Rights of a TM Proprietor v. Rights of a Permitted User

Our Associate, Sandeep Gupta discusses “Rights of a TM Proprietor v. Rights of a Permitted User”

Recently in a suit for passing-off filed by Sunstar Joint Stock Company, the Hon’ble Delhi High Court granted an ad-interim injunction against the defendant, Arvind Kumar Aggarwal. Sunstar, a Vietnamese company, alleged that it was the proprietor of the trade marks THAI DUONG and THAI DUONG & Star Design for cosmetics and functional herbal products. It entered into an agreement with the defendant for manufacturing, packaging and exporting henna hair dye in 10 gm sachets under the mark THAI DUONG. The henna hair dye was not sold in India, rather it was simply exported for sale outside of India.  The plaintiff also alleged that, in 2018, the defendant obtained a registration for the trade mark THAI DUONG on the basis of proposed use.  

The defendant contended that Sunstar is not the user of the trade mark in India and it cannot claim better rights against a registered proprietor of the mark.

The Court held that the defendant was the permitted user of the trade mark THAI DUONG.  The court stated that, as per the provisions of the law, permitted use of the trade mark by the defendant would be deemed to be use by Sunstar. The court further stated that, as per the provisions of law, export of the henna solely for export purposes under the mark THAI DUONG would qualify as use of the trade mark in India.

The court held that the essentials of a prima facie case, balance of convenience and irreparable harm were fulfilled. Accordingly, the Court granted an ad-interim injunction in favour of Sunstar restraining the defendant from using the trade mark THAI DUONG.

This case reinforces the well-settled position of law that the application of a trade mark to goods manufactured in India, solely for the purpose of export, amounts to ‘use’ of the mark under Indian trade mark law. It also reiterates that use of a mark by a permitted user inures to the benefit of the prior adopter of the mark, as opposed to the permitted user of the mark. This case is a prime example of the fact that India safeguards the rights of those that are the first to use, and not the first to register, a mark in India.

Citation: Sunstar Joint Stock Company & Anr. Vs. Mr. Arvind Kumar Aggarwal & Anr [CS(COMM) 223/2020] order dt. 3.7.20