Toshiba v. Tosiba: Procedural History and Person(s) Aggrieved!

After Shamnad’s succinct discussion, not a lot needs to be added to the analysis of the Toshiba v. Tosiba case decided by the Supreme Court late last month. However, for the die-hard trademark law fans, here’s a more detailed discussion of the facts, the procedural history and law laid down. At the outset, I must confess that I was surprised to learn that a number of people have been closely following this suit. Spicy IP is grateful to everyone who offered their inputs. Special thanks also to Ms. Shwetasree Majumder (One of the counsels for TOSHIBA) for patiently explaining (and re-explaining) the unusual facts and circumstances surrounding the case.

Note: The case is decided under the Trade and Merchandise Marks Act, 1958 (TMM Act). Most of readers will be aware that the Trademarks Act, 1999 has replaced the TMM Act (The 1999 Act came into force in 2003). However, as the mark in question (TOSHIBA) was registered under the TMM Act, the old law continues to be applicable.

The facts: The company now well known as Kabushiki Kaisha Toshiba (TOSHIBA) resulted from the merger of two companies namely Shibaura Engineering Works (Estd. 1857) and Hakunetshu-Sha and Company (Estd. 1890). While the Company officially adopted the name Toshiba Corporation only in 1984, it had registered (and was using) the mark “TOSHIBA” in a number of countries (including India) way back in 1953. Since 1953, Toshiba has acquired about 35 TM registrations in India in various classes; classes 7, 9 and 11 being most relevant in the present case.

The respondent, Tosiba Appliances (Tosiba), on the other hand, has been selling various electrical appliances under the name “TOSIBA” since 1975. About 14 years after the first use by Tosiba, they received a notice from TOSHIBA demanding that the use of the “deceptively similar mark” Tosiba, be stopped immediately.

In normal circumstances, the sequence of events would be the filing of a suit for temporary injunction and thereafter for permanent injunction by TOSHIBA. However, this was not to be, partly because the use of the mark TOSHIBA (by Toshiba Corp.) was punctuated by a number of external factors, including the Export and Import Policy that restricted the import of Washing Machines and Spin Dryers from 1985 to 1991.

As a result, the mark Toshiba was not used in relation to Washing Machines and Spin dryers for the period between 1985 and 1991. The respondent Tosiba therefore filed a composite application for rectification under Sections 46 and 56 of the TMM Act demanding that 5 of TOSHIBA’s registrations be rectified on grounds of: (i) non-use for a period of >5 years (§ 46(1)(b)), (ii) absence of bona fide intention to use at the time of registration (§ 46(1)(a)) and (iii) for retaining the purity of the register under section 56.

Interestingly, Tosiba has never sold washing machines or spin dryers! However, the application was allowed partly and the registrar of trademarks directed that the registrations in question be rectified so as to delete the goods “washing machines” and “spin dryers.” An appeal was preferred before a Single Judge of the Calcutta High Court (by Toshiba, and a cross appeal was filed by Tosiba). The single judge affirmed the order of the Registrar and the matter went in appeal to the division bench of the same court (Calcutta HC). The appeal was dismissed and a further appeal was filed before the Supreme Court.

One of the key grounds for appeal before the SC was that Tosiba is not a “person aggrieved” within the meaning of Section 46 of the TMM Act, which reads in relevant part as follows:

“46. Removal from register and imposition of limitations on ground of non-use. (1) …, a registered trade mark may be taken off the register in respect of any of the goods in respect of which it is registered on application made … by any person aggrieved on the ground either—

(a) that the trade mark was registered without any bona fide intention on the part of the applicant for registration that it should be used in relation to those goods by him or, …; or

(b) that up to a date one month before the date of the application, a continuous period of five years or longer had elapsed during which the trade mark was registered and during which there was no bona fide use thereof in relation to those goods by any proprietor thereof for the time being: ….”

(3) An applicant shall not be entitled to rely for the purpose of

clause (b) of sub-section (1) or for the purposes of sub-section (2) on any non-use of a trade mark which is shown to have been due to special circumstances in the trade and not to any intention to abandon or not to use the trade mark in relation to the goods to which the application relates.

Procedural History Before the Delhi HC:

Before we go into the issues discussed by the SC, I thought it would be appropriate to describe the interesting procedural history before the Delhi HC. (According to one person who wishes to remain anonymous, the procedural history and the surrounding circumstances are more interesting than the facts of the case before the SC!)

After filing an application for rectification before the Registrar, Tosiba Appliances also filed a caveat before the High Court. [For those interested in the details, a caveat may be filed by any party having “reasonable apprehension that a suit may be filed against it”. By filing a caveat, the party ensures that no ex parte order is passed without a notice being sent to it. There need not be any underlying suit and the caveat can be extended every 6 months. According to counsel, this tool is often used by companies to prevent their rivals (or perceived rivals) from successfully securing ex parte injunctions.]

It was therefore no wonder that when TOSHIBA filed a suit for injunction before the Delhi HC in 1990, it was unable to obtain an ex parte injunction. The suit for temporary injunction was merged with the suit for permanent injunction and a full trial began before the Delhi HC. However, a number of external happenings lead to the case being stuck in an “endless limbo” (in the words of TOSHIBA’s counsel Shwetasree). First, there was an amendment to the Code of Civil Procedure (CPC) permitting evidence to be filed on affidavit. The matter was at the time in the stage of trial and several long and painstaking sessions had been conducted with the assistance of a Japanese interpreter to record the key witnesses’ evidence. The change in the law necessitated that the remaining evidence be filed on affidavit. Before all the affidavits could be filed, another amendment to the CPC changed the pecuniary jurisdiction of the Delhi HC from 5 lakhs to 20 lakhs, as a result of which, the matter got sent to the Tis Hazari courts (lower courts). In order to have the Delhi HC retain (or re-attain) jurisdiction, TOSHIBA filed an application seeking to enhance the value of the suit. This application was eventually allowed and a transfer petition (requesting transfer of the matter from Tis Hazari back to the Delhi HC) was filed and the suit came back to the Delhi HC after about a year and a half. By this time the earlier witness had retired from TOSHIBA and a new witness had to be found and the process of recording evidence had to be restarted.

The matter is now listed for cross examination (by TOSIBA) in November. It is likely that in the light of the SC decision, TOSHIBA will file an application for advancement of the date of cross examination. We’ll keep you posted on the developments as and when these come to our knowledge. I expect that the Delhi HC decision will be a lot more involved and I hope that issues such as cross border reputation of TOSHIBA, acquiescence (considering the fact that the suit was filed by TOSHIBA more than 10 years after TOSIBA started using its mark), and whether TOSHIBA was a well known mark at the time the suit was filed etc. do come up. While we wait for the Delhi HC to rule, here are the details of the SC decision.

Issues before the SC:
[Readers might like to be reminded that the above issues expected to be argued before the Delhi HC were not raised before the SC because the case before the SC was the result of appeals relating to a rectification application and not a suit for infringement of TM.]

Key Issue Discussed:
1. What is the meaning of the term “person aggrieved” used in Sections 46 and 56 of the TMM Act?

Ancillary Issues discussed in passing (probably constituting obiter dicta and not discussed at length in this post… for more than one reason!)

1. What are the respective scopes of sections 46(1)(a) and 46(1)(b)
2. Whether Sub-section (3) can be said to be equally applicable to both clause (a) and (b) of Section 46(1). [I think this discussion falls squarely within the latin maxim “Expressio unius est exclusio alterius” (The express mention of one thing excludes all others). Any readers disagreeing? Please let me know… if not, I really don’t want to discuss this issue here!]

The various courts on “Person aggrieved”

The Calcutta High Court (single judge) expressed doubts as to the locus standi of Tosiba stating that “It is the admitted position that until now the respondents (TOSIBA) have manufactured and sold articles only in class 11, and those are household electrical articles like electric iron, fan and toaster….” The court further noted that “if a statement was made before the deputy registrar [that the Respondent was dealing in goods such as washing machines and spin dryers, i.e., goods in Class 7] then that was a misstatement.”

The division bench of the Calcutta HC held (per order dated 8 December 2005) that TOSIBA was indeed a person aggrieved

"The purpose of introducing the expression `person aggrieved' in the statute is obviously to prevent action from persons who are interfering only from merely sentimental notions or personal vengeance and act as mere common informers. But in case where one trader, by means of having a trade mark wrongly registered in his name, narrows the area of business open to his rivals, in that case the rival is a person aggrieved. It may be that the rival is not immediately carrying on the trade. But if there is a reasonable possibility for the rival to carry on that trade in future in view of his presently carrying on a trade in the same class of goods then the rival trader is a person aggrieved. In other words, if a person or a corporation is in the trade of the same class of goods along with the company which has got a mark registered in its name and is thus the hampered in the possible expansion of his trade in that case the person or the corporation is a person aggrieved.'”

After detailing the two Calcutta HC decisions, the SC also discussed a number of other cases that deal with the issue of “person aggrieved.” Most interestingly however, its final decision was based on a very simple fact: Tosiba was not dealing in washing machines or spin dryers! Therefore, the court, (quoting an old 1898 decision from UK), opined that the lower courts had missed the fact that Tosiba had not shown that any practical damage or injury would come to it if the TM (TOSHIBA) were allowed to stand in the register. The orders of the registrar as well as the 2 decisions of the Calcutta High Court were thus overturned with an additional order that the matter pending before the Delhi HC be decided expeditiously.

For those interested, the SC also discussed the difference between “person aggrieved” under Section 46 and section 56 upholding the decision of the SC in Hardie Trading v. Addisons (2003) 11 SCC 92. [See paragraph 46 of the decision]

The various courts on scope of Section 46(1)(a) and 46(1)(b):

A considerable amount of space in the judgment has been devoted to discussing the scope of section 46(1)(a) versus the scope of Section 46(1)(b) as discussed by various courts (including the 2 Calcutta HC decisions). I do not think it necessary to reproduce the quoted decisions here. Suffice it to say that the court seems to agree with the holding in American Home Products v. Mac Labs (1986) 1 SCC 465 and states that:

“The intention to use a trade mark sought to be registered must be genuine and real. When a trade mark is registered, it confers a valuable right. It seeks to prevent trafficking in trade marks. It seeks to distinguish the goods made by one person from those made by another. The person, therefore, who does not have any bona fide intention to use the trade mark, is not expected to get his product registered so as to prevent any other person from using the same. In that way trafficking in trade mark is sought to be restricted.”

All the detailed discussion however seems to be unnecessary in the end because the court seems to base its final decision on whether or not Tosiba could show any real injury (i.e. the preliminary issue of whether or not Tosiba is a “person aggrieved”)

Coming back to what in my opinion is the most important issue: Why did these seemingly well settled issues come all the way to the SC? It appears that the stakes were high here for TOSHIBA because after the ban on import of washing machines was lifted, TOSHIBA expected to enter the Indian market in a big way. If the rectification as directed by the Registrar and the Cal HC was upheld, TOSHIBA would have to re-file an application for registration of the mark TOSHIBA for washing machines and spin dryers. This would be a fresh registration with a much later filing date and would not enjoy the benefits that come from having an old established registration… Interesting! But would it really have mattered that much? I would be nice if our readers would like to engage in a discussion over how (or how not?)