The field of Intellectual Property Rights (IPR) has long been marked by intricate legal debates and evolving judicial interpretations. In India, the Trademarks Act, 1999, serves as a cornerstone of trademark law, delineating the rights, obligations, and remedies available to trademark holders.

Among its numerous provisions, Section 124 has emerged as a focal point of contention, particularly concerning the stay of civil suits involving trademark infringement and passing off when a rectification petition is filed. The implications of this section have become even more complex following significant legislative changes, notably the abolition of the Intellectual Property Appellate Board (IPAB) and the establishment of the Intellectual Property Division in the High Court of Delhi.

This article delves into the divergent judicial opinions on the application of Section 124, examines the impact of recent legislative changes, and explores potential avenues for resolving the prevailing legal uncertainties. It also offers a critical analysis of the underlying principles governing this provision and suggests future directions for achieving greater consistency in judicial interpretation.

Section 124 of the Trademarks Act, 1999: An Overview:
Section 124 of the Trademarks Act, 1999, plays a crucial role in the procedural framework of trademark litigation in India. It provides for the stay of civil suit proceedings when a prima facie case of invalidity of a trademark is presented and a rectification petition is filed before the appropriate forum.

The legislative intent behind this provision is to prevent conflicting decisions on the validity of a trademark by ensuring that the issue is adjudicated by the designated authority, such as the High Court or formerly the IPAB, before the civil suit proceeds. For ease in reference , relevant Part of Section 124 of Trademarks Act 1999 is reproduced as under:

Section 124. Stay of proceedings where the validity of registration of the trade mark is questioned, etc:

1. Where in any suit for infringement of a trade mark:
   1. the defendant pleads that registration of the plaintiff's trade mark is invalid; or
   2. the defendant raises a defence under clause (e) of sub-section (2) of section 30 and the plaintiff pleads the invalidity of registration of the defendant's trade mark,
   the court trying the suit (hereinafter referred to as the court), shall--
   1. if any proceedings for rectification of the register in relation to the plaintiff's or defendant's trade mark are pending before the Registrar or the High Court, stay the suit pending the final disposal of such proceedings;
   2. if no such proceedings are pending and the court is satisfied that the plea regarding the invalidity of the registration of the plaintiff's or defendant's trade mark is prima facie tenable, raise an issue regarding the same and adjourn the case for a period of three months from the date of the framing of the issue in order to enable the party concerned to apply to the High Court for rectification of the register.
2. If the party concerned proves to the court that he has made any such application as is referred to in clause (b) (ii) of sub-section (1) within the time specified therein or within such extended time as the court may for sufficient cause allow, the trial of the suit shall stand stayed until the final disposal of the rectification proceedings.

The core issue that has arisen in judicial interpretation is whether this provision requires the stay of suits involving both trademark infringement and passing off claims, or if it applies solely to infringement claims. The distinction between these two types of claims is crucial, as infringement pertains to the violation of statutory rights under the Trademarks Act, whereas passing off is a common law tort aimed at protecting the goodwill associated with unregistered trademarks.

Bone of Contention: The Scope of Section 124:
The primary legal question revolves around whether Section 124 mandates the stay of both infringement and passing off claims when a rectification petition is filed. This issue has been further complicated by the transfer of rectification jurisdiction from the IPAB to the High Courts, following the abolition of the IPAB in 2021.

Judicial interpretations have varied, leading to significant debate and differing rulings across various High Courts. The crux of the debate lies in whether the procedural coherence intended by Section 124 extends to both statutory and common law claims or if its scope is limited to statutory infringement claims alone.

Several relevant cases have highlighted this divergence in judicial opinion, creating a complex legal landscape for practitioners and litigants alike. These cases include Sana Herbals Pvt. Ltd. Vs. Mohsin Dehlvi [2022:DHC:005678], Mr. Amrish Aggarwal Trading as Mahalaxmi Product Vs. Venus Home Appliances Pvt. Ltd. [2023:DHC:7127], Micro Labs Limited vs. Eris Life Sciences [24.07.2018: O.S.A.Nos.167 to 169 of 2018]:Division Bench-Madras High Court and others, which have contributed to the ongoing debate.

Case Analysis of Relevant Case Laws:
Sana Herbals Pvt. Ltd. Vs. Mohsin Dehlvi [2022:DHC:005678]:

In the Sana Herbals case, the Delhi High Court's Single Judge addressed the implications of the abolition of the IPAB and the subsequent transfer of jurisdiction to the High Court. The court held that this legislative change removed the necessity to stay both infringement and passing off suits when a rectification petition is pending.

The rationale was that since the High Court now handles both the rectification petitions and the civil suits, there is no longer a risk of conflicting decisions. Consequently, the court concluded that staying the suits was not warranted under these new circumstances. The Relevant finding of Hon'ble Single Judge, High Court of Delhi , in this matter is reproduced herein below for ease in reference:

7…there have been subsequent developments since the passing of judgment in Patel Field Marshal Agencies (supra). In terms of the Tribunals Reforms Act, 2021, the IPAB has been abolished and the jurisdiction to decide rectification petitions now vests with the High Court under Section 21 of the Act. Therefore, now the suit as well as the rectification applications have to be decided by one authority alone i.e. the High Court and resultantly, there cannot be any possibility of conflicting decisions. Hence, the rectification petitions can be clubbed with the civil suits and there is no requirement of staying the civil suit.

This decision marked a significant departure from earlier interpretations, raising questions about the continued relevance of Section 124's stay provision in the post-IPAB era."

Mr. Amrish Aggarwal Trading as Mahalaxmi Product Vs. Venus Home Appliances Pvt. Ltd. [2023:DHC:7127]-Single Judge, Delhi High Court.
In contrast, another Single Judge of the Delhi High Court in Mr. Amrish Aggarwal disagreed with the ruling in Sana Herbals. The judge referred the issue to the Division Bench, questioning whether the earlier judgment had properly applied Section 124(2) of the Trademarks Act. The relevant observation of the Hon'ble Single Judge is as under:

Whether the view by the Coordinate Single Bench in para 7 of Sana Herbals7 , that, after the abolition of the IPAB, there is no requirement of staying a civil suit during pendency of the rectification petition, even where the rectification petition is instituted under Section 124 of the Trade Marks Act, can sustain, in view of Section 124(2)?.

The central issue was whether the stay should extend to both infringement and passing off actions, or if the stay was limited to infringement claims alone. This referral highlighted the unresolved tension between different judicial interpretations and underscored the need for further clarification from a higher judicial authority.

The Division Bench Ruling:
Amrish Aggarwal Trading as Mahalaxmi Product Vs. Venus Home Appliances Pvt. Ltd. [2024:DHC:3991-DB]-Division Bench, High Court of Delhi.

The Division Bench in Amrish Aggarwal provided a more definitive interpretation by affirming the necessity to stay both infringement and passing off claims when a rectification petition is pending. The Relevant Paras of this Judgement is reproduced herein below:

2. The issue arises in the context of Section 124 of the Trade Marks Act, 19992 and which envisages proceedings in a suit for infringement or passing off being stayed if it be found that proceedings for rectification have been initiated or were pending on the date when the suit comes to be instituted.

The Hon'ble Division Bench, also negated the argument of the Petitioner that under Section 124 of Trademarks Act 1999 , passing off action is liable to be continued. The relevant portion of the finding of Hon'ble Division Bench is as follows:

34….. Mr. Suman further submitted that without prejudice to his preceding argument, even if the Court were to arrive at a finding that suit proceedings are liable to be stayed as per Section 124 of the 1999 Act, the same would not extend to a passing off action since that is outside the purview of Section 124 of the 1999 Act.".[@ Para 34 and @Pg.131-132 of Plaintiff's list of Judgment dated 04.07.2024].

This argument of the Petitioner was negated by Hon'ble Division Bench as follows:
53. Similarly, the argument of learned counsel based on the distinction between an infringement action and passing off is unmerited since it proceeds in ignorance of the fact that in case of the latter, registration is not even recognised to be a valid defence.

Thus in this matter, the Bench emphasized that Section 124's intent is to centralize the resolution of trademark validity issues and prevent parallel adjudications that could lead to inconsistent decisions. This ruling reinforced the view that the stay should be comprehensive, covering both types of claims to maintain procedural coherence and ensure that the validity of the trademark is resolved before any further legal action.

Micro Labs Limited vs. Eris Life Sciences [24.07.2018: O.S.A.Nos.167 to 169 of 2018]:Division Bench-Madras High Court.
The Division Bench of the Madras High Court in Micro Labs also supported the view that both infringement and passing off claims should be stayed. The relevant Portion of this Judgement is reproduced as under:

2……an application was filed seeking stay of the proceedings of the suit till the rectification proceedings are over. The learned single Judge dismissed the injunction applications filed by the appellant while granting stay of the proceedings of the suit as prayed for. Challenging the same, the present appeals are filed.

4. Learned counsel appearing for the appellant would submit that it is a suit not only for infringement of trade mark but also for passing off. The respondent is a prior user. It is only during the proceedings before the Court, an application for rectification was filed. Thus the orders passed by the learned single Judge would require interference.

8…..we are inclined to grant stay of the proceedings of the suit….."

This decision aligned with the recent Delhi High Court Division Bench ruling but stood in contrast to earlier decisions that allowed the continuation of passing off actions while staying infringement claims. The Micro Labs ruling further contributed to the jurisprudential divide on the application of Section 124.

Puma Stationer P. Ltd. Vs. Hindustan Pencils Ltd. [2010 (43) PTC 479 (Del) DB]:Division Bench-High Court of Delhi.

In the Puma Stationer case, the Delhi High Court Division Bench had previously allowed passing off actions to continue while staying infringement claims.

The relevant portion of the Judgement is as under:
15. We are of the view, therefore, that the law on this issue is quite well settled. Where an application for rectification/cancellation of a registered trade mark is pending before the statutory authority, the High Court is obliged to stay further proceedings in the suit pending before it pursuant to Section 124(1) of the Trade Marks Act, 1999.

16. In so far as the suit out of which present appeal arises is concerned, there is an allegation against the Appellants of passing off the trade mark `Plasto‟ as well as `Non-Dust‟ and there is an allegation of infringement of the trade mark `Non-Dust‟.

17. In view of the express provisions of Section 124 of Trade Marks Act, we stay further proceedings in the suit in so far as the alleged infringement is concerned with regard to the trade mark `Non-Dust  until the disposal of the matter before the Intellectual Property Appellate Board. It is, however, made clear that the passing off action may continue.

This earlier decision highlighted the inconsistency in the application of Section 124 and underscored the lack of a uniform approach to handling combined claims. The contrasting rulings in Puma Stationer and subsequent cases have created a patchwork of legal interpretations that complicate the predictability and consistency of trademark litigation in India.

The Impact of Legislative Changes:
The abolition of the IPAB and the establishment of the Intellectual Property Division in the Delhi High Court have introduced new dynamics into the application of Section 124. These changes have raised questions about the continued relevance of the stay provision, particularly in light of the High Court's expanded role in handling both rectification petitions and civil suits.

While some judicial decisions, like Sana Herbals, have interpreted these changes as justifying a lift on the stay, others, including the Amrish Aggarwal ruling, have maintained that the fundamental principles of Section 124 remain unchanged.

The legislative transition has added complexity to the interpretation of whether the stay should extend to both infringement and passing off claims. It has also highlighted the need for a more nuanced understanding of how the procedural aspects of trademark law interact with broader changes in the legal and institutional landscape.

Divergent Judicial Opinions: The Saga Continues:
The ongoing divergence in judicial opinions, as seen in cases such as Micro Labs , Puma Stationer and Amrish Aggarwal, reflects the broader confusion surrounding Section 124. The inconsistency between different Division Benches in the Delhi High Court and between Delhi and Madras High Courts highlights the need for a clear and unified approach to the application of the stay provisions. This lack of uniformity undermines the predictability and stability of trademark litigation, leading to increased uncertainty for litigants and legal practitioners.

Appropriate Legal Recourse: The Need for a Larger Bench Reference:
Given the conflicting rulings and the significant impact on trademark dispute resolution, it is imperative to refer the issue to a larger bench of the Delhi High Court. A larger bench can provide definitive guidance on the application of Section 124, ensuring a consistent and coherent approach across different cases. This approach is consistent with established principles from cases like Lala Shri Bhagwan Das Vs. Shri Ram Chand [1965 SCC OnLine SC 73] and Mahadeolal Kanodia Vs. Administrator General of West Bengal [1960 SCC OnLine SC 47], which underscore the importance of larger bench decisions in resolving complex legal issues.

A larger bench decision would not only clarify the scope of Section 124 but also help harmonize the procedural framework for trademark litigation in India. This would, in turn, enhance judicial efficiency, reduce the likelihood of conflicting decisions, and provide greater legal certainty for parties involved in trademark disputes

Future Directions and Conclusion:
Trademark infringement and passing off claims remains a contentious issue. The divergence in judicial opinions has exacerbated the confusion surrounding the application of this provision. The need for a larger bench reference is evident, as it would provide the necessary authoritative guidance to resolve these inconsistencies. Looking ahead, there is a strong case for judicial clarification that explicitly defines the scope of Section 124 in light of the evolving legal landscape. Until such clarity is achieved, the legal community and litigants will continue to face challenges in navigating the procedural aspects of trademark disputes, potentially undermining judicial efficiency and legal certainty.

Written By: Advocate Ajay Amitabh Suman, IP Adjutor - Patent and Trademark Attorney
Email: [email protected], Ph no: 9990389539