In a significant ruling, the Delhi High Court has issued a permanent injunction against trademark infringement involving Ramada International Inc. The Court has restrained Clubramada Hotels And Resorts Private Limited (the defendant) from unauthorized use of the RAMADA trademark and awarded ₹10 lakh in damages to the plaintiff.

Background of the Case

Ramada International, a globally recognized hotel chain, was established in 1954 with its first hotel in Arizona, USA. Over the years, the brand has expanded its presence to over 900 hotels across more than 60 countries, including India.

The plaintiff alleged that Clubramada Hotels And Resorts Private Limited had unlawfully incorporated the “Ramada” trademark into its corporate name. Additionally, the defendant had registered domain names using the disputed trademark without authorization.

Legal Notice and Defendant’s Response

Upon discovering the trademark infringement, Ramada International issued a legal notice to the defendant. In response, the defendant admitted to using the trademark but refused to transfer the rights of the disputed domain names to the plaintiff.

Recognizing the continued misuse of its brand identity, Ramada International approached the Delhi High Court, seeking legal intervention to stop the infringement.

Court Proceedings and Key Observations

Ex Parte Ad Interim Injunction (2021)

On December 14, 2021, the Delhi High Court passed an ex parte ad interim injunction, prohibiting the defendant from using the RAMADA name and trademarks. Despite this order, the defendant continued its infringing activities.

Repeated Violation of Court Orders

Ramada International filed two interim applications after observing that the defendant had failed to comply with the Court’s injunction order. The Court reiterated its ruling and instructed the Managing Director of the defendant company to appear in person to explain the continued infringement.

On August 17, 2023, the Court reviewed the MD’s explanation and found it unsatisfactory. The Court recorded that the defendant had shown blatant disregard for judicial orders and directed them to deposit ₹5 lakh as a provisional penalty.

However, despite the Court’s directives, the defendant failed to pay the amount. This further demonstrated willful non-compliance and contemptuous conduct in the case.

Court’s Findings on Trademark Infringement

The Delhi High Court emphasized that Ramada International had been using the RAMADA trademark extensively and continuously across multiple countries, including India. The plaintiff holds at least eight trademark registrations for the “Ramada” brand in India and operates 39 hotels across 30 cities under the Ramada name.

The Court referred to a previous decision by the World Intellectual Property Organisation (WIPO) in Ramada International, Inc. v. Degui Wang, which recognized Ramada International’s exclusive rights over the trademark and ordered the transfer of the infringing domain names to the plaintiff.

Read Meanwhile: Please Follow us for Trademark Registration Services

Defendant’s Bad Faith and Unjustified Use of the Trademark

The Court observed that the defendant had full knowledge of the Ramada brand’s reputation but intentionally adopted the disputed mark to exploit the goodwill of the plaintiff. It held that the defendant’s actions were mala fide and stated:

“The defendant’s adoption of the infringing marks cannot be deemed bona fide or honest. The defendant was fully aware of the plaintiff’s registered trademarks and their established reputation, making any plea of ignorance untenable. Further, the defendant has failed to provide any credible justification for adopting the plaintiff’s trademark, clearly intending to exploit the plaintiff’s goodwill and reputation for its own benefit.”

The Court criticized the defendant for deliberate misrepresentation and bad faith use of the trademark, which amounted to a blatant disregard of Ramada International’s statutory and proprietary rights.

Final Ruling and Compensation Awarded

In view of the continued trademark infringement, the Delhi High Court passed a permanent injunction restraining the defendant from:

• Using the RAMADA name in any form, including corporate branding, advertisements, and websites.
• Operating under domain names containing the infringing marks.

Additionally, the Court ordered the defendant to pay ₹10 lakh in damages to Ramada International for unauthorized usage of its trademark.

The Court also ruled that the plaintiff was entitled to recover actual litigation costs and directed it to submit the bill of costs within three months.

Significance of the Judgment

This ruling reinforces the importance of protecting well-established trademarks and sets a strong precedent against companies attempting to misuse reputed brand names. The Delhi High Court’s decision highlights:

• The stringent approach towards willful trademark infringement.
• The importance of compliance with Court orders.
• The financial consequences of bad faith adoption of registered trademarks.

This case serves as a warning to businesses attempting to capitalize on established brand names and reaffirms the legal protections available under Indian trademark law.

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I. Background

Recently, the Delhi High Court’s Single Judge Bench, led by Justice C. Hari Shankar, delivered a significant judgment in the commercial lawsuit PhonePe (P) Ltd. v. Ezy Services. The plaintiff, PhonePe, sought a permanent injunction against the defendants to prevent the usage of “Pe” or any deceptively similar variation that could be seen as infringing its trademark or creating confusion among users.

Both PhonePe and BharatPe operate as market leaders in India’s digital payment ecosystem. While PhonePe is accessible to all users via its mobile app, BharatPe targets merchants exclusively. The court rejected PhonePe’s plea for an interim injunction, highlighting that descriptive or generic terms, even with minor spelling modifications, do not warrant exclusive ownership without substantial evidence of acquiring distinctiveness over time. The court instructed BharatPe to maintain records of revenue generated under the contested trademark and file semi-annual audited financial statements.

II. Arguments from the Plaintiff

PhonePe presented several key arguments:

1. Trademark Registration: The company holds registrations for “PhonePe” and its variations under various classes since March 2016. The Devanagari transliteration “पे” as “Pe” was claimed to be a creative and novel adaptation.
2. Established Usage: PhonePe has been in continuous use since 2015, with over 100 million app downloads.
3. Distinctiveness: The company asserted that “Pe” was an invented term not found in dictionaries. When paired with the word “Phone,” it formed a distinctive identifier.
4. Market Presence: Evidence, including advertisements, celebrity endorsements, and partnerships, was presented to demonstrate goodwill.
5. Allegation of Similarity: The plaintiff contended that BharatPe’s app, offering similar services and downloadable from the same platforms, created confusion due to the use of the “Pe” suffix. They argued that the capitalized “P” in “Pe” accentuated its importance, making BharatPe deceptively similar to PhonePe.
6. Consumer Perception: PhonePe claimed that consumers with average intelligence might associate BharatPe’s services with their brand due to the shared “Pe” suffix.

III. Arguments from the Defendants

BharatPe countered these allegations with the following points:

1. Trademark Ownership: PhonePe did not have exclusive rights over the terms “Pe,” “Pay,” or the Devanagari “पे.” Their registration was limited to the composite mark “PhonePe.”
2. Good Faith Adoption: BharatPe claimed to have used the mark since August 2016, with the domain name registered in 2017 and services launched in 2018.
3. Distinctiveness: The defendants described BharatPe as a coined term that uniquely represented their services, aimed at creating a universal QR code for merchant payments.
4. Market Usage: By December 2020, BharatPe had achieved over 5 million downloads.
5. No Confusion: BharatPe argued that consumers could distinguish between the terms “Phone” and “Bharat” as the dominant elements of the trademarks. The similarity in the “Pe” suffix was insufficient to cause confusion.
6. Common Trade Practice: The defendants highlighted that multiple players, such as Google Pay and Amazon Pay, used the “Pay” suffix. The plaintiff’s admission that “Pe” was merely a phonetic variation of “Pay” weakened their exclusivity claim.
7. Prior Usage: References were made to other trademarks involving the term “Pe” predating PhonePe’s registration.

The mark in question is mentioned below;

IV. Legal Principles

Anti-Dissection Rule (Section 17 of the Trademarks Act, 1999)

This principle requires conflicting trademarks to be compared in their entirety rather than dissected into individual components. The rationale is that consumers form an overall impression of a mark rather than focusing on its parts.

The court observed that PhonePe’s trademark could not be dissected into “Phone” and “Pe,” nor could BharatPe’s mark be broken into “Bharat” and “Pe.” Trademarks must be evaluated as a whole for determining infringement or confusion.

Court Held That;

Para 29 of Durga Dutt Sharma v. Navaratna Pharmaceutical Laboratories:

When once the use by the defendant of the mark which is claimed to infringe the plaintiff’s mark is shown to be “in the course of trade”, the question whether there has been an infringement is to be decided by comparison of the two marks. Where the two marks are identical no further questions arise; for then the infringement is made out. When the two marks are not identical, the plaintiff would have to establish that the mark used by the defendant so nearly resembles the plaintiff’s registered trade mark as is likely to deceive or cause confusion and in relation to goods in respect of which it is registered (vide Section 21). A point has sometimes been raised as to whether the words “or cause confusion” introduce any element which is not already covered by the words “likely to deceive” and it has sometimes been answered by saying that it is merely an extension of the earlier test and does not add very materially to the concept indicated by the earlier words “likely to deceive”. But this apart, as the question arises in an action for infringement the onus would be on the plaintiff to establish that the trade mark used by the defendant in the course of trade in the goods in respect of which his mark is registered, is deceptively similar. This has necessarily to be ascertained by a comparison of the two marks – the degree of resemblance which is necessary to exist to cause deception not being capable of definition by laying down objective standards. The persons who would be deceived are, of course, the purchasers of the goods and it is the likelihood of their being deceived, that is, the subject of consideration. The resemblance may be phonetic, visual or in the basic idea represented by the plaintiff’s mark. The purpose of the comparison is for determining whether the essential features of the plaintiff’s trade mark are to be found in that used by the defendant. The identification of the essential features of the mark is in essence a question of fact and depends on the judgment of the Court based on the evidence led before it as regards the usage of the trade. It should, however, be borne in mind that the object of the enquiry in ultimate analysis is whether the mark used by the defendant as a whole is deceptively similar to that of the registered mark of the plaintiff.  

Dominant Test Paras 19 and 21 of South India Beverages (P) Ltd. v. General Mills Mktg. Inc.:

Though it bears no reiteration that while a mark is to be considered in entirety, yet it is permissible to accord more or less importance or “dominance” to a particular portion or element of a mark in cases of composite marks. Thus, a particular element of a composite mark which enjoys greater prominence vis-à-vis other constituent elements, may be termed as a “dominant mark”. 21. The view of the author makes it scintillatingly clear, beyond pale of doubt, that the principle of “anti-dissection” does not impose an absolute embargo upon the consideration of the constituent elements of a composite mark. The said elements may be viewed as a preliminary step on the way to an ultimate determination of probable customer reaction to the conflicting composites as a whole. Thus, the principle of “anti-dissection” and identification of “dominant mark” are not antithetical to one another and if viewed in a holistic perspective, the said principles rather complement each other.

V. Key Observations of the Court

The court acknowledged that both PhonePe and BharatPe are composite marks.

1. PhonePe could not claim exclusive rights over the “Pe” suffix.
2. The word “Pe” was found to be a phonetic variation of the descriptive term “Pay.” Minor spelling variations of descriptive terms do not warrant exclusive rights unless they acquire distinctiveness.
3. The court noted the difference in services: PhonePe offers direct payment services, while BharatPe provides a QR code system for merchants compatible with multiple payment apps.
4. There was insufficient evidence to conclude that “Pe” had acquired a secondary meaning exclusively associated with PhonePe.

VI. Review and Conclusion

The judgment underscores the complexities surrounding trademark disputes, particularly involving descriptive or generic terms. The court’s adherence to established legal principles, such as the anti-dissection rule and the requirement for acquiring secondary meaning, serves as a valuable precedent.

This case highlights the evolving landscape of trademark law in India and offers insights for practitioners navigating similar disputes. It emphasizes the need for substantial evidence when claiming exclusivity over descriptive terms and underscores the importance of examining trademarks as a whole. The ruling provides a roadmap for understanding key legal principles, making it an essential reference for legal professionals and businesses alike.

Read Judgement: PhonePe and BharatPe Trademark Dispute

Read Further: Nykaa’s Trademark Infringement Case: A Detailed Analysis: Triple Identity Test: NYKAA VS OYKAA

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In a significant legal decision, the Madras High Court recently dismissed PhonePe’s lawsuit seeking exclusive rights to the term “Pe” in the digital payments sector. The company had filed the case to obtain recognition of its brand as a well-known trademark and to secure a permanent injunction against competitors BundlePe and LatePe. The ruling underscored that “Pe,” derived from the Hindi word for “pay,” is a generic term frequently used across the payment services industry.

Court’s Observations on the Use of “Pe”

Justice P. Velmurugan, who presided over the case, emphasized that “Pe” was neither unique nor distinctive as claimed by PhonePe. The court noted that this term is commonly employed by numerous major players in the payment landscape, such as Google Pay, Paytm, and Apple Pay. Since the word “Pe” had become a standard term within the digital payments ecosystem, it could not be exclusively associated with any single entity.

The judge observed, “The primary issue revolves around whether the term ‘Pe’ can create confusion between the services of the plaintiff and the defendants. However, the evidence presented demonstrates that the term ‘Pe’ is a transliteration of the Hindi word for ‘pay’ and is widely adopted by other financial services providers. Therefore, it lacks the distinctiveness required for exclusive trademark protection.”

PhonePe’s Claims and Arguments

PhonePe asserted that it coined the term by combining the words “Phone” and “Pe,” and had been using the trademark since 2015. The company highlighted that the brand name was registered under several classes of the Trade Marks Act, and phonetic variations such as “FonePe” and “PhonePay” were also protected.

To strengthen its case, PhonePe pointed to its substantial market presence, claiming it processed nearly 48% of all UPI transactions in India. The company alleged that BundlePe and LatePe were deliberately using similar brand names to deceive consumers and leverage PhonePe’s established reputation. Despite issuing a cease-and-desist notice, the defendants continued to use the disputed marks, prompting PhonePe to seek legal recourse.

BundlePe’s Defense

BundlePe Innovations Pvt Ltd, the defendant, rejected PhonePe’s accusations, arguing that its brand names were neither deceptive nor confusing for consumers. The company highlighted that it followed all regulatory processes during registration and that no objections were raised at the time.

Furthermore, BundlePe clarified that its platform did not offer money transfer services like PhonePe. Instead, it functioned as a comprehensive solution for bill payments and recharges. The company argued that PhonePe’s trademark was inherently generic, comprising common terms like “Phone,” “Pay,” and “Pe,” which lacked originality.

Court’s Final Ruling

After examining the evidence and arguments from both sides, the court sided with BundlePe. It found no compelling proof that the defendant’s branding caused market confusion or infringed on PhonePe’s trademark rights. The court noted that the prefixes “Bundle” and “Late” provided sufficient differentiation from “PhonePe,” ensuring that consumers were unlikely to be misled.

The court emphasized that PhonePe’s concerns were based on a hypothetical risk rather than concrete evidence of consumer confusion. Justice Velmurugan stated, “There is no tangible proof to show that consumers have been misled. The defendant’s branding includes distinct prefixes that negate any likelihood of confusion.”

Read Meanwhile; Sun Pharma’s RACIRAFT Vs JB Pharma’s RANRAFT: Delhi High Court Grants Interim Trademark Protection to Sun Pharmaceutical

Conclusion

The court dismissed PhonePe’s claims for damages and permanent injunction. It ruled that BundlePe’s use of the term “Pe” was in good faith and did not infringe upon PhonePe’s trademark rights. This judgment underscores the importance of distinctiveness in trademark claims and reinforces the principle that generic terms commonly used in an industry cannot be monopolized.

This ruling is a crucial reminder for businesses to carefully assess the distinctiveness of their trademarks before seeking exclusive rights. It also highlights the balance courts strive to maintain between protecting intellectual property and promoting healthy competition in the market.

Read further: Explained: PhonePe v. BharatPe Trade Mark Dispute — “Pe”/Pay-as-you-go

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Nykaa E-Retail Pvt. Ltd., one of India’s leading e-commerce platforms, is recognized for its extensive range of products tailored primarily for women. The brand offers makeup, skincare, and wellness products and also manufactures its own line of goods. Recently, the company filed a lawsuit seeking an injunction against the alleged infringement of its registered trademark ‘NYKAA.’

Nykaa’s Trademark and Global Presence

Nykaa holds trademark registrations under various classes, both in India and internationally, including countries like Singapore, the UAE, the UK, Bangladesh, and Kuwait. The brand name ‘Nykaa’ is derived from the Hindi word ‘Nayaka,’ symbolizing an actress or someone in the spotlight. As a distinctive mark without a dictionary definition, the trademark ‘Nykaa’ enjoys a unique identity in the marketplace. FSN E-Commerce Ventures Ltd. holds the licensing rights for the mark.

The Allegation Against ‘Oykaa’

The legal dispute arose when a company under the name ‘Oykaa’ entered the market, offering similar products such as makeup, skincare, and wellness goods. The defendant also operates a website, www.oykaa.com, which closely resembles Nykaa’s platform.

Nykaa argued that Oykaa not only adopted a similar name but also mirrored the design of its website, potentially causing significant confusion among consumers. The blatant similarities extended to the defendant copying the terms and conditions of Nykaa’s website without any alterations.

Timeline of Events

The domain for Oykaa was registered on October 7, 2021, and its trademark application was filed on a ‘proposed to be used’ basis in 2022. In stark contrast, Nykaa adopted its mark in 2012 and has applied for recognition as a well-known trademark before the Trademark Registry.

Legal Issue

The central question before the court was whether the defendant’s use of the mark ‘Oykaa’ constituted trademark infringement against Nykaa’s established brand.

Court Observation: The Triple Identity Test

The court applied the ‘Triple Identity Test’ to assess the infringement claim. This test evaluates three critical factors:

1. Identical Goods and Services: Whether the products or services offered by both parties are the same.
2. Identical Trade Channels and Customers: Whether the target market and distribution channels overlap.
3. Imitative or Identical Marks: Whether the defendant’s mark closely resembles the plaintiff’s mark.

The court found that all these conditions were met in this case.

Reference to Previous Cases

The court referenced several notable cases to support its decision:

• Ahmed Oomerbhoy v. Gautam Tank: In this case, the use of the term ‘Super Postman’ alongside the registered ‘Postman’ trademark was deemed an infringement as the goods and trade channels were identical. The Triple Identity Test was satisfied, leading to a successful passing-off claim.
• Kalyani Breweries v. Khoday Brewing and Distilleries Industries Ltd.: The Calcutta High Court emphasized that when essential features of a trademark are copied, minor differences in product packaging or getup do not prevent confusion. The court ruled that the second manufacturer cannot use a similar trade name.

Read Meanwhile: Please Follow us for Trademark Registration Services

Judgment

Based on the evidence and legal precedents, the court determined that the defendant was attempting to capitalize on Nykaa’s reputation and goodwill. The court concluded that allowing the defendant to continue using the mark ‘Oykaa’ would cause irreparable harm to Nykaa’s business and mislead consumers.

Consequently, the court granted an ex-parte interim injunction, restraining the defendant from using the name, mark, or logo ‘OYKAA’ or any other mark resembling ‘NYKAA.’ This prohibition extended to all related products, website listings, and e-commerce platforms. The court further ordered the immediate removal of the Oykaa website and product listings.

Conclusion

The Nykaa-Oykaa trademark dispute underscores the significance of the Triple Identity Test in identifying and addressing trademark infringements. The case highlights the importance of protecting a brand’s reputation, goodwill, and customer trust in an increasingly competitive e-commerce landscape.

The ruling also draws parallels with the Dream11 v. Dreamz11 case, where the court found a conscious attempt by the defendant to imitate the logo, mark, and website of Dream11. By adopting the Triple Identity Test, the court confirmed that the second mark aimed to confuse consumers and induce them to use the defendant’s services.

As the e-commerce sector continues to expand, safeguarding digital trademarks becomes crucial. The Nykaa case sets a strong precedent, emphasizing the need for strict measures to protect online brands from deceptive practices and maintain consumer trust.

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In the realm of legal documentation, the terms Memorandum of Understanding (MoU) and Agreement are often used interchangeably, leading to confusion. However, these two documents serve distinct purposes and have different legal implications. This article delves into the key differences between an MoU and an Agreement in India, providing clarity on their definitions, uses, and legal enforceability.

What is an MoU and an Agreement?

A Memorandum of Understanding (MoU) and an Agreement are foundational documents used to outline the terms and conditions of a commercial transaction or partnership. While they may seem similar, they differ significantly in their legal standing and purpose.

Memorandum of Understanding (MoU)

An MoU is a non-binding document that serves as a preliminary understanding between two or more parties. It outlines the mutual intentions and expectations of the parties involved, acting as a precursor to a formal agreement. Often referred to as a “Gentleman’s Agreement,” an MoU is not legally enforceable in a court of law. However, it holds moral and ethical weight, as the parties are expected to adhere to the terms outlined.

In international relations, MoUs fall under the broader category of treaties. They are commonly used to establish a framework for collaboration, such as joint ventures, partnerships, or research initiatives. For instance, two organizations with similar goals might use an MoU to formalize their intent to work together on a project.

Agreement

An Agreement, on the other hand, is a legally binding contract that formalizes the terms and conditions agreed upon by the parties. It includes essential elements such as an offer, acceptance, consideration, and the intention to be legally bound. Once signed, an Agreement can be enforced in a court of law, and parties can take legal action if one party breaches the terms.

Agreements are used in various contexts, including business transactions, employment contracts, and real estate deals. They provide a higher level of security and clarity, ensuring that all parties are legally obligated to fulfill their commitments.

Key Differences Between MoU and Agreement

While both MoUs and Agreements serve as tools for documenting mutual understandings, they differ in several critical aspects:

1. Legal Enforceability:
   • MoU: An MoU is not legally binding, except in cases where it involves monetary consideration. It is more of a statement of intent rather than a enforceable contract.
   • Agreement: An Agreement is legally enforceable, meaning parties can seek legal remedies if the terms are violated.
2. Purpose:
   • MoU: Used to outline mutual intentions and expectations before entering into a formal contract. It is often used in the early stages of negotiations.
   • Agreement: Formalizes the terms of a deal and is used when parties are ready to commit to legally binding obligations.
3. Elements:
   • MoU: Typically includes the intentions, goals, and expectations of the parties but lacks the formal elements of a contract.
   • Agreement: Includes essential elements of a contract, such as offer, acceptance, consideration, and the intention to be legally bound.
4. Collateral Rights:
   • MoU: Does not grant collateral rights to the parties involved.
   • Agreement: Grants collateral rights, allowing parties to enforce the terms legally.
5. Flexibility:
   • MoU: Offers more flexibility, as it is not legally binding and can be modified or terminated by mutual consent.
   • Agreement: Less flexible, as any changes or terminations require formal amendments or legal processes.

Read Meanwhile; What is an Import Export License? A Comprehensive Guide to Global Trade Compliance

Practical Examples

Real Estate Transaction

Imagine you are interested in purchasing a property but need six months to arrange the funds. During this period, you might draft an MoU with the seller, outlining the terms of the potential sale. The MoU could include a small advance payment and a clause allowing the seller to cancel the deal if you fail to make the final payment within the agreed timeframe. However, once the sale is finalized, you would need a formal Agreement to ensure the transaction is legally binding.

Collaborative Projects

Two organizations aiming to collaborate on a research project might use an MoU to outline their shared goals and responsibilities. This document would serve as a foundation for their partnership, but it would not be legally enforceable. Once the project details are finalized, they could draft a formal Agreement to solidify their commitments.

Conclusion

Understanding the difference between an MoU and an Agreement is crucial for anyone involved in legal or commercial transactions. While an MoU is a useful tool for outlining mutual intentions, it lacks the legal enforceability of an Agreement. On the other hand, an Agreement provides a legally binding framework, ensuring that all parties are held accountable for their commitments.

If you are drafting an MoU or Agreement, it is advisable to seek legal assistance to ensure that the document meets your needs and complies with applicable laws. For expert guidance, consider consulting professionals like Nikhil Soni & Co, who can help you navigate the complexities of legal documentation in India.

By clearly distinguishing between these two documents, you can make informed decisions and protect your interests in any transaction or partnership.

Draft Format of Agreement

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When starting a business, choosing the right structure is crucial for long-term success. Among the most common types are partnerships and companies. Both have unique characteristics, benefits, and operational structures that cater to different business goals. Understanding these differences can help entrepreneurs make informed decisions.

What is a Company?

A company is a legal entity distinct from its shareholders or members, formed under specific regulations. It can enter into contracts, own property, sue, and be sued under its registered name. Companies often serve various purposes, such as profit generation, social welfare, or government-related activities.

Definition of a Company

According to Section 2(20) of the Indian Companies Act, 2013, a company is defined as an entity incorporated under this Act or any previous legislation. Companies can either be public or private, depending on their operational scope and ownership structure.

Types of Companies

1. Corporations: Established to manage commercial or industrial ventures.
2. Public Limited Companies (PLC): Allow public investments and are listed on stock exchanges.
3. Private Limited Companies: These have a restricted number of shareholders and are not open to public investment.

Key Characteristics of a Company

1. Separate Legal Entity: A company operates independently of its owners.
2. Limited Liability: Shareholders are responsible only for the capital they have invested.
3. Perpetual Succession: The company continues to exist regardless of changes in ownership.
4. Ownership and Management Separation: Shareholders own the company, while directors handle its management.
5. Transferability of Shares: Shares can be freely transferred unless restricted by company policies.
6. Capital Raising: Companies can raise funds by issuing shares or bonds.
7. Regulatory Compliance: Companies must adhere to legal obligations, such as tax regulations and corporate governance norms.
8. Asset Independence: Company assets are distinct from shareholder assets.
9. Tax Obligations: Companies are taxed separately on their profits.

Read Meanwhile: Selecting the Right Trademark: Why It’s Crucial for Brand Success

What is a Partnership Firm?

A partnership firm is a business arrangement where two or more individuals come together to manage a business and share its profits and losses. The partners may actively manage the business or delegate responsibilities based on mutual agreements.

Definition of Partnership

As per Section 4 of the Indian Partnership Act, 1932, a partnership is defined as an “agreement between two or more persons who have agreed to share the profits of a business carried on by all or any one of them acting for all.” The legal agreement between partners is called a Partnership Deed.

Types of Partnership Firms

1. General Partnership: All partners have unlimited liability and share equal responsibility for debts.
2. Limited Liability Partnership (LLP): General partners bear unlimited liability, while limited partners are responsible only for their contributions.

Key Characteristics of a Partnership Firm

1. Number of Partners: Requires a minimum of two partners, with a maximum of 20.
2. Partnership Agreement: Specifies terms like profit sharing, roles, and responsibilities.
3. Unlimited Liability: Partners are personally liable for business debts.
4. Profit Sharing: Earnings are distributed based on the partnership deed.
5. Management: Typically involves active participation from all partners.
6. Optional Registration: Although not mandatory, registration offers legal advantages.
7. Operational Flexibility: Easy to establish and manage.
8. Capital Contribution: Partners contribute capital as specified in the agreement.
9. Dissolution: Occurs by mutual consent or due to specific events.
10. Taxation: Partners are taxed individually on their share of profits.

Similarities Between Companies and Partnership Firms

Despite their differences, companies and partnership firms share several similarities:

1. Separate Legal Identities: Both operate as distinct entities separate from their owners.
2. Registration Requirements: Both must comply with registration and legal formalities.
3. Capital Raising: Both can secure funds, albeit through different methods.
4. Tax Obligations: Both structures are subject to taxation.
5. Financial Documentation: Maintaining accurate financial records is mandatory.
6. Annual Meetings: Companies conduct AGMs, while partnerships hold regular meetings to discuss business operations.
7. Multiple Owners: Companies have shareholders, while partnership firms have partners.
8. Governance Rules: Companies follow Articles and Memorandums of Association, while partnerships adhere to the Partnership Deed.
9. Dissolution Possibility: Both can be dissolved under certain conditions.
10. Liability: Both can be held accountable for financial obligations, though liability limits differ.

Registrar of Companies; Company Incorporation

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What is a Limited Liability Partnership?

A Limited Liability Partnership (LLP) is a legal business entity that combines the flexibility of a partnership with the limited liability protection of a company. It is formed by a minimum of two partners who agree to the terms stated in an LLP agreement. The personal assets of the partners are protected, as they are only liable to the extent of their investment in the business. This ensures that the partners’ personal wealth is safeguarded in case of business losses or legal issues.

Features of a Limited Liability Partnership

1. Separate Legal Entity: An LLP is a distinct legal entity separate from its partners. It can own property, enter into contracts, and conduct business in its name.
2. Minimum Two Partners: To establish an LLP, a minimum of two partners is required. There is no upper limit on the number of partners.
3. Designated Partners: At least two designated partners are mandatory, with one being a resident of India. These partners are responsible for ensuring compliance with legal and regulatory requirements.
4. Limited Liability: The liability of each partner is limited to the amount they contribute to the LLP, protecting their personal assets from business obligations.
5. Low Formation Cost: Setting up an LLP involves relatively lower costs compared to forming a private limited company.
6. Less Compliance: LLPs are subject to fewer regulatory requirements, making them easier to manage compared to traditional companies.
7. No Minimum Capital Requirement: There is no mandatory minimum capital investment for starting an LLP, offering flexibility in establishing the business.

Benefits of a Limited Liability Partnership

1. Limited Liability Protection: Partners’ personal assets are safeguarded from the business’s debts and liabilities.
2. Flexibility in Management: Partners have the liberty to structure their roles and responsibilities as per the LLP agreement.
3. Tax Benefits: LLPs enjoy pass-through taxation, meaning the profits are taxed only at the partner level, avoiding double taxation.
4. Ease of Formation and Operation: The registration process for an LLP is straightforward, and ongoing compliance requirements are minimal compared to companies.

Disadvantages of a Limited Liability Partnership

1. Compliance Costs: While less stringent than companies, LLPs must adhere to specific compliance requirements like annual filings and record maintenance. Non-compliance can lead to penalties.
2. Limited Access to Capital: LLPs cannot raise funds through equity shares, which makes attracting investors or venture capitalists challenging.
3. Dissolution Risks: An LLP can face dissolution if the number of partners drops below two for six months or due to severe financial difficulties, disrupting business operations.

Read Meanwhile: What is an Import Export License? A Comprehensive Guide to Global Trade Compliance

LLP vs. Limited Partnership

• Liability: In a limited partnership, at least one partner has unlimited personal liability, whereas all partners in an LLP enjoy limited liability protection.
• Management: LLPs allow all partners to participate in the management, while limited partnerships often restrict the involvement of certain partners.

Difference between LLP and partnership

Structure of an LLP

An LLP is a distinct entity registered under the Companies Act. It requires at least two members, who can be individuals or companies. There is no cap on the maximum number of partners. The structure allows flexibility, as an LLP can even include one individual and a dormant company. Partners must provide a registered business address and maintain a member register.

The difference between a Limited Liability Partnership and a company

LLP Registration Process

To register an LLP, follow these steps:

1. Obtain Digital Signature Certificate (DSC): Partners need a DSC from a government-authorized agency to sign documents electronically.
2. Apply for Designated Partner Identification Number (DPIN): File Form DIR-3 along with Aadhaar and PAN documents to obtain DPIN.
3. Reserve a Name: Use Form RUN-LLP to propose a unique name for the LLP. Ensure it does not resemble existing entities.
4. Incorporate the LLP: Submit Form FiLLiP to the Registrar of Companies, providing required details and paying applicable fees.
5. File LLP Agreement: Within 30 days of incorporation, file Form 3 to submit the LLP agreement, detailing the rights and duties of partners.

Example of an LLP

A common example of an LLP is a law firm. In such a structure, lawyers operate as partners, sharing profits and liabilities. However, their personal assets remain protected from the firm’s debts, providing financial security while encouraging collaborative decision-making.

Conclusion

A Limited Liability Partnership (LLP) offers a unique combination of flexibility, limited liability protection, and ease of management, making it a preferred choice for startups, SMEs, and professional service providers. Understanding its features, benefits, and registration process is essential for entrepreneurs looking for a business structure that balances personal asset protection with operational convenience. By adopting the LLP model, businesses can focus on growth and innovation without the fear of personal financial loss.

Read Further; Limited Liability Partnership FAQ

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An import/export license is a government-issued document that authorizes businesses to legally engage in the import and export of goods and services across international borders. This license ensures compliance with both national and international trade regulations, fostering fair trade practices and securing the integrity of global commerce. It plays a vital role in monitoring the movement of goods, ensuring all products meet safety and quality standards. For businesses aiming to operate in the global marketplace, obtaining this license is an essential step toward achieving legitimacy and operational efficiency.

Benefits of Import Export Code (IEC) Registration

Import Export Code (IEC) registration offers significant advantages for businesses involved in international trade. The IEC, issued by the Directorate General of Foreign Trade (DGFT), is a unique identifier necessary for conducting import and export operations. Here’s why IEC registration is crucial:

1. Mandatory Requirement: It is legally required to carry out import/export transactions.
2. Global Market Access: Enables businesses to establish a foothold in international markets.
3. Business Expansion: Facilitates growth and diversification by opening up global opportunities.
4. Government Incentives: Grants access to schemes, subsidies, and tax benefits provided by the government.
5. Streamlined Compliance: Simplifies regulatory and documentation processes for smoother trade activities.

Read Meanwhile: How to Register a Trademark for a One Person Company (OPC) in India

Import vs. Export Licenses in India

Import and export licenses serve distinct purposes in regulating international trade in India. Understanding their differences helps businesses ensure compliance and avoid operational hurdles.

Import License

• Requirement: Mandatory for bringing goods into India.
• Purpose: Controls the entry of restricted or sensitive goods.
• Issuing Authorities: Various government departments issue these licenses depending on the product type.

Export License

• Requirement: Essential for exporting goods from India.
• Purpose: Monitors the export of restricted or sensitive items.
• Issuing Authorities: Specific governmental agencies regulate the process based on the product category.

Steps to Apply for an Import License

Acquiring an import license involves meticulous preparation to meet all trade regulations. Follow these steps to apply:

Step 1: Verify License Requirement

Determine if your goods fall under the restricted or prohibited categories. This involves:

• Checking product classifications and regulatory lists.
• Reviewing DGFT notifications about restricted goods.
• Ensuring compliance with trade regulations.

Step 2: Identify the Issuing Agency

Different agencies issue licenses based on the nature of goods. To ensure smooth processing:

• Research the appropriate governmental body.
• Contact relevant authorities like DGFT for clarity.
• Adhere to the specific guidelines provided by the agency.

Step 3: Submit the Application

After gathering the required details:

• Prepare necessary documents, including identity proofs, address verification, and product details.
• Apply through the designated online or offline portal.
• Pay the prescribed application fee.

Steps to Apply for an Export License

Applying for an export license involves a similar process, ensuring compliance with all trade requirements.

Step 1: Determine License Necessity

Identify if your goods require an export license by:

• Reviewing product classifications and regulatory controls.
• Consulting DGFT notifications about controlled goods.
• Ensuring adherence to trade laws.

Step 2: Check Additional Licensing Needs

Some goods may require extra licenses. Ensure:

• Compliance with environmental, safety, or health regulations.
• All documentation and additional permits are in place.

Step 3: Application Submission

Prepare your application by:

• Collecting documents such as PAN card, business address proof, and product specifications.
• Submitting through the agency’s portal or physical office.
• Paying the necessary fees.

Documents Required for Import/Export Licenses

To obtain an import/export license, businesses must provide documentation that verifies their credibility and compliance. Commonly required documents include:

• PAN Card: Identifies the business.
• Identity Proof: Government-issued ID of the applicant.
• Address Proof: Verification through utility bills or agreements.
• Bank Certificate: Validates financial credibility.
• Product Details: Includes specifications and safety data sheets.

Importance of an Import/Export License

The import/export license is a critical requirement for businesses engaging in international trade. Key benefits include:

• Legal Compliance: Adherence to trade laws and regulations.
• Global Market Access: Enables businesses to expand their reach internationally.
• Government Support: Provides access to schemes, subsidies, and tax incentives.
• Credibility: Enhances trustworthiness and business reputation in the global market.

Cost of Obtaining an Import/Export License

The cost of obtaining a license varies based on the type of goods and issuing authority. Typical expenses include:

• Application Fees: Charges for filing the license request.
• Processing Charges: Fees for license processing.
• Regulatory Costs: Expenses for meeting compliance standards.
• Renewal Fees: Periodic charges to maintain license validity.
• Documentation Costs: Costs associated with preparing and submitting necessary paperwork.

IEC vs. Import/Export License

Understanding the difference between IEC and import/export licenses is essential for businesses.

• IEC: A unique identifier required for all import/export activities.
• Import/Export License: Specific approvals needed for trading restricted or sensitive goods.

Both are essential but serve different purposes in trade compliance.

By securing the appropriate licenses and complying with trade regulations, businesses can streamline their operations, enhance credibility, and tap into the immense potential of global markets.

Difference between Import and export code vs import-export license

Conclusion

An import/export license is a cornerstone of international trade, ensuring compliance with global and national regulations. It not only facilitates smooth and lawful transactions but also opens the door to numerous opportunities for businesses to expand their market presence globally. Whether it’s gaining access to government incentives, building trust with international partners, or ensuring the safety and quality of traded goods, an import/export license is indispensable.

By understanding the procedures, requirements, and benefits of obtaining these licenses, businesses can navigate the complexities of international trade more effectively. Proper licensing enhances credibility, fosters business growth, and safeguards against legal and operational challenges. With the right approach, businesses can leverage their import/export licenses as a tool to thrive in the global market, contributing to a more interconnected and dynamic economy.

For aspiring exporters and importers, staying informed about trade regulations and maintaining compliance is not just a necessity—it’s a pathway to long-term success and sustainability in the competitive world of international commerce.

Government Website

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What is a Trademark?

A trademark is a unique sign or mark used to identify the source or origin of a product or service. It serves as a tool for consumers to make informed purchasing decisions by recognizing specific qualities associated with the product. For manufacturers, trademarks incentivize investment in quality and brand reputation, acting as a commercial tool for maximizing economic efficiency.

According to Section 2(1)(m) of the Trademarks Act, 1999, a “mark” encompasses a wide range of identifiers, including devices, brands, headings, labels, tickets, names, signatures, words, letters, numerals, shapes of goods, packaging, or a combination of colors. Additionally, Section 2(1)(zb) defines a “trademark” as a mark capable of graphical representation and possessing distinguishing characteristics that set the applicant’s goods or services apart from others. For a mark to qualify as a trademark under the Act, it must first meet the criteria of a “mark” and then satisfy the requirements of being distinctive.

Importance of Trademark Registration

The process of trademark registration provides legal recognition and protection to a brand. It begins with filing an application before the Trademark Registry. The Registrar examines the application and, within 30 days, issues a report, either rejecting or conditionally approving the application based on Sections 9 and 11 of the Act.

Once registered, trademarks grant exclusive rights to the proprietor under Section 28 of the Act. Key benefits include:

1. Exclusive Rights: The owner has exclusive rights to use the trademark for the goods or services it represents.
2. Legal Remedies: In case of infringement, the proprietor can file a lawsuit to protect their rights.
3. Brand Recognition: Registration enhances brand value, fostering consumer trust and loyalty.

Grounds for Refusal of Trademark Registration

While trademarks are essential for distinguishing a manufacturer’s goods or services, not all marks qualify for registration. The Trademarks Act outlines absolute and relative grounds for refusal. Absolute grounds, as specified in Section 9, address issues inherent to the mark itself, while relative grounds, covered under Section 11, focus on potential conflicts with existing registered trademarks.

Absolute Grounds for Refusal

The absolute grounds for refusal aim to uphold public policy, safeguard the interests of consumers, and protect the goodwill of manufacturers. Section 9 prohibits registration in the following cases:

1. Lack of Distinctive Character: Marks that fail to distinguish the applicant’s goods or services from others are not eligible for registration.
2. Descriptive Marks: Marks that solely describe the quality, quantity, intended purpose, value, or geographical origin of goods or services cannot be registered.
3. Customary Marks: Marks that have become generic or customary in the trade or language are excluded.
4. Deceptive Marks: Marks likely to deceive or confuse the public, or those that are scandalous or contrary to law, are barred from registration.

Relative Grounds for Refusal

Under Section 11, trademarks that are identical or similar to existing registered marks may be refused registration if they are likely to cause confusion among consumers. This ensures the protection of established trademarks and prevents unfair competition.

The Global Perspective: India’s Innovation Index Ranking

India’s standing in the global trademark landscape reflects its innovation potential. As per the 2023 Global Innovation Index, India ranked 40th overall and 54th in the category of trademarks by origin. Among the top three innovation economies in Central and Southern Asia, India secured the first position, followed by Iran and Kazakhstan. In the lower middle-income group, India again ranked first, highlighting its competitive edge in innovation and intellectual property development. However, these rankings underscore the need for continued improvements in trademark awareness and registration practices.

Consequences of Non-Registration

Failure to register a trademark can have significant repercussions, including:

1. Lack of Legal Protection: Unregistered trademarks lack legal recognition, leaving the proprietor vulnerable to infringement.
2. Loss of Exclusivity: Without registration, the trademark owner cannot prevent others from using identical or similar marks.
3. Reputational Damage: Unauthorized use of an unregistered trademark can harm the brand’s reputation and dilute its value.

Section 9(1) of the Trademarks Act, 1999

Section 9(1)(a): Lack of Distinctiveness

Clause (a) of Section 9(1) of the Trademarks Act, 1999, outlines the grounds for refusal of trademark registration due to a lack of distinctive character. The term “devoid of any distinctive character” signifies that the trademark cannot effectively differentiate the goods or services of the applicant from those of others. A trademark’s distinctiveness is essential for identifying the origin of goods or services.

Although the Act does not directly define “distinctiveness,” courts have consistently interpreted it to mean that a trademark must enable the public to clearly and immediately associate the mark with the specific manufacturer or service provider.

Relevant Case Laws

Muneer Ahmad vs. Registrar of Trade Marks (2023)

In this case, the applicant sought to register the word ‘Bharat,’ styled alongside a slanted paintbrush figure, for products such as paintbrushes and roller brushes. The Registrar refused registration, citing the trademark’s highly descriptive nature, which indicated the quality and purpose of the goods.

Trademarks lacking distinctiveness can fall into two categories:

1. Inherently Lacking Distinctiveness: These marks cannot differentiate between the goods or services of one entity and another due to their generic or descriptive nature.
2. Common Usage: Trademarks commonly used for specific goods or services fail to act as identifiers of the product’s source. Such marks are frequently rejected unless substantial evidence supports their distinctiveness.

The court emphasized the need to assess the trademark as a whole under Section 9. Ultimately, it concluded that while the word ‘Bharat’ might lack distinctiveness, the overall device mark was distinctive and registrable.

Geep Flashlight Industries Ltd. vs. Registrar of Trade Marks (1972)

This case involved the proposed registration of the trademark ‘Janta’ for electric torches. The Registrar rejected the application, asserting that the mark was not distinctive. The applicant attempted to prove distinctiveness through extensive sales data and advertisements. However, the term ‘Janta’ was deemed descriptive, suggesting affordability and mass-market appeal, which made it unsuitable for exclusive use.

The court held that:

• A low price alone does not ensure product popularity; factors like utility and quality also influence consumer decisions.
• Despite the applicant’s evidence of market reputation, the term ‘Janta’ remained non-distinctive and could not serve as a unique identifier.
• Words commonly used in everyday language, such as ‘Janta,’ should remain accessible for general descriptive or trading purposes. Granting a monopoly over such terms would be unjust.

The court ultimately upheld the Registrar’s decision, stating that ‘Janta’ could not be registered as it lacked the capacity to distinguish the applicant’s goods from others.

Section 9(1)(b): Descriptive Marks and Trademark Registration

Section 9(1)(b) of the Trademarks Act imposes restrictions on registering marks that are purely descriptive in nature. The primary rationale is to prevent the monopolization of common terms that describe the qualities or characteristics of goods and services. However, if a descriptive mark has, over time, acquired a secondary meaning uniquely associated with a specific product or brand, it may become eligible for registration.

Characteristics That Bar Trademark Registration

The subsection outlines specific characteristics of trademarks that may lead to refusal of registration:

1. Kind: Marks that denote the type or category of a product cannot be registered. For instance, the term “SUV” for a car cannot be trademarked.
2. Quality: Words indicating the standard of a product, such as “Best” or “No.1,” are not registrable.
3. Quantity: Terms indicating weight, volume, or number, like “500g” or “dozen,” cannot be trademarked.
4. Intended Purpose: Descriptions of the product’s use, such as “floor cleaner” or “shampoo,” are non-registrable.
5. Values: Terms like “Celsius” or “degree” are generally not registrable unless used in a creative or arbitrary manner. For example, the brand “62 Degrees East” creatively incorporates a numerical value, making it distinctive.
6. Geographical Origin: Names of countries, cities, or regions indicating the source of the product—e.g., “Shimla Apple”—cannot be registered.
7. Time of Production or Service: Terms like “24×7” referring to service availability are not registrable.
8. Other Characteristics: Generic terms associated with specific goods or services, such as “teeth” for dental products or “football” for sports gear, are not eligible for trademark registration.

Relevant Case Laws on Descriptive and Geographical Marks

Foreign Cases

1. Liverpool Electric Cable Co Ltd (1929)
   • The court denied trademark registration for “Liverpool,” stating that it was the name of a significant commercial center. Even if a geographical term acquires distinctiveness for specific goods, it may still face refusal.
2. Sir Titus Salt, Bart., Sons and Co.’s Application XI (1894)
   • The term “Eboline,” derived from “Eboli” (a town), was refused registration. The court emphasized that adding a suffix like “ne” does not transform a geographical name into an invented term.

Indian Cases

1. Muneer Ahmad vs. Registrar of Trade Marks (2023)
   • The trademark examiner initially refused to register “Bharat” with a paintbrush design, citing its descriptive nature. The Delhi High Court ruled that the mark, viewed as a whole, was distinctive and allowed registration.
2. Hi-Tech Pipes Ltd. vs. Asian Mills Pvt. Ltd. (2006)
   • The plaintiff used “Gujarat” for steel pipes, and the court held that despite being a geographical term, the company could protect it if distinctiveness and the likelihood of confusion were established.
3. Imperial Tobacco Co. of India Ltd. vs. The Registrar of Trademarks (1986)
   • The term “Simla” was refused registration for cigarettes as it indicated geographical origin. The court highlighted that trademarks using significant geographical terms must prove long-standing and distinctive use to qualify for registration.

Exceptions and Distinctiveness

Geographical terms generally lack inherent distinctiveness. However, exceptions may apply in cases where:

• The geographical term is creatively used without indicating the source or origin of goods.
• The term refers to a small or insignificant place with no commercial significance.
• Substantial evidence of long-term, exclusive use establishes the term’s distinctiveness for specific goods or services.

For major industrial cities or commercially significant locations, registration remains challenging unless overwhelming evidence of acquired distinctiveness is provided.

Read Meanwhile: Understanding Collective Trademarks: A Comprehensive Guide

Bar on Registration of Descriptive Trademarks: Legal Precedents and Implications

Trademark laws aim to distinguish brands while preventing unfair monopolies over commonly used terms. Section 9(1) of the Indian Trade Marks Act prohibits registering marks that are descriptive of the quality or character of goods. Below, we examine notable cases addressing this principle.

M/s Hindustan Development Corporation Ltd. vs. The Deputy Registrar of Trade Marks (1955)

In this case, the Calcutta High Court debated the registrability of the term “Rasoi” as a trademark for hydrogenated oils. The court emphasized evaluating the public’s perspective rather than the term’s literal meaning. Since “Rasoi” directly relates to cooking and hydrogenated oils are primarily used for this purpose, the court deemed it descriptive of the product’s character. Consequently, the registration was denied.

Marico Limited vs. Agro Tech Foods Limited (2010)

Marico registered “LOSORB” and “LO-SORB” for edible oils and related products. Agro Tech used the term “low absorb technology” on its “Sundrop” sunflower oil packaging, indicating reduced oil absorption during frying. The Delhi High Court ruled that “low absorb” is a descriptive phrase, barring exclusive ownership under Section 9(1). However, distinctiveness through usage could allow registration, though it would not prevent competitors from descriptive use.

Cadila Healthcare Ltd. vs. Gujarat Co-operative Milk Marketing Federation Ltd. & Ors (2009)

This case revolved around the trademark “sugar free.” The court observed that “sugar free” merely describes the product’s characteristic. Without acquired distinctiveness beyond the artificial sweetener category, Cadila could not claim exclusivity. Section 30(2) clarifies that descriptive use of registered trademarks does not constitute infringement. The court concluded that generic descriptive terms cannot receive absolute protection unless distinctiveness is proven.

Info Edge (India) Pvt. Ltd. and Anr. vs. Shailesh Gupta and Anr. (2002)

The Delhi High Court examined “naukri.com” and “naukari.com.” The court recognized that descriptive terms, even if generic, could acquire distinctiveness through extensive use, resulting in goodwill. Misusing such terms to mislead consumers was deemed dishonest, and an injunction was granted to protect Info Edge’s interests.

Online India Capital Co. Pvt. Ltd. vs. Dimensions Corporate (2000)

The Delhi High Court denied protection to the domain name “mutualfundsindia.com,” deeming it a generic descriptor for financial services. The absence of evidence for acquired secondary meaning was critical to this decision, reaffirming the requirement for distinctiveness in descriptive marks.

Bharathiya Coffee Workers Catering vs. Indian Coffee Workers Co-Operative (1998)

This dispute involved the use of “Indian Coffee House.” The Kerala High Court noted that the name was generic and commonly used by former employees of the Indian Coffee Board. While goodwill existed, it did not grant exclusive rights. The court ruled that others could use the term without infringing.

Christian Louboutin SAS vs. Abubaker & Ors (2018)

Christian Louboutin sought exclusivity over its “red sole” design. The Delhi High Court clarified that single colors do not qualify as trademarks under the Trade Marks Act. While distinctive use of a color could support a trademark claim, it cannot prevent others from employing the same feature descriptively or decoratively. The court emphasized that trademarks must signify origin, not simply enhance product appeal.

Section 9(1)(c): Refusal of Registration for Customary Terms

Section 9(1)(c) of the Indian Trade Marks Act, 1999, serves as a ground for refusing trademark registration. It applies to marks that:

1. Have become customary in the current language, or
2. Are commonly used in bona fide trade practices.

Customary Terms and Their Implications

When evaluating a trademark, the public’s perception of the mark in relation to the goods or services it represents is critical. A trademark should not monopolize symbols or terms associated with universal ideas or common usage. For instance:

• A red cross universally signifies medical services or hospitals.
• Traffic signs have pre-established meanings.

Such symbols cannot be registered as trademarks, as they are neither distinctive nor capable of distinguishing one brand from another. A trademark’s core purpose is to differentiate goods or services of one entity from others. Allowing registration of customary terms would undermine this principle.

Section 9(1) Proviso: Acquired Distinctiveness as an Exception

Despite the restrictions under Section 9(1), the proviso allows a trademark to be registered if:

1. It has acquired a distinctive character through extensive usage before the application date, or
2. It is recognized as a well-known trademark.

Role of Acquired Distinctiveness

The primary function of a trademark is to identify the source of goods or services. Over time, extensive and exclusive use can embed the trademark into the minds of consumers, associating it with a specific brand. This acquired distinctiveness provides an exception to the prohibition on registering descriptive or customary marks.

When assessing whether a trademark has acquired distinctiveness, courts consider factors such as:

• Market share of the goods bearing the mark.
• Duration and geographical extent of the mark’s usage.
• Investment in advertising and promotions.
• Consumer recognition of the mark as indicative of a specific source.
• Reputation of the goods in trade circles.

If evidence confirms that the public identifies the trademark with a specific source, it satisfies the condition for registration under the proviso.

Judicial Precedents on Acquired Distinctiveness

1. Kaviraj Pandit Durga Dutt Sharma vs. Navaratna Pharmaceutical Laboratories (1965)
   The Supreme Court held that trademarks in continuous use, even with minor changes, could qualify for registration if they retain their identity and acquired distinctiveness.
2. Marico Limited vs. Agro Tech Foods Limited (2010)
   The court clarified that a descriptive trademark could achieve distinctiveness if exclusively used over a prolonged period without interruption or competition.
3. Mrs. Ishi Khosla vs. Anil Aggarwal (2007)
   The Delhi High Court ruled that a new or innovative product associated with an appealing trademark could gain popularity and distinctiveness quickly. The court emphasized that no fixed time frame is required for a trademark to acquire distinctiveness.

Challenges in Proving Acquired Distinctiveness

Acquiring distinctiveness is a complex process. While the duration of use is an essential factor, it is not decisive. For example:

• Some trademarks may gain distinctiveness within a short span due to unique appeal.
• Others might fail to achieve it even after years of use.

The burden of proof lies on the applicant to demonstrate that their mark is recognized by the public as indicative of their goods or services. Furthermore, distinctiveness must be proven for all products bearing the mark, not just one.

Trademark Registered in Breach of Section 9(1): Key Insights

Section 32 of the Trade Marks Act, 1999, addresses situations where a trademark has been registered in violation of Section 9(1). According to this provision, a trademark that breaches Section 9(1) will be considered invalid unless it acquires a distinctive character for the goods or services it represents after registration. Before any legal challenge to its validity, the trademark owner can present evidence proving the mark’s acquired distinctiveness.

This provision safeguards trademarks that lacked distinctiveness at the time of registration but gained distinctiveness later, thereby aligning with the fundamental purpose of trademarks—distinguishing goods or services of one entity from another.

When to Assess Acquired Distinctiveness?

A critical question arises when registering inherently descriptive trademarks under the proviso to Section 9(1): at what point should acquired distinctiveness be evaluated?

Provisions Governing Acquired Distinctiveness

1. Section 9(1) Proviso
   A trademark barred by Section 9(1) can still be registered if it acquires a distinctive character or achieves the status of a well-known trademark before the application date.
2. Sections 31(2) and 32
   Under these sections, evidence of acquired distinctiveness must generally be submitted as of the application filing date. However, Section 31 allows this period to extend until the actual date of registration.
3. Section 57
   In cases where a third party challenges a trademark’s validity, the owner may submit evidence of acquired distinctiveness even after registration. However, this provision applies only to cancellation proceedings, not civil suits for trademark infringement.

Impact of Registering Descriptive Trademarks with Acquired Distinctiveness

While descriptive trademarks may achieve registration due to acquired distinctiveness, their registration does not grant the proprietor absolute exclusivity.

Supreme Court Clarifications

The Supreme Court of India has consistently ruled that descriptive trademarks cannot be monopolized, even after registration. For instance:

• If a registered trademark is descriptive of the goods’ characteristics, the proprietor cannot prevent others from using the mark descriptively.
• This ensures that manufacturers or sellers can use descriptive terms as features of their products, provided they do not use the term as a trademark.

Example

The term “24/7,” when registered as a trademark, cannot restrict others from using it descriptively to indicate around-the-clock service.

Features and Functional Aspects of Goods

Descriptive trademarks often reflect the functional or appealing characteristics of goods. Such traits may include:

• Product functionality.
• Descriptions related to product quality or use.
• Generic terms that are essential for consumer understanding.

When a descriptive term is registered as a trademark, Section 30 of the Trade Marks Act prevents the proprietor from barring others from using the term descriptively. This approach encourages fair competition and discourages monopolizing descriptive or generic terms.

Objective of Section 32(1)

Section 32(1) ensures that descriptive trademarks remain available for public use. By requiring acquired distinctiveness for registration, the provision discourages the adoption of trademarks based solely on generic or descriptive terms. This protects the rights of other manufacturers and promotes equitable access to descriptive language in trade.

Section 9(2) of the Trademarks Act, 1999: An In-Depth Guide

Section 9(2) of the Trademarks Act, 1999, imposes absolute restrictions on the registration of certain trademarks based on their potential to deceive, offend, or violate public decency. These provisions ensure that trademarks adhere to societal values and do not harm public interests.

Section 9(2)(a): Trademarks That Are Deceptive or Confusing

This clause prohibits the registration of trademarks that may mislead or confuse the public. Such trademarks fail to serve their primary purpose of distinguishing goods or services and identifying their origin. Examples include:

• A trademark with the phrase “ANIMAL FREE” for products containing meat.
• Marks closely resembling well-known brands with minor differences.

Relevant Case Law

Sunder Parmanand Lalwani vs. Caltex (India) Ltd (1969)

• The dispute revolved around the trademark “Caltex,” applied for by the appellants in 1958 for watches and components.
• The respondents opposed the registration, arguing that they had used the “Caltex” mark for industrial oils and fuels in India since 1937.
• The Bombay High Court held that while the goods were different, the respondents’ mark had widespread recognition, and the similarity could confuse the general public. The court rejected the appellants’ application, noting that the respondents’ established reputation might lead consumers to assume the same origin for the goods.

Section 9(2)(b): Trademarks That Hurt Religious Sentiments

Trademarks that contain words or symbols offensive to religious sentiments of any group in India cannot be registered.

Relevant Case Law

Controller General of Patents vs. Additional (2013)

• The case involved a trademark featuring the Attukul deity and the phrase “Sabarimala of women.”
• Opponents argued that using religious symbols for commercial purposes violated religious sentiments and constitutional rights under Articles 25 and 26.
• The Kerala High Court ruled that while religious imagery is commonly used in trademarks, its application must not offend public sensibilities. Using such symbols for inappropriate goods (e.g., footwear or tobacco) would be deemed offensive. However, in this case, the trademark was allowed since it was not inherently offensive or exploitative.

Section 9(2)(c): Trademarks That Are Scandalous or Obscene

Trademarks containing scandalous or obscene content are barred from registration. Determining what qualifies as scandalous or obscene depends on societal standards.

Relevant Case Law

1. Ranjit D. Udheshi vs. State of Maharashtra (1964)
   • The Supreme Court applied the Hicklin Test to define obscenity as any material that corrupts minds exposed to immoral influences, regardless of artistic merit.
2. Aveer Sarkar vs. State of West Bengal (2014)
   • Introduced the “community standard test,” which evaluates the overall societal impact of material deemed obscene.
3. Myntra Logo Controversy
   • Myntra was compelled to redesign its logo after allegations that it resembled an offensive image of a woman. The case highlights how public perception and societal standards influence trademark validity.

Section 9(2)(d): Trademarks Prohibited by Law

This clause restricts trademarks containing emblems, names, or symbols prohibited under the Emblems and Names (Prevention of Improper Use) Act, 1950. Examples of prohibited symbols include:

• National flag of India.
• Official emblems of the United Nations (UN) or World Health Organization (WHO).
• Names or seals of prominent individuals like Shri Lal Bahadur Shastri.
• Logos of international organizations like FIFA.

Under Section 4(1)(b) of the Act, trademarks featuring such elements are deemed invalid, ensuring that such symbols remain protected and free from commercial misuse.

Section 9(3) of the Trademarks Act, 1999: Shape-Based Trademarks

Section 9(3) of the Trademarks Act, 1999, specifically addresses trademarks that consist of shapes. According to Section 2(zb) of the Act, trademarks may include shapes that distinguish goods or services from one another. A shape mark refers to a three-dimensional representation that serves as a unique identifier for a particular product or brand.

This section ensures that shape-based trademarks adhere to distinctiveness and are not merely functional or technical elements. It also aligns with the concept of trade dress, encompassing packaging, color schemes, and unique product designs.

Section 9(3)(a): Shapes Arising From the Nature of Goods

Trademarks cannot be registered if the shape of the product is derived solely from the nature of the goods themselves. For example:

• A standard chocolate bar or an ice cream sandwich.
• Common shapes like mugs, glasses, or vases that inherently relate to their functionality.

Section 9(3)(b): Shapes Necessary to Achieve a Technical Result

Trademarks that consist of shapes essential to achieve a technical function are also ineligible for registration. Examples include:

• The shape of a straw designed for optimal fluid intake.
• The tread design on car tires necessary for grip and stability.

Relevant Case Law

Delta Sport Handelskontor vs. EUIPO – Lego (2024)

• Background: The Danish company Lego owned a trademark for its interlocking brick design. A German competitor, Delta Sport, challenged the validity of this trademark, arguing that the design was purely functional.
• Ruling: The European Court of Justice held that the design’s smooth upper surface was a distinctive feature unrelated to its functionality. This ruling confirmed that the interlocking brick design could be trademarked, as it had aesthetic and distinctive attributes beyond its technical purpose.

Section 9(3)(c): Shapes Providing Substantial Value to Goods

Trademarks consisting of shapes that add significant value to goods, making them more appealing or functional, are restricted. The test for substantial value involves assessing whether the shape compels customers to choose the product over alternatives.

Examples:

• Functional shapes like straws, cups, or tires that improve usability.

Relevant Case Law

1. Apollo Tyres Ltd. vs. Pioneer Trading Corporation (2017)
   • The case centered on tread patterns in tires. While the treads serve functional purposes, the tread pattern itself was deemed unique and eligible for trademark registration, as it distinguished the manufacturer’s products.
2. Whirlpool of India Ltd vs. Videocon Industries Ltd (2014)
   • The plaintiff sought protection for the unique design of their semi-automatic washing machine, arguing that its shape and configuration were purely aesthetic. The Bombay High Court upheld the claim, confirming that the shape served as a distinguishing feature and had no functional purpose.
3. Koninklijke Philips Electronics Ltd. vs. Remington Consumers Products Ltd (2000)
   • The European Court of Justice ruled against registering the shape of a rotary electric trimmer, stating that its essential features were inherently linked to achieving a technical result.

Shape Marks and Consumer Confusion

Unique shapes can act as identifiers for brands, provided they are not functional or technical. Courts have frequently protected shape-based trademarks to prevent consumer confusion.

Key Cases

1. Zippo Manufacturing Company vs. Anil Moolchandani (2011)
   • The Delhi High Court protected the unique shape of Zippo lighters, noting that replication of the shape could mislead consumers into believing the counterfeit product was authentic.
2. Gorbatschow Wodka KG vs. John Distilleries Limited (2011)
   • The Bombay High Court recognized the distinctive shape of the vodka bottles as a trademark. The court observed that the shape was imaginative and not functional, thereby granting protection to the plaintiff’s design against imitation.

Conclusion

Throughout history, people have prioritized the protection of their possessions. In today’s world, the concept of ownership has expanded to include intellectual property, safeguarding the creativity and innovations of individuals from replication and misuse. Among these, trademarks play a crucial role in protecting a brand’s identity and ensuring exclusivity. However, the right to register and exclusively use a trademark is subject to certain restrictions, guided by public policy and legal frameworks.

The primary purpose of a trademark is to help consumers identify the origin or source of a product or service. If a trademark fails to meet this purpose, its registration may be denied. Section 9 of the Trade Marks Act, 1999, outlines several absolute grounds for refusal. These include:

• Lack of distinctiveness.
• Descriptive or generic terms.
• Potential to deceive or confuse consumers.
• Obscene or scandalous content.

Despite these restrictions, trademarks that initially lack distinctiveness may still qualify for registration if they acquire distinctiveness over time through consistent use and consumer recognition.

The Trade Marks Act, 1999, strikes a careful balance between protecting the rights of trademark applicants and safeguarding public interests. By ensuring that trademarks fulfill their purpose of distinguishing products and maintaining ethical standards, the Act upholds fairness for businesses and consumers alike.

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The Bombay High Court has delivered a landmark judgment restraining Shyam Dhani Industries Pvt. Ltd. from using the trademark ‘Tikhalal’, belonging to the renowned spice brand Everest. Alongside granting relief to the plaintiff, Everest Food Products Private Limited, the Court imposed a penalty of ₹2 lakh on Shyam Dhani Industries for filing a false claim of trademark usage since 2006. The judgment came after the plaintiff sought an injunction against the defendants for infringing on their registered trademark and engaging in deceptive practices.

Key Observations by the Court

Justice R.I. Chagla, presiding over the case, highlighted the lack of justification from the defendants for adopting the impugned trademark. The Court observed that the defendants’ usage of the ‘Tikhalal’ trademark created the potential for confusion among consumers and could harm Everest’s established reputation.

In the ruling, Justice Chagla remarked:
“The defendants’ use of the impugned trademark would dilute the distinctiveness of the plaintiff’s trademark and lead to irreparable injury to the plaintiff’s goodwill and reputation, which cannot be compensated monetarily.”

Everest’s Proprietary Rights

The Court acknowledged that Everest has been the registered proprietor of the ‘Tikhalal’ trademark since 2002. Over the years, the company has used the mark extensively for its chili powder products, earning significant goodwill and statutory rights. The ruling favored Everest due to its consistent and transparent use of the trademark.

The Court underscored that Everest’s rights were not only statutory but also rooted in common law principles. These rights enabled them to seek legal protection against unauthorized usage of their trademarks.

Background of the Dispute

Everest Food Products traces its origins back to 1961 when its predecessor, M/s. Vadilal Champaklal & Co., began manufacturing and selling spices under the ‘Everest’ brand. In 1989, the company licensed its trademark to M/s. S. Narendrakumar & Co., which later became Everest Food Products Private Limited. By 2002, Everest had registered the unique wordmark ‘Tikhalal’ specifically for chili powder products, enhancing the brand’s portfolio and reputation.

The conflict began in 2019 when Everest discovered a product labeled ‘Shyam Tikha Lal’, distributed by Shyam Dhani Industries. Despite legal notices, the defendant failed to respond, prompting Everest to file a suit and interim application.

Read Further: Benefits of Trademark Registration in India

Legal Findings and Implications

The Court found substantial evidence of trademark infringement under Section 29(2)(c) and Section 29(3) of the Trade Marks Act, 1999. The defendants’ trademark ‘Shyam Tikha Lal’ was deemed visually and phonetically similar to Everest’s ‘Tikhalal’, leading to a likelihood of consumer confusion.

The Court rejected the defendant’s claims of prior use and territorial jurisdiction, noting discrepancies in their affidavits and fabricated sales invoices. Justice Chagla stated:
“The plaintiff has established overwhelming goodwill and reputation for the ‘Tikhalal’ trademark since its registration in 2002, making this a clear case for granting an injunction.”

The Court also emphasized that the defendants’ trademark registration could not serve as a defense against the plaintiff’s claims of passing off.

Directions and Penalty

The Court directed Shyam Dhani Industries to cease using the ‘Tikhalal’ trademark immediately. Additionally, the defendants were ordered to pay ₹2 lakh to Everest Food Products within four weeks for filing a false claim of usage since 2006. The penalty reflects the Court’s stance against fraudulent practices and aims to deter similar violations in the future.

Conclusion

This judgment reinforces the importance of protecting intellectual property rights and maintaining the integrity of registered trademarks. It underscores the judiciary’s commitment to upholding the rights of businesses that invest time and resources in building their brand identity.

Everest Food Products has emerged victorious in preserving the exclusivity of its ‘Tikhalal’ trademark, securing its position as a trusted name in the Indian spice market. The ruling sends a strong message to entities attempting to infringe upon established trademarks, ensuring fair competition and consumer trust in the marketplace.

Read from Outsource: Trademark Protection: Everything You Need to Know

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