Kwatra v. KEI Industries: Honest Concurrent Use Unvisited, Prosecution History Revisited
The Delhi High Court last week set right for one of its more egregious first instance trade mark law errors of 2022.
January 6’s Kwatra v. KEI Industries by the Delhi appeals court upsets last May’s decision by the court of first instance in a trade mark infringement claim over the KEI business acronym. It does so competently, though conservatively. In this story, I will cover off some talking points from this appeals decision.
To avoid duplicating effort, I will first invite attention to a detailed critique of the first instance ruling that I wrote at the time. In it, I made two key points.
First, I said that the court of first instance had ruled that the Defendant had adopted an identical acronym, with a deceptively similar logo, in the same line of business as the Plaintiffs. This was a mischaracterization of the operations of the rival traders. Further, this court had invalidated the Defendant’s reliance on the principle of honest concurrent use, and held that Section 12 of the Trade Marks Act did not protect his later adoption of a KEI logo.
Second, and more controversially, the court of first instance had thrown its weight behind a position that was strikingly ignorant of history and context. It had said that Indian trade mark law does not contemplate an honest concurrent use defence against trade mark infringement.
I will now take up the appeals decision.
Same Line of Business
From the jump, the appeals court expresses misgivings about the factual findings of the court of first instance.
It spends a long time untangling the specifics of the two traders’ trade mark registrations by class. It finds, in the event, that the Plaintiffs’ registrations protect only two slices of business. One is wires and cables (electric and telecommunication) in Class 9. The other is a registration for promotional services melded to its core business in Class 35.
This, the court of first instance had reasoned, was a lineball as far as other types of electrical and electronic products was concerned. The appeals court sees it the other way. It rules — correctly, I reckon—that the Defendant’s core business of fans, geysers, immersion rods, grills, and so on, is some distance apart from the enclaves of protection secured by the Plaintiffs’ KEI registrations.
On this issue, rules the appeals court, the court of first instance decision is ex facie erroneous.
Prosecution History
The appeals court next takes up prosecution history.
It finds that the Plaintiffs did indeed apply for the KEI trade mark for electrical products, but found the Defendant’s KEI trade mark in their way. To get around it, they volunteered before the Trade Marks Registry the position that their own services were different to the Defendant’s, and that there could be no likelihood of confusion between the two for this reason.
There is no walking this back, says the appeals court.
This is a finding on prosecution history, and it is of considerable moment. I say so because prosecution history has been hurt by its inconsistent application in trade mark litigation in recent years. (I covered off some sites of its application, with notes on recent case law, last summer.) The KEI appeals court affirms the value of consistency across prosecution and litigation so:
“A party approaching the Trade Marks Registry must be held to its statements made before the Trade Marks Registry, and cannot be permitted to make a factual assertion contrary to what it claims before the Trade Marks Registry.”
These are strong, important words. Optimistically, they should settle much of the duplicity on prosecution history in previous rulings. Even if adopted less enthusiastically, they ought to at least set a high bar for infringement Claimants to clear in asserting trade mark rights.
Going forward, this should inject some consistency into the deployment of prosecution history in litigation.
Honest Concurrent Use
These findings by the appeals court exhaust its inclination to interfere on the honest concurrent use issue. On it, the court limits itself to a couple of observations.
It reads the impugned decision closely. It notes that the court of first instance applied Supreme Court copyright precedent to a trade mark section by analogy. It also notes that, at the very least, what the statute allows as “special circumstances” would, in fact, permit an honest concurrent use defence to be raised against a trade mark infringement claim. (This is significant, for it chases away the court of first instance’s extreme position that there is no statutory accommodation for this defence at all.)
However, the appeals court simply backs off the substance of the matter. The reason for its reticence is its confidence in the strength of its other findings. For one, it stands behind its conclusion that the Plaintiffs and Defendant are engaged in differing lines of rival business. It also reiterates that it is on firm ground in reading the Plaintiffs’ prosecution history against them.
With these findings front and centre, examining the honest concurrent use issue, says the appeal court, is not necessary.
Frustratingly, this leaves the door open for honest concurrent use objections to be revived by later courts. Against them, the ‘special circumstances’ statement offers some insurance, but not much. It is certainly some way short of the more meaningful strides made by the Bombay High Court on the subject earlier the same week. In context, therefore, the KEI appeals court declining the invitation to weed out a rogue interpretation of honest concurrent use is measurably disappointing.
However, in what has been something of a welcome signature of this particular appeals court, it does set right a bad outcome. Indeed, it does so emphatically.
That, at least, is something gained.
