Acquiescence as a Defense Under the Trade Marks Act, 1999

Statutory Basis

Section 33(1) of the Trade Marks Act, 1999 provides that where the proprietor of an earlier registered trademark has acquiesced for a continuous period of five years in the use of a later registered trademark, with knowledge of that use, the earlier proprietor loses the right either to seek invalidation of the later mark or to oppose its use in relation to the goods or services for which it has been so used — unless the later mark was registered in bad faith.

The essential elements of the defense may be summarized as follows:

(a) The later mark must be registered.

(b) The earlier registered proprietor must have been aware of the use of the later registered mark for a continuous period of five years or more.

(c) The subsequent applicant or registered proprietor must have used the mark continuously throughout that five-year period.

(d) The later mark, once registered, cannot be cancelled unless its registration was applied for in bad faith.

(e) Use of the later mark, in relation to the goods or services for which it has been so used, cannot be opposed — again, unless the application was made in bad faith.

In short, Section 33(1) establishes that continuous acquiescence for five years extinguishes the earlier proprietor's ability to stop the later use. The one caveat is that an application or registration procured in bad faith remains open to challenge in rectification or opposition proceedings, irrespective of the acquiescence period.

Where the doctrine applies, the proprietor of the later mark is entitled to resist any attempt by the earlier proprietor to oppose its use or otherwise assert the earlier right against it. The burden of proving acquiescence rests on the party invoking it as a defense.

Acquiescence Distinguished from Consent

Acquiescence is, in essence, implied consent arising from silent acceptance over time. Section 30(2)(c) of the Trade Marks Act separately provides that express or implied consent by the registered proprietor to another's use of the mark is a defense to infringement. However, because infringement is an ongoing act, such consent can in principle be withdrawn at any time — after which continued use would once again amount to infringement, unless the separate defense of acquiescence has by then matured. Put differently, implied consent that has continued unbroken for five years ripens into acquiescence, at which point it can no longer be withdrawn to revive an infringement claim.

Laches

Related to, but distinct from, acquiescence is the doctrine of laches — the failure to assert one's rights within a reasonable time, resulting in the claim being barred. Laches is an equitable defense, generally understood as an unreasonable delay in pursuing a right or claim that prejudices the opposing party. A party invoking laches argues, in effect, that the claimant has "slept on its rights," and that the resulting change in circumstances makes it unjust to grant equitable relief such as an interim or temporary injunction. Laches is thus a form of estoppel grounded in delay. Where a defense of laches succeeds, the court will decline to grant the equitable relief sought — though the claimant may still pursue a legal remedy if the limitation period has not expired.

Khoday Distilleries Ltd. v. The Scotch Whisky Association and Others

The Supreme Court of India's decision in this case is instructive on how acquiescence and waiver operate in practice, and how they barred a challenge to the mark "Peter Scot."

Facts

Khoday Distilleries Ltd. ("Khoday"), a company incorporated under the Companies Act, 1956, had manufactured whisky under the mark "Peter Scot" since May 1968. Its application for registration was accepted and advertised, subject to the mark being treated as associated with an earlier registration (No. 249226-B), and the mark was subsequently registered.

The respondents became aware of Khoday's mark on or about September 20, 1974, but did not file an application for rectification of the registration until April 21, 1986 — nearly twelve years later. In response, Khoday explained the origin of the mark by affidavit: "Peter" was the name of the company's founder's father, and "Scot" reflected his nationality. Khoday also pointed to the internationally known British explorer Captain Scott and his son Peter Scott — the latter widely recognized as an artist, naturalist, and Chairman of the World Wildlife Fund — as an additional influence behind the name.

Procedural History

The application for rectification was nonetheless allowed. Khoday appealed to the High Court, relying principally on an affidavit filed on the respondents' behalf by Ian Barclay, which conceded that the respondents had known of the alleged infringement since 1974 but had taken no action until 1986. Khoday argued that this delay barred the rectification application under the principles of waiver and acquiescence.

A learned Single Judge dismissed the appeal. On the acquiescence point, the Single Judge held that acquiescence sufficient to bar rectification must reflect gross negligence or deliberate inaction on the applicant's part — conduct that either caused the appellant to incur substantial expenditure or led it to believe that the respondents, though entitled to object, had deliberately chosen not to act and were indifferent to the registered use of the mark. On the facts, the Single Judge found no such acquiescence. A Division Bench of the High Court affirmed this dismissal, and Khoday appealed to the Supreme Court.

The Supreme Court's Reasoning

The Supreme Court drew on the observations of Oliver, L.J. in Taylor Fashions Ltd. v. Liverpool Victoria Trustees Co. Ltd. [1981] 2 W.L.R. 576, on the broadening scope of estoppel by conduct as a means of achieving justice where it would be inequitable for a party to succeed given its own conduct. Building on this, the Court observed that questions of equity and justice similarly bring the doctrine of estoppel by acquiescence or waiver into play in the infringement context.

The Court then turned to its own precedent in M/s. Power Control Appliances and Others v. Sumeet Research and Holdings, (1994) 2 SCC 448, which had held that acquiescence consists of standing by while another invests in and builds up a right, in a manner inconsistent with a later claim to exclusivity in a trademark or trade name. Acquiescence requires positive conduct, not mere silence or inaction, which is the hallmark of laches instead. Drawing on Sir John Romilly's distinction in Harcourt v. White between mere negligence and true acquiescence, the Court reaffirmed that acquiescence is one facet of delay: where a plaintiff knowingly stands by and allows a defendant to build up a significant trade until it becomes commercially necessary to challenge it, the plaintiff will be estopped by that acquiescence. Where such acquiescence rises to the level of consent, it operates as a complete defense, as recognized in Mouson (J.G.) & Co. v. Boehm — though the acquiescence must be sufficient to support an inference of a licence creating a new right in the defendant, per Rodgers v. Nowill.

The Court also revisited Ramdev Food Products (P) Ltd. v. Arvindbhai Rambhai Patel and Others, (2006) 8 SCC 726, which held that the acquiescence principle applies where a party sits by or allows another to invade its rights and invest in that use, in a manner inconsistent with a later claim to exclusivity — while clarifying that delay alone is not necessarily sufficient to defeat an injunction. That decision further held that the defense of acquiescence is made out where the plaintiff's assent or inaction, together with the defendant's consequent conduct, makes it unjust in all the circumstances to grant the relief sought, and that the plaintiff's specific knowledge and the prejudice suffered by the defendant are both relevant considerations.

Application to the Facts

On the facts before it, the Supreme Court noted that the respondents had objected to evidence of the substantial growth in sales of "Peter Scot," while simultaneously arguing that a comparison of Indian and Scotch whiskies showed some Indian brands to be priced higher than certain Scottish ones. The Court found this position self-contradictory and lacking in fairness, and held that the respondents' claim was barred by the principles of acquiescence and waiver.

The Question of Deceptive Similarity

A separate issue before the Court was whether the mere presence of the term "Scot" in the mark was sufficient, on its own, to render "Peter Scot" deceptive or confusing. Drawing on precedent from Australia and the United States, the Supreme Court observed that the relevant class of purchaser could be expected to understand the value, quality, and character of Scotch whisky, and to be aware of the differences in manufacturing process, place of manufacture, and origin between Scotch whisky and other whiskies. The Trade Marks Registry, the Single Judge, and the Division Bench had each failed to draw this distinction — one that was both real and consistent with established precedent in the field. The Supreme Court observed that, had this distinction been properly applied, the outcome below might well have been different; it was only because the wrong legal test had been applied, leading to an incorrect result, that the Court found it necessary to intervene.

Outcome

The Supreme Court allowed the appeal, set aside the judgment of the High Court, cancelled the rectification of the "Peter Scot" mark, and restored the registration in favor of the appellant.

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This article is intended for general informational purposes and does not constitute legal advice. Readers should consult a qualified trademark attorney for guidance on specific matters arising under the Trade Marks Act, 1999, or its judicial interpretation.