201905.07
12

Licensor prevails in a dispute over continued use of the brand name post termination

Can a licensee turnaround and claim rights in a licensed mark when faced with termination of the agreement.  The marks in questions are “EURO”, “EUROBOND” and EURO device of a globe. The Plaintiff, Euro Panel Products Private Limited (EPPL) filed suit against the Defendants, Eurobond Industries Private Limited (Eurobond) and ors, to restrain the latter from using the trademark EURO, EURO (device) and words EUROBOND in any manner in relation to their business. The Single Judge granted an injunction in favour of EPPL restraining Eurobond. Aggrieved by the order Eurobond has filed an Appeal before the two judges bench; Division Bench (DB) challenging the injunction against them.

BACKGROUND

  1. EPPL claim they conceived the marks “EURO”, “EUROBOND” and EURO device of a globe in 2002. They had obtained registration of the mark EUROBOND in Class 6 in January 2003 and of a series of EURO formative label marks such as EURO Standard, U Euro, Euro Whiteware, Euro Sanitaryware, Euro Tileobond, etc. EPPL claims EURO marks have acquired tremendous reputation and goodwill on account of extensive turnover and advertisements.
  2. In In July 2004, they gave ‘no objection’ to four individuals to incorporate a new company using the word EUROBOND as part of its trading name and accordingly the Defendant Company ‘Eurobond Industries Private Limited’ was incorporated. In September, 2006, EPPL entered into an agreement with Eurobond granting licence to use the word EURO as part of its corporate name.
  3. EPPL in December 2013, owing to change in the shareholding of Eurobond terminated the licence agreement with immediate effect and called upon them to discontinue use of the name EURO name within 60 days. In response Eurobond sought time to exhaust their stock, packing material, etc, bearing the trademark/name EUROBOND. Thereafter, Eurobond addressed a further reply claiming to have become proprietor of the mark EUROBOND which they acquired from M/s Gala & Gala brothers who are allegedly prior user of mark than EPPL.
  4. EPPL filed suit and application for temporary injunction restraining Eurobond from using the trademark or the words EURO or EUROBOND.

Decision of Single Judge

After hearing the parties the Single Judge granted an injunction restraining EUROBOND from using the trademark or any other mark containing the words EURO or EUROBOND and also prevent passing off. The court also stayed the suit pending the hearing and final disposal of Eurobond’s application for rectification of EPPL’s trademark EUROBOND. Aggrieved by the injunction order EUROBOND has filed appeal before the Division Bench (DB).

In Appeal Eurobond argued:

  1. Single Judge failed to consider that their use of the trademark EUROBOND was prior as Gala and Gala company was using the said trademark prior to EPPL. Gala company had applied to Sales Tax Registrar on 10th January, 2003, the same date EPPL applied for registration of the EURO mark. EUROBOND is an honest and concurrent user and as such the court could not have granted injunction.
  2. Court’s finding regarding Eurobond being a permitted user is not sustainable as EPPL has not produced any written document. When the trademark EUROBOND is separately registered, unless the licence agreement was with respect to the said trademark, Court’s finding that licence agreement which was only for the trademark EURO, would cover EUROBOND also is untenable.
  3. Injunction in relation to passing off is not sustainable as there is no evidence to substantiate grounds for passing off.

The Division Bench (DB) after considering the arguments and case laws held:

  • Admittedly, EPPL’s trademark ‘EUROBOND’ has been registered with effect from January, 2003 and they are also the registered proprietor of various EURO formative word as well as label marks. EPPL has entered into a license agreement with Eurobond to use the trademark EURO. The agreement also specifically states that EPPL has the right to terminate the license upon there being change in the shareholding or ownership pattern of Eurobond. Moreover, as per the terms once the agreement is terminated Eurobond would not be in a position to use the word EURO and will have to change its corporate name/ trading style by deleting the name EURO.
  • Records evidence that Eurobond is in the business of manufacturing of Aluminum Panel Sheets. The licence given by EPPL to Eurobond for using the name EURO is solely in connection of the activities of the user. It is only because of the license given by EPPL that Eurobond could have incorporated the company under the name and style of EUROBOND. Thus, Eurobond’s contention that license was only for the word EURO is not sustainable.
  • The single Judge had granted sufficient period of three months to Eurobond to change its corporate name and dispose of the existing stock of goods bearing the trademark EUROBOND. The DB however, found merit in the argument that there was no discussion in the order on the basis of which the injunction has been granted in relation to passing off.

In view of the above DB restrained Eurobond from using the mark holding that infringement was made out.