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Thursday, December 26, 2013

DOCTRINE OF ESTOPPEL BY ACQUIESCENCE OR WAIVER FOR INFRINGEMENT

Acquiescence as a defense:

Section 33 (1) of the Trademarks Act, 1999 provides that if the earlier Registered Proprietor has acquiesced for a continuous period of 5 years in the use of a registered trademark, being aware of that use, he is not entitled to either seek invalidation of such later mark or oppose its use in relation to goods or services in relation to which it has been so used, unless registration of such mark was applied in bad faith.

The essential for defense of acquiescence shall be:

(a)    The mark should be registered

(b)   The earlier registered proprietor should be aware of use of such registered mark for a period of 5 years or more

(c)    The subsequent Applicant/ registered proprietor has used such registered trademark for a continuous period of 5 years

(d)   The subsequent mark if registered cannot be cancelled unless registration was applied in bad faith

(e)    The subsequent mark cannot be opposed for usage in respect of goods or services in respect of which it has been so used, unless application was made in bad faith

This section clearly establishes that if there is acquiescence for a continuous period of 5 years, the usage of such mark cannot be stopped by earlier registered proprietor. Though any application or registration of such mark can be challenged either in rectification or opposition proceedings if such application was made in bad faith.

Where such doctrine applies, the proprietor of later trademark is not entitled to oppose use of the earlier registered mark or exploitation of the earlier right. Burden of proof is on the defendant.

Acquiescence vs. Consent

Acquiescence is implied consent by remaining silent spectator. Section 30 (2) (c) of the Trademarks Act provides that express or implied consent by the registered proprietor or registered as to use of the mark is a defense to infringement. But as the infringement is a continuous process this consent may be withdrawn subsequently and such acts would amount to infringement unless a defense of acquiescence is available.  In other words implied consent of 5 years can be termed as acquiescence.

Laches:

Failure to assert one’s rights in a timely manner can result in a claim being barred by laches. Laches is an equitable defense or doctrine asserted in litigation. It is defined as an "unreasonable delay pursuing a right or claim by one party in a way that prejudices the opposite party". The person invoking laches is asserting that an opposing party has "slept on its rights," and that, as a result of this delay, circumstances have changed such that it is no longer just to grant the equitable relief sought for such as an interim or temporary injunction. Laches is a form of estoppel for delay. A successful defense of laches will find the court denying the request for equitable relief. However, even if equitable relief is not available, the party may still have an action at law if the statute of limitations has not run out.

The Hon’ble Supreme court of India in Khoday Distilleries Limited vs. The scotch whisky association and others, bared challenge to “peter scot” on principles of acquiescence and/ or waiver.
 

Appellant i.e. Khoday Distilleries Limited hereinafter “Khoday” was a company incorporated under the Companies Act, 1956 and manufactured whisky under the mark “Peter Scot” since May, 1968.  Its application for registration of its mark was accepted and allowed to proceed with the advertisement, subject to the condition that the mark would be treated as associated with Reg. T.M. No.249226-B. The said trade mark was subsequently registered. Respondents came to know of the appellants mark on or about 20th September, 1974. They filed an application for rectification of the said trade mark on 21st April, 1986.  Appellant by way of affidavit explained coining of the mark “Peter Scot” where “Peter” was his father’s name and “Scot” was his nationality. Another factor behind the coining of this brand name was the internationally known British explorer, Captain Scott, and his son Peter Scott, who is widely known as an artist, naturalist and Chairman of the World Wildlife Fund. 
 

However, the application for rectification was allowed. The appellant then preferred an appeal before the High Court. One of the main ground of appeal was that in one of the affidavit filed on behalf of the respondents affirmed by Ian Barclay it was stated that the respondents were aware of infringement of mark as far back in 1974 but as no action was taken in relation thereto till 1986, therefore the application for rectification was barred under the principles of waiver and acquiescence.
 

A learned Single Judge of the High Court dismissed the said appeal and as regards the plea of acquiescence held that the acquiescence if it is to be made a ground for declining to rectify, must be of such a character as to establish gross-negligence on the part of the applicant or deliberate inaction which had regulated in the appellant incurring substantial expenditure or being misled into the belief that the respondents though entitled to, had deliberately refrained from taking any action and were unmindful of the use of the mark by the person in whose name it was registered and held that the facts of this case are not such as to warrant the conclusion that there has been acquiescence.
 

On an appeal a Division Bench of the High Court, dismissed the said appeal and appellant approached the Supreme Court against said order. 
 

Supreme Court relied on ratio laid down by Oliver, L.J., in Taylor Fashions Ltd. v. Liverpool Victoria Trustees Co. Ltd. [ (Note) [1981] 2 W.L.R.] 576

“Of course, estoppel by conduct has been a field of the law in which there has been considerable expansion over the years and it appears to me that it is essentially the application of a rule by which justice is done where the circumstances of the conduct and behaviour of the party to an action are such that it would be wholly inequitable that he should be entitled to succeed in the proceeding.”

Supreme Court observed that “Thus, in cases involving equity or justice also, conduct of the parties has also been considered to be a ground for attracting the doctrine of estoppel by acquiescence or waiver for infringement.”

The ratio laid down in M/s. Power Control Appliances and others v. Sumeet Research and Holdings, [(1994) 2 SCC 448 ] was relied, where Supreme Court held :-

26. Acquiescence is sitting by, when another is invading the rights and spending money on it. It is a course of conduct inconsistent with the claim for exclusive rights in a trade mark, trade name etc. It implies positive acts; not merely silence or inaction such as is involved in laches. In Harcourt v. White Sr. John Romilly said: It is important to distinguish mere negligence and acquiescence. Therefore, acquiescence is one facet of delay. If the plaintiff stood by knowingly and let the defendants build up an important trade until it had become necessary to crush it, then the plaintiffs would be stopped by their acquiescence. If the acquiescence in the infringement amounts to consent, it will be a complete defence as was laid down in Mouson (J.G.) & Co. v. Boehm. The acquiescence must be such as to lead to the inference of a licence sufficient to create a new right in the defendant as was laid down in Rodgers v. Nowill.

Supreme Court observed that the question again came up for consideration in Ramdev Food Products (P) Ltd. v. Arvindbhai Rambhai Patel and others, [(2006) 8 SCC 726] wherein it was held :-

103. Acquiescence is a facet of delay. The principle of acquiescence would apply where: (i) sitting by or allowing another to invade the rights and spending money on it; (ii) it is a course of conduct inconsistent with the claim for exclusive rights for trade mark, trade name, etc.

The delay by itself, however, may not be necessarily a ground for refusing to issue injunction.

It was opined:-

106. The defence of acquiescence, thus, would be satisfied when the plaintiff assents to or lays by in relation to the acts of another person and in view of that assent or laying by and consequent acts it would be unjust in all the circumstances to grant the specific relief.

It was furthermore observed:-

108. Specific knowledge on the part of the plaintiff and prejudice suffered by the defendant is also a relevant factor. (See Spry on Equitable Remedies, 4th Edn., p. 433.)


Taking into considerations all peculiar facts of the case as well as precedents laid down by Supreme Court it was observed that stand of respondents to object to the evidence that was produced before the learned Single Judge with regard to the increase in the volume of sale of Peter Scot, on the other hand urging that if a comparison is made of the Indian whisky and Scotch Whisky it would appear that some Indian whiskies are costlier than some of the Scottish brands.  The stand taken by the respondents is self-contradictory and is not fair and Supreme Court was of opinion that action of the respondents is barred under the principles of acquiescence and/ or waiver. 

 
As regards the question as to consideration is as to whether the use of the term Scot would itself be a sufficient ground to form an opinion that the mark Peter Scot is deceptive or confusing. The Supreme Court relied upon precedents operating in Australia and United States of America.

 
The Supreme Court observed that they are concerned with the class of buyer who supposed to know the value of money, the quality and content of Scotch Whisky. Who are supposed to be aware of the difference of the process of manufacture, the place of manufacture and their origin.  Trademark Registry, the learned Single Judge as also the Division Bench of the High Court, therefore, failed to notice the distinction, which is real and otherwise borne out from the precedents operating in the field. The SC further observed that had these tests been applied the matter might have been different.  In a given case probably SC would not have interfered but intend to do so only because wrong tests applied led to a wrong result. 

 
The Supreme Court allowed the appeal and dismissed the impugned judgement of High Court, thereby cancelling the rectification proceedings in respect of “Peter Scot’ mark abs reinstating the Registration in favour of Appellant.

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