The Delhi High Court has clarified that where the contractual documents between the parties expressly define their relationship as one of licensor and licensee, provide that all right, title, interest and goodwill in the mark vest in the licensor, permit the licensee to use even the impugned mark only in a controlled and conditional manner, and stipulate that the licensee would become “exclusive and absolute owner” only upon final registration, the arrangement does not operate as a present assignment of the impugned mark but only as a licence user arrangement contemplating a future and contingent vesting of ownership upon registration.
Consequently, the Court held that any use of the impugned mark by the licensee during subsistence of such agreement and prior to registration enures, by virtue of Section 48(2) of the Trade Marks Act, to the benefit of the licensor and cannot be relied upon by the licensee to establish independent prior user or goodwill in a passing off action.
The Court emphasised that where a subsequent agreement, read in its commercial context and terms, records that the subject matter of the earlier agreement has become obsolete and substitutes a new regime governing a new and distinct product, the subsequent agreement may prima facie constitute a novation under Section 62 of the Contract Act, extinguishing the earlier arrangement. Even so, where the plaintiff disputes both novation and the applicability of a termination letter to the earlier agreement, a suit for specific performance is not liable to be rejected at the interim stage merely because no declaratory relief has been sought against the termination notice.
Accordingly, the High Court granted interim relief in Kamdhenu Ltd (KL)’s suit and restrained the defendants therein, jointly and severally, from manufacturing, marketing, distributing, trading, wholesaling, soliciting, advertising, promoting, selling, using or dealing in goods under the impugned mark “AL KAMDHENU GOLD” or any mark/trade name bearing “KAMDHENU” as its essential feature, including as part of a domain name, in relation to steel products and allied/cognate products or connected services, as such use amounted prima facie to infringement and passing off of “KAMDHENU”, “KAMDHENU GOLD” and “KAMDHENU GOLD TMT”.
Where the goods concern reinforcement steel bars used in infrastructure and safety-sensitive projects, the balance of convenience and public interest favour restraining the defendant from use of the impugned mark pending trial, added the Court.
A Single Judge Bench of Justice Tejas Karia examined AIL’s argument based on alleged joint family management and collaborative development of the mark. Referring to the 1997 Agreement, the 2002 Agreement and the 2021 Agreement, the Bench noted that each expressly stated that the parties were unrelated, separate and distinct legal entities and that their relationship was purely commercial and contractual. On that basis, the Bench held that all rights pertaining to trademarks, trade names and associated goodwill resided with the corporate entities rather than individual directors, and that claims founded on purported family arrangements or collaborative development of the “KAMDHENU” mark did not affect the legal rights of the parties.
After setting out the distinction between assignment and licence from Classic Equipment and the statutory framework under Sections 2(1)(r) and 48(2) of the Trade Marks Act, the Bench observed that assignment transfers ownership and divests the assignor of rights, whereas licence merely permits use and ownership/goodwill continue with the licensor. The Bench stated that AIL acquired no right, title or interest other than a bare licence/right to use, and provided that any goodwill arising from use would vest in KL and be deemed held by AIL for KL’s absolute benefit.
Reading Clauses 22 to 26 conjointly, the Bench held that they did not effect any present transfer of proprietary rights but merely contemplated a future and contingent possibility of transfer upon registration, and that the pervasive control retained by KL over the manner, scope and continuance of use indicated that the 2002 Agreement, even as regards the impugned mark, was in substance and effect a licence user arrangement and not an assignment.
On novation, the Bench analysed Recital E of the 2021 Agreement together with the legal concept of novation and Section 62 of the Contract Act. It noted that Recital E expressly referred to the 2002 Agreement, recorded that the earlier product CTD bars/Tor Steel had become obsolete, and stated that AIL was interested in continuing the arrangement for manufacture of the newer “KAMDHENU NXT” TMT bars. The Bench noted that the parties by mutual consent entered into the 2021 Agreement to govern rights and obligations in respect of a new and distinct product. In that commercial context, and applying the principle that novation under Section 62 turns on the mutual intention to substitute a new contract in place of the old, the Bench held prima facie that the 2021 Agreement constituted a novation of the 2002 Agreement.
Since the 2002 Agreement was a permissive user arrangement and AIL itself had placed a disclaimer in the Oct 03, 2005 advertisement stating “for 99 years as per agreement”, any use of the impugned mark by AIL during the subsistence of the 2002 Agreement and prior to registration would not confer independent goodwill on AIL. By virtue of Section 48(2), any such use and goodwill enured to KL as licensor. Accordingly, the Bench concluded that AIL had failed to establish a prima facie case by proving prior use or goodwill in its own favour.
As to KL’s claim for infringement and passing off, the Bench applied the settled test for interim injunction and considered the mark comparison, the parties’ respective rights, confusion, balance of convenience and irreparable injury. It held that “KAMDHENU GOLD”, forming the dominant part of the impugned mark, was admittedly coined by KL and, taken as a whole, was arbitrary and non-descriptive. The impugned mark wholly incorporated KL’s registered mark “KAMDHENU GOLD” with only the addition of the prefix “AL”, which prima facie did not alter the essential character of the mark. The dominant and distinctive element “KAMDHENU GOLD” thus stood appropriated in its entirety.
The Bench further observed that since the execution of the 2002 Agreement AIL’s business activities were largely related to manufacture of goods under the “KAMDHENU” mark for KL, indicating market association of “KAMDHENU” and “KAMDHENU GOLD” with KL and not with AIL. Given the identity of goods and the structural, phonetic and conceptual similarity, any concurrent use by AIL was likely to cause confusion and association with KL, leading to diversion of trade.
On irreparable harm, balance of convenience and public interest, the Bench held that since KL was the registered proprietor of “KAMDHENU”, “KAMDHENU GOLD” and “KAMDHENU GOLD TMT”, the balance of convenience favoured KL. The Bench also accepted that KL had provided evidence of use, goodwill and reputation associated with those marks and was entitled to protection against dilution of such goodwill. Given that the products were reinforcement steel bars used in transportation and infrastructure projects where safety and structural integrity are critical, the Bench held that any defect or deficiency in goods bearing the impugned mark may reasonably be associated with KL, thereby affecting its reputation and goodwill, and that monetary compensation would be insufficient.
Briefly, Ashiana Ispat Limited (AIL) instituted civil suit against Kamdhenu Limited (KL) alleging, inter alia, passing off of AIL’s products bearing the mark “AL KAMDHENU GOLD” as those of KL, who in turn, instituted suit against AIL and other defendants who had entered into service agreements with AIL for manufacturing TMT steel bars under the same impugned mark, alleging infringement of trade mark and copyright, passing off, delivery up and damages in respect of its registered marks including “KAMDHENU”, “KAMDHENU GOLD” and “KAMDHENU GOLD TMT”.
AIL pleaded that it was established in 1992 and was engaged in the business of manufacturing integrated steel under the impugned mark and various permutations/combinations thereof; that it operated through its primary website ‘www.ashianaispat.in’; that it registered the domain name ‘www.alkamdhenugold.com’, redirecting users to its primary website; and that it maintained social media pages under the name “AL KAMDHENU GOLD”.
AIL’s case was that in 1996 it was taken over by the joint management of KL, then known as Kamdhenu Ispat Limited, and that KL’s management was jointly run by the Agarwal family and the Jain family, the latter now controlling AIL. According to AIL, both families together conceived/adopted the mark “KAMDHENU” in 1994, jointly built the brand, and benefitted from profits generated by the sale of steel products under “KAMDHENU” and its permutations/combinations.
AIL further pleaded that KL and AIL had entered into an agreement in Feb 1997 under which KL formally allowed AIL to use the mark “KAMDHENU” for three years, and that after family differences in 2002 the parties amicably divided the business, with the Agarwal family transferring shareholding in AIL to the Jain family and the Jain family transferring shareholding in KL to the Agarwal family. The AIL asserted that by virtue of the 2002 Agreement it started using the impugned mark for selling and marketing its steel products while also using “KAMDHENU” for manufacturing/selling steel products for KL; that KL’s conduct showed an intention to give up all rights in the impugned mark.
AIL contended that KL was claiming rights over the impugned mark and the marks “KAMDHENU GOLD” and “KAMDHENU GOLD TMT” and intended to sell products under those marks, though AIL had not found any KL product bearing those marks. On this footing, AIL alleged that KL was unauthorizedly asserting rights over a mark contractually assigned to AIL and was attempting to interfere with AIL’s vested rights and goodwill, amounting to passing off and unfair competition.
KL, on the other hand, pleaded that it had bona fide adopted “KAMDHENU” in 1994, continuously and uninterruptedly used it in relation to steel bars and later diversified goods/services, built substantial goodwill and reputation thereunder, and was the registered proprietor since 1996 of “KAMDHENU” and other formative marks including “KAMDHENU GOLD” and “KAMDHENU GOLD TMT”. KL’s case was further that the 2021 Agreement novated/superseded/terminated the 2002 Agreement because the earlier agreement pertained to obsolete CTD/Tor steel under IS 1786:1985, whereas the 2021 Agreement governed TMT bars and “KAMDHENU NXT”.
Appearances:
Senior Advocate Chander M. Lall, along with Advocates Achuttan Sreekumar, Ankur Sudan, Swastik Bisarya, Vidhi Jain and Annanya Mehan, for the Plaintiff in CS(COMM) 130/2025 and for Defendants in CS(COMM) 569/2025
Senior Advocate Akhil Sibal, along with Advocates Sudarshan Kr. Bansal, Mohit Goel, Sidhant Goel, Abhishek Kotnala, Ridhie Bajaj, Shivang Bansal, Sugandha Shahi, Amit Chanchal Jha, Somya Khandelwal, Devansh Mishra and Nishtha Kapoor, for Defendant in CS(COMM) 130/2025 and for Plaintiff in CS(COMM) 569/2025
