement suit, similar to when Section 57 petitions follow a Section 124 application, but with the chronology of the petitions reversed in this case. According to Section 124, a stay for the new suit will likely apply until the rectification petition is resolved on its merits. However, the MadHC hasn’t clarified the order in which the petitions will be addressed. It is unclear which rectification petition will be addressed first—whether the petitioner’s or the respondent’s (which is now a counterclaim converted into an original petition). Nevertheless, on the whole, the MadHC has used its powers in a rational and judicious manner.
[Hattip to Mr. Ramesh Ganapathy for letting us know about the Order.]