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

3. The admitted facts are that the respondents through their agents had registered trade mark "Raleigh" and other trade marks (12 marks) under the Indian Merchandise Marks Acts, 1889 (4 of 1889) and the Trade Marks Act, 1940 (5 of 1940).The Trade and Merchandise Marks Act, 1958 (43 of 1958) (for short, the Act) which came into force with effect from October 3, 1958 has repealed the predecessor Act and how the Act is in operation. The respondents entered into an agreement with Sudhir Kumar Sen on November 3, 1948 to render technical know-how to the Indian Company to be formed which would manufacture bicycles and market them under Raleighs Indian Trade marks. Pursuant thereto, a company called Sen Raleigh Ltd. came into existence which manufactured cycles with technical assistance by the respondents-Raleigh Industries of U.K. and marketed the bicycles with a brand name and trade marks belonging to the respondents. On April 24, 1954, Sen Raleigh was recorded as permitted users of the trade marks. By agreement dated December 29, 1962, Sen Raleigh and the respondents agreed that Sen Raleigh was registered user for further period up to 1976. Sen Raleigh was taken over by the Government of India on September 8, 1975 under the IDR Act and the Government took over the management of Sen Raleigh Ltd. The agreement dated December 29, 1962 was modified and the respondents were given option to terminate the agreement. An agreement dated December 20, 1976 was entered into between the appellant, as registered user and the respondent in respect of 12 trade marks for a period of 5 years. On March 28, 1978, joint application by Sen Raleigh and the appellant duly signed by the respondent as proprietor and Sen Raleigh Ltd. as registered user came to be made, before the Registrar of Trade Marks. On October 24, 1980, Sen Raleigh was nationalised and got vested in the appellant-Corporation by publication of the notification under IDR Act. On March 5, 1982,the respondent wrote a letter to the appellant that in the absence of a new agreement they were instructing their advocate to prevent the appellant by restraint proceedings to use the trade mark effective from April 1, 1982.4. On March 24, 1982, the appellant made an application under Sections 32, 46 and 56 of the Act against the respondents in the High Court of Calcutta in Suit No. 266/92 pleading inter alia, that the respondents had failed to provide technical assistance by passing the technical know-how to Sen Raleigh after November 1, 1976. Neither the appellant nor Sen Raleigh were registered users of the trade mark after November 1, 1976 under Section 48 (2) of the Act up to the date of one month before filing that rectification application. A continuous period of 5 years or longer had passed and the trade mark had not been bona fide used by the respondent. Having regard to the extended nature of non-user of the concerned trade mark after November 1, 1976, any further use of the said trade marks by the respondents was likely to deceive and cause confusion to the trade and public alike in India etc. Simultaneously, an application for registration of three trade marks in their favour was filed by the appellant on March 25, 1982. By proceedings dated June 13, 1984, the Registrar of Trade Marks informed the appellant that the registered users applications were abandoned since the appellant failed to comply with the statutory requirements. The learned single Judge dismissed the application by his judgment dated September 13, 1990 holding, inter alia, that any proprietor mentioned in Section 46 (1) (b) of the Act extends to bona fide user other than registered users. Special circumstances as a defence were available to the respondent for non-user even after 1979, the supply-technical know-how by the respondent was not totally absent. After termination of the collaboration and user agreement between the appellant and the respondents it was likely to cause confusion and deception amongst the trade and public. The conduct of the respondents was not violative of Section 32(b) and (c). The Court in those circumstances declined to rectify the trade mark and strike it off from the register of trade marks. On appeal, the Division Bench in Appeal No. 13/91 confirmed the same holding that on and from October 25, 1980, the respondent had allowed and permitted the appellant to manufacture bicycles etc. according to its specifications and to pass off the goods under their trade marks. Though the collaboration and registered user agreements stood expired from October 31, 1981, no agreement came to be executed nor continued to use the specifications on technical know-how. There is no specific bar for an unregistered licensee to use registered trade mark so long as there is a connection in the course of trade between the licenser and the licensee. The appellant was unable to prove that there had been no such user of the trade mark for a continuous period of 61 months or longer and the lack of bona fide intention. The expression "by any registered proprietor" in Section 46(1)(b) should not be restricted to user by proprietor or registered user who should also include bona fide or authorised user. The legislature did not intend to register proprietor to be deprived of their property at the instance of user whose use is unregistered. The expression, therefore, should not be restricted to user by the proprietor himself or any registered user but should also take into account bona fide authorised user. Non registration of the user agreement by Sen Raleigh and the appellant was due to the default of the latter. The appellant had not taken any steps to withdraw registered user applications and as such should not be permitted to take such a contradictory stand of applying for rectification at the same time. The power under Section 46 is discretionary. In view of the appellants conduct, it was taking advantage of its own wrong. The discretion, therefore, was not to be extended in favour of the appellant. Thus, this appeal by special leave.

Court's reasoning:
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.