'Trade Mark Squatting' Amounts To 'Bad Faith' Within Meaning Of S. 11(10)(ii) Of Trade Marks Act: Delhi High Court

Justice C. Hari Shankar was dealing with a petition under Section 57 of the Trade Marks Act, filed by the BPI Sports LLC, seeking removal of the trademark “BPI SPORTS” registered in favour of one Saurabh Gulati.

The bench observed that Gulati was aware that the mark was registered in the name of BPI Sports in the USA and that the company enjoyed global repute in the said mark.

"There is no dispute, in the present case, of the fact that the respondent was the importer of the petitioner. It was in his capacity as such importer that the respondent was actually using the mark BPI SPORTS which, later, the respondent has registered in its own favour, for identical goods. The intention of the respondent to capitalise on the petitioner‟s reputation with respect to the said mark appears, therefore, to be transparent," said the court.

The court said that there was a clear intention to steal the mark of the petitioner-company, so as to block the company’s attempt to have it registered in its name in India, which is also the textbook definition of trade mark squatting.

BPI Sports argued that Gulati had fraudulently obtained registration of the mark “BPI SPORTS”, which belongs to it and stands registered in its favour in the US.

It alleged that Gulati was resorting to trade mark squatting, as he had no intention of using the mark and had merely got it registered in its favour to avoid it being registered in favour of the petitioner-company. It claimed that Gulati was only importing goods under the impugned mark and had no intention to use the mark in India.

The US based company further said that it is a leading player in the dietary and nutritional supplements sector and that the word mark “BPI SPORTS” stands registered in its favour in the US in respect of dietary and nutritional supplements. As per the company, it started using the mark “BPI SPORTS” in India in January 2019.

BPI Sports argued that as the prior adopter and user of the mark, which was registered in its favour in the US, it would entitled to claim common law rights over the mark, in preference to Gulati.

The court dismissed the contention of the petitioner-company that the registration of the word mark “BPI SPORTS” in favour of Gulati infringed its registered trade mark.

"This is an obviously incorrect submission, as the petitioner holds no registration in its favour in India of the mark BPI SPORTS either as a word mark or as a device mark, and infringement, under Section 29 of the Trade Marks Act, can only be of a registered trade mark," it added.

The bench noted that Section 11(1) and (2) are applicable where the mark whose registration is sought, is identical with, or similar to, an “earlier trade mark”.

While holding that BPI Sports’ trade mark is not a “well known trade mark”, as defined in clause (zg) of Section 2(1) of the Trade Marks Act, the court said, “The petitioner’s marks, therefore, do not qualify as “earlier trademarks” for the purposes of Section 11. Sub-sections (1) and (2) of Section 11 would not, therefore, apply in the present case.”

The bench further dismissed the argument that by use of the said mark, Gulati was seeking to pass of its products as that of the petitioner-company and, therefore, for that reason, the mark was not entitled to registration under Section 11(3).

“For a mark which is primarily used in abroad, if a case of passing off, against an Indian mark is sought to be made out, the plaintiff has necessarily to establish that the reputation of the mark abroad has spilled over into India, to the extent that the plaintiff has sufficient trans-border reputation, as would make out a case of passing off,” said the court.

While holding that the company had failed to make out a case of worldwide or global reputation of the “BPI SPORTS” mark, the court concluded, “Sub-sections (1) to (3) and Section 11 of the Trade Marks Act, which stand specifically and exclusively invoked in the petition cannot, therefore, come to the aid of the petitioner.”

The bench, however, said that BPI Sports was entitled to relief on the basis of Section 11(10)(ii) of the Trade Marks Act, which requires the Registrar, while registering the mark, to take into consideration the bad faith involved either of the applicant or the opponent affecting the right relating to the trademark.

Referring to Section 11(10)(ii), the court said, “Though the provision is worded in a somewhat open-ended fashion, requiring the Registrar to, while registering a mark, “take into consideration” the bad faith of the applicant, it does not expressly state that the existence of bad faith would disentitle the applicant to registration. Statutory provisions have, however, to be interpreted in a purposive manner, and cannot be regarded as mere superfluity. Even otherwise, plainly read, the intent and purpose of Section 11(10)(ii) is obviously to disentitle registration of a mark, the request for registration of which is tainted by bad faith.”

The court said there can be no manner of doubt that Gulati's act of registering the BPI SPORTS word mark, "which, to his knowledge and awareness, was registered in the name of the petitioner in the USA and in which the petitioner had global repute, in his name, constitutes “trade mark squatting".

The court concluded that it was the clear intention of Gulati to steal the mark of the petitioner-company, so as to block the latter’s attempt to have it registered in its name, which is also the textbook definition of trade mark squatting.

“There is no dispute, in the present case, of the fact that the respondent was the importer of the petitioner. It was in his capacity as such importer that the respondent was actually using the mark BPI SPORTS which, later, the respondent has registered in its own favour, for identical goods. The intention of the respondent to capitalise on the petitioner’s reputation with respect to the said mark appears, therefore, to be transparent,” the court observed.

Referring to the facts of the case, the court remarked, “In the facts of the present case, ex facie, the manner in which the respondent has acted in obtaining the registration of the impugned mark BPI SPORTS, in respect of very same goods for which the marks stands registered in the petitioner’s favour, albeit in the US, and in respect of which the petitioner was using the mark even in India – as, in the case of registered mark, import of goods using the mark constitutes “use” thereof in terms of Section 29(6) of the Trade Marks Act – discloses clear bad faith on the part of the respondent.”

The bench added: “Having imported the petitioner’s goods under the BPI SPORTS word and device mark, and having noticed the existence of a market for the goods and, perhaps, influenced by the global goodwill that the mark commanded, Respondent 1 has, for reasons recondite, obtained registration of the petitioner’s mark in his name for the very goods in respect of which, albeit abroad, the mark stood registered in favour of the petitioner. The motivation, for doing so, is apparently unwholesome. That Respondent 1 has not even chosen to contest the present petition amounts, moreover, to a tacit acknowledgement of this position.”

The court concluded that the petitioner-company had made out a case of bad faith in adoption of the impugned mark by Gulati, invoking Section 11(10)(ii) of the Trade Marks Act and directed the removal of the mark from the register of trade marks.

“Inasmuch as this was a fact which was not within the notice of Registrar of Trade Marks when the impugned mark was registered, and has emerged from the record which has been placed before the Court, the case would fall within the scope of marks which are “wrongly remaining on the register” within the meaning of Section 57(2) of the Trade Marks Act,” said the court.

Case Title: BPI Sports LLC vs Saurabh Gulati & Anr.

Citation: 2023 LiveLaw (Del) 358

Dated: 27.04.2023

Counsel for the Petitioner: Mr. Alankar Kirpekar, assisted by Mr. Jaspreet Singh Kapur