MERE FILING OF A TRADE MARK APPLICATION CANNOT BE REGARDED AS A CAUSE OF ACTION FOR FILING A SUIT FOR PASSING OFF

[Mr. M. GOVINDARAJAN]

            Trade Marks Act gives protection to the registered trade mark owner. There will be no infringement action in respect of unregistered trade mark. This would include any proceedings to prevent or to recover damages for infringement. The interest and rights of the registered trade mark owner and their hard earned goodwill and reputation are protected by the Trade Mark Act. It also prevents general public from deception/confusion. So is the case about passing off action, a species of tort. The law of trade marks introduced in various statutes has grown out of law of passing off which is designed and developed with a twin desire to promote free competition and yet inhibit unfair competition.

            The law provides procedure for registration of trade mark. Remedy for infringement of trade mark is available only after registration. It is not available at the filing stage. No cause of action arised for filing a suit for passing off at this stage. This has been confirmed by the Supreme Court in the case 'K. Narayanan and another V. S. Murali' - (2008) 24 CLA-BL.Supp. 237(SC). The brief facts of the case is as follows:

            The appellants are engaged in the business of manufacturing and selling banana chips and had adopted the trade mark A-ONE with respect to the said banana chips in 1986. The appellants had applied for an application for registration of the trade mark A-ONE before the Trade Mark Registry at Chennai on 6th December, 1999 with respect to the said banana chips. The application of the appellants for registrations is still pending. The respondents also filed three trade mark applications numbered as 899359, 899360 and 899361 on 24th January, 2000 before the Trade Mark Registry at Chennai seeking registration as user of the trade mark A-ONE throughout India since 1995.

            The respondent filed a suit on the file of District Judge, Coimbatore against the appellants seeking as injunction restraining the appellants from passing off their goods using trade mark A-ONE. The said suit was dismissed by the District Judge, Coimbatore on 23.12.2001.

            In the meanwhile the appellants filed an application before the High Court, Madras seeking an injunction to restrain the respondent from passing off his goods using the trade mark A-ONE. The appellants also filed an application before the High Court for leave to institute the suit and the High Court granted the leave. Later the single Judge of High Court dismissed the injunction application and also revoked the leave to sue, granted to the appellants.

            Being aggrieved by the order of the single Judge, the appellants preferred appeals before the Division Bench of the High Court. The Division Bench of the High Court dismissed the appeal. The findings of the Division Bench are as under:

"The point raised in the appellants is one which was already decided against the appellant by our considered judgment in the case of 'Premier Distilleries (P) Ltd., V. Sushi Distilleries' (2001) 3 CTC 652.

Learned Counsel sought to contend that there is an earlier view of this court which conflicts the view which we have taken. Having perused that order, we find that it was merely a summary order which does address itself pointedly to the question. Mere filing of the application for registration of the trade mark in the Registry situated at Madras would not suffice to confine the jurisdiction of this court. That question was specifically addressed, and dealt with in our reasoned order in the case of 'Premier Distilleries (P) Ltd.' (supra). In that order, we have pointed out that the very term 'cause of action' would clearly imply that the action, viz., the institution of the suit must follow the cause, and not precede it. Even before the registration is granted for the trade mark, there is no right in the person to assert that the mark has been infringed. A proposed registration which may, or may not be granted will not confer a cause of action to the plaintiff, whether the application for registration is filed by the plaintiff or the defendant."

            Being aggrieved on the orders of the Division Bench the appellants filed appeal before the apex court. The apex court examined the impugned order of the Division Bench and also the Single Judge and other materials on record and also the contentions of the both parties.

The contentions of the appellants are as follows:

     >>> The Division Bench of the High Court in its impugned judgment had taken a contrary view from the judgment of the Division Bench of the High Court of Delhi in 'Jawahar Engineering Co., V. Jawahar Engineers (P) Ltd., (1983) PTC 207, which has held that the real point which gives the court jurisdiction is not the place where the advertisement has appeared but the place for which the trade mark is sought for sale. It has also held that when an injunction is sought, it is not necessary that the threat should have become a reality before the injunction is granted or refused and it can even be sought for the treat that is still to materialize;

     >>> The view taken in the above case was followed by the Single Judge of the High Court of Madras in the judgment reported in (1990) PTC 240;

     >>> The Division Bench of High Court, Madras also followed the said judgment in its unreported judgments dated 13th March 1995 and 29th March 1995;

     >>> When the respondent filed a trade mark application at the Trade Mark Registry at Chennai, a threat was communicated regarding the use of the trade mark in Chennai and it was immaterial whether there was actual use or not and the appellants would be entitled to an injunction against the said mark;

     >>> The respondent has based its application for registration of the trade mark on use of the mark throughout India without any geographical limitation from 1st April, 1995, which included the city of Chennai, which, thus, entitled the appellants to file the suit at the High Court of Madras based on the claims made in the trade mark application.

The contentions of the respondent are as follows:

     >>> Mere filing of an application for registration of trade mark by the respondent in Chennai would not confer any territorial jurisdiction for the High Court at Chennai to entertain the present suit filed by the appellants, when admittedly both the parties to the suit resided in Coimbatore, had their place of business in Coimbatore and the goods were sold only in Coimbatore;

     >>> Since according to Sec. 18 of the Act, an application for registration could be filed by both proprietor of a trade mark used and proposed to be used by him, therefore, mere filing of an application for registration would not result in creating a cause of action for filing a suit for passing off;

     >>> Since according to Sec. 28 of the Act, the registration of a trade mark gave a person, exclusive ownership of the trade mark and right to take action against the infringement of trade mark, therefore, an action against infringement of trade mark could not be made in the court merely on the basis of an application for registration of trade mark;

     >>> Actual sale of goods was necessary to be proved in the case of passing off action and, therefore, the court within whose jurisdiction the commercial sale of goods took place, had jurisdiction to entertain a suit for passing off;

     >>> The decision of the Division Bench of Delhi High Court in 'Jawahar Engineering Co.,' (supra) was not applicable to the present case because in that case the plaintiff was a registered owner of the trade mark and the action was for injunction regarding a threatened breach of registered trade mark, whereas in the present case, the appellants were not registered owners;

     >>> Merely filing a trade mark application, the respondent did not misrepresent in the course of trade that his goods were the goods of the appellants and, therefore, there was no cause of action for filing a suit for passing off, which necessarily required sale of one's goods respectively as though it were the goods of another.

The Supreme Court relied on the following judgments:

     >>> Wander Ltd., V. Antox India (P) Ltd., - (1990) (Supp) SCC 727;

     >>> Dhodha House V. S.K. Maingi - (2006) 9 SCC 41;

In 'Wander Ltd., V. Antox India (P) Ltd.,' (supra) it has been observed by the Supreme Court - "Passing off is said to be a species of unfair trade competition or of actionable unfair trading by which one person, through deception, attempts to obtain an economic benefit of the reputation which another has established for himself in a particular trade or business. The action is regarded as an action for deceit. The tort of passing off involves a misrepresentation made by a trader to his prospective customers calculated to injure, as a reasonable foreseeable consequence, the business or goodwill of another which actually or probably, causes damages to the business or good of the other trader."

            In 'Dhodha House V. S.K. Maingi' (supra) the Supreme Court has observed - "A cause of action will arise only when a registered trade mark is used and not when an application is filed for registration of the trade mark. In a given case, an application for grant of registration certificate may or may not be allowed. The person in whose favor a registration certificate has already been granted indisputably will have an opportunity to oppose the same by filing an application before the Registrar, who has the requisite jurisdiction to determine the said question. In other words, a suit may lie where an infringement of trade mark or copy right takes place but a cause of action for filing the suit would not arise within the jurisdiction of the court only because an advertisement has been issued in the Trade Marks Journal or any other journal, notifying the factum filing of such an application."

            The Supreme Court held that in view of the matter, they are of the opinion that filing of an application for registration of a trade mark does not constitute a part of cause of action in a suit for passing off. The appellants cannot file the suit in the High Court of Madras seeking the injunction to restrain the respondent from passing off his goods using the trade mark A-ONE, based only on the claims made in the trade mark application of respondent filed before the Trade Mark Registry, since the necessary requirements of an action for passing off are absent.

            For the above reasons the Supreme Court dismissed the appeal.