Court’s Decision
The Delhi High Court dismissed an application under Section 124(1)(b)(ii) of the Trade Marks Act, 1999, filed by Defendant No. 1 seeking stay of proceedings and permission to file rectification against the registered trademark “STEELCASE”. The Court held that:
“There is/are no ‘prima facie tenable’ and/or ‘plea regarding invalidity’ made out by the defendant no.1.”
The Court found the defendant’s assertions to be bald and without sufficient basis to warrant invoking the rectification mechanism. Consequently, the Court refused to stay the trial and listed the matter for framing of issues.
Facts
- The plaintiff, a US-based company operating since 1920 under the trade name “STEELCASE”, has been present in India since 2000 and is engaged in selling office furniture and architectural products.
- It is the registered proprietor of the trademark “STEELCASE” in Classes 9, 11, 16, and 20 since 1995.
- Defendant No. 1 operates under the name “M/s. STEEL CASE INDIA PRIVATE LIMITED” and uses the domain “www.steelcaseindia.com”.
- Defendant No. 1 claims prior use of the mark “STEELCASE” in India since 1981 and challenges the validity of the plaintiff’s registrations on the ground of descriptiveness and lack of distinctiveness at the time of application.
Issues
- Whether the plea of invalidity raised by the defendant regarding the trademark “STEELCASE” was prima facie tenable under Section 124(1)(b)(ii) of the Trade Marks Act.
- Whether the Court should permit the defendant to initiate rectification proceedings and stay the suit.
Petitioner’s (Defendant’s) Arguments
- Defendant No. 1 argued it was a prior user of the mark since 1981, while the plaintiff registered the mark only in 1995.
- Earlier applications by the plaintiff for the trademark “STEELCASE” in 1968 and 1974 were abandoned due to examiner objections that the mark was descriptive and lacking in distinctiveness.
- Relying on Lupin Ltd. v. Johnson and Johnson and Franco India Pharmaceuticals v. Corona Remedies Pvt. Ltd., the defendant contended that even at the interlocutory stage, courts can assess prima facie invalidity.
- Argued that “STEELCASE” is a descriptive mark and thus cannot be registered.
Respondent’s (Plaintiff’s) Arguments
- The plaintiff denied the existence of any valid plea of invalidity in the written statement.
- Asserted that no evidence was provided by the defendant showing use of the mark prior to 1981.
- Relied on McCarthy on Trademarks & Unfair Competition, emphasizing that a descriptive mark must clearly and directly convey the nature of goods or services.
- Argued that “STEELCASE” is a suggestive and distinctive mark, not descriptive.
- Relied on Burger King Corporation v. Ranjan Gupta and Pepsico Inc. v. Parle Agro (P) Ltd. to argue that Section 124(1)(b)(ii) requires a prima facie tenable plea—not merely an allegation.
Analysis of the Law
- Section 124(1)(b)(ii) of the Trade Marks Act mandates that a court may allow rectification proceedings only if it is “satisfied” that the plea of invalidity is prima facie tenable.
- The Court noted that this standard is higher than a mere allegation; the defendant must plead a rational, plausible defence with sufficient material.
- The Court emphasized that Section 124 must be read along with Section 29 of the Act, and a frivolous plea should not lead to a stay of proceedings.
Precedent Analysis
- Burger King (2023 SCC OnLine Del 1383): The Court clarified that framing of an issue on invalidity must follow satisfaction of prima facie tenability.
- Pepsico Inc. v. Parle Agro (CS(COMM) 268 of 2021): Reaffirmed that “prima facie tenability” is about arguability of the plea—not its merits—and the court’s role is limited to assessing if the pleadings make out a challenge worth considering.
- Lupin Ltd. (2015 Mh.L.J.) and Franco India Pharmaceuticals (Commercial IP Suit No. 105 of 2022): Cited by the defendant but found inapplicable by the Court since they involved more concrete and specific challenges to the trademark, which were absent in the present case.
Court’s Reasoning
- The Court found the defendant’s pleadings to be vague and lacking in particularised challenge or evidence.
- The assertions regarding descriptiveness were held to be open-ended and did not meet the threshold under Section 124(1)(b)(ii).
- The trademark “STEELCASE” was held not to be descriptive per se, and at best suggestive, which is not sufficient to invalidate registration.
- The Court remarked:
“This application under Section 124(1)(b)(ii) of the TM Act is but a counterblast, which ought to be nipped at the bud rather than proceeding with frivolous litigations.”
Conclusion
The application filed by Defendant No. 1 under Section 124(1)(b)(ii) of the Trade Marks Act was dismissed. The Court found no prima facie tenable plea of invalidity had been raised. Accordingly, the trial in CS(COMM) 1180/2018 will proceed and the matter is listed for framing of issues on 29.08.2025.
Implications
- The ruling reaffirms that Section 124 cannot be invoked as a matter of right and that courts must rigorously assess whether a challenge to trademark validity is prima facie tenable.
- The decision protects trademark owners from being subjected to frivolous counterclaims merely to delay proceedings.
- The Court’s reliance on Burger King and Pepsico provides a strong precedent that vague or bald assertions cannot justify a stay or rectification.