Scheme of the Act is such where rights of prior user are recognized superior than that of the registration and even the registered proprietor cannot disturb interfere with the rights of prior user. The overall effect of collective reading of the provisions of the Act is that the action for passing off which is premised on the rights of prior user generating a goodwill shall be unaffected by any registration provided under the Act. This proposition has been discussed in extenso in the case of N.R. Dongre and Ors. v. Whirlpool Corporation and Anr. MANU/DE/0700/1995 : AIR (1995) Delhi 300 wherein Division Bench of Delhi High Court recognized that the registration is not an indefeasible right and the same is subject to rights of prior user. The said decision of Whirlpool [supra] was further affirmed by Supreme Court of India in the case of N.R. Dongre and Ors v. Whirlpool Corporation and Anr. MANU/SC/1223/1996 : 1996 (3) R.C.R. (Civil) 697 : (1996) 5 SCC 714.
B. The above were the reasonings from the provisions arising from the plain reading of the Act which gives clear indication that the rights of prior user are superior than that of registration and are unaffected by the registration rights under the Act. Secondly, there are other additional reasonings as to why the passing off rights are considered to be superior than that of registration rights.
Traditionally, passing off in common law is considered to be a right for protection of goodwill in the business against misrepresentation caused in the course of trade and for prevention of resultant damage on account of the said misrepresentation. The three ingredients of passing off are goodwill, misrepresentation and damage. These ingredients are considered to be classical trinity under the law of passing off as per the speech of Lord Oliver laid down in the case of Reckitt & Colman Products Ltd. v. Borden Inc MANU/UKHL/0012/1990 : (1990) 1 AllE.R. 873 which is more popularly known as "Jif Lemon" case wherein the Lord Oliver reduced the five guidelines laid out by Lord Diplock in Erven Warnink v. Townend & Sons Ltd. [1979) AC 731, 742 (HL)] (the "Advocate Case") to three elements: (1) Goodwill owned by a trader, (2) Misrepresentation and (3) Damage to goodwill. Thus, the passing off action is essentially an action in deceit where the common law rule is that no person is entitled to carry on his or her business on pretext that the said business is of that of another. This Court has given its imprimatur to the above principle in the case of Laxmikant V. Patel v. Chetanbhat Shah and Anr. MANU/SC/0763/2001 : 2002 (2) R.C.R. (Civil) 357 : (2002) 3 SCC 65.
The applicability of the said principle can be seen as to which proprietor has generated the goodwill by way of use of the mark name in the business. The use of the mark/carrying on business under the name confers the rights in favour of the person and generates goodwill in the market. Accordingly, the latter user of the mark/name or in the business cannot misrepresent his business as that of business of the prior right holder. That is the reason why essentially the prior user is considered to be superior than that of any other rights. Consequently, the examination of rights in common law which are based on goodwill, misrepresentation and damage are independent to that of registered rights. The mere fact that 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 right holder/former user. That is the additional reasoning that the statutory rights must pave the way for common law rights of passing off.
C. Thirdly, it is also recognized principle in common law jurisdiction that passing off right is 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. The said action in deceit is maintainable for diverse reasons other than that of registered rights which are allocated rights under Recent Civil Reports the Act. The authorities of other common law jurisdictions like England more specifically Kerry's Law of Trademarks and Trade Names, Fourteenth Edition, Thomson, Sweet & Maxwell South Asian Edition recognizes the principle that where trademark action fails, passing off action may still succeed on the same evidence. This has been explained by the learned Author by observing the following:--
15-033 "A claimant may fail to make out a case of infringement of a trade mark for various reasons and may yet show that by imitating the mark claimed as a trademark, or otherwise, the Defendant has done what is calculated to pass off his goods as those of the claimant. A claim in "passing off' has generally been added as a second string to actions for infringement, and has on occasion succeeded where the claim for infringement has failed"
The same author also recognizes the principle that Trade Marks Act affords no bar to the passing off action. This has been explained by the learned Author as under:--
15-034 "Subject to possibly one qualification, nothing in the Trade Marks Act 1994 affects a trader's right against another in an action for passing off. It is, therefore, no bar to an action for passing off that the trade name, get up or any other of the badges identified with the claimant's business, which are alleged to have been copies or imitated by the Defendant, might have been, but are not registered as, trade marks, even though the evidence is wholly addressed to what may be a mark capable of registration. Again, it is no defense to passing off that the Defendant's mark is registered. The Act offers advantages to those who register their trade marks, but imposes no penalty upon those who do not. It is equally no bar to an action for passing off that the false representation relied upon is an imitation of a trade mark that is incapable of registration. A passing off action can even lie against a registered proprietor of the mark sued upon. The fact that a claimant is using a mark registered by another party (or even the Defendant) does not of itself prevent goodwill being generated by the use of the mark, or prevent such a claimant from relying on such goodwill in an action against the registered proprietor. Such unregistered marks are frequently referred to as "common law trade marks"
From the reading of aforementioned excerpts from Kerly's Law of Trademarks and Trade Names, it can be said that not merely it is recognized in India but in other jurisdictions also including England/UK (Provisions of UK Trade Marks Act, 1994 are analogous to Indian Trade Marks Act, 1999) that the registration is no defense to a passing off action and nor the Trade Marks Act, 1999 affords any bar to a passing off action.
Equivalent Citation: 2016(66)PTC1(SC), 2015(2)RCR(Civil)810, 2015(7)SCALE136, (2016)2SCC683
IN THE SUPREME COURT OF INDIA
Civil Appeal No. 2758 of 2015 (Arising Out of SLP (C) No. 12671 of 2014)
Decided On: 17.03.2015
Appellants: S. Syed Mohideen
Vs.
Respondent: P. Sulochana Bai
Vs.
Respondent: P. Sulochana Bai
Hon'ble Judges/Coram:H.L. Dattu, C.J.I. and A.K. Sikri, J.
1. The Respondent herein is a registered owner of trade mark 'Iruttukadai Halwa'. Though, this trade mark was got registered by the Respondent/plaintiff sometime in the year 2007, as would be noted hereafter, according to the Respondent/plaintiff the business of selling halwa in the aforesaid name was started by her father-in-law way back in the year 1900. When she found that Appellant was also selling halwa under the trade name 'Iruttukadai Halwa', she filed suit for declaration, permanent injunction and other reliefs on the ground that the Appellant had adopted deceptive similar trade mark to confuse the consumers. This suit was decreed by the trial court on 20.04.2011. Insofar as the relief of rendition of accounts is concerned it was denied by the trial court. The Appellant herein filed an appeal against the said decree before the High Court of Madras. The High Court has dismissed the appeal, thereby affirming the decree of the trial court, vide judgment dated 07.06.2013. It is this judgment which is challenged by the Appellant/defendant in the present proceedings. The case set up by the Respondent/plaintiff in her suit was that her father-in-law, Mr. R. Krishna Singh, started the business of selling halwa in the year 1900 at East Car Street, Tirunelveli Town. After the death of Mr. R. Krishna Singh, the Respondent's husband late K. Bijili Singh, who is the son of Mr. R. Krishna Singh, continued the business till his death in the year 2000. After his death, the Respondent, who is the daughter-in-law of late Mr. R. Krishna Singh, continued to carry on the business of selling halwa. It was also claimed that the product of halwa assumed an unique name of 'Iruttukadai Halwa' not only at Tirunelveli in Tamil Nadu region, but also in other parts of India as well as in foreign countries. It was further claimed that from the year 1900 till now, 'Irruttukadai Halwa Shop' would open only at 5.00 p.m. or 5.30 p.m., and would remain open till 10.30 p.m., or 11.00 p.m., each day and only one item is being sold viz., halwa. Since the quality of halwa assumed significance for the reason that even after the consumers purchased the halwa from Iruttukadai and stored the same in their homes, the taste and quality lasted longer and in view of maintaining such good quality, the consumers used to call this shop as 'Irruttukadai Halwa Shop'. In the long run, the word 'Irruttukadai' became the name of the shop. Since the halwa sold by Irruttukadai is considered as high quality and its taste lasts longer, in the beginning of 1900, when the shop was opened, only one oil lamp used to be lit in the centre of the shop. Due to passage of time, today in the place of oil lamp, the shop is illuminated with a 40W bulb. Unlike other shops, no other illumination is made in the shop in question as decoration. While so, the Appellant/defendant's father, zealous for the goodwill enjoyed by the Respondent from the public and the proceeds emanated from the sale of halwa, started a shop in the name of 'Raja Sweets' just opposite to Tirunelveli Railway Station and sold halwa along with savouries. Subsequently, the Appellant also opened one another shop, 5 kilometers away from the Respondent's shop, in the name of 'Nellai Raja Sweets' and sold all other eatables by decorating the shop with fancy lights. However, the proceeds of the Respondent did not show any decline. After sometime, the Appellant again opened yet another shop at No. 1/1 A, Therkku-vasal opposite to Tirunelveli Railway Station in Madurai road in the name of 'Tirunelveli Iruttukadai Halwa' to deceive the public that the Respondent has opened another shop in the above said address by giving advertisement in Tamil Muyrasu newspaper daily on 26.06.2007. Some of the public, after seeing the advertisement made in the above said newspaper daily, started enquiring the Plaintiff/respondent as to whether any other shop has been opened in the name of Iruttukadai Halwa. As the Plaintiff has no other shop, the Plaintiff issued a lawyer's notice on 20.07.2007 calling upon the Defendant not to use the Plaintiffs trade mark for selling their sweet and savouries, since the Plaintiff has also registered under the Trade Marks Act in the name of 'Irruttukadai Halwa'. The Appellant also sent a reply on 30.07.2007 refusing to stop the selling of halwa. On the receipt of the aforesaid reply dated 30.07.2007 refusing to accede to the demand of the Respondent, the Respondent filed the suit for declaration, permanent injunction and rendition of accounts.
2. The Appellant defended and contested the said suit by filing the written statement. It was pleaded that it was not open to the Respondent to claim that the halwa manufactured in their shop alone has got the sweet taste, forgetting for a minute that every halwa manufactured in Tirunelveli by using Tamirabarani river. Further, it was also pleaded that when the Appellant having run the halwa shop business for 40 years in the same place in the name of Raja Sweets and the shop of the Defendant is situated five kilometers away from the Plaintiffs shop, the question of cheating the public does not arise at all. When the Appellant alone has got the name board in the style of 'Tirunelveli Iruttukadai Halwa', the Respondent, having not displayed any such name board either in front of their shop or anywhere in Tirunelveli city, there is no question of making allegation that the Appellant is attempting to deceive the public by using the name of the Respondent's shop. Also the carry bag used by the Appellant with the name 'Raja Sweets' has got a different colour with different picture showing the telephone number. Further, it was pleaded that the Appellant also got registered Under Section 25(2) of the Trade Marks Act, 1999 (hereinafter referred to as the 'Act') with the specific name as 'Tirunelveli Iruttukadai Halwa'. Therefore, when the Registrar under the Trade Marks Act has accepted the application filed by the Appellant for registration of his trade mark 'Tirunelveli Iruttukadai Halwa' and issued the trade mark certificate dated 09.04.208, the Respondent has no right to the suit.
3. On the basis of aforesaid pleadings, the trial court framed the following issues:
"(i) Whether the Court has got jurisdiction to hear the suit?
(ii) When the Defendant has been using the Plaintiffs place of address with mala fide intention?
(iii) Whether it is proper for the Defendant to say that the Plaintiff has no logo?
(iv) Whether there has been any loss of profit, loss of reputation and goodwill to the Plaintiff by allowing the Defendant to carry on the business in the name of Iruttukadai halwa?
(v) Whether the Plaintiff has got the right of proprietorship to carry on the business in her address?
(vi) Whether t he Plaintiff is entitled to the decree of declaration in the name of trade mark?
(vii) Whether the Plaintiff is entitled to permanent injunction?
(viii) Whether the Plaintiff is entitled to ask for rendition of accounts from 22.6.2007, as the Defendant has been carrying on the business in the name of the Plaintiffs trade mark?
(ix) Whether the Plaintiff is entitled to have any order for destroying all the items namely, the bags carrying the name and logo identical to the Plaintiffs trade mark?
(x) Whether the Defendant has got any right to sell the halwa in question in the same name of the Plaintiffs trade mark?
(xi) To what reliefs the Plaintiff is entitled to?"
4. In support of her case, the Respondent examined two witnesses and produced twenty-seven documents. On the other hand, the Appellant examined three witnesses and marked seven documents in support of his case. Arguments were heard thereafter. While decreeing the suit, the trial court reasoned that the Respondent's family started the business in the year 1900 which fact was proved by placing various documents. On this basis, the trial court recorded the finding that the Respondent is the prior user of the word 'Iruttukadai Halwa' and, therefore, she is entitled to the decree for declaration and injunction.
5. The High Court has also affirmed the aforesaid findings observing that the Respondent's trade mark name 'Iruttukadai Halwa' had become a household name in the nook and corner of the State of Tamil Nadu. There was even a famous Tamil song from the movie "Samy" wherein name of this halwa was mentioned time and again. Therefore, opined the High Court, no one can claim as his own name 'Iruttukadai Halwa' except the Respondent. The High Court recognised the fact that the Appellant had also got the trade mark 'Iruttukadai Halwa' registered. However, no credence to this aspect is given by the High Court on the ground that as a prior user with prior registration of the trade mark the Respondent had exclusive right to this trade mark. Another reason to confirm the decree is predicated on Section 34 of the Act, as per which rights of the prior user of the trade mark has been well recognized. The observations of the High Court in this behalf are as under:
"Besides, Under Section 34 of the Trade Marks Act, 1999, the vital right of the prior user of the trade mark has been well recognised. Even a registered trade mark holder like the Defendant cannot lawfully interfere with or restrain the use of the trade mark by the prior user, for, the law is well settled that even a registration by the recent user cannot be a ground to reject the plea of the prior user that he/she is the prior user of the trade mark."
6. According to the High Court, the Respondent is not only a prior user of the trade mark, she has even prior registration of trade mark 'Iruttukadai Halwa' as she got it registered on 17.08.2007. Insofar as the Appellant is concerned, he got the trade mark 'Tirunelveli Iruttukadai Halwa' registered on 09.04.2008. This, according, to the High Court is bound to create confusion in the mind of the public and would amount to deceiving the public. In the words of the High Court:
"Accordingly, when the Plaintiff has earned the reputation and goodwill in the business in the name and style of 'Iruttukadai Halwa', the Defendant cannot simply add the word 'Tirunelveli Iruttukadai Halwa', as the same has been used prior in point of time by the Plaintiff. 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."
7. It is clear from the above that two reasons which have primarily influenced the trial court as well as High Court to decree the suit of the Respondent are:
(i) The Respondent is the prior user of the trade mark 'Iruttukadai Halwa', and because of its long user the Respondent's trade mark has acquired a distinct reputation and goodwill in the business under the name and style 'Iruttukadai Halwa'. Therefore, as a prior user the Respondent/plaintiff will be entitled to injunction against the Respondent.
(ii) Because of the distinct reputation and goodwill earned by the Respondent in respect of trade mark 'Iruttukadai Halwa' the use of trade mark by the Appellant under the name and style of "Tirunelveli Iruttukadai Halwa', even when it is registered trade mark, will amount to deceiving the public and nobody is allowed to encroach upon the goodwill and reputation of the other party. In effect, rule against 'passing off is applied to give the relief."
8. The submission of Mr. Mani, learned Advocate appearing for the Appellant, while questioning the validity of the aforesaid judgment was that even the Appellant had been selling the halwa and sweets in Tirunelveli for last 40 years in the same place in the name of 'Raja Sweets'. It was further submitted that shop of the Appellant is situated 5 kilometers away from the Respondent's shop and, therefore, the question of cheating the public does not arise. It was pointed out that the Appellant alone has got the display board outside the business premises with the name 'Tirunelveli Iruttukadai Halwa' whereas the Respondent had not displayed any such name on the board in front of her shop or anywhere in Tirunelveli city. Further, the carry bag used by the Appellant with the name 'Raja Sweets" has got a different colour with different picture showing the telephone number. On this basis, it was argued that the question of deception does not arise and it cannot be said that the public would be cheated thereby. Mr. Mani submitted that the aforesaid important distinguishing features have been totally ignored by the courts below.
9. In addition to this submission, his other argument on which great reliance was placed, is that the trade mark of the Appellant with the specific name 'Tirunelveli Iruttukadai Halwa' was duly registered Under Section 25(2) of the Act and once the Registrar had accepted the application of the Appellant for registration of the trade mark and issued the trade mark certificate dated 09.04.2008 in this behalf, there was no reason to injunct the Appellant from using such a trade mark.
10. Learned Counsel for the Respondent Ms. Rohini Musa, on the other hand, sought to justify the decree passed in favour of her client relying upon the reasons given by the courts below with strong emphasis that a finding of fact was recorded to the effect that not only Respondent was prior user of the aforesaid trade name but a user was for a period of more than 100 years as the family of the Respondent started using this trade mark way back in the year 1900. She also relied upon the judgments which are referred to by the High Court in the impugned judgment on the proposition that a prior user has exclusive right to use the trade mark.
11. After considering the aforesaid submissions of the counsel for the parties, we find formidable force in the arguments of the Learned Counsel for the Appellant predicated on the rights accrued to him as a result of the trade mark of 'Tirunelveli Iruttukadai Halwa' having been duly registered by the Registrar Under Section 25(2) of the Act. This is the aspect which cannot be down played at all. An owner of a registered trade mark is given certain invaluable rights including the right to use the said trade mark to the exclusion of others.
12. No doubt, the Respondent claims prior user of the trade mark 'Iruttukadai Halwa'. Moreover, she is also registered owner of this trade mark which she got registered in the year 2007. This registration is even prior to the registration of trade mark in favour of the Appellant. But at the same time, we have the Appellant who is also a registered owner of the trade mark 'Tirunelveli Iruttukadai Halwa' which was registered by the Registrar in the year 2008. In the fact situation, when the Appellant also has the trade mark duly registered in his favour Under Section 25(2) of the Act, what are the implications thereof, is the question. To put it otherwise, what are the rights of a registered trade mark holder against other person who also hold a valid registration of his trade mark, is the moot question. Before we advert to and answer this core issue, it becomes imperative to scan through the relevant provisions of the Act, in order to understand the scheme of subject matter in issue.
13. Chapter III of the Act pertains to the 'Procedure For And Duration of Registration'. For getting a trade mark registered, an application can be preferred Under Section 18 of the Act. Such an application is to be made in the prescribed manner in the office of the trade mark registry within whose territorial limits the principal place of business in India of the applicant or in the case of joint applicants, the principal place of business in India of the applicant whose name is first mentioned in the application as having a place of business in India, is situate. Once such an application is made, the Registrar may refuse the application or he may accept it absolutely or subject to such amendments, modifications, conditions or limitations, if any, as he may think fit. However, in case the Registrar decides to reject the application or gives conditional acceptance, he is supposed to record in writing the grounds for doing so. Section 19 of the Act gives the discretion to the Registrar to revoke the acceptance even when such an application is accepted for registration of a trade mark. However, it is to be done after the acceptance but before its registration and that too on satisfaction of any of the two conditions stipulated in the said provision, which are:
"(i) If the applications has been accepted in error; or
(ii) If the Registrar finds that trade mark should not be registered or should be registered subject to conditions or limitations or subject to additional conditions or different from conditions or limitations subject to which the application has been accepted. However, before doing so, right of hearing is provided to the applicant."
14. Procedure for registration of the trade mark is provided from Sections 20 to 23 of the Act. As per Section 20, when such an application is accepted for registration, the Registry is supposed to advertise the same in the prescribed manner. The purpose of advertising is to afford the public at large an opportunity to oppose the registration of the mark. After the advertisement, such a right to oppose the registration conferred on every member of the public as 'any person' can file objections Under Section 21 of the Act. An opposition is to be made within four months from the date of advertisement/re-
15. Section 23 mandates such a registration and further provides that the trade mark when registered shall be registered as on the date of making of the said application and that date shall, subject to the provisions of Section 154, be deemed to be the date of registration. Section 24 deals with jointly owned trade marks with which are not concerned in the present case. Thereafter, Section 25 provides for duration, renewal, removal and restoration of registration. Duration of the trade mark, as per Section 25(1) of the Act, is 10 years which can be renewed for a period of 10 years from the date of expiration of the original registration. Sub-section (2) thereof permits renewal of registration of the trade mark for a further period of 10 years from the date of expiration of the original registration or of the last renewal of registration, as the case may be, on payment of prescribed fee. If the duration of trade mark has lapsed and the applicant does not take steps to renew thereof, Sub-section (3) of Section 25 enables the Registrar to remove the trade mark from the register, after following the procedure contained in the said Sub-section.
16. From the aforesaid procedure contained in Chapter III pertaining to registration, two things become apparent which may be recapitulated as under:
"(i) When the application for registration is received and accepted, a public notice thereof is given by publishing an advertisement thereby affording an opportunity to public at large to file any opposition to the said application.
(ii) While considering such application for registration of a trade mark, the Registry would, among others, consider as to whether the trade mark as a whole is likely to create confusion. If it is so, he may refuse the registration."
17. In the present case, we find that no such opposition was made by the Respondent when the application of the Appellant for registration of trade mark Tirunelveli Iruttukadai Halwa' was preferred and after following the procedure laid down therein the Registrar granted the registration. Further, it is- curious to note that this registration is stated to be Under Section 25(2) of the Act, which would imply that it was a case of renewal of registration in the year 2008 and the original registration was much earlier. However, those facts do not emerge from the record and the Appellant also did not press this fact. Therefore, we shall proceed on the basis that the Appellant's trade mark was registered in the year 2008, more so when we find that actual date has no bearing to the outcome.
18. Effect of registration is provided in Chapter IV of the Act in Section 27. This Section provides that no infringement will lie in respect of an unregistered trade mark. However, Section 27(2) recognises the common law rights of the trade mark owner to take action against any person for passing of goods as the goods of another person or as services provided by another person or the remedies thereof. Section 27reads as under:
"27. No action for infringement of unregistered trade mark.
(1) No person shall be entitled to institute any proceeding to prevent, or to recover damages for, the infringement of an unregistered trade mark.
(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."
19. Section 28 which is very material for our purpose, as that provision confers certain rights by registration, is reproduced below in its entirety:
"28. Rights conferred by registration.-(1) Subject to the other provisions of this Act, the registration of a trade mark shall, if valid, give to the registered proprietor of the trade mark the exclusive right to the use of the trade mark in relation to the goods or services in respect of which the trade mark is registered and to obtain relief in respect of infringement of the trade mark in the manner provided by this Act.
(2) The exclusive right to the use of a trade mark given under Sub-section (1) shall be subject to any conditions and limitations to which the registration is subject.
(3) Where two or more persons are registered proprietors of trade marks, which are identical with or nearly resemble each other, the exclusive right to the use of any of those trade marks shall not (except so far as their respective rights are subject to any conditions or limitations entered on the register) be deemed to have been acquired by any one of those persons as against any other of those persons merely by registration of the trade marks but each of those persons has otherwise the same rights as against other persons (not being registered users using by way of permitted use) as he would have if he were the sole registered proprietor."
20. A bare reading of this provision demonstrates the following rights given to the registered proprietor of the trade mark.
"(i) Exclusive right to use the trade mark in relation to the goods or services in respect of which the trade mark is registered.
(ii) To obtain relief in respect of infringement of trade mark in the manner provided by this Act."
21. Sub-section (3) of Section 28 with which we are directly concerned, contemplates a situation where two or more persons are registered proprietors of the trade marks which are identical with or nearly resemble each other. It, thus, postulates a situation where same or similar trade mark can be registered in favour of more than one person. On a plain stand alone reading of this Section, it is clear that the exclusive right to use of any of those trade marks shall not be deemed to have been acquired by one registrant as against other registered owner of the trade mark (though at the same time they have the same rights as against third person). Thus, between the two persons who are the registered owners of the trade marks, there is no exclusive right to use the said trade mark against each other, which means this provision gives concurrent right to both the persons to use the registered trade mark in their favour. Otherwise also, it is a matter of common-sense that the Plaintiff can not say that its registered trade mark is infringed when the Defendant is also enjoying registration in the trade mark and such registration gives the Defendant as well right to use the same, as provided in Section 28(1) of the Act.
22. However, what is stated above is the reflection of Section 28 of the Act when that provision is seen and examined without reference to the other provisions of the Act. It is stated at the cost of repetition that as per this Section owner of registered trade mark cannot sue for infringement of his registered trade mark if the Appellant also has the trade mark which is registered. Having said so, a very important question arises for consideration at this stage, namely, whether such a Respondent can bring an action against the Appellant for passing off invoking the provisions of Section 27(2) of the Act. In other words, what would be the interplay of Section 27(2) and Section 28(3) of the Act is the issue that arises for consideration in the instant case. As already noticed above, the trial court as well as High Court has granted the injunction in favour of the Respondent on the basis of prior user as well as on the ground that the trade mark of the Appellant, even if it is registered, would cause deception in the mind of public at large and the Appellant is trying to encash upon, exploit and ride upon on the goodwill of the Respondent herein. Therefore, the issue to be determined is as to whether in such a scenario, provisions of Section 27(2) would still be available even when the Appellant is having registration of the trade mark of which he is using. After considering the entire matter in the light of the various provisions of the act and the scheme, our answer of the aforesaid question would be in the affirmative. Our reasons for arriving at this conclusion are the following:
"(A) Firstly, the answer to this proposition can be seen by carefully looking at the provisions of Trade Marks Act, 1999 (The Act). Collective reading of the provisions especially Section 27, 28, 29 and 34 of the Trade Marks Act, 1999 would show that the rights conferred by registration are subject to the rights of the prior user of the trademark. We have already reproduced Section 27 and Section 29 of the Act.
From the reading of Section 27(2) of the Act, it is clear that the right of action of any person for passing off the goods/services of another person and remedies thereof are not affected by the provisions of the Act. Thus, 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. This is evident from the reading of opening words of Section 27(2) which are "Nothing in this Act shall be deemed to affect rights...."
Likewise, the registration of the mark shall give exclusive rights to the use of the trademark subject to the other provisions of this Act. Thus, the rights granted by the registration in the form of exclusivity are not absolute but are subject to the provisions of the Act.
Section 28(3) of the Act provides that the rights of two registered proprietors of identical or nearly resembling trademarks shall not be enforced against each other. However, they shall be same against the third parties. Section 28(3) merely provides that there shall be no rights of one registered proprietor vis-à-vis another but only for the purpose of registration. The said provision 28 (3) nowhere comments about the rights of passing off which shall remain unaffected due to overriding effect of Section 27(2) of the Act and thus the rights emanating from the common law shall remain undisturbed by the enactment of Section 28(3) which clearly states that the rights of one registered proprietor shall not be enforced against the another person.
Section 34 of the Trade Marks Act, 1999 provides that nothing in this Act shall entitle the registered proprietor or registered user to interfere with the rights of prior user. Conjoint reading of Section 34, 27 and 28 would show that the rights of registration are subject to Section 34 which, can be seen from the opening words of Section 28 of the Act which states "Subject to the other provisions of this Act, the registration of a trade mark shall, if valid, give to the registered proprietor.." and also the opening words of Section 34 which states "Nothing in this Act shall entitle the proprietor or a registered user of registered trade mark to interfere..". Thus, the scheme of the Act is such where rights of prior user are recognized superior than that of the registration and even the registered proprietor cannot disturb interfere with the rights of prior user. The overall effect of collective reading of the provisions of the Act is that the action for passing off which is premised on the rights of prior user generating a goodwill shall be unaffected by any registration provided under the Act. This proposition has been discussed in extenso in the case of N.R. Dongre and Ors. v. Whirlpool Corporation and Anr. MANU/DE/0700/1995 : AIR (1995) Delhi 300 wherein Division Bench of Delhi High Court recognized that the registration is not an indefeasible right and the same is subject to rights of prior user. The said decision of Whirlpool [supra] was further affirmed by Supreme Court of India in the case of N.R. Dongre and Ors v. Whirlpool Corporation and Anr. MANU/SC/1223/1996 : 1996 (3) R.C.R. (Civil) 697 : (1996) 5 SCC 714.
B. The above were the reasonings from the provisions arising from the plain reading of the Act which gives clear indication that the rights of prior user are superior than that of registration and are unaffected by the registration rights under the Act. Secondly, there are other additional reasonings as to why the passing off rights are considered to be superior than that of registration rights.
Traditionally, passing off in common law is considered to be a right for protection of goodwill in the business against misrepresentation caused in the course of trade and for prevention of resultant damage on account of the said misrepresentation. The three ingredients of passing off are goodwill, misrepresentation and damage. These ingredients are considered to be classical trinity under the law of passing off as per the speech of Lord Oliver laid down in the case of Reckitt & Colman Products Ltd. v. Borden Inc MANU/UKHL/0012/1990 : (1990) 1 AllE.R. 873 which is more popularly known as "Jif Lemon" case wherein the Lord Oliver reduced the five guidelines laid out by Lord Diplock in Erven Warnink v. Townend & Sons Ltd. [1979) AC 731, 742 (HL)] (the "Advocate Case") to three elements: (1) Goodwill owned by a trader, (2) Misrepresentation and (3) Damage to goodwill. Thus, the passing off action is essentially an action in deceit where the common law rule is that no person is entitled to carry on his or her business on pretext that the said business is of that of another. This Court has given its imprimatur to the above principle in the case of Laxmikant V. Patel v. Chetanbhat Shah and Anr. MANU/SC/0763/2001 : 2002 (2) R.C.R. (Civil) 357 : (2002) 3 SCC 65.
The applicability of the said principle can be seen as to which proprietor has generated the goodwill by way of use of the mark name in the business. The use of the mark/carrying on business under the name confers the rights in favour of the person and generates goodwill in the market. Accordingly, the latter user of the mark/name or in the business cannot misrepresent his business as that of business of the prior right holder. That is the reason why essentially the prior user is considered to be superior than that of any other rights. Consequently, the examination of rights in common law which are based on goodwill, misrepresentation and damage are independent to that of registered rights. The mere fact that 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 right holder/former user. That is the additional reasoning that the statutory rights must pave the way for common law rights of passing off.
C. Thirdly, it is also recognized principle in common law jurisdiction that passing off right is 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. The said action in deceit is maintainable for diverse reasons other than that of registered rights which are allocated rights under Recent Civil Reports the Act. The authorities of other common law jurisdictions like England more specifically Kerry's Law of Trademarks and Trade Names, Fourteenth Edition, Thomson, Sweet & Maxwell South Asian Edition recognizes the principle that where trademark action fails, passing off action may still succeed on the same evidence. This has been explained by the learned Author by observing the following:--
15-033 "A claimant may fail to make out a case of infringement of a trade mark for various reasons and may yet show that by imitating the mark claimed as a trademark, or otherwise, the Defendant has done what is calculated to pass off his goods as those of the claimant. A claim in "passing off' has generally been added as a second string to actions for infringement, and has on occasion succeeded where the claim for infringement has failed"The same author also recognizes the principle that Trade Marks Act affords no bar to the passing off action. This has been explained by the learned Author as under:--
15-034 "Subject to possibly one qualification, nothing in the Trade Marks Act 1994 affects a trader's right against another in an action for passing off. It is, therefore, no bar to an action for passing off that the trade name, get up or any other of the badges identified with the claimant's business, which are alleged to have been copies or imitated by the Defendant, might have been, but are not registered as, trade marks, even though the evidence is wholly addressed to what may be a mark capable of registration. Again, it is no defense to passing off that the Defendant's mark is registered. The Act offers advantages to those who register their trade marks, but imposes no penalty upon those who do not. It is equally no bar to an action for passing off that the false representation relied upon is an imitation of a trade mark that is incapable of registration. A passing off action can even lie against a registered proprietor of the mark sued upon. The fact that a claimant is using a mark registered by another party (or even the Defendant) does not of itself prevent goodwill being generated by the use of the mark, or prevent such a claimant from relying on such goodwill in an action against the registered proprietor. Such unregistered marks are frequently referred to as "common law trade marks"From the reading of aforementioned excerpts from Kerly's Law of Trademarks and Trade Names, it can be said that not merely it is recognized in India but in other jurisdictions also including England/UK (Provisions of UK Trade Marks Act, 1994 are analogous to Indian Trade Marks Act, 1999) that the registration is no defense to a passing off action and nor the Trade Marks Act, 1999 affords any bar to a passing off action. In such an event, the rights conferred by the Act under the provisions of Section 28 has to be subject to the provisions of Section 27(2) of the Act and thus the passing off action has to be considered independent Truttukadai Halwa' the provisions of Trade Marks Act, 1999.
D. Fourthly, It is also well settled principle of law in the field of the trade marks that the registration merely recognizes the rights which are already pre-existing in common law and does not create any rights. This has been explained by the Division Bench of Delhi High Court in the case of Century Traders v. Roshan Lal Duggar Company MANU/DE/0153/1977 : AIR 1978 Del 250 in the following words:
"First is the question of use of the trade mark. Use plays an all important part. A trader acquires a right of property in a distinctive mark merely by using it upon or in connection with his goods irrespective of the length of such user and the extent of his trade. The trader who adopts such a mark is entitled to protection directly the article having assumed a vendible character is launched upon the market. Registration under the statute does not confer any new right to the mark claimed or any greater right than what already existed at common law and at equity without registration. It does, however, facilitate a remedy which may be enforced and obtained throughout "THE State and it established the record of facts affecting the right to the mark. Registration itself does not create a trade mark. The trade mark exists independently of the registration which merely affords further protection under the statute. Common law rights are left wholly unaffected."Same view is expressed by the Bombay High Court in the case of Sunder Parmanand Lalwani and Ors. v. Caltex (India) Ltd. MANU/MH/0063/1969 : AIR 7 969 Bombay 24 (D.B.) in which it has been held vide paras '32' and '38' as follows:
(Emphasis Supplied)"
"32. A proprietary right in a mark can be 'Iruttukadai Halwa" obtained in a number of ways. The mark can be originated by a person, or it can be subsequently acquired by him from somebody else. Our Trade Marks law is based on the English Trade Marks law and the English Acts. The first Trade Marks Act in England was passed in 1875. Even prior thereto, it was firmly established in England that a trader acquired a right of property in a distinctive mark merely by using it upon or in connection with goods irrespective of the length of such user and the extent of his trade, and that he was entitled to protect such right of property by appropriate proceedings by way of injunction in a Court of law. Then came the English Trade Marks Act of 1875, which was substituted later by later Acts. The English Acts enabled registration of a new mark not till then used with the like consequences which a distinctive mark had prior to the passing of the Acts. The effect of the relevant provision of the English Acts was that registration of a trade mark would be deemed to be equivalent to public user of such mark. Prior to the Acts, Prior to the Acts, one could become a proprietor of a trade mark only by user, but after the passing of the Act of 1875, one could become a proprietor either by user or by registering the mark even prior to its user. He could do the latter after complying with the other requirements of the Act, including the filing of a declaration of his intention to use such mark. See observations of Llyod Jacob J. in 1956 RPC 1. In the matter of Vitamins Ltd.'s Application for Trade Mark at p. 12, and particularly the following: "A proprietary right in a mark sought to be registered can be obtained in a number of ways. The mark can be originated by a person or can be acquired, but in all cases it is necessary that the person putting forward the application should be in possession of some proprietary right which, if questioned, can be substantiated". Law in India under our present Act is similar."
We uphold said view which has been followed and relied upon the courts in India over a long time. The said views emanating from the courts in India clearly speak in one voice which is that the rights in common law can be acquired by way of use and the registration rights were introduced later which made the rights granted under the law equivalent to the public user of such mark. Thus. we hold that 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 the registration by the Act.
23. When we apply the aforesaid principle to the facts of the present case, we find that the impugned judgment of the High Court, affirming that of the trial court is flawless and does not call for any interference. From the plethora of evidences produced by the Respondent she has been able to establish that the trade mark Truttukadai Halwa' has been used of by her/her predecessors since the year 1900. The business in that name is carried on by her family. It has become a household name which is associated with the Respondent/her family. The Court has also noted that the Halwa sold by the Respondent's shop as Truttukadai Halwa' is not only famous with the consumers living in Tirunelveli, but is also famous with the consumers living in other parts of India and outside. Reference is made to an article published in Ananda Viketan, a weekly Tamil magazine dated 14.9.2003, describing the high quality and the trade mark Iruttukadai halwa sold by the Plaintiff, the findings and conclusions reached by the Court below is perfectly in order, hence, the same does not call for interference, carries more merit, for, this name has been further acknowledged in a Tamil song from the movie "Samy" as follows:
"Tirunelveli Halwada, Tiruchy Malai Kottaida
(Rock Fort)
Tirupathike Ladduthantha Samyda
Iruttukadai Alwada, Idli Kadai Ayada
(grandma)"
When the above Tamil cinema song being repeatedly played in the State of Tamil Nadu has also spoken more about the trade mark Truttukadai halwa', it goes without saying that the Plaintiffs trade mark name Truttukadai halwa' has become a household name in the nook and corner of this State, therefore, no one can claim as his own the name Truttukadai halwa' except the Respondent.
24. This factual position is summed up by the High Court in the following manner:
"From the year 1900 onwards till now, the Respondent's family has been running the shop only for limited hours without selling any other item except halwa and the public not only in Tirunelveli but also in other parts of India has accepted the name as Iruttukadai halwa. As highlighted above, this could be seen from the telephone directory, issued in the year 1999, wherein the Plaintiffs Iruttukadai halwa shop has been mentioned with the address at No. 14, East Car Street, Tirunelveli Town. Moreover, another interesting article published in Ananda Viketan, a weekly magazine dated 14.09.2003 in the State of Tamil Nadu clearly brings home the case of the Plaintiff for the grant of declaration and injunction against the Defendant on the ground that the word 'Iruttukadai halwa' means and indicates only the halwa sold at Door No. 14, East Car Street, Tirunelveli Town belonging to the Plaintiff alone. Moreover, the Plaintiff has also registered the trade mark 'Iruttukadai halwa' Under Section 25(2) of the Trade Marks Act, 1999 with the Registrar. Under Clause 16 even the paper and paper articles etc., and the trade mark's certificate issued and registered under Clause 30 also clearly proves the case of the Plaintiff that she is the prior user of the trade mark 'Iruttukadai halwa'. Therefore, the trial Court accepting the case of the Respondent that she has officially registered the trade mark as a prior user rightly granted the decree for declaration and injunction against the Defendant. 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 in law. Accordingly, when the Plaintiff has earned the reputation and goodwill in the business in the name and style of 'Iruttukadai Halwa', the Defendant cannot simply add the word 'Tirunelveli Iruttukadai Halwa', as the same has been used prior in point of time by the Plaintiff. 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."
Having regard to the aforesaid findings of the courts below and the application of principle of law on these facts as enunciated above, we find full justification in the decree passed by the courts below in favour of the Respondent. As a consequence, this appeal fails and is hereby dismissed. The Respondent shall also be entitled to cost which is quantified at ` 50,000/-.
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