The Bombay High Court has restrained a former franchisee of Zee Learn Limited from using the marks “KIDZEE”, “KIDGEE” or any deceptively or phonetically similar name in connection with her school, holding that the dispute arose from the parties’ franchise agreement and could be referred to arbitration.
Justice Amit Borkar was dealing with a petition filed by Zee Learn under Section 9 of the Arbitration and Conciliation Act, 1996, seeking interim protection against the continued use of its registered ‘KIDZEE’ trademark. The franchise agreement between Zee Learn and the respondent for operating a Kidzee Centre at Koderma, Jharkhand, had expired on January 20, 2020. Zee Learn alleged that the respondent continued using ‘KIDZEE’ and subsequently adopted ‘KIDGEE’, which it claimed was deceptively similar to its mark and continued to create an impression of association with the brand.
Zee Learn relied on Clause 14.4 of the Franchise Agreement, under which the franchisee, after termination, could not claim an association with the franchisor or advertise such association. The company argued that the adoption of ‘KIDGEE’ after expiry of the agreement was an attempt to retain the benefit of the earlier association with the ‘KIDZEE’ brand.
The respondent had contended, among other things, that ‘KID’ was a generic word and that she had obtained Government permission and a UDISE Code to operate the school. The Court, however, held that such regulatory permission did not determine whether the respondent had complied with her contractual obligations towards Zee Learn.
On arbitrability, the Court drew a distinction between statutory trademark rights having erga omnes effect and disputes concerning contractual rights between identified parties. It noted that Zee Learn was not seeking alteration of the trademark register or a declaration binding against the world, but was seeking enforcement of rights arising from its contractual relationship with the former franchisee. The mere fact that a trademark was involved, therefore, did not take the dispute outside arbitration.
The Court also rejected the argument that the criminal proceedings and allegations of misconduct affected the arbitrability of the contractual dispute, observing that such allegations could be considered in the appropriate criminal or other proceedings but did not determine whether the respondent had complied with the franchise agreement.
On the similarity between ‘KIDZEE’ and ‘KIDGEE’, Justice Borkar found a prima facie case in favour of Zee Learn, taking into account the respondent’s earlier franchise relationship, her use of ‘KIDZEE’ for several years, the continuation of the same educational activity and the phonetic and structural similarity between the two names. The Court observed that a parent familiar with the school as a ‘KIDZEE’ centre could believe that ‘KIDGEE’ was the same institution under a changed name or continued to have an association with Zee Learn.
The Court accordingly restrained the respondent, pending arbitration, from conducting or implementing the ‘Kidzee Program’, using ‘KIDZEE’, ‘KIDGEE’ or any deceptively or phonetically similar mark in connection with the school, or using any name, logo or representation suggesting an association or affiliation with Zee Learn. It also directed removal of the disputed marks from the school premises, advertisements, stationery, websites, social media and other promotional material.
The Court, however, declined Zee Learn’s prayer for a ₹7.85 crore bank guarantee and appointment of a Court Receiver to collect the school’s fees, holding that the precise monetary liability and quantum of loss remained to be determined in arbitration. Instead, the respondent was directed to preserve relevant admission, fee, account, marketing and other records and file an affidavit disclosing details of the school, students, fees, bank accounts and use of the disputed marks.
The Court clarified that its observations were prima facie and confined to the Section 9 proceedings, and that the arbitral tribunal would determine the disputes independently. The petition was accordingly partly allowed.
