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Synopsis

The Delhi High Court while hearing an infringement of a trademark dispute of steel manufacturing giants Rathi group held that merely because one branch of the family was the prior adopter of the mark, the same would not extinguish the rights of the other family members. Earlier registration of the mark RATHI in favor of K.L. Rathi would not make any difference, the court said.

The brief background of the case is that the mark RATHI had been used since the year 1942 by the members of the Rathi Family in respect of steel products. In 1969, two companies, GD Rathi and KL Rathi were formed, which started manufacturing steel products under the mark RATHI. The mark RATHI was registered in the year 1975 in the name of KL Rathi and subsequently in the name of GD Rathi in the year 1980. In 1995, both the aforesaid companies, KL Rathi and GD Rathi, assigned the mark RATHI in favor of RF and RRC respectively. Pursuant to the said assignment, the registration certificates were issued by the Trade Mark Registry in favor of the aforesaid trusts.

The court discussed the provisions of the Trademarks Act under Sections 12, 28(3), and 30 (2) (e) and observed that “Section 12 of the Act, the Registrar may permit the registration of the identical or similar marks by more than one proprietor in case of honest concurrent use of the said marks in respect of similar goods. As per Section 28(3) of the Act, when two or more persons are the registered proprietors of identical trademarks, both of them have the right to use the said trademarks. Further, Section 30(2)(e) of the Act clearly lays down that use of a registered trademark by one of the registered proprietors shall not amount to infringement of the said trademark.”

The bench of Justice Amit Bansal held that both RF as well as RRC and before that K.L. Rathi and G.D. Rathi, being the registered proprietors of the mark RATHI, have the concurrent right to use the said mark and neither of them can prevent the other from using the said mark.

The court while rejecting the plea of the plaintiff also rejected the contention that K.L. Rathi was the prior registrant of the mark RATHI and the registration was granted in favor of G.D. Rathi only on account of consent given by K.L. Rathi. Court observed that no such consent had been brought to the attention of the court. In fact, the records of the case show that K.L. Rathi had the intention to oppose the registration sought by G.D. Rathi, court noted. 

The court further observed that: “Once registration had been granted in favor of G.D. Rathi with effect from 1980, the plaintiff could not have restricted the use of the mark RAITH by G.D. Rathi in any manner, as both G.D. Rathi and K.L. Rathi and after the execution of Assignment Deeds, their assignees RF and RRC, had an equal right to use the said mark. Both the entities had an independent right to use the mark RATHI without any obligation towards each other.”

It is a matter of fact that two MOUs were executed between the parties and MOU-1 was executed in 1995 by 12 members of three different family groups of the Rathi Family. Similarly, MOU-2 was executed in October 1995 between six members forming part of two different groups of the Rathi Family. The signatories to MOU-1 and the Trust Deed-1 were not the parties to MOU-2 and the Trust Deed-2, and vice-versa. In other words, a signatory to the MOU-1 cannot have a grievance against a signatory to MOU-2 for alleged violation of the terms of the MOU-2, the court said.

The court observed that “Clearly, each of the two MOUs and the Trust Deeds were separate and independent documents that governed the members of the respective trusts. There was ‘no mutual and oral understanding’ between the members of the Rathi Family that the mark will be used with the common object of benefitting the Rathi Family and safeguarding the rights of the Rathi Family in the mark RATHI from third parties, contrary to the claim of the Plaintiff.”

It further held that the plaintiff can not in any manner, control the usage or licensing of the mark RATHI by RRC, as RRC has an independent right to use or license the mark RATHI in accordance with the provisions of MOU-2 and the Trust Deed-2.

The court while deciding the plea taken by the plaintiff stating that he is the prior registrant of the said trademark relied upon Shri Ram Education Trust v. SRF Foundation & Anr., 2016 SCCOnLine Del 472, and observed that it was held that “merely because one branch of the family was the prior adopter of the mark, the same would not extinguish the rights of the other family members. Therefore, in the present case, the earlier registration of the mark RATHI in favor of K.L. Rathi would not make any difference.”

The court while interpreting Section 2(1)(r) and Section 29(1) of the Act observed that Section 2(1)(r) of the Act recognizes the ‘permitted use’ by consent of the registered proprietor of a trademark in a written agreement. Further, Section 29(1) of the Act recognizes that there is no infringement when the mark is used by a permitted user of a registered proprietor. The court held that defendants no.1 to 3 being permitted users, cannot be said to be infringing the mark RATHI by using the same in respect of their goods.

The bench of Justice Amit Bansal further held that “the various products that are manufactured and sold under the mark RATHI by the licensees of RRC, are clearly identified as those emanating from the concerned manufacturer. Hence, there cannot be any question of deceit or misrepresentation. On a prima facie view, no case of passing off is made out on behalf of the plaintiff.”

Further, the Court w.r.t. to dilution of the mark RATHI held that “as regards the case set up by the plaintiff with regard to dilution of goodwill in the mark RATHI, RRC is as much the registered proprietor of the mark RATHI as the plaintiff. In terms of the licenses granted to defendants no.1 to 3, there are conditions laid out in the said Trademark Agreements towards quality control.”

The court concluded that the plaintiff had failed to make out a prima facie case for the grant of interim injunction. Balance of convenience also did not come to the aid of the plaintiff for the grant of interim injunction. The interim order dated 28th April 2022 passed in favor of the Plaintiff was vacated.  Accordingly, the application under Order 39, Rule 4 of Defendant no. 1 to 3 was allowed while the application of the Order 39, Rule 1 and 2 was dismissed.

The Court further imposed a cost of Rs.5,00,000 on the Plaintiffs to be paid to defendants no.1 to 3.

Case Title: DHANANJAY RATHI versus SHREE VASU STEELS PRIVATE LIMITED & ORS.