Delhi High Court: Once licence is revoked, use of trademark by ex-licencee amounts to infringement

Delhi High Court: Once licence is revoked, use of trademark by ex-licencee amounts to infringement

The petitioners claimed that the respondent expanded the project despite the agreement termination

The Delhi High Court has held that once the licence is revoked by the licensor, any use of the mark by the ex-licensee would amount to an infringement of the trademark. It would mean the ex-licencee was deceiving the public by making them believe it was still connected with the licensor.

The Bench comprising Justice Sachin Datta stated that the licensor had a right and duty to ensure the consistency of the goods or services being sold and advertised under its mark and act against any infringement.

The Judge said that under Section 9 of the Arbitration and Conciliation (A&C) Act, 1996, the Court cannot examine the legality of the termination of the license agreement. It was for the arbitral tribunal to decide and compensate the aggrieved party if the termination was found illegal.

In 2010, the respondent was developing a project called RPS Infinia on a 7.587-acre land in Faridabad, Haryana. In May 2021, the respondent approached the petitioners for branding and sales services. On 28 June 2021, they entered a Memorandum of Understanding (MOU) and two consultancy agreements.

The project was to be rebranded as WTC Faridabad with the petitioner’s claiming rights to the brand. The petitioners also asserted rights to the World Trade Center Faridabad brand, based on a license agreement with the World Trade Centers Association, Inc.

It was alleged that the respondent used the petitioners' brand incorrectly, affecting its image, and failed to make payments as agreed. Disputes led to a legal notice on 12 May 2023 from the petitioners, terminating the agreements and demanding cessation of the use of the brand/logo.

However, despite attempts to resolve the matter amicably through emails and meetings, a settlement could not be reached.

Thereafter, the petitioners issued a follow-up notice on 7 September, without eliciting a response from the respondent.

The petitioners claimed that, meanwhile, the respondent expanded the project to the adjoining land and used the 12th Avenue and the World Trade Centre Faridabad brands, despite the agreement termination.

On 4 October, the petitioners slapped the respondent with a legal notice, invoking arbitration based on the MOU and agreements. Thereafter, the petitioner approached the Court under Section 9 of the A&C Act seeking to restrain the respondent from using its mark.

The petitioner sought the injunction against the respondent on the following grounds:

• Even after terminating the MOU and agreements on 12.05.2023, the respondent continued to use the petitioners' brands, World Trade Center Faridabad, WTC Faridabad, and the WTC logo, to promote RPS Infinia and 12th Avenue.

• The respondent was misleading the public by creating a false impression that the projects were associated with the World Trade Centre brand.

• Once the petitioner terminated the agreements, the respondent had no right to use the licensed marks. This amounted to infringement of their rights and public deception.

The respondent made the following counter-arguments:

• The petitioners approached the Court in October, five months after the termination of the MOU and agreements on 12.05.2023. Therefore, they were not entitled to interim relief.

• The petitioners did not provide a complete copy of the license agreement for the mark WTC Faridabad, casting doubt on the petitioners' rights to the mark.

• If the Court decided to issue an order restraining the respondent from using the mark, it should allow time for the respondent to make necessary changes with the Real Estate Regulatory Authority (RERA) and financial institutions, considering the project's registration and loans taken.

The High Court observed that under Clause 2.6 of the MOU, the respondent had no right to continue using the mark after the termination of the agreement.

The Bench held that once the petitioner terminates the licence granted in favor of the respondent, it cannot use the mark for which the licence was granted. It meant infringement of the trademark. The Court added that once infringement was established, an injunction had to follow; the delay in instituting the action cannot be cited as a defence by an infringer.

Thus, Justice Datta allowed the petition and restrained the respondent from using the marks World Trade Centre Faridabad, WTC Faridabad, and WTC logo or any other trademark identical with or deceptively like these. He also directed the respondent to ensure that all references to the brands are removed from social media platforms, websites, publicity material, brochures, advertisements, and hoardings.

As per the request of the respondent, the Court allowed it two weeks’ time to make necessary O.M.P.(I) (COMM.) 335/2023 Page 16 of 17 applications/intimation to RERA and/or bank/financial institutions to take requisite steps and make appropriate changes in the documentation concerning the project.