Once The Licence Is Revoked, Any Use Of The Trademark By Ex-Licensee Would Amount To Infringement: Delhi High Court

The bench of Justice Sachin Datta held that an ex-licensee cannot be allowed to use the mark after termination of license. Further, the licensor has a right and duty to ensure the consistency of the goods or services being sold and advertised under its mark and take action against any infringement of the mark.

The Court held that the Court exercising powers under Section 9 of the A&C Act cannot examine the legality of the termination of the license agreement as it would be the for the arbitral tribunal to decide and compensate the aggrieved party if the termination is found to be illegal.

Facts

The respondent was developing a project on a 7.587-acre land in Faridabad, called "RPS Infinia," starting in 2010. In May 2021, the respondent approached the petitioners for branding and sales services. They entered into a Memorandum of Understanding (MOU) and two consultancy agreements on June 28, 2021.

The project was to be rebranded as "WTC Faridabad," with the petitioners claiming rights to this brand. The petitioners also asserted rights to the "World Trade Center Faridabad" brand, based on a License Agreement with "World Trade Centers Association, Inc."

The respondent allegedly used the petitioners' brand incorrectly, affecting its image, and failed to make payments as agreed. Disputes led to a legal notice from the petitioners on May 12, 2023, terminating the agreements and demanding the cessation of brand/logo use.

Despite attempts to resolve the matter amicably through emails and meetings, no settlement was reached.The petitioners issued a follow-up notice on September 7, 2023, but the respondent didn't comply.

The petitioners claimed that the respondent expanded the project to adjoining land and used the "12th Avenue" and "World Trade Centre, Faridabad" brands, despite the termination of agreements.

The petitioners served the respondent with a legal notice on October 4, 2023, invoking arbitration based on the MOU and agreements. Thereafter, the petitioner approached the Court under Section 9 of the A&C Act seeking to restrain the respondent from using its mark.

Contention of the Parties

The petitioner sought the injunction against the respondent on the following grounds:

• That even after terminating the MOU and Agreements on 12.05.2023, the respondent continued to use the petitioners' brands, such as "World Trade Center Faridabad," "WTC Faridabad," and the WTC Logo, to promote "RPS Infinia" and "12th Avenue."
• That the respondent was misleading the public by creating the false impression that these projects were associated with the World Trade Centre brand.
• That once the petitioner terminated the agreements, the respondent had no right to use the licensed marks, and this amounted to infringement of their rights and public deception.

The respondent made the following counter-arguments:

• That the petitioners approached the court in October, five months after the termination of the MOU and Agreements on 12.05.2023, therefore, it is not entitled to get the interim reliefs.
• hat the petitioners did not provide a complete copy of the License Agreement for the mark "WTC Faridabad," casting doubt on the petitioners' rights to the mark.
• That if the court decided to issue an order restraining the respondent from using the brand/mark, it should allow some time for the respondent to make necessary changes with the Real Estate Regulatory Authority (RERA) and financial institutions, considering the project's registration and loans taken.

Analysis by the Court

The Court observed that under Clause 2.6 of the MOU, the respondent would not have any right to continue the use of the mark upon the termination of the agreement.

The Court held that once the petitioner has terminated the licence granted in favour of the respondent, it cannot continue to use the mark for which the licence was granted. It held that use of mark after the termination of the licence would amount to infringement of the trademark.

The Court that once the licence is revoked by the licensor, any use of the mark by the ex-licensee would amount to an infringement of the trademark and would deceive the public, inasmuch as the public would be led to believe that the ex-licensee is still connected with the licensor.

The Court held that an ex-licensee cannot be allowed to use the mark after termination of license. Further, the licensor has a right and duty to ensure the consistency of the goods or services being sold and advertised under its mark and take action against any infringement of the mark.

It also held that once infringement is established, an injunction has to follow; delay in instituting the action cannot be cited as a defence by an infringer.

The Court held that the Court exercising powers under Section 9 of the A&C Act cannot examine the legality of the termination of the license agreement as it would be the for the arbitral tribunal to decide and compensate the aggrieved party if the termination is found to be illegal.

Accordingly, the Court allowed the petition and restrained the from using the marks “World Trade Centre Faridabad”; “WTC Faridabad” and WTC Logo or any other trademark identical with or deceptively similar thereto, in any manner whatsoever. It also directed the respondent to ensure that all references to the brand/marks “World Trade Centre Faridabad”; “WTC Faridabad” and WTC Logo shall be removed from social media platforms, websites, publicity material, brochure, advertisements, hoardings etc.

Keeping in mind the request made by the respondent, the Court allowed it 2 weeks’ time to make necessary O.M.P.(I) (COMM.) 335/2023 Page 16 of 17 applications/intimation to RERA and/or bank/financial institutions for the purpose of making appropriate changes in the documentation/s concerning the project and to take all requisite steps to migrate to use of a non-infringing mark/brand.

Case Title: Viridian Development Managers Pvt Ltd v. RPS Infrastructure Limited

Citation: 2023 LiveLaw (Del) 1090

Date: 06.11.2023

Counsel for the Petitioners: Mr. Preetesh Kapur, Sr. Adv. alongwvith Mr. Shaunak Kashyap, Ms. Nistha Gupta and Mr. Kartikaya Gautam, Advs.

Counsel for the Respondent: Ms. Priya Kumar, Adv. alongwith Mr. Manu Manchanda and Mr. Kabir Harpalani, Advs

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