KEI Industries v. Kwatra: No Honest Concurrent Use Defence Against Trade Mark Infringement
An honest concurrent use defence cannot be asserted against a trade mark infringement claim. This is the controversial headline out of the Delhi High Court in a May 17 decision in KEI Industries v. Kwatra.
In this story, I take up the basis for the finding and make a short case for its revision.
The Claim
KEI Industries initiate this trade mark infringement claim in early 2021, on the strength of the business acronym KEI.
KEI, they claim, has been in use since 1968 in respect of electronics. This use props up a 1988 word mark registration and a 2007 device mark series. They are put to notice of the Defendants’ family enterprise in the same line of business in 2017. This prompts an exchange of legal notices, which ultimately turns into opposition proceedings.
The Defendants’ case is that their trade mark rights emanate from a family enterprise which set up business under Kwality Electrico India, in 1996. They claim continuity in this trade mark via a predecessor since 1966. If valid, this would give them a shot at outright priority. However, they do not succeed in making good the outright priority as the documents supporting the ownership of the 1966 trade mark do not benefit Defendant №1 directly.
The only clear path to Defendant №1’s own use of KEI, then, is a device trade mark which it claims to have adopted in 2008. The device claims the abbreviation as a standalone, with no reference to Kwality Electrico India. This invites the force of the Plaintiffs’ claim. The 2008 device mark does not appear before the Trade Marks Registry until a set of 2016 applications, which also brings it to the attention of the present Plaintiffs.
This triggers the 2017 notices and the later objections in prosecution I have already alluded to.
Priority of Use & Deceptive Similarity
The Court wastes little time in entering two key findings that break the case in the Plaintiffs’ favour.
It rules, first, that there is no case for priority-based defence, in the absence of evidence reliably tying the 1966 use claim to Defendant №1. This has two knock-ons, in turn: it binds Defendant №1 to the 2008 use date of its device mark, and it automatically casts Defendant №1 as the later user both to the Plaintiff’s 1988 word mark series and its 2007 device mark series.
The finding is a comprehensive loss for Defendant №1, who is also unable to disclose proof of use of its KEI device mark earlier than 2015.
Next, the Court shows little inclination towards entertaining Defendant №1’s case arguing out of deceptive similarity of the respective device marks. The Court holds that both the font and style of Defendant №1’s ‘KEI’ and the litigants being in the same line of business, taken together, means that “a clear prima facie case” against the Defendants is “self apparent”.
Honest Concurrent Use
This leaves the KEI Industries Court to consider one final contention.
The Defendants suggest that the bona fide use of the KEI trade mark by them and their predecessors independent of the Plaintiffs should entitle them to the benefit of an honest concurrent use defence.
Indian courts have entertained all manners of such honest concurrent use claims from infringement Defendants in the past. This is what makes the KEI Industries Court’s total refusal to entertain this defence all the more extraordinary.
Firmly and definitively, it rules:
“There is no provision in the Trade Marks Act which contemplates honest and concurrent user as a defence to a charge of infringement of trade mark.”
It is important, at this stage, to understand what honest concurrent use actually is.
It brooks very little disagreement to say that honest concurrent use is not so much a provision under the Trade Marks Act as it is a principle that safeguards certain categories of unauthorised trade mark use. (I have written about this subject in long form previously here.)
In this rendition, then, there are three important sites of application of this principle under the Trade Marks Act:
The first is the safeguarding of honestly and concurrently used trade marks from prosecutorial censure under Section 12. The second is the protection of questionably secured trade mark rights that have since acquired distinctiveness under Section 32. The third and final one is the saving of bona fide use of personal names and descriptions under Section 35.
Each of these applications stick up for a trader who uses a trade mark honestly and concurrently with that of another. The outcome, in each successful case, is a continuation of the honest concurrent user’s trade mark, whether under the duress of prosecution actions or infringement proceedings.
The KEI Industries Court’s view, then, that there is “no provision in the Trade Marks Act which contemplates honest and concurrent user as a defence to a charge of infringement of trade mark” can only refer to a Section 12 invocation.
Yet, this is not what Defendant №1 argues.
He does, indeed, contend that Section 12 protects his 2008 adoption. However, for authority, he relies on 2020’s Mittal Electronics. This decision, as I wrote at the time, strongly illustrates how the principle of honest concurrent use is coded into the saving of personal names under Section 35 of the Trade Marks Act. In other words, it invokes the broader principle of honest concurrent use, not the narrow iteration of it in Section 12.
Surely, this much ought to be clear to the Court from the fact that the dispute before it is for trade mark infringement. However, we see no acknowledgement of this fairly basic misapplication, nor, indeed, of Mittal Electronics.
Straightaway, then, KEI Industries is tarnished by a lack of appreciation for the nature and quality of the Defendant’s argument on honest concurrent use.
A Guaranteed Injunction & Misplaced History
The second limb of the finding is based on a joint reading of Sections 28(1) and 135(1) of the Trade Marks Act. These provisions on infringement and relief respectively, says the Court, combine to guarantee an injunction to a Plaintiff who successfully establishes a case for infringement. Though Section 135(1), the provision reciting relief, only sets out categories rather than specifics, KEI Industries says that it must be allowed a Section 28(1) overwrite, to permit all relief in respect of infringement.
On this reading, even if there is an honest concurrent use defence out there, it cannot interfere with injunctive relief.
The Court confirms that this is so in these words:
“Read thus, honest and concurrent user by the Defendant, of the infringing trade mark, even if it exists, is not statutorily envisaged as a ground on which the Plaintiff, whose marks has been infringed, can be denied an injunction, to which Section 135(1), read with Section 28(1), guarantees the Plaintiff.”
To anyone with a historical understanding of how honest concurrent use came to be mainstreamed into Indian trade mark law, this blasé finding can hardly fail to stir some pushback. Though several critiques could be mounted of this approach, the sheaf of settled law it most directly calls to mind is the 1963 Supreme Court decision in London Rubber.
London Rubber was — and remains — one of the most comprehensive studies on this subject in Indian history. It gives us several meaningful propositions on the framing of honest concurrent use claims. I shovel the most important of them into three short points here:
- That honest concurrent use is designed to protect smaller, prior using trade mark proprietors over larger ones by valuing trade mark use as an index of property, regardless of commercial value;
- That there must be an inquiry into the volume of use by the Claimant by assessing the commercial nature, capacity, duration and other circumstances of the honest concurrent use; and
- That an honest concurrent use claim must be considered separate from the likelihood of confusion.
The first of these points speaks to the conceptual space which honest concurrent use claims occupy. The latter two refer to the factual assessments demanded by a judicial authority seized of an honest concurrent use defence. It is instructive — and damning — that KEI Industries makes no reference whatsoever to these building blocks of the honest concurrent use defence, either via London Rubber or otherwise.
One more thing needs to be said here.
It is clear that the language of Section 12 applies only to honest concurrent use claims in registration or opposition proceedings at the Trade Marks Registry. To this extent, KEI Industries is not far wrong.
However, what it does get wrong is that this very principle of honest concurrent use, with no loss of effect, is regularly evaluated as part of a general defence to trade mark infringement. It ought to be impossible to miss these instances on even a surface-level survey of the honest concurrent use defence through the pages of recent trade mark law history in India. They represent a fairly wide cross-section of cases where honest concurrent use has been deployed within infringement frameworks. They emanate from diverse sources too; the Delhi, Bombay, and Kolkata High Courts among them. To endorse the blanket position that honest concurrent use has no application as an infringement defence is to effectively set all this case law to one side.
Remarkably, this is precisely the burden that the KEI Industries Court brings to bear upon itself.
What we get from KEI Industries in its stead is a single reference to the 1994 Supreme Court decision in Sumeet Machines.
Sumeet Machines, as I’ve discussed previously, offers some good pre-1999 Act grounding on the acquiescence defence in Indian trade mark law. It has little connection, though, with honest concurrent use claims. In fact, the Court says as much, admitting that it is almost entirely bereft of trade mark context. The Court’s own reading identifies Sumeet Machines as a case where a mislabelled honest concurrent use defence was urged by Defendants against copyright infringement. Sumeet Machines shut down that reliance on Section 12(3) of the 1958 Act — now repealed and folded into Section 12 — and held it could not be pressed as a defence.
As in copyright law, says the Court here, so in trade mark law.
It holds that Sumeet Machines can also be:
“an authority for the proposition that a provision which permits grant of concurrent registrations of identical or similar trade marks, if the use of the latter mark is honest and concurrent, cannot be used as a defence to a charge of infringement.”
The lack of reference to easily available substantive honest concurrent use law only exaggerates the effect of cherry-picking a finding from a different discipline of intellectual property law. Either way, KEI Industries is guilty of a staggering misalignment with precedent.
To summarize: KEI Industries does not consider how honest concurrent use applies to the facts before it. It does not appreciate the substance of the defence before it, nor refer to precedent that would have made sense of that substance. It tries to force Section 12 onto infringement facts that do not call for its application. For its labours, it manages to extract only the narrow truism that a provision to protect honestly and concurrently adopted trade mark rights in prosecution may only be applied to trade marks in prosecution.
Whether or not the final outcome itself is justifiable on deceptive similarity grounds, the Court’s observations on honest concurrent use are of urgent concern.
The decision requires a re-look at the earliest opportunity.
