Delhi High Court Rules in Favor of BPI Sports: ‘Trade Mark Squatting’ Amounts To ‘Bad Faith’ under Trade Marks Act

Delhi High Court Rules in Favor of BPI Sports: ‘Trade Mark Squatting’ Amounts To ‘Bad Faith’ under Trade Marks Act

The Delhi High Court by its single judge Justice C. Hari Shankar has observed that, ‘Trade mark squatting’ which is an internationally known intellectual property misdemeanor, amounts to ‘bad faith’ within the meaning of Section 11(10)(ii) of the Trade Marks Act, though it does not find specific place in the Trade Marks Act.

The Court was adjudicating a petition filed under Section 57 of the Trade Marks Act, filed by the BPI SPORT ’LLC, seeking removal of the trademark ‘BPI SPORTS’ registered in favor of the Respondent 1- Saurabh Gulati.

The petitioner had pleaded that the registration of the impugned ‘BPI SPORTS’ word mark in favor of Respondent 1 infringed the registered trademarks of the petitioner.

However, the Court held this to be an incorrect submission, as the petitioner held no registration in its favor 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, could only be of a registered trade mark.

Further, the Court noted that the plaint invoked Section 11(1), (2) and (3) of the Trade Marks Act. However, the Court opined that none of these provisions would apply, while observing that, “Sub-sections (1) and (2) of Section 11 are both applicable where the mark, of which registration is sought, is identical with, or similar to, an ‘earlier trade mark.’ The Petitioner’s ‘BPI SPORTS’ trademark is neither a registered trademark, nor a trademark covered by an application relatable to Section 18, Section 36E or Section 154 of the Trade Marks Act. Nor does the petition so aver. Nor is the petitioner’s trade mark a well-known trade mark.”

The Court perused the provision defining ‘well known trade mark’, under clause (zg) of Section 2(1) of the Trade Marks Act, and observed that there was no declaration of the petitioner’s mark as a ‘well-known trade mark.’

Given the fact that the petitioner had entered the Indian market only in 2019, it was extremely questionable as to whether the petitioner’s ‘BPI SPORTS’ mark qualified as a well-known trade mark on the basis of criteria that envisaged in Section 11(6). The petitioner’s mark, therefore, did not qualify as ‘earlier trademarks’ for the purposes of Section 11, the judge stated. Therefore, Section 11(1) and (2) did not apply in the present case.

The Judge further dismissed the argument that by use of the said mark, Respondent was seeking to pass of its products as that of the petitioner-company an

“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,” the judge observed.

On the facts of the case, the Court found that the petitioner was, however, entitled to relief on the basis of Section 11(10)(ii)21 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.

Perusing 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 Counsel appearing for petitioner- Mr. Alankar Kirpekar had castigated Respondent 1 as a ‘trade mark squatter.’

In this regard, the Court commented that ‘Trade mark squatting’ is an internationally known intellectual property misdemeanor, though it does not find specific place in the Trade Marks Act.

While applying the same in the present case, the Court held that there was no doubt that the act of Respondent 1 in 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 held that though trade mark squatting as an individual phenomenon does not find especial mention in the Trade Marks Act, it certainly amounts, to “bad faith” within the meaning of Section 11(10)(ii) of the Trade Marks Act.

Averting to the present case, the Court noted the fact that the respondent was the importer of the petitioner and it was in his capacity to use the mark ‘BPI SPORTS’which, later, the respondent had registered in its own favor, for identical goods. The intention of the respondent to capitalize on the petitioner’s reputation with respect to the said mark appears, therefore, was transparent, the judge discerned.

The Court was of the ex facie view that, the manner in which the respondent had 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 favor, 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 – disclosed clear bad faith on the part of the respondent.

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.