Court’s Decision
The Delhi High Court, in a judgment by Justice Anish Dayal, allowed the suit filed by Hyatt International against its former hotel franchisee for infringing and passing off its registered trademarks, including “Hyatt,” “Hyatt Regency,” and “Hyatt Place.” The Court granted a decree of permanent injunction restraining the defendants from using the impugned marks “Hyatt Hillton,” “Hyatt Hillton Hotel,” and associated logos on physical or digital media.
The Court also awarded damages of ₹25 lakhs to Hyatt International, noting that:
“Use of the mark ‘Hyatt’ by the defendants is clearly with the intent to ride upon the immense goodwill and reputation of the plaintiff’s trademark. This constitutes unfair competition.”
Facts
Hyatt International Corporation is a globally renowned hotel brand, owning various trademarks in India and abroad under names like “Hyatt,” “Hyatt Regency,” “Hyatt Place,” etc. The defendants were once associated with Hyatt under a franchise arrangement, but the relationship ended in 2014.
After termination of the franchise, Hyatt issued notices to the defendants to stop using its marks. However, the defendants continued to operate under the names “Hyatt Hillton,” “Hyatt Hillton Hotel,” and even used email addresses, domain names, hoardings, and social media platforms prominently displaying the “Hyatt” brand. They were also found to have registered websites like “hyatthillton.com” and pages on online travel aggregators under infringing names.
Hyatt filed a suit alleging trademark infringement, passing off, and unfair competition. Despite being served, the defendants failed to appear or file a written statement, leading the Court to proceed ex parte.
Issues
- Whether continued use of “Hyatt” by the former franchisee after termination constitutes trademark infringement and passing off.
- Whether the plaintiff is entitled to damages and a permanent injunction in light of blatant trademark misuse.
- Whether such use violates the Trademarks Act, 1999 and amounts to unfair competition under common law.
Petitioner’s Arguments
The plaintiff, Hyatt International, argued that it is the lawful registered proprietor of the “Hyatt” trademarks in India and globally, having used the marks for decades. It submitted that the defendants had, after termination of the franchise, no legal right to continue using the “Hyatt” name or any deceptive variant like “Hyatt Hillton.” The use of “Hyatt” in conjunction with “Hillton” was not a mere coincidence but a deliberate attempt to mislead consumers and piggyback on the goodwill of Hyatt and Hilton hotels—two globally established brands.
Hyatt submitted voluminous evidence, including its trademark registrations, printouts of infringing web pages, screenshots of online travel platforms, and social media content showing persistent misuse. It argued that the defendants’ conduct met all the tests of infringement under Sections 29(1), 29(2), and 29(5) of the Trademarks Act and also amounted to passing off.
Hyatt also relied on judicial precedents to argue that such deceptive adoption of a well-known mark by an ex-franchisee warrants not just injunction but also exemplary damages.
Respondent’s Arguments
The defendants did not file a written statement or appear before the Court, despite service of summons. The matter proceeded ex parte. However, based on the evidence on record and the pleadings, the Court assumed that the defendants had no legitimate justification for continued use of the “Hyatt” marks or any variant thereof.
Analysis of the Law
The Court meticulously examined the provisions of Sections 28 and 29 of the Trademarks Act, 1999. Under Section 28, a registered proprietor has an exclusive right to use the mark in respect of the goods or services for which it is registered. Under Section 29(1), any use of an identical or deceptively similar mark in the course of trade amounts to infringement. Section 29(2)(c) penalizes use that causes likelihood of association, and Section 29(5) criminalizes use of the mark as part of a trade name.
The Court also referred to the concept of “initial interest confusion” and emphasized that even if consumers realize later that a business is not affiliated with the genuine brand, the act of luring them using a deceptive name constitutes infringement.
It was also held that continued use of a mark after termination of a franchise agreement is not just a contractual violation but a statutory infringement.
Precedent Analysis
- Indian Hotels Co. Ltd. v. Jiva Institute of Vedic Science & Culture, 2008 SCC OnLine Del 825
The Court held that deceptive similarity in names used in hospitality businesses causes confusion and is liable to be restrained. - WWF International v. Mahavir Spinning Mills Ltd., (1998) 1 SCC 448
Affirmed the right of the owner of a well-known mark to prevent dilution and misuse. - Satyam Infoway Ltd. v. Sifynet Solutions Pvt. Ltd., (2004) 6 SCC 145
Established protection against cybersquatting and domain name misuse. - H&M Hennes & Mauritz AB v. HM Megabrands Pvt. Ltd., 2018 SCC OnLine Del 9338
Held that dishonest adoption of a global brand’s identity warranted not just injunction but punitive damages.
The Court found Hyatt’s case squarely covered by these precedents and distinguished instances where parties may coincidentally adopt similar marks without malice.
Court’s Reasoning
The Court reasoned that the defendants’ use of the impugned marks was with full knowledge of Hyatt’s rights and that they had no authorization post-termination. The twin use of “Hyatt” and “Hillton” was held to be a dishonest ploy to cash in on the goodwill of not one but two global hospitality giants.
The Court concluded that:
“The continued use of the mark ‘Hyatt’ post-termination is a classic case of passing off and infringement, intended to mislead customers and derive unlawful benefit.”
The use of infringing domain names, social media handles, and third-party booking portals further aggravated the violation.
Conclusion
The Delhi High Court passed a decree of permanent injunction restraining the defendants from:
- Using the marks “Hyatt,” “Hyatt Hillton,” or any deceptive variant.
- Operating websites, social media pages, hoardings, or any publicity material under the impugned marks.
- Registering domain names or email addresses bearing the infringing marks.
The Court also awarded Hyatt International ₹25 lakhs in damages and ₹5 lakhs as costs. It held that the defendants’ conduct was egregious, mala fide, and warranting exemplary relief.
Implications
- Sets a strong precedent protecting global brands from deceptive misuse by ex-franchisees.
- Affirms that use of well-known marks in trade names, domain names, and digital spaces amounts to infringement under Indian law.
- Reinforces the remedy of punitive damages for wilful violation of trademark rights.
- Emphasizes that prior relationship or permission to use a mark does not entitle continued use post-termination.
Cases Referred and Their Relevance
- Indian Hotels Co. Ltd. v. Jiva Institute of Vedic Science & Culture – Deceptive hospitality trade names restrained.
- WWF International v. Mahavir Spinning Mills Ltd. – Protection of well-known marks upheld.
- Satyam Infoway Ltd. v. Sifynet Solutions Pvt. Ltd. – Cybersquatting recognized as trademark misuse.
- H&M Hennes & Mauritz AB v. HM Megabrands Pvt. Ltd. – Exemplary damages for bad faith use of global brand identity.
FAQs
1. Can a former franchisee use a brand’s name after termination of the agreement?
No. Once a franchise agreement ends, continued use of the brand’s trademark amounts to infringement and is liable to be restrained.
2. Is using a deceptively similar name like “Hyatt Hillton” legally permissible?
No. Combining two established brand names to mislead consumers is considered dishonest and constitutes trademark infringement and passing off.
3. Can damages be awarded even if the infringing party does not appear in court?
Yes. In ex parte matters, the court can award damages if there is adequate evidence of wilful and mala fide infringement.
