Case: Cycle Corpn. Of India Vs. T.I. Raleigh Inds. Pvt. Ltd.

bona fide user of the trade mark by unregistered user. It must, therefore, be held that though the deemed presumption under sub-section (2) of Section 48 is referable to the permitted user or the registered user and it does not extend to unregistered permitted user, the connecting link of passing off the goods between the licensors trade mark and the licensee should bona fide be with the permission or consent which may be express or implied by long course of dealings. It would connect the registered proprietor and the user of the trade mark by the unregistered licensee. The appellant must be presumed by course of conduct that he is a bona fide user for the purpose of Section 46(1)(b). 13. In K.R. Beri & Co. v. The Metal Goods Mfg. Co. Pvt. Ltd., AIR 1980 Delhi 299, the Division Bench construed Section 48(2) and held that an unregistered user of the trade mark even with the consent of the proprietor cannot be construed to be a registered user under Section 48(1) and such construction renders sub-section (2) of Section 48 surplusage or otiose which is impermissible by statutory construction. We have given anxious consideration to the reasoning therein. On strict interpretation, the view of the Division Bench may be correct but it is correct to hold that by a bona fide user of an unregistered user when connection between the proprietor of the trade mark and the permitted user in relation to passing off the goods under the trade mark are proved, it does not render sub-section (2) of Section 48 surplusage or otiose. 14. It is true that the burden lies on the registered proprietor of the trade mark to establish the exceptions provided under Section 46(3). Equally, the applicant for rectification also prima facie shows non-user for the relevant period. Then the burden shifts to the proprietor of the trade mark to affirmatively prove the special circumstances for non-user of trade mark. It must be shown that the non-use of trade mark is due to special circumstances of the trade and not due to some other cause which would have operated, whether the special circumstances had arisen or not. Although the special circumstances of trade taken by themselves would have prevented the use of the trade mark. If the non-user was, in fact, due to some other circumstances and would have occurred whether the circumstances and would have occurred whether the circumstances had followed or not, sub-section (3) would not apply. It must, therefore, be duty of the registered proprietor to show that non-user was strictly due to the special circumstances of trade and not of any intention on the part of the registered proprietor not to use the trade mark during the relevant period.15. Though there was a ban on import of the Raliegh cycles manufactured outside India and passed off under the registered mark of the respondents as a registered proprietor, the circumstances do not attract sub-section (3) of Section 46 to relieve the respondent to establish non-user, but on the facts of this case, we have the admitted position that Sen Raleigh, admittedly, was a registered user through which the appellant had bona fide used the registered trade mark of the registered proprietor. There is no discontinuance or non-use of the trade mark by the respondent to establish the special circumstances in this case. It is also not necessary to go into the question whether the application filed by the appellant under Section 48(1) and its pendency would be special circumstance in favour of the respondent. Suffice it to hold that sub-section (3) of Section 46 is not attracted to the facts in this case. 16. The question then is : whether the discretion has been properly exercised by both the Division Bench as well the single Judge in refusing to take off the trade mark from the register by striking off trade mark from the register of the Registrar of Trade Marks ? 17. It is true that while exercising discretion, the Court under Section 46 of the Act should take into consideration not only commercial interest of the parties but also public interest : In para 21.82 at page 386 of the Law of Trade Marks and Passing-off by P. Narayanan (4th Edn.), it is stated that the Court or the Registrar has discretion in granting or refusing an application for rectification. Ordinarily, however, the mark will be expugned (taken off) when the factual circumstances necessary for the removal are established unless it is shown that the case comes within the exceptions provided in sub-section (3). The High Court refused to exercise the discretion to strike off the trade mark from the register. It is seen that the appellant had not abandoned, at any point of time, the use of the trade mark of the respondent-registered proprietor till filing of the application. Though the appellant has not used the trade mark by itself since 1954 and after the expiry of the permitted use by Sen Raleigh until the notice was issued by the respondent directing the appellant not to use the trade mark, the appellant came to use the same in passing off bicycles manufactured by it under trade mark of the respondent. It is not relevant for the purpose of Section 46(1)(b) whether the bicycles were manufactured with the assistance of technical know-how passed on by Sen Raleigh or the permitted user. Suffice it to state that the appellant, as a fact, had used the trade mark of the respondent in passing off the bicycles manufactured by it. The High Court, in our view, declined for good reason, to rectify the trade mark under Section 46(1)(b) of the Act. We are, also not persuaded to take a different view from that of the High Court. In these circumstances, we are of the view that the High Court has properly exercised its discretion and refused to rectify and strike off the trade mark from the register of trade marks of the Registrar.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]10. It would, therefore, be clear that a permitted use of the trade mark should be done under sub-section (1) of Section 48. It should be either by the registered proprietor of the trade mark or a person other than the registered proprietor registered under Section 48(1) to use the trade mark by operation of sub-section (2). An unregistered person under Section 48(1) or a person who did not register under Section (1) of Section 48 shall not be deemed to be a registered user for the purpose of Section 46 or any other law.11. The High Court recorded a finding and it is not disputed across the bar, that the appellant had entered into an agreement with Sen Raleigh which was a permitted user and used the trade mark till November 1, 1976 and thereafter by registered user agreement dated December 20, 1976 used trade mark for a period of 5 years. It is not in dispute that till date of filing of the application, the appellant used the trade mark in passing off the bicycles under the trade mark of theadmitted position and in the facts and circumstances, we are of the view that the appellant was a bona fide user of the trade mark of the respondent in passing off the bicycles under the trade mark of the respondent who, admittedly, is a registered proprietor. It is true, as held by this Court, that to get a trade mark registered without any intention to use it in relation to any goods but merely to make money out of it by selling it to others, the right to use it as a commodity would be trafficking in that trade mark. It requires to be prevented and prohibited. The Court would not lend assistance to such registered proprietors of the trade mark. There must be real trade connection between the proprietor of the trade and licensee of the goods and the intention to use the trade mark must exist at the date of the application for registration of trade mark and such intention must be genuine and bona fide and continue to subsist in order to disprove the charge of trafficking in trade mark. It is a question of fact in everyquestion was considered by this Court in American Home Products Corporation v. Mac Laboratories Pvt. Ltd., 1986(1) SCC 465 in paragraphs 38 and 39 and they need no reiteration.12. It is seen that preceding the nationalisation of the cycle manufacturing industry under the IDR Act, the respondent had a collaboration agreement with Sen Raleigh who was registered user under Section 48. From him, the appellant came to succeed by statutory operation. It was, therefore, not a case of getting the trade mark registered under the predecessor Act and continuing under the Act for trafficking of the trade mark. It is true that under Section 48(1) either the registered proprietor or a permitted person is required to register as permitted user. The benefit of Section 46 would be available during the period for which the agreement registered and user continued in furtherance thereof. It appears that even an unregistered licensee, so long as there is unbroken connection in the course of the trade between the licenser and the passing off licensees goods under the trade mark, there would be sufficient connection in the course of the trade between the proprietor and bona fide user of the trade mark by unregistered user. It must, therefore, be held that though the deemed presumption under sub-section (2) of Section 48 is referable to the permitted user or the registered user and it does not extend to unregistered permitted user, the connecting link of passing off the goods between the licensors trade mark and the licensee should bona fide be with the permission or consent which may be express or implied by long course of dealings. It would connect the registered proprietor and the user of the trade mark by the unregistered licensee. The appellant must be presumed by course of conduct that he is a bona fide user for the purpose of Section 46(1)(b).It is true that the burden lies on the registered proprietor of the trade mark to establish the exceptions provided under Section 46(3). Equally, the applicant for rectification also prima facie shows non-user for the relevant period. Then the burden shifts to the proprietor of the trade mark to affirmatively prove the special circumstances for non-user of trade mark. It must be shown that the non-use of trade mark is due to special circumstances of the trade and not due to some other cause which would have operated, whether the special circumstances had arisen or not. Although the special circumstances of trade taken by themselves would have prevented the use of the trade mark. If the non-user was, in fact, due to some other circumstances and would have occurred whether the circumstances and would have occurred whether the circumstances had followed or not, sub-section (3) would not apply. It must, therefore, be duty of the registered proprietor to show that non-user was strictly due to the special circumstances of trade and not of any intention on the part of the registered proprietor not to use the trade mark during the relevant period.15. Though there was a ban on import of the Raliegh cycles manufactured outside India and passed off under the registered mark of the respondents as a registered proprietor, the circumstances do not attract sub-section (3) of Section 46 to relieve the respondent to establish non-user, but on the facts of this case, we have the admitted position that Sen Raleigh, admittedly, was a registered user through which the appellant had bona fide used the registered trade mark of the registered proprietor. There is no discontinuance or non-use of the trade mark by the respondent to establish the special circumstances in this case. It is also not necessary to go into the question whether the application filed by the appellant under Section 48(1) and its pendency would be special circumstance in favour of the respondent. Suffice it to hold that sub-section (3) of Section 46 is not attracted to the facts in thishowever, the mark will be expugned (taken off) when the factual circumstances necessary for the removal are established unless it is shown that the case comes within the exceptions provided in sub-section (3). The High Court refused to exercise the discretion to strike off the trade mark from the register. It is seen that the appellant had not abandoned, at any point of time, the use of the trade mark of the respondent-registered proprietor till filing of the application. Though the appellant has not used the trade mark by itself since 1954 and after the expiry of the permitted use by Sen Raleigh until the notice was issued by the respondent directing the appellant not to use the trade mark, the appellant came to use the same in passing off bicycles manufactured by it under trade mark of the respondent. It is not relevant for the purpose of Section 46(1)(b) whether the bicycles were manufactured with the assistance of technical know-how passed on by Sen Raleigh or the permitted user. Suffice it to state that the appellant, as a fact, had used the trade mark of the respondent in passing off the bicycles manufactured by it. The High Court, in our view, declined for good reason, to rectify the trade mark under Section 46(1)(b) of the Act. We are, also not persuaded to take a different view from that of the High Court. In these circumstances, we are of the view that the High Court has properly exercised its discretion and refused to rectify and strike off the trade mark from the register of trade marks of the Registrar.