Introduction
In the instant case, Quality Chef Agro Foods Pvt. Ltd. & ors. (“Plaintiffs”) instituted a suit for permanent injunction and passing off against ADF Trading Pvt. Ltd. (“Defendants”), before the Madras High Court (“Court”). The Plaintiffs sought to restrain the defendants from using the mark
“ROYALCHEF” for export of rice from India to Qatar.
This case elucidates the differences in rights flowing from assignment and licensing of trademarks, in the backdrop of restrictive covenants.
Background
In the year 1985, the 3rd plaintiff (“P3”) and the 4th defendant (“D4”) formed a partnership firm named M/s Asian Exports and began using the mark ROYALCHEF, allegedly conceived by P3. Upon D4’s retirement from the firm in 2006, Asian Exports was reconstituted and continued by new partners. P1 is the continuation of erstwhile Asian Exports.
Asian Exports had previously filed two suits against D4 for infringement of the trademark ROYALCHEF. These suits were settled as per a Memorandum of Compromise (“MoC”), pursuant to which P3 and D4 entered an Assignment Deed and a License Deed.
The relevant terms and conditions of the settlement are below:
“i) That M/s. Asian Exports consents that the trademarks and copyrights in the trademarks ROYALCHEF and BABY wherever registered and applied for including India, Singapore, London, Australia and any other country in the name of M/s. Asian Exports shall stand irrevocably transferred to and in favour of the fourth defendant i.e., Mr.Sheik Dawood, however, the fourth defendant undertakes to permit M/s.Asian Exports to use the trademark ROYALCHEF in respect of goods exported only from India to Qatar and Qatar alone.
ii) M/s. Asian Exports retained the trademark ROYALCHEF with respect to Qatar and the fourth defendant would be assigned the trademark ROYALCHEF for other places and other trademarks.
iii) That M/s. Asian exports was entitled to use the trademark ROYACHEF in respect of goods exported from India to Qatar and Qatar alone.”
Plaintiffs’ Contentions
The Plaintiffs strongly contended they had exclusive rights to the use of the mark ROYALCHEF in the territory of Qatar and to export rice from India to Qatar.
As per the Assignment Deed, Asian Exports assigned the rights of the mark ROYALCHEF to D4. According to the Plaintiffs, D4 licensed P3 to use ROYALCHEF in respect of the goods exported only from India to Qatar and Qatar alone.
The Plaintiffs were aggrieved that the Defendants started exporting rice from India to Qatar under the identical trademark ROYALCHEF. They submitted that the Defendants learned about the Plaintiffs’ flourishing business in Qatar and began exporting rice to harm their business.
Further, D4 had unlawfully registered the trademark ROYALCHEF in Qatar while the two trademark infringement suits were pending.
Defendants’ contentions
The Defendants vehemently objected to the existence of exclusivity in the License Deed and argued that P3’s claim of exclusive right to use ROYALCHEF in Qatar was unsustainable.
They stated that D4 and P3 were erstwhile partners of Asian Exports and that the two trademark infringement suits filed earlier were settled. D4 merely permitted P3 to export goods under the trademark ‘ROYALCHEF from India to Qatar and Qatar alone. However, at no point, during or after the settlement had the parties discussed that the defendants will be restricted from exporting goods under the said trademark to Qatar.
The defendants contented that while D4 permitted Asian Exports or P3 to export goods from India to Qatar and Qatar alone under the trademark ROYALCHEF, the defendants themselves were not restricted from exporting the goods under the same trademark.
Court’s reasoning
On the issue of Plaintiffs’ exclusive proprietorship, the Court ruled that neither the Deed of Assignment nor the Deed of Licence restricted the defendants from exporting the goods to Qatar.
The Court observed that Asian Exports had assigned absolute proprietorship of ROYALCHEF to D4. Thereafter, D4 had granted Asian Exports an irrevocable perpetual license to export goods from India to Qatar under the trademark ROYALCHEF.
Upon a combined reading of MoC, Assignment Deed and License Deed, the Court held that D4 is not restricted from exporting goods to Qatar and that the Plaintiffs were not conferred any exclusive proprietorship over ROYALCHEF.
Deciding the question of D4’s exclusive proprietorship, the Court concluded that the D4 is the absolute owner of registered trademark and reasoned that the Plaintiffs being mere licensees were not entitled to question the true owner of the trademark and their use anywhere.
The Plaintiffs admission that there was no restrictive covenant binding on D4 swung the scales in the Defendants’ favour.
Conclusion
The Court decided that the Plaintiffs were not entitled to any injunction restraining defendants from using ROYALCHEF and it was of the view that the D4 had not transferred the entire right to the Plaintiffs and retained the right of trading goods from India to Qatar, like any other country.
Citation: Quality Chef Agro Foods Pvt. Ltd. & ors. v. ADF Trading Pvt. Ltd. & ors., C.S. (Comm. Div.) No. 286/2018 (Madras High Court, 03-01-2025). Available at https://indiankanoon.org/doc/3299838/
Authored by Ms. Charishma, Associate, Innovation, Consulting & Strategy, BananaIP Counsels
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