Rights of Prior User of Trade Mark | Trade Marks Act, 1999

The Trade Marks Act, 1999 [“the Act”] governs the registration of trademarks subject to various conditions enlisted in the provisions of the Act. This article discusses the rights of a prior user of a trade mark against a similar trade mark which is registered as per the provisions of the Act. Before addressing the issue, it is imperative to refer to the scheme of the Act.

Statutory Framework at a Glance

Section 2(1)(zb) defines a “trade mark” as a mark capable of being represented graphically and is capable of distinguishing goods or services of one person from those of others. Section 2(1)(m) defines “mark” and includes the following marks, which are capable of being registered subject to the provisions of the Act-

Device
Brand
Heading
Label
Ticket
Name
Signature
Word
Letter
Numeral
Shape of goods
Packaging or combination of colors or any combination thereof.

The Central Government appoints a Registrar of Trademarks under Section 3 of the Act, who is tasked with maintenance of the Register of Trade marks defined under Section 6 of the Act, and also with the authority to oversee the Registration process of the Trademarks. Any person, who is desirous of registering a trade mark may apply in writing to the Registrar of trade marks under Section 18 of the Act. The Registrar may adjudicate the application on the basis of relative and absolute grounds of refusal of registration envisaged under Section 11 and Section 9 of the Act, respectively, and accordingly, accept or refuse the application for registration of the trademark. Once the application is accepted under Section 18, the Registrar shall cause the Application to be advertised under Section 20 of the Act, calling for any objection with respect to the proposed registration of the trade mark. If any person has any opposition to the Registration of the Trademark, so advertised, he may, within a period of 4 months from the date of advertisement, give a notice in writing to the Registrar under Section 21 of the Act, pursuant to which the Registrar may hear both the parties and decide whether Registration is be granted or not. If the advertisement issued under Section 20 is not opposed by anyone, or if opposed under Section 21, however, the objection is decided in favour of the Applicant, then the Registrar shall proceed to Register the Trademark under Section 23 of the Act. Section 23 clarifies that the date of the Registration of the Trademark shall be construed as the date on which the Application was filed for Registration of the trade mark as opposed to when Registration is finally granted under Section 23 of the Act. For example, if an application for Registration of trademark is made on 25.02.2025 and Registration under Section 23 of the Act is finally granted on 25.12.2025, then the date of Registration of the Trademark shall be construed as 25.02.2025 i.e. when the Application was made for the Registration of Trademark. As per Section 25 of the Act, the Registration of the trade mark shall be for a period of 10 years subject to renewal from time to time.

Infringement of Trademark and Test of Deceptive Similarity

Section 27 of the Act bars a proprietor of an unregistered trademark to bring an action of infringement of its trademark. Therefore, in order to bring an action of infringement of a trademark, it is imperative that the trademark is registered as per the provisions of the Act. Once a trademark is registered, then Section 28 confers a statutory right on a proprietor to exclusively use the registered trademark in relation to the goods and services in respect of which the trademark is registered and also bring an action of infringement as per Section 29 of the Act on grounds enlisted therein. Registration of a trademark, essentially, is a statutory protection accorded to a trademark under the Act. As per Section 29 of the Act, one of the principal grounds under which an action for infringement can be brought is of deceptive similarity viz. if a proprietor of an unregistered trademark uses his trademark in such a manner which is deceptively similar to the registered trademark of another person which is likely to cause confusion in the mind of the public, or which is likely to have an association with the registered trademark.

It is now well settled that when comparing two trademarks, in order to ascertain deceptive similarity between them, the trademarks ought to be compared as a whole and dissection of the trademarks must be avoided. The two trademarks should not be compared with a microscope to find the differences, for this is not the way the average purchaser views the marks¹. The likelihood of confusion must be assessed from the perspective of an average customer having imperfect recollection². The average customer is not one who will make a detailed scrutiny colour by colour, mark by mark to find out whether the product is of the Plaintiff or the Defendant³. The Bombay High Court in the matter of Hiralal Prabhudas vs Ganesh Trading Company⁴, after going through a conspectus of various judgment on the issue, held that the following principles ought to be kept in mind while assessing deceptive similarity between two trademarks viz.-

“5. What emerges from these authorities is

what is the main idea or salient features,
marks are remembered by general impressions or by some significant detail rather than by a photographic recollection of the whole,
overall similarity is the touchstone,
marks must be looked at from the view and first impression of a person of average intelligence and imperfect recollection,
overall structure phonetic similarity and both visual and phonetic tests must be applied,
the purchaser must not be put in a state of wonderment,
marks must be compared as a whole, microscopic examination being impermissible,
the broad and salient features must be considered for which the marks must not be placed side by side to find out differences in design and
overall similarity is sufficient.” (emphasis supplied)

Passing Off

Whereas passing off is a remedy recognized in common law which exists independent of provisions of the Trademark Act⁵. Registration of trademark, itself, does not create a trademark. The trademark exists independently of the registration which merely affords further protection under the statute. Common Law rights remain wholly unaffected⁶. Meaning, if a proprietor possesses an unregistered trademark, he may not be able to bring an action of infringement against another proprietor who may be misusing his trademark, however, he can still bring an action of Passing off against the other proprietor even if the other proprietor possesses a registered trademark. This is evident from Section 27 of the Act which although categorically bars a proprietor of an unregistered trademark to bring an action of infringement, however, sub section 2 of Section 27 clarifies that the remedy of passing off remains unaffected, as follows-

“27. No action for infringement of unregistered trademark

….

(2) Nothing in this Act shall be deemed to affect rights of action against any person for passing off goods or services as the goods of another person or as services provided by another person, or the remedies in respect thereof.”

Therefore, rights conferred by registration, under Section 28 of the Act are not indefeasible or absolute and are subject to Section 27(2) of the Act. An action of passing off is independent of the provisions of the Act⁷.

An action for passing off is grounded on the principle that no person is entitled to represent his or her business as business of other person⁸. It is premised on the rights of a prior user and the goodwill that has been generated by such prior user⁹. Unlike an action of Infringement under Section 29 of the Act, for which a proprietor only needs to have a registered trademark to invoke Section 29 of the Act to bring an action of infringement, however, for bringing an action of passing off, a proprietor of a trademark has to satisfy the following three ingredients which have come to be recognized as classical trinity under the law of passing off¹⁰. The three essential ingredients have been succinctly explicated by the Delhi High Court in Kabushiki Kaisha Toshiba vs Tosiba Appliances Co.¹¹ viz. –

Goodwill– The Plaintiff must demonstrate that their trademark has an established reputation and goodwill in the market.
Misrepresentation– There must be evidence that the Defendant’s use of the mark has led, or is likely to lead to a misrepresentation in the market.
Damage– The Plaintiff needs to show potential or actual damage to their business or goodwill resulting from Defendant’s misrepresentation.

All the above three essential ingredients must be demonstrated to exist so as to bring an action of passing off and existence of only one of the above ingredients will not sustain an action of Passing Off. In Toshiba (supra), the proprietor of the trademark “TOSHIBA” brought an action of infringement and passing off against the usage of “TOSIBA” trademark by the Defendant. The Plaintiff failed to satisfy the first essential ingredient of passing off viz. Goodwill and reputation of the Plaintiff’s trademark in the Indian market therefore, the passing off action was not sustained and the Court did not even delve into finding whether the other two ingredients of passing off exist or not. However, the action of infringement of Plaintiff’s trademark “TOSHIBA” against Defendant’s trademark “TOSIBA” was sustained by the Court. This is where the fundamental difference between “infringement” and “passing off” lies. In a case of Infringement, Plaintiff principally needs to show deceptive similarity between the two trademarks, and it is immaterial whether the Plaintiff’s trademark possess goodwill or reputation in the market¹². However, in an action of passing off it is imperative for the Plaintiff to prove the classical trinity test in order to succeed. The case of Toshiba (supra) also exemplifies why it is always beneficial to have your trademark registered. As in case of infringement, the Plaintiff with a registered trademark does not need to prove beyond deceptive similarity between the two trademarks, however, in case of passing off, the Plaintiff needs to stand the test of classical trinity and it is mandatory to prove goodwill, misrepresentation and damage, in order to succeed. In case of passing off, the Plaintiff needs to cross a higher threshold, unlike in the case of infringement. In Toshiba (supra) the Plaintiff although failed to make a case of Passing off against the Defendant, however, its case of infringement of its trademark by the Defendant was sustained by the Court.

Difference between Infringement and Passing Off

The following differences emerge from the aforesaid discussion-

INFRINGMENT

PASSING OFF

An action of Infringement is a statutory right enshrined under Section 29 of the Act.

An action of Passing off is a remedy recognized in common law and is independent of the provisions of the Act.

In order to bring an action of Infringement, it is imperative that the Plaintiff has the trademark registered as per the provisions of the Act.

An action of Passing off is a common law remedy which is independent of the provisions of the Act. Even a proprietor of an unregistered trademark can bring an action of passing off against a trademark which is registered, subject to fulfillment of the trinity test and prior use of the trade mark in question.

An action for infringement would lie irrespective of whether the Plaintiff possess, or does not possess, goodwill or reputation in the mark that it seeks to assert. Infringement is a statutory tort, unlike passing off, which is a common-law tort¹³.

For bringing an action of passing off, it is imperative for the Plaintiff to prove goodwill and reputation of the trademark, along with the other necessary ingredients, viz. misrepresentation and damage.

For bringing an action of infringement it is not required to show sales or marketing of the registered trademark. Physical or actual use is not a pre-requisite for acquiring proprietary rights in a trademark. Merely intention to use the registered trademark is sufficient to establish these rights¹⁴. An intention to use does not necessarily mean that the proprietor must show the marketing of the goods under the trademark¹⁵.

It is not necessary for the Plaintiff to establish use of the mark; even a registered proprietor who has not commenced use, can sue for infringement¹⁶.

For passing off, the damage caused owing to the passing off of its trademark by the Defendant, to its sales, is one of the three essential ingredients of passing off. Therefore, it is imperative for the Plaintiff to not only show that the trademark was marketed by the Plaintiff but also show that owing to passing off of its trade mark by the Defendant, its sales suffered a blow.

In a passing off action, the Plaintiff must demonstrate prior and continuous use, and that the mark has acquired distinctiveness in the minds of the public¹⁷.

In an action of infringement, if the similarity between the Plaintiff’s and Defendant’s trade mark is so close, either visually, phonetically or otherwise and the court reaches the conclusion that there is an imitation, then no further evidence is required to establish that the Plaintiff’s rights are violated. If the Plaintiff is able to prove that the essential features of its trade mark have been adopted by the Defendant then the fact that the get-up, packaging and other writing or marks on the goods or on packets in which he offers his goods for sale show marked differences or indicate clearly a trade origin different form that of the registered proprietor of the mark would be immaterial¹⁸. Basically, the Plaintiff need not delve into the peculiarity of similarities between the trademarks and is only required to show adoption of essential features of the Plaintiff’s trademark by the Defendant.

In case of passing off, a detailed analysis of the similarity between the trademarks is required to be undertaken. Therefore, the Defendant may escape liability, if he can show that the added matter is sufficient to distinguish his goods from those of Plaintiff¹⁹.

Rights of Prior User of Trademark

Section 28(3) of the Act postulates a situation where same or similar trademarks can be registered in favour of more than one person. Between two persons who are the registered owners of the identical trademarks, there is no exclusive right to use the said trade mark against each other, which means that this provision gives concurrent right to both the persons to use the registered trademark in their favour²⁰. Essentially, Section 28(3) of the Act proscribes an action of infringement of trade mark against another proprietor who also has a similar registered trademark. However, the said provision does not proscribe the registered proprietor to enforce their right against any other third party. The proscription of action of infringement by one registered proprietor against another registered proprietor having a similar trade mark is founded on Section 28(1) of the Act which confers a statutory right upon a registered proprietor to exclusively use the trademark. Also, as per Section 31 of the Act, the registration of the trade mark is prima facie evidence of its validity. Given this the scheme of Act, can a registered proprietor still bring an action of passing off against another registered proprietor? and on what grounds?

As discussed hereinabove, the remedy of passing off exists independently of the provisions of the Act as it is a common law remedy. This is further clarified by Section 27(2) of the Act. Furthermore, Section 28(3) of the Act, although proscribes an action of infringement against another trade mark which is also registered, however, the said provision is silent on the action of passing off, pertinently due to the application of Section 27(2) which does not bar the remedy of passing off against another person, notwithstanding any other provision in the Act.

Another important provision to note in this regard is Section 34 of the Act which categorically recognizes the rights of a prior user of a trade mark. Section 34 of the Act proscribes a proprietor of a registered trademark to restrain any person, having a trade mark identical or nearly resembling to his registered trademark provided that the person has been using the identical trademark prior in point of time to that of the registered proprietor. If a person is able to prove that he is the prior user of the trademark which happens to be identical or similar to a registered trademark, then as per Section 34 of the Act the person’s right to use the trademark is not only protected but he is also entitled to have its trademark registered and the Registrar shall not refuse to register the trademark for the reason that an identical trademark already stands registered. In Inder Raj Sahni vs Vikas Gupta²¹ the Delhi High Court observed that the determination of prior use cannot be based on competing assertions or bare, unsubstantiated claims. The Court emphasised that the law requires credible and continuous evidence of commercial use, whether in the form of sales records, advertising, consumer association or other market-facing activities that reflect the accrual of goodwill and a proprietary connection with the mark. It is the genuine and sustained use of a mark in the course of trade that gives rise to enforceable proprietary rights in trademark law.

The rights of a prior user to use the trademark which happens to be in conflict with a registered trademark owing to its similarity, is founded on the common law remedy of passing off which protects a proprietor who had been generating goodwill with respect to a particular trademark prior in point of time. Being a prior user of the trade mark also entitles the prior user to bring an action of passing off against another proprietor of a trademark, notwithstanding the fact that both the trademarks may be registered as per the provisions of the Act. The mere fact, that both the prior user and the subsequent user are registered proprietors are irrelevant for the purposes of examining who generated goodwill first in the market and whether the latter user is causing misrepresentation in the course of trade and damaging the goodwill and reputation of the prior right holder/former user²².

Case law- S.Syed Mohideen vs P. Sulochana Bai²³

The Plaintiff obtained registration in trademark ‘Iruttukadai Halwa’ in the year 2007 and claimed to be using the said trademark since the year 1900. Subsequently, the Defendant obtained a registration of a similar trademark viz. ‘Tirunelveli Iruttukadai Halwa’ in the year 2008. The Plaintiff filed a suit for permanent injunction against the Defendant on the ground that the Defendant adopted a deceptive similar trademark to confuse customers. The suit was decreed by the Trial Court and an appeal against the decree was dismissed by the High Court. The matter was carried in Appeal before the Supreme Court. The Supreme Court expounded upon the rights of a prior user of a trademark and an action of passing off being independent of the provisions of the Act. On the basis of Evidence produced by the Plaintiff, the Court observed that the Plaintiff has established that her trademark has been in use since 1900 under which she has generated immense goodwill and reputation in the market. The Supreme Court upheld the findings of the High Court, reproduced hereinbelow-

24…..When the Plaintiff has proved that the person who gets into the business at the first point of time acquired the right to use the trade mark, the priority in use of the trade mark by the Plaintiff will have to be recognized.Therefore, the Court is of the considered opinion that allowing the Defendant to use the trade mark ‘Tirunelveli Iruttukadai Halwa’ will amount to deceiving the public, hence, no one can be permitted to encroach upon the goodwill and reputation of other party, particularly when a specific mark, though may be a descriptive word, has acquired a subsidiary meaning and is fully admitted by the particular company and when a party who cannot be termed as a honest current user of the mark on the reputation and goodwill of the company, it will constitute invasion of the proprietary right, hence, the same cannot be permitted any longer. In a situation like this, it is the bounden duty and obligation of the Court not only to protect the goodwill and reputation of the prior user, but also to protect the interest of the consumers.” (emphasis supplied)

The Supreme Court in S.Syed Mohideen (supra) inter alia culled out the following principles with respect to the rights of a prior user of trade mark vis-à-vis the remedy of passing off-

A conjoint reading of Sections 27, 28, 29 and 34 of the Act shows that the rights conferred by registration are subject to the rights of the prior user of the trademark.
The Rights in passing off are emanating from the common law and not from the provisions of the Act and they are independent from the rights conferred by the Act.
Rights granted by registration are not absolute but are subject to the provisions of the Act.
Section 28(3) of the Act does not proscribe an action of passing off by a registered proprietor of a trademark against another registered proprietor having an identical trademark.
The scheme of the Act is such where rights of prior user are recognized superior than that of registration and even the registered proprietor cannot disturb or interfere with the rights of prior user.
Registration is not an indefeasible right and subject to the rights of prior user.
Merely because both prior user and subsequent user are registered proprietors are irrelevant for the purposes of examining who generated the goodwill first in the market and whether the latter user is causing misrepresentation in the course of trade and damaging the goodwill and reputation of the prior user.
Passing off is a broader remedy than that of infringement. This is due to the reason that the passing off doctrine operates on the general principle that no person is entitled to represent his or her business as business of other person.
Registration is merely a recognition of the rights pre-existing in common law and in case of conflict between the two registered proprietors, the evaluation of the better rights in common law is essential as the common law rights would enable the court to determine whose rights between the two registered proprietors are better and superior in common law which have been recognized in the form of registration by the Act.

Can an action of infringement lie against another proprietor of registered trademark?.

While the Act categorically proscribes an action of infringement against another registered proprietor, however, the recent trend shows that such an action is also sustainable subject to certain conditions. In Khadi and Village Industries Commission vs Girdhar Industries and Anr.²⁴, the Delhi High Court observed that the Trade Mark Act although proscribes any infringement suit against a registered trade mark, or an order of injunction restraining the use of a registered trade mark, such a suit would be maintainable, and such an order could be passed, if the court is satisfied that the Defendant’s registration is invalid. However, the Delhi High Court added a caveat that while arriving at such a decision, the court must bear in mind Section 31(1) of the Act which treats the very factum of registration as prima facie evidence of its validity. The threshold that the Plaintiff would have to cross in such a case would be very high. For this, not only must the plaint contain cogent pleadings alleging invalidity of the Defendant’s registration, it must also contain convincing grounds to satisfy the court, prima facie, that the registration is in fact invalid.

Principles Governing Grant of Injunction in Trade Mark Cases

In Pernod Ricard India Pvt. Ltd. & Anr. vs Karanaveer Singh Chabra²⁵ the Supremę Court held the following principles which must guide the court while granting an order of injunction in trade mark cases-

Serious Question to be tried/triable issue: The Plaintiff must show a genuine and substantial question fit for trial. It is not necessary to establish likelihood of success at this stage, but the claim must be more than frivolous, vexatious or speculative.
Likelihood of confusion/deception: Although a detailed analysis of merits is not warranted at the interlocutory stage, courts may assess the prima facie strength of the case and the probability of consumer confusion or deception. Where the likelihood is weak or speculative, interim relief may be declined at the threshold.
Balance of convenience: The Court must weigh the inconvenience or harm that may result to either party from the grant or refusal of injunction. If the refusal would likely result in irreparable harm to the Plaintiff’s goodwill or mislead consumers, the balance of convenience may favour granting the injunction.
Irreparable harm: Where the use of the impugned mark by the Defendant may lead to dilution of the Plaintiff’s brand identity, loss of consumer goodwill, or deception of the public- harms which are inherently difficult to quantify- the remedy of damages may be inadequate. In such cases, irreparable harm is presumed.
Public Interest: In matters involving public health, safety, or widely consumed goods, courts may consider whether the public interest warranted injunctive relied to prevent confusion or deception in the marketplace.

Conclusion

The Trademarks Act provides a statutory remedy to a registered proprietor to bring an action of infringement on the grounds mentioned in Section 29 of the Act. However, at the same time, the Act also recognizes the common law remedy of passing off which is founded on the rights of prior user of the trade mark who has generated goodwill with respect to a particular trade mark, prior in point of time vis-à-vis an identical registered trademark. Merely because both prior user and subsequent user are registered proprietors are irrelevant for the purposes of examining who generated the goodwill first in the market and whether the latter user is causing misrepresentation in the course of trade and damaging the goodwill and reputation of the prior user²⁶.

By Daksh Pandit