Delhi High Court Division Bench Upholds Restoration of "MBD" Trademark: Union of India & Ors. vs. Malhotra Book Depot

The Division Bench of the Delhi High Court, in Union of India & Ors. vs. Malhotra Book Depot (LPA No. 564 of 2012), has upheld the judgment dated November 29, 2011, passed by a Single Judge of the Delhi High Court in W.P.(C) No. 7882/2010, directing the restoration and renewal of the trademark "MBD" (Class 16) in favor of the respondent, Malhotra Book Depot. The Division Bench, however, modified the direction to require the Registrar to first satisfy itself that the respondent is indeed the registered proprietor or successor-in-interest of the mark, and that no identical or similar marks have been registered by third parties during the intervening period.

Brief Facts

• The predecessors of the respondent—Shri Ashok Kumar Malhotra and late Shri Balbir Singh, trading as M/s. Malhotra Book Depot (subsequently constituted as a partnership of Ms. Satish Bala Malhotra, Ms. Monica Malhotra Kandhari, and Ms. Sonica Malhotra Kandhari)—had applied for and secured registration of the trademark "MBD" in Class 16, in respect of "publications (printed) and books," vide registration dated November 23, 1970.
• The registration was thereafter duly renewed for the period from November 23, 1977 to November 23, 1984.
• On April 1, 1992, the constitution of the firm changed, with a fresh partnership deed executed between Shri Ashok Kumar Malhotra and Ms. Satish Bala Malhotra.
• Following the demise of Shri Ashok Kumar Malhotra, the firm's constitution changed again, with a fresh partnership deed executed on December 30, 2009, between Ms. Satish Bala Malhotra, Ms. Monika Malhotra Kandhari, and Ms. Sonica Malhotra Kandhari.
• In April 2010, the respondent instituted a suit for permanent injunction restraining infringement of the mark "MBD," and in connection therewith applied for a Certificate for Use in Legal Proceedings. This application was returned by the Registrar of Trade Marks on the ground that no record of the trademark could be traced in the Registry's database. Upon investigation, the respondent discovered that the mark had never been renewed following the expiry of the 1977–1984 renewal term.
• On October 7, 2010, the respondent applied for renewal and restoration of the mark, but the application was not accepted by the Registry.
• The respondent thereafter sought a writ of mandamus directing restoration and renewal, contending that the mandatory statutory notice in Form O-3—required under the Trade and Merchandise Marks Rules, 1959, then in force—intimating the respondent of the impending expiry and the option to renew, had never been issued by the Registrar, and that the Registrar could not therefore lawfully deny restoration.

Contentions of the Appellants (Union of India)

The appellants opposed the writ petition principally on the following grounds:

• Renewal had fallen due as far back as November 23, 1984—some 26 years prior to institution of the writ petition—and the petition was accordingly liable to be dismissed on grounds of delay and laches;
• The removal of the mark had been duly notified in Trade Marks Journal No. 997, dated December 16, 1990, for non-payment of renewal fees;
• Such removal could not have occurred without following due process under the applicable statutory provisions, and the respondent was merely seeking to take advantage of the fact that Registry records of dispatch of Form O-3 notices, being over 26 years old, were no longer available;
• Upon receiving complaints regarding non-receipt of registration certificates and non-issuance of Form O-3 notices generally, the Registry had issued Public Notices dated September 24, 2010 and November 31, 2010, advising affected parties to file appropriate petitions in the prescribed manner; and
• The respondent had itself been separately advised, by a Registry letter dated January 24, 2011, to file a petition in this regard.

Findings of the Single Judge

The learned Single Judge allowed the writ petition, holding, among other things, that:

(a) The Registrar's counter-affidavit, in response to the respondent's unequivocal averment that no Form O-3 notice had been received, contained only a presumptive assertion that removal could not have occurred without due process—while separately admitting, in paragraph 7 of the same affidavit, that Form O-3 notices had indeed not been issued in various cases. The Court concluded that no such notice had been issued to the respondent, as mandated under Rule 67.

(b) Under Section 25 of the Trade and Merchandise Marks Act, 1958 (the "Act"), as applicable in 1984 when the respondent's registration expired, an application for renewal could only be made upon receipt of the Form O-3 notice.

(c) The Registrar could remove a mark from the Register, and advertise such removal in the Journal, only after issuance of the mandatory Form O-3 notice.

(d) Removal of a registered trademark from the Register carries civil consequences for the registered proprietor, and cannot be effected without prior notice in the prescribed form.

(e) Mere expiry of registration through effluxion of time, coupled with the proprietor's failure to renew, does not by itself entitle the Registrar to remove the mark without complying with the mandatory procedure prescribed under Section 25(3) of the Act, read with Rule 67 of the Rules; removal effected in violation of this requirement is illegal and void.

(f) The Registrar's contention that the respondent's restoration application was time-barred under Section 25(4) and Rule 69 could not be sustained, since the removal itself had not been carried out in compliance with Section 25(3) read with Rules 67 and 68.

(g) Since the mandatory Form O-3 notice had not been issued prior to removal in the present case, the respondent's application for restoration and renewal could not be treated as barred by limitation.

Proceedings Before the Division Bench

In the Letters Patent Appeal, the appellants relied upon a subsequent order of the Intellectual Property Appellate Board (IPAB), dated April 16, 2012, in Pernod Ricard India Private Ltd. vs. The Controller General of Patents, Designs and Trade Marks (OA Nos. 59 & 60/2011/TM/KOL), in which the IPAB had held that the Act does not make renewal of a trademark contingent upon service of a Form O-3 notice, nor does it make removal of the mark dependent on issuance of such notice.

The respondent, in turn, relied upon the Karnataka High Court's decision in Tetragon Chemie (P) Ltd. vs. Government of India (2007), where a Single Judge had held that, in the absence of a Form O-3 notice, an order removing a mark for non-payment of renewal fees within the prescribed period was bad in law, and had accordingly directed renewal.

Reasoning of the Division Bench

Given the divergence of opinion between the Single Judge of the Delhi High Court and the IPAB, the Division Bench undertook a detailed examination of the statutory scheme, and found the IPAB's reasoning to be contrary to legislative intent. The Court noted that both the Act and the Rules deal jointly with the "duration, renewal, removal and restoration" of trademark registration under a single, integrated statutory scheme—reflected in Section 25 of the Act.

Statutory Framework

The Court examined Section 25(3) of the Act, which requires the Registrar to send notice, in the prescribed manner, to the registered proprietor before expiration of the last registration, intimating the date by which renewal may be sought. Only if the prescribed conditions remain unfulfilled at the expiry of the prescribed time may the Registrar proceed to remove the mark from the Register—subject to a proviso that removal cannot occur if an application for renewal, together with the prescribed fee and surcharge, is filed within six months of expiry.

The Court also considered Section 25(4), which provides that where a mark has been removed for non-payment of the prescribed fee, the Registrar may, upon an application filed between six months and one year from the expiration of the last registration, restore the mark and renew its registration for a further period of ten years, if satisfied that it is just to do so.

Reading these provisions together, the Court held that issuance of a Form O-3 notice under Section 25(3) is a mandatory precondition to lawful removal of a mark from the Register.

Interplay with Section 26

The Court further considered Section 26 of the Act, which provides that a mark removed for non-payment of renewal fees shall, for a period of one year from the date of removal, nonetheless be deemed to remain on the Register for purposes of assessing any subsequent application to register an identical or similar mark—unless the tribunal is satisfied either that there had been no bona fide use of the removed mark in the two years preceding removal, or that no likelihood of deception or confusion would arise from the subsequent use of the new mark, given the prior use of the removed mark.

The Court reasoned that, while the one-year restoration period under Section 25(4) is generally to be computed from the date of expiration of the last registration where removal has duly followed the Section 25(3)/Rule 67 procedure, Section 26 suggests that this one-year period must instead be read as running from the date of actual removal—not the date of expiry of the last registration—in cases where removal does not immediately follow expiry. The Court reasoned that any other construction would render Section 26 illogical, since there would be no purpose in deeming a removed mark to remain on the Register for one year from removal, unless the registered proprietor retained a corresponding right to seek restoration and renewal during that same period.

Sections 2(r) and 29: Continuing Rights Pending Removal

The Court additionally relied on Section 2(r) of the Act, which defines a "registered trademark" as a mark that is actually entered on the Register—not merely one whose registration remains current or has been duly renewed—and on Section 29, which provides that infringement occurs where an unauthorized person uses a mark identical or deceptively similar to a registered trademark. Reading these provisions together, the Court held that a trademark remains a "registered trademark" for purposes of infringement under Section 29 for so long as it remains on the Register, irrespective of whether its registration has technically expired, provided it has not actually been removed.

Conclusion on Section 26's Purpose

The Court concluded that Section 26 would be rendered otiose if the rights of a registered proprietor to restoration and renewal were held to lapse automatically upon expiry of one year from the expiration of the last registration—regardless of whether the mark had actually been removed from the Register immediately thereafter, or only after a considerable delay. If the legislative intent had been to extinguish the proprietor's rights strictly one year from the date of expiry (rather than from the date of removal), Section 26 would similarly have been drafted to operate for one year from the date of expiry, rather than from the date of removal.

Holding

On this reasoning, the Division Bench held that removal of the respondent's mark, having been effected without following the mandatory procedure prescribed under Section 25(3) read with Rule 67, was bad in law. However, in disposing of the appeal, the Court modified the direction issued by the Single Judge, directing the Registrar to restore and renew the mark only upon being satisfied that:

(i) the respondent is indeed the registered proprietor, or a valid successor-in-interest of the registered proprietor, of the mark whose registration had expired; and (ii) no identical or similar marks have been registered by third parties during the intervening period.

Commentary

This judgment offers significant clarification on the interplay between Sections 25 and 26 of the Trade and Merchandise Marks Act, 1958 (and, by extension, the analogous provisions of the Trade Marks Act, 1999), reaffirming that procedural safeguards—particularly the mandatory issuance of notice prior to removal—cannot be dispensed with merely because significant time has elapsed since the original expiry.

At the same time, the qualification introduced by the Division Bench—that restoration is conditional upon no identical or similar mark having been registered in the interregnum—raises an important unresolved question, particularly relevant on facts such as these, where nearly three decades elapsed between expiry and the respondent's restoration application. Where the mark in question had, in fact, continued to be used openly and continuously by the respondent throughout this period, and remained closely associated and identified with it in the marketplace, the practical application of this condition—and its interaction with third-party rights that may have arisen in good faith during the intervening period—remains a matter that may well surface in future proceedings, and merits close attention from both trademark owners and practitioners monitoring the Register for restoration risk.