Delhi High Court Grants Interim Injunction, Upholds Prior Use Rights Of Chinese Corporation Over “HUALI” Trademark

Delhi High Court Grants Interim Injunction, Upholds Prior Use Rights Of Chinese Corporation Over “HUALI” Trademark

Delhi High Court Confirms Prior Use Rights for Chinese Corporation Over "HUALI" Trademark, Restricts Defendants.

The Delhi High Court has ruled in favor of a Chinese corporation, affirming its seniority in the usage rights of the "HUALI" trademark. This verdict stems from a comprehensive review of the plaintiff's historical and widespread use of the trademark, effectively validating their claims against the defendants.

Justice Sanjeev Narula of the Delhi High Court has issued an interim injunction against the defendants, barring them from producing, marketing, exporting, offering for sale, advertising, or exhibiting goods under the "HUALI" name. This decision follows the plaintiff’s allegations that the defendants’ use of the "HUALI" trademark infringed on their established rights.

Justice Narula remarked, “The defendants’ adoption of the 'HUALI' trademark for identical goods is clearly intended to mislead consumers into associating their products with those of the plaintiff, indicating dishonest intent.” Additionally, the Court noted that the defendants submitted fraudulent documents to substantiate their claim, reinforcing the decision to impose restrictions.

The case centers on the Trademarks Act of 1999, particularly Section 34, which upholds the rights of prior users of a trademark over those of later registrants. Section 27(2) further permits passing-off actions based on prior usage, irrespective of registration status, thereby reinforcing the protection of common law rights.

Justice Narula emphasized that statutory registration does not invalidate the common law rights accrued through continuous and legitimate use. The Court highlighted that the defendants' retrospective claims of trademark usage were fabricated and designed to challenge the plaintiff’s well-established rights.

The plaintiff, a prominent producer of furniture parts, specializes in PVC and melamine edge banding products marketed under the "HUALI" trademark. Having registered the trademark globally in 2004 and in India in 2007, the plaintiff has consistently used the mark, bolstering its common law and statutory rights across multiple jurisdictions, including an application under Class 20 of the Trade Marks Act, 1999, in India.

Despite this, the defendants managed to register the same trademark under No. 4146654 for Class 20 goods, citing a usage date of August 24, 2008. The plaintiff contended that the defendants had deceitfully secured registration based on a fictitious usage claim, thus harming the plaintiff’s brand.

Initially, the Trademark Registry objected to the defendants’ registration, referencing the plaintiff’s pending application and questioning the defendants' alleged usage date. Despite these objections and a police complaint lodged by the plaintiff in October 2022 regarding the defendants' infringing actions, no substantial legal response ensued at that time, prompting the plaintiff to pursue litigation to safeguard their trademark rights.

The Court underscored that trademark registration does not provide immunity from legal challenges, especially when there is evidence of prior use that supports a passing-off claim. It affirmed that the plaintiff’s prior and continuous use of the "HUALI" trademark substantiated their claims against the defendants, who had attempted to falsify their business chronology to support an earlier usage claim.

Justice Narula highlighted that the plaintiff's initial trademark application encountered an objection under Section 11(2) of the Trademarks Act due to the defendants’ registration, which was retrospectively fabricated to contest the plaintiff’s application.

The Delhi High Court has granted the plaintiff an interim injunction, thereby protecting their continued use of the "HUALI" trademark since 2007. The case is scheduled for further review on August 1, 2024, where it will undergo additional examination to determine the final resolution.