When we talk about section 124 of Trade Marks Act, 1999, it is considered to be the most controversial section of Trademarks Act in today’s time. Courts across the country have had a go at the interpretation of stay of proceedings where the validity of the registration of Trademark is questioned. When the supreme court decided in the case Patel Field Marshal Agencies and Ors. Vs P.M. Diesels Ltd. and Ors. 2017 (13) SCALE 783, then it was felt that this controversy would put to rest, but however that was really a case?

Section 124 of Trade Marks Act, 1999

Section 124 has been defined under Trademarks Act, 1999 as follows-

Stay of proceedings where the validity of the registration of the Trademark is questioned, etc.-

  • Where in any suit for infringement of a Trademark
  • The defendant pleads that registration of the Plaintiff’s Trademark is invalid, or
  • The defendant raises a defence under clause (e) of sub section (2) of section 30 and the plaintiff pleads the invalidity of registration of the defendant’s Trademark.
  • The court trying the suit (hereinafter referred to as the court), shall-
  1. If any proceeding for rectification of the register in relation to the plaintiff’s or defendant’s trademark are pending before he registrar of the Appellate Board, stay the suit pending the final disposal of such proceedings;
  2. If no such proceedings are pending and the court is satisfied that the plea regarding the invalidity of the registration of the plaintiff’s or defendant’s trademark is prima facie tanabe, raise an issue regarding the same and adjourn the case for the period of three months from the date of framing of issue in order to enable the party concerned to apply to the Appellate Board for rectification of the register.
  • If the party concerned proves to the court that he has made any such application as is referred to in clause (b) (ii) of sub section (1) within the time specified theerin or within such extended time as the court may for sufficient cause allow, the rial of the suit shall stand stayed until the final disposal of the rectification proceedings.
  • If no such application as aforesaid ha been made within the time so specified r within such extended time as the court may allow, the issue as to the validity of the registration of the trademark concerned shall be deemed to have been abandoned and the court shall proceed with the suit in regard to the other issues in the case.
  • The final order made in any rectification proceedings referred to in sub section (1) or sub section (2) shall be binding upon the parties and the court shall dispose of the suit comfortably to such order in so far as i related to the issue as to the validity of the registration of Trademark.
  • The stay of a suit for the infringement of a Trademark under this section shall not preclude the court from making any interlocutory order (including any order granting an injunction, directing account to be kept, appointing a receiver or attaching any property), during the period of the stay of the suit.

The section envisages twi situations-

  1. Where the registration has been challenged prior to the institution of the infringement suit.
  2. Where the registration has been sought to be challenged subsequent to the infringement suit.

The outcome under the first situation is very straight-forward and the suit is stayed pending the disposal of the cancelation proceedings.

Howbere complexity arise in situation 2 where it can be divided into 3 stages as represented in the following infographic-

1958 vis-a-vis 1999 Act

Section 111 of the 1958 act was the corresponding act of section 124. The regime under the 1958 was that when in an infringement suit, the validity of registration of trademark was challenged, an application for rectification of the register shall be made to the High court. The primary difference in the 1999 Act was that the jurisdiction to adjudicate the validity of the trademark registration was outsourced to the Appellate Board.

Intellectual property Appellate Board

The Intellectual Property Appellate Board (IPAB) was constituted by the official gazette notification of the central government in the Ministry of Commerce and Industry on 15the September, 2003 with a lot of fan-fare. It was believed that by establishing IPAB, it will expedite the snail pace of the adjudication of IP related disputes. The PAB was bestowed with the power to adjudicate the question of validity of a trade mark registration as mentioned in section 124 of the Act.

Practical Application of section 124

Through the Ptel field Marshal judgement, the Supreme Court has resolved the multiple controversies regarding the multiplicity of proceedings in relation to a Trademark infringement suit. The supreme court has clearly provided that the parties are required to seek liberty from the court for pursuing the cancellation of the opposite Party’s registration before the IPAB. Once order is decided by the IPAB, then civil court will be bound by the IPAB’s order and the main sui proceedings in the trademark infringement matter will be decided in accordance with the outcome of IPAB proceedings. Fuhrer, even though the consequence of not raising the plea of validity has been set out by the supreme court, a few questions will still remain unanswered.

It would be important to see the courts adjudicate upon these pending controversies by interpreting the above mentioned case. 

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