Trademark Act, Section 34 provides the right of prior use. In reference to goods or services that the owner or registered user of a registered trademark has continuously used since a previous date. In short, section 34 says that if a third party has been using a registered trademark consistently from an earlier date, the registered user cannot prevent the third party from using the brand.

According to Section 34, the user must have been using the mark consistently in addition to being a previous user. A simple interpretation of the section indicates that continuous prior use of the mark must exist; sporadic/ minimal prior use of the mark is not permissible to invoke Section 34 and establish the right of prior use. Consequently, Section 34 need not be used in cases where there has been sporadic earlier use.

The consumer is unlikely to have been particularly affected by sporadic prior use. Consumers won't be able to remember anything unless they use it regularly. It is likely that the customer won't remember the mark if it is used infrequently. For this reason, Section 34 makes it very evident that the previous use must have been continuous.

The rights of a prior user of the mark are preserved and are superior to those of the registered owner of a trademark who received registration later. However, the prior user must satisfy the following crucial conditions in order to be eligible for the benefits under Section 34: 

1. For the owner to be considered the prior user, the trademark must be "used" by them; 

2. The owner of the trademark must continuously use it within the borders of India; 

3. The trademark may only be used in connection with the products or services listed in the registered proprietor's application. 

4. The trademark must have been in use earlier than the date on which the subsequent user began using it.

According to Section 34 of the Act, if a user has been "continuously" using a trade mark before the registered user or the date of registration, whichever is earlier, the registered proprietor or user of the mark does not have the right to stop any other user from using an identical or similar mark. Additionally, this section limits the application of Section 28 of the Act, which grants specific exclusive rights to the registered user of a trade mark (due to the non-obstante clause). Therefore, it is a well-established rule that the registered owner of a mark may not infringe upon or interfere with the rights of the previous user of the same mark or one that is similar. However, for the defence of prior use to be effective, a few requirements must be met, making this principle entirely applicable.

In the recent Peps Industries Private Limited v. Kurlon Limited case, the Hon. Delhi High Court in India clarified this position. According to the Court's opinion in this case, the prior user must demonstrate "continuous and consistent" use of the trademark for the defence of prior use to be successful. The Court added that for the defence to be successful, the previous user must also demonstrate the "volume of sales."

In Kamat Hotels (India) Ltd. vs. Royal Orchid Hotels Ltd. & Anr., the Bombay High Court examined the provisions of Section 34 and provided a detailed list of the requirements that must be fulfilled for an individual to be eligible for protection under the provisions of the section. The Court said that the mark must have been continuously used before. Isolated or sporadic use is not permitted. Simply adopting the mark or releasing an advertisement by the owner is insufficient; the mark must have been used continuously and commercially in relation to the goods and services.

In Neon Laboratories Ltd. Vs. Medical Technologies Ltd. and Ors., the Supreme Court ruled that the courts must balance the rights of the parties involved in the dispute while applying the "first in the market" test. Put another way, if a previous user can show that they have been using the mark continuously and commercially since before the date of registration or use of the mark by the registered proprietor, then even the registered proprietor is barred from taking legal action against the previous user.

CASE LAWS

Peps Industries Pvt. Ltd. V. Kurlon Ltd.

FACTS: Peps Industries requested a permanent injunction to prevent Kurlon from using the mark "NO TURN," which it had registered. The defendant asserted that it was the previous user of the "NO TURN" mark. Since January 15, 2008, the plaintiff has adopted and used the same continuously. According to the defendant, they have been utilizing the trademark since 2007.

ISSUE: If the defendant was, in fact, the previous user of the mark "NO TURN," among other things.

DECISION: The court held that even while the defendant has been using the mark since 2007, the usage was sporadic during those years, thus it does not qualify as prior use for the purposes of section 34. Furthermore, there were not many sales. The defendant cannot rely on Section 34 because there was no evidence of continuous usage of the mark "NO TURN" by the defendant. In other words, the court declared that even though the defendant was the original user of the mark, usage of the mark has been sporadic and not extensive since 2007. Therefore, under Section 34, the defendant is ineligible to assert the defence. 

Neon Laboratories Ltd. v. Medical Technologies Ltd. and Ors.

FACTS: Pharmaceutical production and marketing were activities shared by Neon Laboratories and Medical Technologies, the case's two parties. The mark "ROFOL" was registered by the appellant, Neon Laboratories, in 1992. The application was approved in 2001. Nevertheless, it wasn't until 2004 that Neon Laboratories released a product under the registered trademark name. In 1998, the respondent, Medical Technologies, launched a generic medication called "PROPOFOL" into the Indian market. The medication was sold under the brand name "PROFOL." Later, there was an amalgamation of the predecessor-in-title, which led to the respondent being awarded trademark ownership of "PROFOL." The respondent went ahead and registered the trademark in addition to starting to use it. Medical Technologies discovered in 2005 that Neon Laboratories had released an identical generic drug under the trademark "ROFOL." Because of Neon Laboratories' use of a trademark that is confusingly similar to and identical to Medical Technologies' trademark "PROFOL," the later was sued by the former. A lawsuit was brought by Medical Technologies in the Ahmedabad trial court for passing off. The court issued a temporary injunction against Neon Laboratories. In response to an appeal, the Gujarat High Court upheld the same ruling.

ISSUE: Whether credit must be given to the party who registered the trademark first or the one who introduced the drug in the market first?

DECISION: The Supreme Court declared that the registration of the trademark "ROFOL," which has retroactive effect from the date of its application, would have helped in the case being decided in favour of the defendant-appellant if the defendant had begun using its trademark "ROFOL" before, simultaneously with, or immediately after the respondent began marketing their products under the trademark "PROFOL." But the defendant-appellant did nothing to get its products into the market under the "ROFOL" trademark. Furthermore, it was "legally lethargic" of the appellant to take any action that would have prevented the respondents from using the trademark "PROFOL" while the registration application was still pending. Additionally, the Supreme Court declared that the respondents, not the appellants, who could have objected to, started the litigation.

CONCLUSION: It is well-established that the act of merely registering a trademark does not prevent earlier users from using a mark that is identical to or similar to the registered trademark. But such prior use should be intermittent or substantial and not sporadic or minimal. If the trademark has been used continuously and develops a goodwill in the market and the customers start associating the trademark with a specific quality of goods or services, and they are able to prove it through evidences, then the continuous prior user of trademark will be kept on higher footing.