INFRINGEMENT AND PASSING OFF OF TRADEMARK

INFRINGEMENT AND PASSING OFF OF TRADEMARK

Sana Singh Dipak Rao & Sana Singh


04/07/2020

 

An infringement action occurs on the invasion of a statutory right of the registered trademark holder. Such action may be instituted when a person uses a mark which is identical or deceptively similar to that of the registered proprietor. There are broadly two types of remedies a person has in such situations:

 

  • Infringement Suit: The registered owner of the mark has the exclusive right to institute a suit before a court having civil jurisdiction. While infringement of a trademark is a continuing offence, a suit may be filed within 3 years’ time from the date of the infringement or within 3 years’ time from the date of knowledge of infringement.

 

  • Passing off: An action for passing off is a common law remedy which allows an unregistered owner of a mark to seek civil action against misrepresentation, whether intentional or unintentional, on part of the infringer. The basis of a passing off action is that the plaintiff is likely to or has already suffered damages/ economic loss due to such misrepresentation.

 

  • Criminal Action: Chapter XII of The Trade Marks Act, 1999 provides for imprisonment for a term not less than six months which may extend up to three years and/or a fine not less than fifty thousand rupees which may extend up to two lakh rupees.

 

The court may grant the following reliefs in a suit for infringement or passing off:

 

  • Damages (nominal or compensatory) on accounts of profits obtained as a result of the unauthorized use.
  • Permanent or temporary injunction against any further unauthorized use of such mark by the defendant.
  • An order for delivery up of the infringing labels and marks for the purpose of destruction or reassure.
INFRINGEMENT AND PASSING OFF OF TRADEMARK

INFRINGEMENT AND PASSING OFF OF TRADEMARK

Sana Singh Dipak Rao & Sana Singh


03/07/2020

 

An infringement action occurs on the invasion of a statutory right of the registered trademark holder. Such action may be instituted when a person uses a mark which is identical or deceptively similar to that of the registered proprietor. There are broadly two types of remedies a person has in such situations:

 

  • Infringement Suit: The registered owner of the mark has the exclusive right to institute a suit before a court having civil jurisdiction. While infringement of a trademark is a continuing offence, a suit may be filed within 3 years’ time from the date of the infringement or within 3 years’ time from the date of knowledge of infringement.

 

  • Passing off: An action for passing off is a common law remedy which allows an unregistered owner of a mark to seek civil action against misrepresentation, whether intentional or unintentional, on part of the infringer. The basis of a passing off action is that the plaintiff is likely to or has already suffered damages/ economic loss due to such misrepresentation.

 

  • Criminal Action: Chapter XII of The Trade Marks Act, 1999 provides for imprisonment for a term not less than six months which may extend up to three years and/or a fine not less than fifty thousand rupees which may extend up to two lakh rupees.

 

The court may grant the following reliefs in a suit for infringement or passing off:

 

  • Damages (nominal or compensatory) on accounts of profits obtained as a result of the unauthorized use.
  • Permanent or temporary injunction against any further unauthorized use of such mark by the defendant.
  • An order for delivery up of the infringing labels and marks for the purpose of destruction or reassure.
OPPOSITION OF A TRADEMARK AND RECTIFICATION OF THE TRADEMARK REGISTER

OPPOSITION OF A TRADEMARK AND RECTIFICATION OF THE TRADEMARK REGISTER

Sana Singh Dipak Rao & Sana Singh


03/07/2020

 

Opposition of a Trademark:

 

A ‘Trademark opposition’ means an objection filed by third parties, against registration of a trademark within 4 months of the advertisement of the trademark to be opposed. Any person, natural or legal, may file an opposition with the Registry. This includes any individual person(s), companies, partnership firm(s) and trust(s). Notably, the person filing the opposition need not have any commercial interest in the matter or a prior registered trademark in the Registry.

 

Following are the grounds under which an opposition may be filed:

 

  • The mark which is devoid of any distinctive characteristic or includes indications which may serve in trade to designate quality, quantity, intended purpose, values, geographical origin or the time of production.
  • The mark is likely to deceive the public or cause confusion. This includes any mark which may be identified with an already registered trademark or that have become customary in the practice of trade.
  • The mark contain matters which are likely to hurt the religious sentiments of any class or section of people.
  • The mark is prohibited under the Emblem and Names Act, 1950.

 

Following are the steps to file an opposition:

 

  • Filling a Notice of opposition: Any person who wishes to file a notice is required to mention important specifics concerning, details of the opposed application, details of the opposing party and grounds for opposition. Such notice must be filed within 4 months of the advertisement of the mark. If the Registry is satisfied with the notice, it will then serve a copy to the concerned applicant. The applicant has 2 months from date of receipt of the notice to file a counterstatement or else the Registry may deem the application of the trademark as abandoned.

 

  • Filling of Evidence: The opponent upon receiving a copy of the counterstatement is required to file evidence by way of affidavit within 2 months (which is extendable by 1 month) from the date of receipt of the counterstatement. If the opponent fails to do so, the opposition will be treated as abandoned and the application may proceed towards registration. Similarly, the applicant is also provided with 2 months for filing similar evidence with the Registrar. The Registrar may, upon request extend the period of filing by 1 month. If applicant does not wish to submit any evidence and wishes to instead rely on facts already stated in the counter statement, should be intimated in writing to the Registrar and the opponent. If required, the parties may file additional evidence subsequently.
  • Hearing of the parties: Upon completion of the evidence stage, the Tribunal generates a hearing notice specifying the date on which the parties will be heard. Such a notice must be sent by the Registrar at least 1 month before the date of first hearing. Within 14 days from the receipt of such notice, whoever intends to appear will notify by submitting the relevant form to the Registrar. Any party who fails to do so may be treated as not desiring to be heard and the matter may proceed accordingly. After hearing the opponent and the Applicant, the Registrar is liable to decide whether the concerned application of trademark is refused or has the opposition been cancelled.

 

Rectification of Trademark Register:

 

Any ‘person aggrieved’ by the registration of a trademark, may file for removal, cancellation or rectification of the register of trademarks. Rectification is used to remove a registered trademark from the register which is not used within 5 years from the date of its registration. However, unlike in the opposition proceedings, only a person who has a ‘substantial interest’ or a person who would be ‘substantially damaged’ if the mark remained can file for rectification. Moreover, a collective mark may also be removed from the register if the manner in which the mark has been used has caused it to become liable to mislead the public as a collective mark.

 

Following are the grounds under which an application for rectification can be filed:

 

  • The trademark was registered without any bonafide intention that it should be used in relation to the goods and services for which it was originally registered and there has been no use of the trademark for 3 months before the date of the application.
  • The entry made in the register was made without sufficient cause or was obtained by fraud or misrepresentation of facts, or if the mark is deceptively similar to an earlier registered trademark.
  • The registered trademark has not been used for a continuous period of 5 years from the date of registration of trademark.
  • The Proprietor is no longer competent in case of the goods and the services for which the mark is registered or there is no longer any public advantage for the mark to remain registered.

 

The law prescribes the following procedure to file an application for rectification:

 

  • An application for rectification of an entry relating to a trademark should be accompanied by a statement. The statement must set out the nature of the Applicant’s interest, the facts upon which he basis the rectification and the relief which he seeks.
  • Within 2 months (extendable by 1 month) from the receipt of the copy of such application, the Registered Proprietor send to the Office of the trademark Registry a counterstatement stating the grounds on which the application for the rectification is contested and the same be served to the applicant within 1 month from the receipt of the same. The parties may also file evidence which in the digitized form and uploaded in the Trade Mark Automation System and subsequently integrated with the relevant records of the proceedings.
  • Afterwards, the Registry will send a notice in writing to the registered proprietor stating the grounds under which the trademark proposes to rectify the register. The notice will specify the time at which the parties will be heard. On the date fixed for hearing, the Hearing Officer communicates to the parties its decision along with the grounds of the same.
PROMISSORY ESTOPPEL HAS TO YIELD TO LARGER PUBLIC INTEREST

PROMISSORY ESTOPPEL HAS TO YIELD TO LARGER PUBLIC INTEREST

Vikas Goel  Vikas Goel


02/07/2020

 

INTRODUCTION

In a recent pronouncement[1], the Apex Court upheld amendment notifications issued by the Central Government (“Government” / “UOI”) limiting the extent of amount of benefit promised in the original notification. The genesis of the judgement is that doctrine of promissory estoppel cannot be invoked where invocation of the same against the Government is contrary to principal of equity or public interest.

 

FACTS OF THE CASE

In order to boost economic growth and employment opportunities in the district of Kutch (Gujarat), which was struck by a devastating earthquake on 26.01.2001, the Government issued a notification dated 31.07.2001[2] giving certain excise duty benefits to new industries new industrial units set up in the Kutch District prior to July 31, 2003 (which was subsequently extended to December 31, 2005). Such industrial units were entitled to refund of full duty paid by on finished goods, in cash/personal ledger account (“PLA”) for a period of 5 years from the date of commencement of commercial production.

 

Various amendments were made to original notification dated July 31, 2001 between September 2001 to September 2004 to clarify certain matters including extending cut -off date of for setting up new industrial units from 31.07.2003 to 31.12.2003. One of the amendments made with effect from 06.08.2003[3] provided that PLA payment could be made to discharge duty liabilities on the finished products only after exhausting the CENVAT credit balances.

 

Another amendment notification dated 27.03.2008[4] issued by the Government provided that the benefit of refund of excise duty would be granted with reference to value addition done by the industrial units, which was notionally fixed on 34% for the commodity manufactured. This notification also empowered the Commissioner to decide special rate in a situation where the actual value addition was more than the deemed value addition, as notionally fixed. Resultantly there was a reduction in the amount of refund of excise duty to which the industrial units setup pursuant to original notification dated July 31, 2001 were entitled. The industrial unit owners challenged amendment notification dated 27.03.2008 before the Hon’ble Gujarat High Court (“GHC”) contending that they had set up their industrial unit at district Kutch, as against Maharashtra by incurring additional substantial costs of approx. Rs.2200 PMT, only because of the incentive promised by the Government to refund excise duty paid in Kutch Area. Industrial unit owners (Petitioner before the GHC) challenged the notification dated 27.03.2008 on the ground that the said notification changed the entire basis of the incentive exemption and had the effect of substantially reducing the entitlement of refund from nearly 100% of the duty paid to only 34% of such duty amount. It was also contended that the amendment notification curtailing the promised incentive midway were in breach of the doctrine of principal estoppel.

 

During pendency of the writ before the GHC, Government issued another notification dated 10.06.2008[5] leading the petitioners to amend their writ petition for challenging even the said notification dated 10.02.2008. It appears that by way of yet another amendment notification dated 03.10.2008[6], the Government revised the deemed value addition at 75% in respect of the products manufactured by the eligible industries without giving them any option of applying for special rate.

 

Decision by GHC

GHC allowed the writ petitions vide judgement and order dated 10.03.2010 holding that the amendment notifications dated 27.03.2008 and 10.06.2008 were retrospective and not retroactive. It was further held that bar of promissory estopple would operate against the Government. Accordingly, the GHC set aside the said amendment notifications; with direction for refund of differential amount by the Government to such owners.

 

Decision by the Hon’ble Supreme Court of India (“SC”)

Union of India (“UOI”) challenged the decision of the GHC before the SC raising following grounds:

 

  • Notification dated 27.03.2008 was only clarificatory in nature and did not amount to withdrawing exemption benefit provided by Notification dated 31.07.2003.

 

  • Power to grant exemption from levy and collection of duty includes power to rescind, modify or withdraw such exemption, as per Section 5A of the Central Excise Act.

 

  • The provisions granting refund of excise duty were being abused by unscrupulous manufacturers who indulge in different type of tax evasion tactics.

 

  • Such rampant abuse being against the object and purpose of the original notification, the amendment notification were issued. As such there is no contravention of the doctrine of promissory estoppel.

 

  • Prevention of misuse of excise duty exemption was considered expedient in public interest and hence the Government modified the refund mechanism allowing refund only to the extent of duty payable on actual value addition made by the manufacturers undertaking manufacturing activities in these areas.

 

  • The GHC failed to appreciate that amendment notification was issued by the Government in public interest and in the interest of revenue.

 

  • Doctrine of promissory estopple cannot be invoked against exercise of powers under the statute/

 

  • The bar of promissory estopple is not applicable in fiscal matters.

 

On the other hand, the industrial unit owners supported the judgement passed by the GHC and contended that the amendment notification dated 23.03.2008 was violative of doctrine of promissory estoppel. The industrial unit owners made following submissions:

 

  • The amendment notification had the effect of reneging upon the promise made by the Government to grant incentive by way of refund of duty paid in cash for a period of 5 years starting from the date of commercial production.

 

  • High Court correctly applied the doctrine of promissory estoppel. The incentive under the original notification was not dependent upon the extent of value addition, which concept was introduced only by way of amendment notification.

 

  • The exemption was granted by way of refund of duty paid in cash or from Personal Ledger Account (“PLA”). It was contended that payment from PLA is not necessarily duty on value addition.

 

  • Amendment notifications dated 27.03.2008, 10.06.2008 and 03.10.2008 demonstrate that Government only jettisoned the concept of value addition fixed arbitrarily at 75%, without option of special rate, irrespective of the supposed valuation. There are cases where the input used for final product are subject to Nil input stage duty.

 

  • Mere misuse of exemption notification by some manufacturers cannot justify the withdrawal of incentive since there is an adequate mechanism with the department concerned to curb, deduct, as well as punish the offenders for any such misuse. The notification dated 31.07.2001 itself provided for recovery of refunds along with interest if such refund were wrongly claimed/granted.

 

After examining the matter, the Hon’ble Supreme Court of India set aside the order passed by the GHC and upheld the amendment notifications dated27.03.2008 and 10.06.2008. SC considered its earlier decisions on retrospectivity/ clarificatory/ applicability of promissory estoppel in the fiscal statute. The Hon’ble Court held that doctrine of promissory estoppel must yield when the equity so demands if it can be shown having regard to the facts and circumstances of the case that it would be inequitable to hold the Government or the public authority to its promise, assurance or representation. The Hon’ble Court further held that determination of applicability of doctrine of promissory estoppel against public authority/Government hinges upon balance of equity or public interest. In case there is a supervening public interest, the Government would be allowed to change its stand. The Court held that the amendment notification were only clarificatory in nature and are “to explain” the earlier notification, which did not take away any vested right conferred by the original notification and such a clarificatory amendment will have retrospective effect. The Apex Court was persuaded with the findings of the analysis carried out by the Excise Department showing some of the manufacturers indulging in various tax evasion tactics, to be a sufficient justification for the Government to issue the amendment notifications. Finding that the object of amendment notifications being prevention of tax evasion, SC held that the amendment notifications were issued in public interest and in the interest of Revenue and hence could not be said to be bad in law, arbitrary and/or hit by the doctrine of promissory estopple. SC, however, clarified that refund granted/paid prior to amendment notification shall not be reopened.

 

CONCLUSION

This judgement summarises the law with respect to application of doctrine of promissory estopple. It holds that the bar of promissory estopple would not apply if in the facts of the given case it is inequitable or is against the public interest. It further held that bar of promissory estopple would not apply against the Government so long as its impugned action rest on exercise of statutory powers. Undeniably, the enunciation of the SC in the present case is based on settled principle, however, question remains that can genuine and honest industrial units owners be made to suffer simply because a few entities had resorted to abuse of the exemption notification. The Apex Court did not deal with the contention of the industrial unit owners to the effect that in the original notification dated 31.07.2001 there was a mechanism in place to curb, detect and punish the defaulters/offenders and also for recover of refund wrongly claimed/allowed along with interest and in view of such provisions impugned amendments were not necessary.

 

 

 

[1] Union of India & Another versus M/s V.V.F Limited & Another  decided on 22.04.2020

Civil Appeal Nos. 2256-2263 OF 2020- In the article, only the facts pertaining to matters arising out of Kutch District are    considered. Supreme Court disposed of similar matters arising out of decision of Gujarat High Court, Sikkim High Court and Guwahati High Court.

[2] Central Excise Exemption Notification No. 39/2001-CE dated 31.07.2001.

[3] Notification No. 65/2003-CE dated 06.08.2003

[4] Notification No. 16/2008-CE dated 27.03.2008

[5] Notification No.33/2008 dated 10.06.2008

[6] Notification No. 51/2008 dated 03.10.2008

NEW COMPREHENSIVE RULES NOTIFIED FOR MSMEs REQUIRING UDYAM REGISTRATION

NEW COMPREHENSIVE RULES NOTIFIED FOR MSMEs REQUIRING UDYAM REGISTRATION

 Gunjan Gupta


29/06/2020

 

The Ministry of Micro, Small and Medium Enterprises (MSME Ministry) vide its notification dated June 26, 2020 (Notification) superseded its earlier notifications dated June 01, 2020; June 30, 2017; November 01, 2013 and October 05, 2006 and notified the composite criteria of investment and turnover for classification of the enterprises into micro, small and medium category and the procedure to apply for Udyam Registration, with effect from July 01, 2020.

 

Thresholds for MSME Classification

 

The thresholds for classifying an enterprise into micro, small and medium category are as under:

 

MSME CLASSIFICATION

Composite Criteria: Investment and Turnover

Classification

Micro

Small

Medium

Manufacturing & Services

Investment in Plant and Machinery    or Equipment              <= INR 1 crore

and

Annual Turnover <= INR 5 crore

Investment in  Plant and Machinery     or Equipment              <= INR 10 crore

and

Annual Turnover <= INR 50 crore

Investment in  Plant and Machinery or Equipment              <= INR 50 crore

and

Annual Turnover <= INR 250 crore

 

It is noteworthy to mention that the new MSME Classification covers only the manufacturing and service enterprises and excludes the trading enterprises from its purview.  

 

Udyam Registration of Existing Enterprises and New Enterprises

 

The enterprises falling under the micro, small and medium category would be required to obtain an Udyam Registration Number (URN) by registering itself on Udyam Registration Portal. No enterprise should obtain more than one URN, however, it can mention any number of activities including manufacturing or service or both in one URN.

 

All existing enterprises registered under Entrepreneur Memorandum-Part-II or Udyog Aadhaar Memorandum needs to register again on Udyam Registration Portal on or after July 01, 2020. It is important to note that all enterprises registered till June 30, 2020 would be re-classified in accordance with this Notification. Further, the registrations obtained by the existing enterprises prior to June 30, 2020 would continue to be valid until March 31, 2021.

 

Linking of MSME Classification with ITR and GSTIN

 

The MSME Ministry has clarified that the new MSME classification would be linked with Income Tax Return (ITR) and the Goods and Services Tax Identification Number (GSTIN).

 

The Notification provides that the expression “plant and machinery or equipment” of an enterprise, would have the same meaning as assigned to the plant and machinery in the Income Tax Rules, 1962 framed under the Income Tax Act, 1961 (IT Act) and would include all tangible assets (other than land and building, furniture and fittings). Further, it also states that the calculation of investment in plant and machinery or equipment would be linked to the ITR of the previous years filed under the IT Act and in case of a new enterprise, where no prior ITR is available, the investment would be based on self-declaration of the promoter of the enterprise and such relaxation would end after March 31 of the financial year in which it files its first ITR.

 

Further, the Notification also clarified that the export of goods or services or both, would be excluded while calculating the turnover of any enterprise, for the purpose of classification of an enterprise into micro, small or medium category. It is also provided that the information with regards to turnover and export turnover of an enterprise would be linked to the IT Act or the Central Goods and Services Act, 2017 and the GSTIN.

 

All the enterprises having GSTIN listed against the same Permanent Account Number (PAN) shall be collectively treated as one enterprise and the turnover and investment figures for all such enterprises would be seen together and the aggregate values would be considered for determining the applicable category.  

 

Updation of information and transition period in classification

 

An enterprise having URN needs to update its information every year on Udyam Registration Portal, including the details of the ITR and the GST Return for the previous financial year and such other additional information as may be required, on self-declaration basis. It is important to note that failure to update the relevant information within the specified period would render the status of the enterprise as suspended. 

 

The classification of an enterprise would be updated based on the information furnished or gathered from the Government sources including ITR or GST return. In case of upward or downward change in the status of an enterprise, a communication would be sent to the enterprise about the said change. The Notification also provides for the transition period if there is an upward or downward change in the status of an enterprise.

 

With the notification of the new comprehensive rules for MSMEs, the Government has enlarged the scope of MSME sector to a great extent. Now, even the large enterprises on the basis of the new MSME Classification can get themselves registered on Udyam Registration Portal and avail the benefits/exemptions reserved for MSME sector, which were earlier not available to them.  It is important to note that the registration on Udyam Registration Portal is voluntary and not mandated by the MSME Ministry. However, for availing the benefits/exemptions available to MSME sector, the enterprises must get themselves registered on Udyam Registration Portal on or after July 01, 2020.