Trademarking Surnames: How Fair is your Use?

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Before we look at the decision of the Delhi High Court, it would be wise for us to look at the provision of Section 35:

35.  Saving for use of name, address or description of goods or services.—

Nothing in this Act shall entitle the proprietor or a registered user of a registered trade mark to interfere with any bona fide use by a person of his own name or that of his place of business, or of the name, or of the name of the place of business, of any of his predecessors in business, or the use by any person of any bona fide description of the character or quality of his goods or services.

The scope of Section 35 does seem to grant a proprietor a veritably large field to apply his own name in the course of his trade, given the lack of any limitations contained within the statute. Not surprisingly, the torch has been passed on to the courts to illuminate the boundaries of the provision.

The facts of the decision of the Delhi High Court in Anil Rathi vs. Shri Sharma Steeltech (India) are rather straightforward. The Plaintiff, holding the sole power to issue licenses to use the mark ‘RATHI’ under an MoU and Trust Deed between all the members of the family, found that the defendants had been issuing licenses to use the mark without authorization, and therefore filed an infringement suit to restrain such use. The Defendant argued that since the mark “RATHI” had been registered by the two companies of two separate members of the Rathi family, there was no exclusive ownership over the mark, and that every member of the Rathi family had a vested independent right to use the mark under Section 35, by virtue of being a member into the Rathi family. He also contended that this right under Section 35 also extended to the grant of licenses to use the mark.

The Delhi High Court returned a finding in favour of the Plaintiff stating that the terms of the MoU and the Trust Deed were sufficiently clear in holding that the registered proprietor of the mark ‘RATHI’ was the senior most member of the Rathi family, and therefore being the senior trustee, he was competent to file a suit for infringement. Further, the Court agreed with the contentions of the Plaintiff that Section 35 did not extend the bona fide use exception to instances of granting licenses or use by any legal entity. With regards to bona fide use, the Court applied an in casu determination, basing its findings on the grounds that since the MoU and Trust Deed had been entered into not only to prevent exploitation by outsiders of the mark, but also to establish a mechanism for use of the mark by the various member-factions of the family.

Given that the Defendant was a party to both these agreements, and subsequently an implication of awareness was thrust upon him, he could not have been held to be acting in a bona fide manner when he engaged in applying the ‘RATHI’ mark to various legal entities and granting licenses of use for the same. The Court found that all these instances operated as an infringement to the statutory right of use held by the Trust, and therefore could not enjoy the protection under Section 35.

Thus, we may conclude that bona fide use of a person’s name would not extend to granting licenses of the same to other entities when it would be deceptively similar to the mark of a registered proprietor. The Court also placed reliance on a number of precedents in arriving at such a decision. Tracing these cases back, the guiding rule for determining how fair one’s use lies in the origination of the disputed (or even infringing) mark, by way of seeing how the defendant decided to use the particular mark, and what is the reason behind using that similar mark. To elucidate, in Dr. Reddy’s Laboratories Ltd. vs. Reddy Pharmaceuticals Ltd., the defendant’s reason for using a similar mark was that the surname of the Managing Director was ‘Reddy’, and in this case, this was deemed to be an insufficient reason. In both Adiga’s Abhiruchi & Ors. vs. Adiga’s Fast Food and Manju Monga vs. Manju Mittal, the Court noted that when the user of the infringing mark had attempted to make cosmetic changes to their mark in order to resort to the sanctuary of Section 35, it could not be stated that such use was bona fide.

While this decision may come to prohibit licensing of a proprietor’s own name when it is in conflict with a registered mark, one question does arise as to whether this would block all future instances of the proprietor from engaging in franchising or licensing deals, especially when he/she has been operating under Section 35 for a number of years. One might say that in such instances, the only option for any proprietor using his own name as the mark for his business would be to thereafter file for registration of his mark claiming acquired distinctiveness (however the door still remains open for opposition proceedings), and thereby, in a scenario of obtaining a successful registration of the same, would he/she then be entitled to engage in franchising and licensing actions with respect to his/her mark.

We hope this article was a useful read. 

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Best regards – Team InvnTree   

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