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Finding Of IPAB Is Not Binding In An Action For Passing Off Action

If a registered trademark of a party is cancelled by the Intellectual Property Appellate Board [IPAB], does it mean that an action of passing off has to be allowed against that party? Or in other words, what could be the effect of the finding of IPAB in the rectification petition on the litigation pertaining to passing off action?

This was the question, which happened to crop up before the Hon'ble Division Bench, High Court of Delhi in a Commercial Appeal bearing RFA (OS) (Comm) 03 of 2022 titled as Vivek Kochar and another Vs KYK Corporation Limited and Ors , wherein the Hon'ble Division Bench was pleased to deal with such issue by passing the Judgement dated 23.09.2022.

The subject matter appeal was filed by the Appellants/Plaintiffs whereby the suit filed by the Appellants was dismissed and the counter claim filed by the Respondent No.1 was partly allowed, whereby the Appellants were restrained from using the subject matter trademark/copyright KYK, amounting to passing off and infringement of Respondent No.1's copyright.

The reason for passing the impugned judgement was that the registered trademark of the Appellants was cancelled by the Ld. IPAB on the cancellation petition filed by the Respondent No.1.

The Appellants filed a Writ Petition against the order of IPAB, but the same was also dismissed. This was the order of Ld. IPAB, on which the Hon'ble Single Judge primarily relied upon while allowing an action of passing off against the Appellants.

The Appellants filed the subject matter suit on the basis of the registered trademark KYK and also on the basis of common law rights under the said trademark in relation to the business of marketing and selling of automobile parts and fittings, including bearings, filters, gears and gear parts, v-belts, fan belts, and machinery parts used in motor land vehicles.

When Respondent No.1 appeared in the suit, he filed the written statement as well as the counter claim on the basis of proprietary rights in the trademark KYK; the business of manufacturing, marketing, selling, and exporting inter alia all types of bearings, including parts of land vehicles, bearings (axle) for vehicle wheels, and bearings (carrying for wheels).

The counter claim of the respondent No.1 was allowed primarily on the basis of the order passed by Ld. IPAB , which cancelled the subject matter trademark of the Appellants.

The Ld. IPAB cancelled the subject matter trademark of the Appellants on the ground that the Appellants failed to prove their use in relation to their trademark prior to 2005. In view of said finding of Ld. IPAB, the Hon'ble Single held that the Appellants can not be allowed to claim user prior to that.

The Hon'ble Division Bench agreed with the finding of the Hon'ble Single Judge with respect to the dismissal of the Appellant's suit pertaining to infringement of trademark as the trademark of the Appellants has been cancelled by the Ld. IPAB. Hence, the relief pertaining to infringement of copyright could not have survived.

However, the Hon'ble Division Bench disagreed with that portion of the judgement where by the counter claim of the Respondent No.1 , in so far as the same pertaining to passing off was allowed.

The reasoning given by the Hon'ble Division Bench was that the fact that the Appellants were unable to prove their use in sustain their registered trademark, however, the same could not have been sufficient for the purpose of allowing the claim of passing off made by the Respondent No.1.

It is submitted that the reason for passing such a judgement is very clear. The criterion for cancelling a registered trademark is quite different and distinct from the action of passing off. A registered trademark may be cancelled on various grounds, inter alia on the ground of non-use, similarity to other trademarks, etc.

However, in order to succeed in an action for passing off , the right holder has to establish tremendous goodwill and reputation. Merely because a party has succeeded in an action for rectification petition does not mean that this party will succeed in an action for passing off action.

This is the reason why the finding of Ld. IPAB can not be binding in an action for passing off. In the subject matter suit, Respondent No.1 was not the registered proprietor of the trademark. Hence, in order to succeed in an action for passing off, tremendous goodwill and reputation were required to be established.

Simply because the Appellants' registered trademark was cancelled does not mean that the Respondent No.1's passing off action should have been permitted. Hence, the Hon'ble Division Bench was pleased to set aside the impugned judgement whereby the counter claim claim of the Respondent No.1 was allowed.

The Hon'ble Division Bench remanded the matter to the Hon'ble Single Judge for adjudication of the counter claim claim of the Respondent No.1 , in so far as the same pertains to the relief of passing off action.

Case Law Discussed:
Cause Title of Case: Vivek Kochar and another Vs KYK Corporation Limited and Ors.
Judgement Date:23.09.2022
Case No. RFA (OS) (Comm) 03 of 2022
Name of the Court: High Court of Delhi
Name of Hon'ble Judge: Vibhu Bakhru and Amit Mahajan, H.J.

Written By: Ajay Amitabh Suman, IPR Advocate, Hon'ble High Court of Delhi.
Email: [email protected], Ph no: 9990389539

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