The Delhi High Court, while adjudicating a batch of connected appeals, addressed a nuanced legal issue under trademark law concerning the interplay between infringement and passing off. The Division Bench of Justice C. Hari Shankar and Justice Om Prakash Shukla described the dispute as a classic instance of a “Kerly impasse” i.e., a legal stalemate arising when competing rights of trademark registration and prior goodwill collide.
The controversy centred on the trademark FIELDMARSHAL, registered in 1965 by Jain Industries for centrifugal pumps. The mark was subsequently assigned to Thukral Mechanical Works in 1986. Notably, despite holding registration, neither Jain nor Thukral commercially used the mark until 1988. In contrast, PM Diesels Pvt. Ltd. (PMD), though unregistered for centrifugal pumps, had been using the mark since the 1975, thereby building substantial goodwill through prolonged market presence.
The dispute witnessed two parallel rounds of litigation initiated by the rival parties. PMD first approached the Delhi High Court in 1985, alleging infringement and passing off by Thukral, and also pursued rectification proceedings seeking removal of Jain’s trademark registration on grounds of non-use. These proceedings travelled through the IPAB, the High Court, and ultimately the Supreme Court, which observed that PMD infringed the Jain’s registration and directed de novo proceeding before the IPAB on merit. Conversely, Thukral instituted a separate suit in 1992 asserting its statutory rights as the registered proprietor of the FIELD MARSHAL mark and alleging infringement and passing off by PMD. Thus, while PMD relied primarily on prior use and goodwill, Thukral anchored its claims in trademark registration and assignment rights. Together, these proceedings culminated in the complex legal conflict characterised as the “Kerly impasse.”
At the very outset, while considering the PMD’s contention that the non-use for five years of the mark by Jain was liable to be removed as a registered mark under Section 46(1)(b) of the TMMA 1958, the Court rejected it as the non-use by Jain could not be relied upon against Thukral, who received the impugned mark’s proprietorship in year 1986, in the Section 46 proceedings. Therefore, the Bench rejected the view taken by the single judge in the previous proceedings with respect to Section 46 of TMMA 1958
On the substantive conflict between remedies, the Court examined whether an entity found to be an infringer could nonetheless restrain the registered proprietor through a passing off action. Acknowledging the evidence of PMD’s accumulated goodwill between 1975 and 1988, the Bench accepted that PMD could, in principle, maintain a passing off claim. In doing so, the Court relied on the Supreme Court’s ruling in Neon Laboratories v. Medical Technologies Ltd. (2016) 2 SCC 672, as well as the principles articulated in Kerly’s Law of Trade Marks, elucidated in Inter Lotto (UK) Ltd v. Camelot Group plc (2004) 1 WLR 955.
However, in consideration of the PMD’s right to passing of the Court dealt with an important question of law i.e., whether an infringer can seek to injunct the person whose trademark it has infringed, from using the mark, on the grounds of passing off. The Court emphasised a critical limitation i.e., success in passing off does not dislodge or negate statutory registration rights of the already registered mark. The Bench observed that prior use overrides registration only within the narrow confines of Section 33 of the 1958 Act, which protects users whose adoption predates registration. Since PMD’s use commenced long after Jain’s 1965 registration, the statutory defence under Section 33 was held to be unavailable.
Accordingly, resolving the Kerly impasse, the Court held that PMD’s goodwill could not shield it from an injunction once infringement stood established. Accordingly, the appeals were allowed, with the Bench reaffirming the primacy of valid trademark registration in the absence of a statutory prior-use defence under Section 33.
Appearances:
For Appellant: Mr. Hemant Singh, Mr. Sachin Gupta, Mr. Rohit Pradhan, Mr. Ajay, Ms. Prashansa Singh, Mr. Adarsh and Ms. Mahima Chanchalani, Advs.
For Respondent: Mr. N. Mahabir, Mr. P.C. Arya, Ms. Noopur Biswas and Mr. Udit Gupta, Advs.
