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TMI Blog2003 (9) TMI 542X X X X Extracts X X X X X X X X Extracts X X X X ..... .S. Shanthi, Ms. Aarthi Radhakrishnan and A.T.M. Sampath for the Respondent. JUDGMENT Mrs. Ruma Pal, J. - The trademarks which are the subject matter of dispute in these appeals were invented by James Hardie and Company Private Ltd., the predecessor in interest of the first appellant (who will be referred to as Hardie). The trademarks consist of the words Spartan and Spartan Velox and a rear picture of the upper body of a helmeted warrior carrying a shield and spear (which will be referred to hereafter as the Hardie device). Registration which was granted in respect of the trademarks in Australia and New Zealand in 1926 and 1927 continues till today. The original trademarks as well as their modified forms, which were also subsequently registered, have been in use by Hardie or its predecessor in interest in respect of paints and lacquers and other surface coatings since that date. It is the case of Hardie that it also wanted to commence business in India and to this end took steps to have the words "Spartan" and "Spartan Velox" registered in this country as far back as in 1940. The words were entered in the Register of Trade Marks at Calcutta in Hardie s name. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dispute that the consideration was not paid. One of the disputes raised in these appeals relates to the effect of this agreement. To return to the narration of facts. In anticipation of the assignment the Registered User s agreement was cancelled on 31-8-1968. However since the consideration was not paid and the assignment did not come through, Hardie requested Addisons to discontinue the use of Hardie s trademarks. Correspondence was exchanged between the parties. Addisons requested for permission to continue to use the trademarks and device. Hardie allowed them to do so till December, 1971. During this period, Addisons continued to use Hardie s trademarks and device on the surface coatings produced by it. 5. On 3-11-1971, Addisons applied for registration of a device which consisted of the frontal view of a standing helmeted warrior holding a shield and spear. On 11-11-1971, Addisons informed Hardie that with effect from 1-12-1971, it would discontinue the use of Hardie s trade marks and that Addisons had made arrangements to market its products in its own brand name. This was followed by several advertisements by Addisons in newspapers to the effect that Addisons products ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st Hansa seeking a permanent injunction restraining Hansa from selling paints in containers which were identical to or deceptively similar with Hardie s trademarks or device which Addisons claimed had been used by it since 1963. An application was filed by Addisons in the suit pending before the High Court in Madras in 1979, alleging that Hardie and Hansa had committed contempt by using Hardie s device. This was disposed of eventually by the Madras High Court with the direction that status quo was to be continued in terms of the consent. Order dated 22-2-1979 in the Calcutta High Court proceedings. The suit is pending. 13. In the same month, Hardie filed an application in the Calcutta suit for stay of the rectification proceedings which were then pending before the Joint Registrar of Trade Marks at Calcutta. The application was dismissed by the learned Single Judge of the Calcutta High Court and the appeal therefrom dismissed by the Division Bench. The application for rectification filed by Addisons was allowed by the Joint Registrar of Trade Marks at Calcutta by his order dated 12-9-1985 as a result of which Hardie s trademarks were expunged from the Register of Trade Marks. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to in passing but the details were not given, as, according to Addison s statement, they were not necessary for the determination of the application for rectification. 18. The application went on to say that from 1971 onwards Addisons "felt the necessity of having a second trademark for distinguishing certain goods manufactured and sold by it. After giving the matter serious thought, it decided to use a trademark containing a device of a warrior and the legend Spartan". The application also says that Addisons came to know of the registration of the trademarks in Hardie s name only after Addisons application for registration of the trademarks was rejected by the Registrar of Trade Marks at Bombay. It was also said that "extensive market research" had been done and it was discovered that the trademarks had not been used in India for over five years continuously. Addisons claimed that the trade marks registered in Hardie s name were identical or deceptively similar with the trademarks sought to be registered by Addisons giving it the locus to seek rectification of the Trademarks Register by expunging Hardie s trademarks therefrom. Addisons applications for the removal of the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s applications for registration had been rejected on the ground of the existence of Hardie s marks. The learned Single Judge upheld the decision of the Registrar on this issue because Addisons was in the same trade as Hardie "and may be able to use the said mark in relation to own goods but for the existence of the registered marks in the name of Hardie". The Division Bench affirmed this view. The phrase "person aggrieved" is a common enough statuary precondition for a valid complaint or appeal. The phrase has been variously construed depending on the context in which it occurs. Three sections viz. sections 46, 56 and 69 of the Act contain the phrase. Section 46 deals with the removal of a registered trademark from the register on the ground of non-use. This section presupposes that the registration which was validly made is liable to be taken off by subsequent non-user. Section 56 on the other hand deals with situations where the initial registration should not have been or was incorrectly made. The situations covered by this section include: - ( a ) the contravention or failure to observe a condition for registration; ( b ) the absence of an entry; ( c ) an entry made witho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d." [Emphasis supplied] But if the ground for rectification is merely based on non-user i.e. under section 46 of the Act, that is not really on account of any public mischief by way of an incorrect entry. The non-user does not by itself render the entry incorrect but it gives a right to a person whose interest is affected to apply for its removal. An applicant must therefore show that "in some possible way he may be damaged or injured if the Trade Mark is allowed to stand; and by "possible" I mean possible in a practical sense, and not merely in a fantastic view...All cases of this kind, where the original registration is not illegal or improper, ought to be considered as questions of common sense, to a certain extent; at any rate and I think the Applicants ought to show something approaching a sufficient or proper reason for applying to have the Trade Mark expunged. It certainly is not sufficient reason that they are at loggerheads with the Respondents or desire in someway to injure them. 1 Addisons application was one under section 46 and the test to determine whether the applicant was a person aggrieved within the meaning of that section should have been the one laid d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e statute but all his efforts were rendered fruitless by reason of the statutory ban on imports. The affidavit of Buttress, however, negates such a situation and as such the issue under section 46(3) being answered in favour of the appellant does not and cannot arise." In any event the contention has been expressly raised in the special leave petition and argued extensively by counsel for the appellants. Submissions have been equally extensively made both in the counter affidavit and by Addison s counsel in the course of arguments before us. In the circumstances we do not think that it would at all be proper not to decide the issue. The Joint Registrar construed the word "use" in section 46(1)( b ) to mean use of the trademark on the goods in respect of which the trade mark is registered. He relied upon a letter written by Hansa s lawyers to Addisons dated 25th December, 1977 in which it was stated that Hansa had not manufactured or sold any goods under the trademarks, to hold - first, that neither Hansa nor Hardie had sold any goods during the relevant period and, second, that therefore there was no use of the registered trademarks. Both the Single Judge and the Division Bench ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e on two occasions. A distributor was appointed by the proprietor in the United Kingdom subsequent to the application for rectification and the first sale of the goods took place 3 years after that. The Court held that the intention of the registered proprietor to seek to establish a market not on any temporary basis but on the basis of continuous sales had been proved. As they had been struggling to market the goods in the United Kingdom and ultimately were successful in finding a distributor, it was held that this was sufficient use of the mark by the proprietor for the purpose of defeating the application for its removal. In section 2(2)( b ) of the Act, we have the additional words "any" and "whatsoever" qualifying the words other relation giving the words a much wider meaning. Reading this definition into section 46(1). It is clear that the word use in section 46(1) may encompass actions other than actual sale. The error committed by the three fora below starting with the Joint Registrar was to read the intention to abandon as being limited to the special circumstances of the trade as if there could be no intention to abandon unless there was such special circumstance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the United States. This was expressed by the Supreme Court of the United States in 1911 in Baglin v. Cusenier Co. 221 US 580, 596-598 : "But the loss of the right of property in trademarks upon the ground of abandonment is not to be viewed as a penalty either for non-user or for the creation and use of new devices. There must be found an intent to abandon, or the property is not lost; and while, of course, as in other cases, intent may be inferred when the facts are shown, yet the facts must be adequate to support the finding." The law has since been changed so that at present an "intent not to resume" use of the mark is to be proved. 1 Nevertheless, "since abandonment results in a forfeiture of rights, the courts reluctant to find an abandonment". Under the majority rule, evidence of abandonment must be clear and convincing. The New York Court of Appeals stated that "Abandonment being in the nature of a forfeiture, must be strictly proved." As far as this country is concerned, section 46(3) of the Act statutorily prescribes the intention to abandon as an essential component of non-use for the purposes of section 46(1). In American Home Products Corpn. v. Mac Labora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d from the Register, because the moment one month has elapsed after the registration of a trade mark has been ordered, a trade rival can make an application on the ground set out in clause ( a ) of section 46(1) claiming that there has been no bona fide use of the trade mark up to a date one month before the date of his application." Although the decision was given in the context of section 46(1)( a ) nonetheless it would show that an intention to use does not necessarily mean that the proprietor must show the marketing of the goods under the trade mark. This decision is also an authority for the proposition that the intention to use the trade marks required of the proprietor would include the intention to permit the user of the trade mark by the registered user. Indeed that would be the inevitable and logical result of reading section 46(1) with section 48(2) of the Act. "The permitted use of a trade mark shall be deemed to be used by the proprietor thereof, and shall be deemed not to be used by a person other than the proprietor, for the purposes of section 46 or for any other purpose for which such use is material under this Act or any other law." [ See also Astronaut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ile. As such it recommended that the payment of royalty clause should be scrapped and the agreement revised to state that in consideration of the rights granted, Hansa would maintain a watch on and report cases of infringement and/or passing off of the trademarks and would bear the costs of any legal action that may have to be resorted to in such cases. It was in these circumstances that, the original draft was revised, and on 31st March, 1977, i.e., within the period in question, the registered user agreement was ultimately executed between Hardie and Hansa. This evidence, which was not disbelieved by any of the fora below, negates Hardies alleged intention to abandon the use of the trademarks. There was as such no "absolute non-user" of the trademarks by Hardie during the period of five years and one month prior to the applications for rectification. This is sufficient for this Court to allow the appeal. ( c ) Special circumstances - Apart from the fact that it had no intention not to use the trademarks during the statutory period Hardie also claimed that it was unable to use its trademarks directly in India because of special circumstances within the meaning of sub-sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t immediately." Construing this paragraph the Division Bench held that economic viability or existing market conditions was outside the concept of "special circumstances", and since the statute only provided for the defence of special circumstances, "any other defence apart from the existence of special circumstances does not and cannot rise". The observation of the Division Bench that apart from special circumstances, there was no other defence available to a proprietor in proceedings to remove his trademark from the register, is as we have already indicated, incorrect. The proprietor can show, as Hardie, has done in this case, that there was no intention to abandon the trademarks. If, that is established it is a complete defence to the action. The second erroneous finding of the Division Bench was that economic viability or existing market condition was outside the concept of special circumstances. The finding does not follow from the section and is against the weight of authority. Special circumstances have been defined in Aktiebolaget Manus v. R.J. Fullwood Bland Ltd. [1949] 66 RPC 71 as "some external forces as distinct from voluntary acts of any individual"..... w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a complete impossibility of importing, but, in the words of Evershed, L.J. (supra), the existence of conditions "making impracticable the ordinary usages of international trade." "A trade mark is a commercial asset intended to be used commercially by business men, and it seems to me that "special circumstances" have to be understood and applied in a business sense. In my view, this token import scheme modification to the earlier general prohibition did not convert what was before impossible into what was, in a business sense, practicable, even if a firm in this country had made the necessary application under that scheme. The non-use of the trade mark by the Bali company, even during the token import scheme, is thus in my view, shown to have been due to special circumstances in the trade." [Emphasis supplied] The Court of Appeal reversed this decision on another issue. The House of Lords in turn reversed the decision of the Court of Appeal and reaffirmed the decision of Justice Ungoed Thomas in Berlei (U.K.) Ltd. v. Bali Brassiere Co., Inc. [1969] (2) All ER 812. This view has been accepted as good law in this country. [ See Aktiebolaget Jonkoping Vulcan v. V.S. V. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the provisions of section 46(3) of the Act. Hardie had brought on record the Import Trade Control Policies for the relevant years. We have considered the same and it is quite clear that paints, distempers, varnishes and lacquers could be imported only for use by actual users i.e. by manufacturers or producers of the paints etc. in India. Hardie had no such factory. There was in the circumstances no question of Hardie importing any paints and lacquers manufactured by it outside India into the country. There was a second restriction under the Import Control Policies even on actual users who imported paint for their own use. They had to use the imported goods for producing goods as specified only for export. The intention of the policy clearly was to keep the domestic market for the domestic producers of paints and lacquers. Concerns like Hardie could not, without making an enormous investment by setting up a factory, import the goods. In the circumstances, for Buttress to have said that it was not economically possible for Hardie to itself put its manufactured goods in the market immediately, cannot be taken as being a circumstance which was peculiar to Hardie alone. It was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of its applications for registration, first, that it was the proprietor of the device and second, that the device had been used by it or that it had a bona fide intention to use the device. Concentrating only on Hardie s and Hansa s claim, the Court appears to have proceeded on the basis that once the objections of Hardie and Hansa to the application for registration were overruled, Addisons applications for registration of the device were to be allowed automatically. Apart from the fallacious approach, we are of the view that the conclusion of the majority on the question of Hardie s and Hansa s right to use the device in question was incorrect. 24. There is no dispute that the device was invented by Hardie or its predecessor-in-interest prior to 1926. There is also no dispute that the device is registered in Hardie s name in Australia and New Zealand and that Hardie has been using the device all these years in the international market. The High Court has erroneously held that Hardie never used the mark and had never by itself manufactured and marketed the goods, namely paints and other allied products in India either under the word marks or under the device. In our narra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontended by Addisons. The assignment was condi- tional upon the payment of consideration and it is not even Addisons case that any consideration was paid to Hardie. Besides the assignments were never registered as section 44 mandates and it is doubtful whether the documents pertaining to assignment were at all admissible as evidence under section 44(3), which expressly excludes unregistered assignments from being accepted as evidence. Moreover, the episode regarding the aborted assignment had taken place in 1967 and the renouncement of the marks and device by Addisons was in 1971, four years subsequent thereto. Had there been any assignment of the trademarks in 1967, why did Addisons ask for Hardie s permission to use the trademarks between 1968 to 1971 and renounce such user in 1971? 27. As with the registered word marks Spartan and Spartan Velox , no evidence has been brought on record by Addisons to show that it had ever taken any steps, apart from making the applications for registration, to use Hardie s device of warrior-rear subsequent to 1971 right up to the time it made its application for registration in December 1977. There is also no evidence that Addisons had at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the question is whether they show that Addisons had ever used or showed any intention to use the device of warrior-rear in respect of which the applications for registration had been made. The consent order also records that Addisons would be entitled to use the warrior standing device which was registered in his name and Hardie and Hansa would not object to Addisons, "selling its products under the get up in which it is selling its products". Therefore, till 1979 the "get up" under which Addisons was selling its products was not under the device of the warrior-rear. 29. The third part of the consent order is that Addisons would not object to Hardie and Hansa selling their products as long as they distinguish their goods from those of Addisons. Pursuant to the consent order dated 22nd February 1979 w.e.f. 3rd September 1979 Hansa started using the "Spartan trade mark with the warrior device of Hardie on the products manufactured by it and has continued to do so. 30. It has not been shown to us how a consent order differs from any other form of agreement except that it may have additional sanctity by reason of the imprimatur of the Court. And yet, the High Court came to t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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