Case BriefsInternational Courts

   

European Court of Justice (ECJ): In a far-reaching decision, the Bench of C. Lycourgos (Rapporteur), President of the Chamber, S. Rodin, J.-C. Bonichot, L.S. Rossi and O. Spineanu-Matei, JJ., held that sending of a warning letter for trademark infringement, per se, will not break the limitation period and end acquiescence for use of the similar later trademark.

The German Federal Court of Justice had requested the ECJ for a preliminary ruling on the interpretation of Article 9 of Directive 2008/95/EC of the European Parliament of 22-10-2008 to approximate the laws of the Member States relating to trademarks, and Articles 54 and 111 of Council Regulation (EC) No 207/2009 of 26-02-2009 on the Community trademark.

The European Union law in question provides that where, in a Member State, the proprietor of an earlier trademark has acquiesced, for a period of five successive years, use of a similar later trademark while being aware of such use, he shall no longer be entitled either to apply for a declaration that the later trademark is invalid or to oppose the use of the later trademark in respect of the goods or services for which the later trademark has been used; unless registration of the later trademark was applied for in bad faith.

Factual Backdrop

The request had been made in proceedings between HEITEC AG (the applicant) and HEITECH Promotion GmbH and RW concerning the use of the trade name HEITECH Promotion GmbH and trademarks containing the word element ‘heitech' by the latter.

The applicant is the proprietor of the EU word mark HEITEC, with seniority claimed as from 13-07-1991, and registered on 04-07-2005. It was entered in the commercial register in 1984 under the name Heitec Industrieplanung GmbH which was later changed to Heitec GmbH. Since the year 2000, it has been operating under the name of Heitec AG.

Heitech, of which RW is the managing director, was entered in the commercial register on 16-04-2003 as the proprietor of a German figurative mark containing the word element ‘heitech promotion' and of an EU figurative mark containing the word element ‘heitech', applied for on 06-02-2008 and registered on 20-11- 2008, which it has used since 06-05-2009 at the latest.

Chronology of Events

The applicant became aware of Heitech's application for registration of the EU figurative mark containing the word element ‘heitech' on 07-07-2008 and by a letter dated 22-04-2009, it sent Heitech a warning letter regarding the latter's use of its tradename and the EU trademark containing the word element ‘heitech'. In its reply, Heitech proposed to enter into a coexistence agreement.

On 31-12-2012, the applicant approached the Nuremberg Regional Court to initiate proceedings against Heitech and RW. However, the proceedings could not begin since the applicant had failed to make the advance payment and lodge the originals of the application initiating proceedings. It was only on 30-12-2013 that the Regional Court received written submissions dated 12-12-2013 from the applicant, together with a cheque for court fees and a new application initiating proceedings bearing the date 04-10-2013. The preliminary proceedings were finally opened on 16-05-2014 and a notice was served to the defendants in the main proceeding on 23-05-2014.

Meanwhile, in a letter dated 23-09-2013, the applicant informed Heitech that it refused to conclude a coexistence agreement and proposed to conclude a licence agreement while stating that it had initiated legal proceedings.

Finally, the applicant claimed the infringement of its trademark rights and contended that Heitech should be ordered to refrain from identifying its company by the trade name ‘HEITECH Promotion GmbH', to refrain from affixing the word elements ‘heitech promotion' and ‘heitech' on goods and from marketing or advertising goods or services under those signs, to refrain from using or transferring, for commercial purposes, the website heitech-promotion.de and to agree to the removal of its company name from the commercial register.

The applicant also brought claims for information, for a finding of an obligation to pay compensation, for the destruction of goods and for the payment of the costs of sending the warning letter.

Findings of the Nuremberg Regional Courts

The Regional Court ordered Heitech to pay the applicant EUR 1 353.80, plus interest, for the costs of sending the warning letter and rejected the other claims. Aggrieved, the applicant appealed before the Nuremberg Higher Regional Court, which held that the applicant's action was unfounded as it was time-barred.

The Higher Regional Court noted that Heitech had used its later signs for an uninterrupted period of at least five years and that the applicant had acquiesced in such use, since, although it was aware of that use, it had not taken sufficient measures to stop that use.

The Higher Court held that the court action had not interrupted the period of limitation, since it had been served on Heitech and RW only after five years had elapsed since the warning letter which preceded that action.

The applicant challenged the afore-mentioned findings before the Federal Court of Justice, Germany (referring court).

Questions Referred

That referring court noted that the outcome of the appeal depends on the interpretation of European Union (EU) law on whether the applicant is time-barred from bringing its claim for an injunction and its ancillary claims. Therefore, the referring court referred the following questions to the Court of Justice for a preliminary ruling:

  1. Can acquiescence be excluded not only by means of an administrative or court action but also through conduct not involving a court or administrative authority?

  2. Does the sending of a warning letter, in which the proprietor of the earlier sign, before initiating legal proceedings, requires the proprietor of the later sign to agree to refrain from using the sign, and to enter into an obligation to pay a contractual penalty in the event of an infringement, constitute conduct precluding acquiescence?

  3. When seeking judicial redress, is the bringing of the action before the court or the receipt of the action by the defendant decisive for calculating the five-year acquiescence period? Is it significant in this regard that receipt of the action by the defendant is delayed beyond the expiry of the five-year period through the fault of the proprietor of the earlier trademark?

  4. Does the limitation of rights encompass consequential claims under trademark law; i.e., claims for compensation, provision of information or destruction, as well as prohibitory injunctions?

Analysis and Findings

Is a warning letter sufficient to break the limitation period and end acquiescence?

Relying on Levi Strauss, C 145/05, the Court noted that by setting a period of limitation in consequence of acquiescence of five consecutive years with knowledge of the use of the later trademark, the EU legislature sought to ensure that the protection conferred by an earlier trademark on its proprietor remains limited to cases where the proprietor shows itself to be sufficiently vigilant by opposing the use of signs by other operators likely to infringe its mark.

Opining that the rule on limitation in consequence of acquiescence is intended to safeguard legal certainty, the Court stated,

“Where the proprietor of an earlier mark or other earlier right, within the meaning of Directive 2008/95 or Regulation No 207/2009, has knowingly ‘acquiesced' in the use of a later mark applied for in good faith for a continuous period of five years, the proprietor of the latter mark must be certain in law that such use can no longer be challenged by the proprietor of that earlier mark or other earlier right.”

As regards the conditions under which the proprietor of the earlier mark or other earlier right may be regarded as having carried out an act that interrupts the period of limitation, the Court observed that the proprietor must bring an administrative or court action before the expiry of the limitation period.

The Court observed that where the proprietor of the earlier mark has issued a warning letter with which the proprietor of the latter mark did not comply, the warning letter will only interrupt the period of limitation in consequence of acquiescence when, following the unsatisfactory response to the warning letter, the proprietor of the earlier mark invokes an administrative or court action to enforce its rights. In contrast, in such a scenario, the failure to bring an administrative or court action will mean that the proprietor of the earlier mark has failed to take the measures available to it to put an end to the alleged infringement of its rights. The Court opined,

“Any interpretation to the effect that sending a warning letter is sufficient to interrupt the period of limitation would allow the proprietor of the earlier mark or other earlier right to circumvent the regime for limitation in consequence of acquiescence by repeatedly sending a warning letter approximately every five years. Such a situation would undermine the objectives of the regime for limitation in consequence of acquiescence and would deprive that regime of its effectiveness.”

Date of action v/s Date of receipt by Defendant: Which one is decisive for calculating the five-year acquiescence period?

Referring to the rule as followed in civil matters, the Court observed that the date on which the application initiating proceedings was lodged is the date on which a court action must be deemed to have been brought.

The Court, though agreed with the opinion of the Advocate General that the lodging of the application initiating proceedings reflects the genuine and unambiguous wish of the applicant to assert its rights, which is sufficient to end acquiescence and to interrupt the period of limitation, it noted that the conduct of that party may nevertheless, raise doubts as to that wish and the seriousness of the action brought before the court.

Noting that the Regional Court with which the applicant had lodged an application initiating proceedings, repeatedly contacted it in order to draw its attention to irregularities that prevented service of the notice on the defendants, the Court opined that the applicant could not claim to have put an end to the acquiescence of the use of the later mark by lodging the application initiating proceedings. The Court noted,

“Where the application initiating proceedings, although filed before the date of expiry of the period of limitation, did not, owing to a lack of diligence on the part of the applicant, satisfy the requirements of the applicable national law for service and was rectified only after that date the action must be regarded as time-barred.”

Consequently, the Court held that it is for the referring court to ascertain whether the date on which the application to initiate proceedings was rectified to enable the court to commence the proceedings and to serve that document on the defendants was within the period of limitation and whether the conduct of the applicant in initiating proceedings could be characterized as lack of diligence.

Whether a proprietor of the earlier mark being time-barred from seeking a declaration of invalidity of a later mark, is also time-barred from bringing ancillary or related claims?

Affirming the opinion of the Advocate General that it would be contrary to the objectives of the regime for limitation in consequence of acquiescence to allow the proprietor of the earlier mark to bring an action against the proprietor of that later mark for damages and injunctions after the end of the limitation period, the Court held,

“If such action or such claims were to succeed after the expiry of the period of limitation, it would amount to leaving intact, beyond that date, the possibility of a finding that the use of the later mark infringes the earlier mark and to attributing a non-contractual liability to the proprietor of the later mark.”

The Court added,

“Such an interpretation of the regime of limitation in consequence of acquiescence would undermine the objective pursued by that regime, which is to give the proprietor of the later trademark the certainty, at the end of that period, that the use of that mark can no longer be challenged, by whatever legal means, by the person that has knowingly acquiesced in its use for an uninterrupted period of five years.”

Conclusion

In the backdrop of above, the Court ruled:

  • A warning letter, by which the proprietor of an earlier mark or other earlier right opposes the use of a later mark without taking the necessary steps to obtain a legally binding solution, does not stop acquiescence and, consequently, does not interrupt the period of limitation.

  • The application of action will be time-barred where the application initiating proceedings, although filed before the date of expiry of the period of limitation, did not, owing to a lack of diligence on the part of the applicant, satisfy the requirements of the applicable national law for service and was rectified only after that date for reasons attributable to the applicant.

  • Where the proprietor of an earlier mark is time-barred from seeking a declaration of invalidity of a later mark and from opposing the use of that later mark, that proprietor is also time-barred from bringing ancillary or related claims, such as claims for damages, the provision of information or the destruction of goods.

[HEITEC AG v. HEITECH Promotion GmbH, C466/20, decided on 19-05-2022]

*Kamini Sharma, Editorial Assistant has reported this brief

Case BriefsSupreme Court

Supreme Court: Explaining the difference between acquiescence and delay and laches, the bench of L. Nageswara Rao and Sanjiv Khanna*, JJ has held that both limitation and laches destroy the remedy but not the right. Acquiescence, on the other hand, virtually destroys the right of the person.

The Court explained that the doctrine of acquiescence is an equitable doctrine which applies when a party having a right stands by and sees another dealing in a manner inconsistent with that right, while the act is in progress and after violation is completed, which conduct reflects his assent or accord. He cannot afterwards complain. In literal sense, the term acquiescence means silent assent, tacit consent, concurrence, or acceptance, which denotes conduct that is evidence of an intention of a party to abandon an equitable right and also to denote conduct from which another party will be justified in inferring such an intention.  Acquiescence can be either direct with full knowledge and express approbation, or indirect where a person having the right to set aside the action stands by and sees another dealing in a manner inconsistent with that right and inspite of the infringement takes no action mirroring acceptance. However, acquiescence will not apply if lapse of time is of no importance or consequence.

“Inactive acquiescence on the part of the respondent can be inferred till the filing of the appeal, and not for the period post filing of the appeal. Nevertheless, this acquiescence being in the nature of estoppel bars the respondent from claiming violation of the right of fair representation.”

Laches unlike limitation is flexible. However, both limitation and laches destroy the remedy but not the right. Laches like acquiescence is based upon equitable considerations, but laches unlike acquiescence imports even simple passivity. On the other hand, acquiescence implies active assent and is based upon the rule of estoppel in pais. As a form of estoppel, it bars a party afterwards from complaining of the violation of the right. Even indirect acquiescence implies almost active consent, which is not to be inferred by mere silence or inaction which is involved in laches. Acquiescence in this manner is quite distinct from delay.

[Chairman, State Bank of India v. MJ James, 2021 SCC OnLine SC 1061, decided on 16.11.2021]


*Judgment by: Justice Sanjiv Khanna

Case BriefsSupreme Court

Supreme Court: The 3-judge bench of AM Khanwilkar, BR Gavai* and Krishna Murari has explained the true test to determine whether a party has waived its rights or not. It has held that for establishing waiver, it will have to be established, that a party expressly or by its conduct acted in a manner, which is inconsistent with the continuance of its rights. There can be no waiver unless the person who is said to have waived, is fully informed as to his rights and with full knowledge about the same, he intentionally abandons them.

“As such, for applying the principle of waiver, it will have to be established, that though a party was aware about the relevant facts and the right to take an objection, he has neglected to take such an objection.”

However, the mere acts of indulgence will not amount to waiver. A party claiming waiver would also not be entitled to claim the benefit of waiver, unless it has altered its position in reliance on the same.

The Court explained that a waiver cannot always and in every case be inferred merely from the failure of the party to take the objection. Waiver can be inferred, only if and after it is shown that the party knew about the relevant facts and was aware of his right to take the objection in question.

“The waiver or acquiescence, like election, presupposes, that the person to be bound is fully cognizant of his rights, and that being so, he neglects to enforce them, or chooses one benefit instead of another.”

Distinguishing waiver from estoppel, the Court explained that the principle of waiver although is akin to the principle of estoppel; estoppel is not a cause of action and is a rule of evidence, whereas waiver is contractual and may constitute a cause of action. It is an agreement between the parties and a party fully knowing of its rights has agreed not to assert a right for a consideration.

“… whenever waiver is pleaded, it is for the party pleading the same to show that an agreement waiving the right in consideration of some compromise came into being.”

The Court also explained the difference between waiver and acquiescence and said that for constituting acquiescence or waiver it must be established, that though a party knows the material facts and is conscious of his legal rights in a given matter, but fails to assert its rights at the earliest possible opportunity, it creates an effective bar of waiver against him. Whereas, acquiescence would be a conduct where a party is sitting by, when another is invading his rights. The acquiescence must be such as to lead to the inference of a licence sufficient to create a new right in the defendant.

[Kalparaj Dharamshi v. Kotak Investment Advisors Ltd,  2021 SCC OnLine SC 204, decided on 10.03.2021]


*Judgment by: Justice BR Gavai

Appearances before the Court by:

For Kalparaj: Senior Advocates Mukul Rohatgi, Dr. Abhishek Manu Singhvi and Pinaki Mishra,

For Deutsche Bank and CoC: Senior Advocate K.V. Viswanathan

For Fourth Dimension Solutions Limited: Senior Advocates C.A. Sundaram, Gopal Sankar Narayanan and P.P. Chaudary,

For RP: Senior Advocates Shyam Divan

For KIAL: Senior Advocate: Senior Advocate Neeraj Kishan Kaul

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Case BriefsHigh Courts

Calcutta High Court: A Division Bench of I.P. Mukerji and Md. Nizamuddin, JJ., allowed an appeal filed against the order of the Single Judge whereby he had rejected the appellant-plaintiff’s application for grant of interim injunction restraining the respondent-defendant from using the subject trademark.

The appellant and the respondent were in the business of manufacturing TMT bars. The appellant was the registered proprietor of the word mark “Shyam” and label marks featuring this word prominently. The appellant filed a suit for infringement of the said trademark and passing off against the respondent. The interlocutory application filed by the appellant for grant of interim injunction till the disposal of the suit was rejected by the Single Judge as noted above. Aggrieved thereby, the appellant approached the High Court.

Two main contentions advanced on behalf of the respondent were: Firstly, that the registration of the mark “Shyam”, which is the name of a God, was invalid. And secondly, it was contended that the appellant filed the suit after a considerable delay and, therefore, the defence of acquiescence was available to the respondent.

Regarding the first contention, the High Court, relying on Lal Babu Priyadarshi v. Amritpal Singh, (2015) 16 SCC 795, held that it could not be said as an infallible principle of law that registration of the word “Shyam” was invalid and it should be cancelled. The respondent has to prove, by leading cogent evidence, before the Board, that indeed the name ‘Shyam’ refers to God only, is not distinctive of the appellant, is generic and common. Hence, its registration was invalid. Since, at the instant stage, the respondent was not able to establish this even prima facie, the Court rejected the first contention.

Coming to the second contention, the Court noted that the appellant was aware of the use of their trademark by the respondent since at least December 2015. Yet, the appellant took their own time in filing the suit and applying for an injunction, i.e., in 2019. However, the Court was of the view that the appellant could not be accused of acquiescing to the use of their trademark by the respondent, though it could be said that they took no action to restrain the respondent from using it. Reliance was placed on Power Control Appliances v. Sumeet Machines (P) Ltd., (1994) 2 SCC 448, wherein the Supreme Court has said that acquiescence would only arise out of the positive acts and not merely by silence or inaction. It has gone to the extent of saying that acquiescence was “one facet of delay”.

In such view of the matter of the Court, considering the prima facie case and balance of convenience, ordered that the respondent would be injuncted from using the trademark in question till the disposal of the infringement suit filed by the appellant, which effect from 1-5-2020, by which date, the respondent was permitted to clear the existing stock. [Shyam Steel Industries Ltd., v. Shyam Sel & Power Ltd., 2019 SCC OnLine Cal 5177, decided on 24-12-2019]

Case BriefsHigh Courts

Himachal Pradesh High Court: Tarlok Singh Chauhan, J. contemplated a writ petition where the relief sought by the petitioner was ‘that the bid finalized in favor of respondent, pursuant to the auction with regard to the property referred to in auction notice which was published in the local newspaper may kindly be quashed and set-aside and that Respondent 1 be directed to conduct fresh auction of the property in question in accordance with law and established procedure as approved by law.’

Factual matrix of the case was that the petitioner was one of the prospective buyers in an auction that the proceedings whereof were eventually finalized in favor of Respondent 2, auction notice was published in a local newspaper for the invitation of tenders for the sale of the said properties. The attached properties were named under “Govind Sagar Matasya Sahakari Vipanan Avam Apurti Sang Ltd., Bilaspur”. The petitioner contended that the property which was put to sale was liable to be auctioned separately but the authorities auctioned it as on composite unit whereas, the petitioner as per the tender form had only applied for Items 2 and 4 i.e. one shop and compressor, condenser and allied fittings with panelling and pipeline, but Respondent 1 allowed Respondent 2 to make composite bid, which resulted in low price being fetched for the property and, therefore, an undue favor had been shown towards the alleged respondent. 

On the contrary, the respondent contended that the petitioner had filed a reply wherein preliminary objections regarding suppression of material facts, estoppel etc. had been taken. On merits, it was averred that the auction of the entire property was done through an open bid, so that the same may have fetched the highest price.

The Court observed that, a perusal of the quotation rates undoubtedly revealed that four properties had been mentioned in the auction notice, but there was nothing in the notice to suggest that each of the properties was to be sold separately. The Court further stated that if “petitioner was really serious in bidding for two items, then he would had definitely offered a bid, but the records revealed that no bid was made by the petitioner despite his being present there. All the proceedings took place in front of the petitioner, yet he never objected to the same. Having participated in the proceedings (though not bidding) with his eyes wide open, the petitioner cannot now turn around and question the bidding process.”

The Court further commented on the delay by the petitioner and stated that Long period of silence and inaction on the part of the petitioner amounts to acquiescence and estoppel, more particularly, when there is no explanation for his long silence. It was further opined that if the petitioner was ready to offer the higher price than offered by Respondent 2 and such offer could have been put forth even at any such subsequent date thereto, but the petitioner failed to do so. Hence, the petition was rejected as the Court found no merits. [Jafar Khan v. Distt. Audit Officer, 2019 SCC OnLine HP 1269, decided on 13-08-2019]