Introduction
Chain of title, permitted use and the limits of derivative user rights are uniquely complex questions that arise from trademark disputes stemming from corporate restructurings and asset transfers in bankruptcy proceedings. John Cockerill Hamon SA (“Plaintiff”) claiming proprietorship of the registered mark “HAMON” through a series of contractual assignments originating in a Belgian bankruptcy proceeding, sought injunctive relief against Hamon Cooling Systems Private Limited (“Defendant No. 1”) for continued unauthorized use of the marks “HAMON COOLING” and “HCS HAMON COOLING”.
Factual Background
Engetra S.A., a Belgian company used the HAMON mark for the first time in 1963 on cooling and heat exchange equipment. Engetra tried to get word and device marks registered in India in 1988 for classes 7 and 11. Engetra transferred Hamon & CIE International S.A. (“HCI”) the registrations in 1999. At the same time, HCI bought most of an Indian company and changed its name to Hamon Thermopack Engineers Pvt. Ltd. The company changed its name several times as it changed hands, but in the end, it became Defendant No. 1 Hamon Cooling Systems Private Limited. In 2022 HCI was subject to judicial reorganisation proceedings in Belgium. The court appointed three trustees to manage the assets of HCI. On July 25, 2022 the trustees of HCI and the Plaintiff entered into a Transfer Agreement. Effective June 1, 2022 it provided the Plaintiff with all of HCI’s names and intellectual property, including all HAMON marks worldwide. At the same time Mr. Chorasiya, a private individual purchased HCI’s holding in Defendant No. 1 under a Share Sale Agreement (SSA). In this transaction no intellectual property rights were transferred. A Confirmatory Deed from April 18, 2024, stated that all HAMON marks had been given to the Plaintiff. Despite these transactions Defendant No. 1 continued to use “HAMON COOLING” and “HCS HAMON COOLING” in its corporate name. Communications and tender submissions and filed trademark applications for these marks on a “proposed to be used” basis which is a fundamental contradiction to its concurrent claim of continuous prior use since 1999. The Plaintiff issued a cease-and-desist notice in April 2024, which was ignored. This led to the filing of the suit.
Analysis
The Court held that the Plaintiff had established a strong prima facie case for grant of an interim injunction. With regard to ownership the court found that there was compelling documentary evidence of a clear chain of title from Engetra to HCI and then to the Plaintiff under the Transfer Agreement. Clause 1.1.1.1 of the Transfer Agreement incorporated the “entire portfolio of brands held by HCI” and Clause 3 specified the assets that were excluded Indian HAMON marks were not on this list. The court further noted that the Plaintiff had already been entered as proprietor of Trade Mark No. 1836422 in the Register of Trade Marks. On the settled principle in SKOL Breweries Ltd. v. Som Distilleries and J.K Jain & Others v. Ziff-Davies Inc., the Court also held that mere non-recordal of certain assignments could not defeat the Plaintiff’s right to maintain an infringement action, as an assignment is effective inter partes upon execution and does not await entry in the Register. Defendant No. 1’s reliance upon Section 34 (the prior user defense) self-defeated. In its own pleadings it was conceded that the use of the HAMON mark from 1999 onwards was with the “implied or express consent” of HCI. Patton International Ltd
The court held that a permitted user cannot claim independent proprietary rights under Section 34 which presupposes independent adoption. Patton Electronics (I) Pvt. Ltd., and Velcro Industries B.V. to hold that goodwill attaching to use of licensor’s mark belongs to licensor and not to licensee. The court found that the filing of the trademark applications on a “proposed use” basis after more than two decades of alleged continuous use was “patently dishonest conduct”. The acquiescence defense equally failed. The Plaintiff acted promptly upon discovering continued unauthorized use. The period between the Transfer Agreement and the suit was within the five-year period of Section 33. Acquiescence requires a positive act inducing independent infringement none was established here. On balance of convenience, the court found it overwhelmingly in the Plaintiff’s favour. Any hardship to Defendant No. 1 was wholly self-created by willful continuation of unauthorized use after full knowledge of the IPR transfer.
Conclusion
This judgment highlights certain important principles of Indian trademark jurisprudence.
First, valid assignment of a trade mark is effective upon execution and is not dependent upon subsequent recordal in the Trade Marks Register.
Second, the goodwill generated through permissive use accrues to the proprietor and cannot be appropriated by the user after the underlying permission comes to an end
Third, filing trademark applications on a “proposed to be used” basis while simultaneously claiming long-standing independent use constitutes conduct that destroys credibility and defeats the defense.
The court noted that public infrastructure projects were being secured through misrepresentation of the HAMON brand’s goodwill, found grant of injunction necessary in broader public interest.