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Territorial Jurisdiction and unregistered Licensee of Trade Marks

– Aamna Hasan & Vaibhav Vutts
Partners at Vutts & Associates LLP

In an interesting case of Exxon Mobil Corporation & Anr V P.K Sen, a Single Judge of Delhi High Court decided on the issue whether territorial jurisdiction can be decided based on the place of business of the unregistered licensee. The matter went up till the Supreme Court for consideration and was decided in the favour of the Defendants.

Exxon Mobil Corporation (licensor) and its licensee, Exxonmobil Lubricants Pvt. Ltd (jointly “Plaintiffs”) instituted a trademark infringement action in Delhi High Court for the mark EXXON against one Defendant, Mr. P K Sen. The licensor located outside India, is the registered proprietor of the trade mark EXXON. The licensee located in Delhi, is an unregistered user under the Indian Trade Marks Act 1999 [“the “Act”].  The defendant is located at Kolkata and the infringing goods are also sold at Kolkata.  Plaintiffs invoked the territorial jurisdiction of Delhi High Court based on the place of business of the unregistered licensee.

As per the Code of Civil Procedure (CPC), a suit can be instituted at a place where the Defendant resides or works for gain or where the cause of action has arisen. However, Section 134 of the Act creates an additional forum for territorial jurisdiction permitting the Plaintiff to sue at Plaintiff’s place of business. This is an additional forum created specifically by the Act.

While deciding the matter the Single Judge, considered three issues namely:

a) Whether the plaintiff No. 1, registered proprietor of the trademark instituting in-fringement suit can be said to actually and voluntarily reside or carry on business or personally work for gain within the local limits of jurisdiction of the Delhi High Court within the meaning of Section 134(2) of the Act by the reason of Plaintiff No.2 hav-ing its registered office and carrying on business in Delhi within the territorial jurisdic-tion of this Court;

b) Whether Plaintiff no.2, permitted user, though not entitled by virtue of Section 53 of the Act to institute a suit for infringement can be added as Plaintiff no.2 in a suit for infringement; and,

c) The effect, if any of the definition of ‘person’ in the explanation to Section 134(2) of the Act being an inclusive one.

The first two questions were decided in favour of the Defendant. However, as regard the definition of “person” it was held that the term was an inclusive one and not restricted to a registered proprietor / user. The term also includes other persons. To this extent a reliance was placed on the case of Exphar S.A. and Another v. Eupharma Laboratories Limited and Anoth-er: 2004 (3) SCC 688 and comparison was made with the concept of license in Indian Copy-right Act 1957 (“Copyright Act”) and the right of the licensee to institute an infringement action.

Based on the above explanation, it was held that the suit is maintainable in Delhi High Court. The rationale for the decision was that the use of the mark by licensee was considered to use by licensor, irrespective of the licensee being a registered user under the Act. Using the same principle, place of business of the unregistered licensee was considered the place of business of the licensor.

This order was revered by the Division Bench. The Division Bench held that suit is not main-tainable in Delhi High Court as Section 53 of Act categorically bars the unregistered licensee to institute infringement suit. The Division Bench has held that the words “person instituting the suit” in Section 134(2) excludes “permitted user” in view of Section 53 and only includes “registered user”. Any other reading of Section 53 will render it otiose. The appeal was fur-ther dismissed by the Supreme Court.

The Division bench while reversing the Single Judge’s order clarified that the comparison with the reliance on Exphar (supra) was incorrect, since there is no concept of permitted or registered user in copyrights. In fact, the Copyright Act provides for an exclusive licensee. Therefore, a Copyright infringement can be initiated by an owner of copyright or an exclusive licensee. Since, the Copyright Act does not contain the terms registered user or permitted us-er, the issue in the present suit is to be decided in light with the Trade Marks Act and a com-parison with the Copyright Act is inappropriate.

The important issue clarified by the Division Bench was that the term “person” mentioned in the explanation of Section 134(2) of the Act includes any other person except unregistered user as the same has been expressly excluded by a specific provision i.e. Section 53 of the Act.

Since an unregistered licensee cannot institute an infringement action, the jurisdiction in an infringement suit can also not be decided based on place of business of an unregistered licen-see. Some points of against the Plaintiff were as below:

(a) Legislative Intent. The Explanation to Section 134 (2) cannot be read with-out linking with Section 53. By enacting Section 53 in clear and unambigu-ous language, the legislative intent was to ensure that “person” does not in-clude “permitted user”. The Explanation is inclusive, but specifically ex-cludes permitted user. This is not a legislative lacuna, but a legislative intent. Conversely, if Explanation were to include “permitted user”, then Section 53 would be rendered otiose.

(b) Mischief Rule/Forum Convenience. The purpose of allowing only a regis-tered user to institute a suit is (and not permitted user) is to prevent forum shopping.

(c) Special Provisions vs General Provisions. Trade Marks Act is a special legis-lation that has specially created Section 53 as an exclusion on permitted user to institute infringement suit. Order 1 Rule 1 of CPC is a general provision. It is cardinal principle of interpretation that the general provision will always yield to a special provision. Construed in this light, Section 53 governs if a permitted user can be impleaded and therefore, reliance on any other provi-sion is ruled out.

The power of registered user to bring enforcement proceedings is limited to registry’s delay in registering user. It is therefore important to that the issue of delay in recordation or regis-tered licensee is addressed with the Trade Marks Registry. The Trade Marks Registry should be directed to fix timelines for recording the licenses. This can be a definite timeline of around 6-12 months. This direction can also be issued by the High Court to the Registry. The Delhi High Court recently issued analogous instructions to Registry regarding issuing of certified documents for litigation.

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