Maintainability of a Letters Patent Appeal Against an Order of the Single Judge Concerning a Rectification Application Filed under Section 57, Trade Marks Act, 1999

Introduction

Under Section 57¹ of the amended Trade Marks Act, 1999 (the Act), an application can be made to the High Court/Registrar of Trade Marks (the Registrar) for cancelling or varying the registration of a mark. A rectification application is usually preferred when a competing mark has the potential to deceive the public or cause confusion² or is identical/similar to an earlier registered trade mark and has an identity/similarity to the goods or services covered by the earlier mark.³ Vide the Tribunals Reforms Act, 2021⁴ (with effect from 4-4-2021), the Intellectual Property Appellate Board (IPAB) has been dissolved and divested of all its powers and the High Court has been restored with the power to cancel/vary the registration of a trade mark and rectify the register. Prior to the said legislation, the IPAB was vested with the power of rectification, along with the Registrar.

Are letters patent appeals maintainable against an order of the Single Judge concerning a rectification application filed under Section 57 of the Act

In light of the High Court being vested with the power of rectification, a consequent issue arose as to whether a letters patent appeal (LPA) would be maintainable against an order of rectification passed by the Single Judge of the High Court. This issue came to the fore before the Delhi High Court in Resilient Innovations (P) Ltd. v. Phonepe (P) Ltd.⁵

Resilient Innovations v. Phonepe (P) Ltd.

In this case, an LPA was filed by Resilient Innovations Private Limited (RIPL) against the Single Judge’s order⁶ dismissing the rectification applications filed by RIPL against the respondent’s (PhonePe) trade mark “” and its variants “PhonePe”.⁷ The Single Judge dismissed the rectification applications by placing reliance on Section 124(1)(ii)⁸ of the Act and holding that in the infringement suit filed by PhonePe⁹ prior to the rectification applications, the Court had not yet framed an issue regarding the validity of the “PhonePe” mark, despite the mark’s validity being raised as an objection by RIPL in the suit.¹⁰ On appeal against the Single Judge’s order, the respondent PhonePe raised objections relating to the maintainability of the LPA appeal.

The respondent contended that both the unamended and the amended Act did not provide for an LPA against orders passed by the High Court relating to a rectification application.¹¹ Further, it was also contended that the Delhi High Courts Act, 1966¹² (the DHC Act) and Section 13¹³ of the Commercial Courts Act, 2015 (the 2015 Act) merely provided for a forum of appeal and that the Act did not envisage an intra-court appeal against an order relating to a rectification application.¹⁴

Analysis of the Division Bench judgment

Dealing with the objection, the Division Bench analysed a catena of cases relating to the maintainability of an LPA and inter alia placed reliance on the Constitution Bench decision of P.S. Sathappan v. Andhra Bank Ltd.¹⁵, which held that an LPA, as envisaged for certain High Courts cannot be effaced unless there is an express or implied exclusion, as provided in the statute concerned.¹⁶

Thereafter, the Division Bench observed that Clause 10 of the Letters Patent, as applicable to the Delhi High Court, envisages for an LPA against the judgment of a Single Judge, provided that the judgment of the Single Judge is not passed in exercise of appellate or revisional jurisdiction.¹⁷ In fact, the said clause provides that an LPA would be maintainable for judgments passed by the Single Judge even in exercise of appellate jurisdiction, if the Single Judge declares it to be a fit case for appeal. In any event, since the order rejecting the rectification applications was not passed in exercise of appellate/revisional jurisdiction, the case was covered squarely within the ambit of Clause 10 and an intra-court appeal could be entertained, unless the Act expressly or implied barred such appeals.

In this backdrop, the respondent contended that the earlier versions of the Act, be it the Trade Marks Act, 1940¹⁸ or the Trade and Merchandise Marks Act, 1958¹⁹ (and more specifically Section 109 of the 1958 Act) provided for a further appeal against the decision of a Single Judge of the High Court adjudicating upon a rectification application, which is missing under the present Act.²⁰

Dealing with the said contention, the Division Bench reiterated the findings of the Full Bench judgments of the Delhi High Court in C.S. Agarwal v. State²¹ and Jaswinder Singh v. Mrigendra Pritam Vikram Singh Steiner²² and held that an intra-court appeal would fall into four slots, namely,

(i) appeals, available under the Code of Civil Procedure, 1908²³ (CPC);

(ii) appeals, provided under the statute;

(iii) appeals under Section10(1) of the DHC Act, against judgments of the Single Judge exercising ordinary original civil jurisdiction [i.e. jurisdiction over suits in the territory of Delhi, exceeding Rs 2 crores under Section 5(2) of the DHC Act]; and

(iv) appeals under Clause 10 of the Letters Patent, as applicable to the Delhi High Court.

The Division Bench observed that an LPA against an order of rectification was neither provided under the CPC nor under the Act and would therefore not fall under slots (i) and (ii).²⁴

The Court then observed that an LPA under Section10(1) of the DHC Act [slot (iii)] would not stand in the present case, since the High Court was not exercising its ordinary original civil jurisdiction while adjudicating upon a rectification application under Section 57 of the Act.²⁵ While making the said observation, the Division Bench did not provide any reasoning whatsoever as to why the High Court was not exercising its ordinary original civil jurisdiction while adjudicating upon a rectification application. As we will see in the following section of this article, this aspect has been delved into detail by the Division Bench of the Delhi High Court in V.R. Holdings v. Hero Investocorp Ltd.²⁶

In light of the aforesaid, the Division Bench observed that the present LPA would fall under slot (iv) (appeals under Clause 10 of the Letters Patent, as applicable to the Delhi High Court) and that the Act did not expressly or impliedly exclude the availability of an LPA, as stipulated under Clause 10.²⁷ Therefore, in light of these observations, the Division Bench in Resilient Innovations²⁸ held that an LPA against the order of a Single Judge adjudicating upon a rectification application under Section 57 of the Act would be maintainable.²⁹

Correctness of Resilient Innovations doubted and consideration of the same issue in V.R. Holdings

Despite the categorical finding in Resilient Innovations³⁰, the issue of maintainability of an LPA against a judgment of the Single Judge concerning a rectification application came up for consideration before another Division Bench of the Delhi High Court in V.R. Holdings³¹. In this case, the appellant (V.R. Holdings) preferred an LPA against the judgment of the Single Judge rejecting the rectification application filed by it, seeking removal of the mark “Hero Group” held by Respondent 1 (Hero Investcorp Ltd).³²

Similar to the case in Resilient Innovations³³, the respondent raised a preliminary objection to the maintainability of the LPA.³⁴ While raising this objection, the respondent also contended that the judgment in Resilient Innovations³⁵ was incorrect and merited reconsideration by a larger Bench, since the Court failed to consider the provisions of the 2015 Act, more specifically Section 13(1-A) read with Section 13(2), which restricted an LPA to only orders passed under Order 43 CPC and Section 37³⁶ of the Arbitration and Conciliation Act, 1996 (the Arbitration Act).³⁷

In this backdrop, it was contended that the provisions of the 2015 Act were applicable in the present case since a rectification application fell within the contours of Section 2(1)(c)³⁸ of the 2015 Act, which defines a “commercial dispute” to include disputes arising out of intellectual property rights, relating to registered and unregistered trade marks, copyright, patent, etc., [Section 2(1)(c)(xvii)] as well.³⁹ Further, the respondent contended that Section 4⁴⁰ of the 2015 Act read with Section 7⁴¹, mandates the Commercial Division of the High Court, exercising ordinary original civil jurisdiction to exercise jurisdiction over such “commercial disputes”. Thus, it was contended that the Single Judge exercised jurisdiction upon the rectification application pursuant to Section 7 of the 2015 Act.⁴² In this light, the respondent contended that an appeal against the Single Judge’s order rejecting the rectification application (commercial dispute) would be governed by Section 13(1-A) of the 2015 Act, which provides for an LPA only against orders enumerated under Order 43 CPC and Section 37 of the Arbitration Act.⁴³

Since an order rejecting a rectification application did not fall under Order 43, it was contended that the present LPA was not maintainable, and especially so, since Section 13(2) of the 2015 Act expressly proscribed the operation of any other law or letters patent of a High Court and provisioned for appeals/LPAs only in accordance with the provisions of the 2015 Act.⁴⁴

Analysis of the Division Bench judgment in V.R. Holdings

While considering the preliminary objection, the Division Bench observed that the judgment in Resilient Innovations⁴⁵ failed to deal with Section 13 of the 2015 Act and the consequential impact of appeals/LPAs being maintainable only with respect to a limited category of orders, as provided under Section 13(1-A) of the 2015 Act.⁴⁶ Despite this, the Court held that the decision of Resilient Innovations⁴⁷ did not merit further reconsideration.⁴⁸

To arrive at this conclusion, the Court first laid out the scheme of the 2015 Act and rightly observed that intellectual property disputes (such as the present one) fell within the scope of a “commercial dispute”, as provided under Section 2(1)(c)(xvii) of the 2015 Act.⁴⁹ Thereafter, on a reading of the first proviso to Section 3⁵⁰ (constitution of Commercial Courts at the District Judge level after consulting with High Courts exercising ordinary original civil jurisdiction), Section 4 (constitution of Commercial Division in High Courts exercising ordinary original civil jurisdiction) and Section 7 (jurisdiction over suits and applications filed in High Courts having ordinary original civil jurisdiction shall be heard by Commercial Divisions of the said High Court), the Court observed that Commercial Divisions as provided under the 2015 Act were established only in those High Courts, which were exercising ordinary original civil jurisdiction prior to the enactment of the 2015 Act.⁵¹ As a matter of fact, at the time of enactment of the 2015 Act and even presently, only five High Courts in India exercise ordinary original civil jurisdiction — i.e. Delhi, Madras, Bombay, Calcutta and Himachal Pradesh. Consequently, under the 2015 Act, Commercial Divisions have been set up only in these High Courts.

In this backdrop, the Court observed that it was pertinent to scrutinise the nature of jurisdiction exercised by the Commercial Division while entertaining a rectification application under Section 57 of the Act.⁵² The Court held that the said section vests contemporaneous power upon the Registrar and the High Court to entertain a rectification application and the power so conferred was by virtue of Section 57 of the Act and was not traceable to the ordinary original civil jurisdiction exercised by a High Court.⁵³ Therefore, in this light, the Court rightly observed that the Commercial Division of a High Court exercising jurisdiction upon a rectification application was not in exercise of its ordinary original civil jurisdiction, but by virtue of Section 57 of the Act.⁵⁴

As aforementioned, the Division Bench in Resilient Innovations⁵⁵ failed to provide any reasoning for the observation — that the High Court does not exercise ordinary original civil jurisdiction while entertaining a rectification application and this aspect was remedied in V.R. Holdings⁵⁶.

Further, the Division Bench also noted the distinction between a court exercising ordinary original civil jurisdiction, such as under Section 134⁵⁷ of the Act, where a suit for infringement is not to be instituted in any court inferior to the District Court having jurisdiction to try the suit.⁵⁸ In this light, the Court drew sustenance from Section 2(4)⁵⁹ CPC, which defines a “District Court” to mean a Principal Civil Court of original jurisdiction.⁶⁰ Therefore, Section 134 vests jurisdiction upon a District Court exercising ordinary original civil jurisdiction to look into suits of infringement. On the other hand, Section 57 vests jurisdiction upon the Registrar and all High Courts to look into rectification applications and it has nothing to do with the ordinary original civil jurisdiction exercised by a High Court.⁶¹ In this backdrop, the Court observed that Section 13 of the 2015 Act, more specifically Section 13(1-A), governs appeals against the orders passed by the Commercial Court (District Judge Level) or the Commercial Division of a High Court exercising ordinary original civil jurisdiction.⁶² The said section does not govern orders passed by the Commercial Division pursuant to the jurisdiction conferred by a statute and which is not traceable to its ordinary original civil jurisdiction.⁶³

Finally, the Court rejected the respondent’s submission that Section 13 governs the exercise of all powers undertaken by the Commercial Division.⁶⁴ In this regard, the Court observed that the Commercial Division performs a variety of functions and some of it may be pursuant to its exercise of ordinary original civil jurisdiction (such as Section 134 of the Act — suit for infringement) while the rest may be by virtue of conferral of power by a special statute (Section 57 — rectification application).⁶⁵ Therefore, the mere exercise of jurisdiction by a Commercial Division does not tantamount to an exercise of “ordinary original civil jurisdiction”, which alone is governed by Section 13 of the Act. Therefore, in light of the aforesaid, the Division Bench concluded that the finding as arrived in Resilient Innovations⁶⁶ was legally tenable and did not merit further reconsideration before a larger Bench.⁶⁷

Conclusion

Even though the High Court in Resilient Innovations⁶⁸ arrived at the correct conclusion, the Division Bench in V.R. Holdings⁶⁹ has threadbare analysed the provisions of the Act and the 2015 Act and has presently solved the issue of maintainability of an LPA against a rectification application. Further, by arriving at the conclusion that an LPA would be maintainable by scrutinising the multi-faceted functions performed by a Commercial Division and observing that the Commercial Division was not acting in exercise of its ordinary, original civil jurisdiction while deciding a rectification application, the Division Bench avoided a paradoxical/lop-sided situation. For instance, if it arrived at the conclusion that an LPA was not maintainable in light of Section 13 of the 2015 Act, it would have resulted in an LPA/intra-court appeal being barred for the aforenoted five High Courts exercising ordinary original civil jurisdiction, where Commercial Divisions have been set up. For the remaining High Courts, given that Commercial Divisions have not been set up and the provisions of the 2015 Act were not applicable, the avenue of an LPA would still be available, where the letters patent of the High Court concerned so provides.

Thus, by arriving at the aforesaid conclusion, the High Court in V.R. Holdings⁷⁰ avoided this paradoxical situation as well.