Settlement-based territorial trademark restrictions require geo-blocking of digital platforms to prevent unauthorized access.

In brief

The question

1. Whether the use of a trademark on social media platforms and websites accessible within a restricted territory constitutes "use" of the mark in that territory under the TOS.

The court held

The court held both parties to be in wilful disobedience of the TOS.

It also directed

Rather than immediate punishment, the court issued mandatory directions to purge the contempt.

SDM was ordered to: (i) refrain from using "SUPERON" on social media/websites unless geo-blocked for India; (ii) remove physical hoardings of "SUPERON" in India; (iii) demarcate operations into three separate divisions; and (iv) cease marketing industrial products under the "Stanvac Prime" brand.

SM was ordered to: (i) cease interlinking "SUPERON" with "STANVAC/STARBLAZE" in physical and digital domains; (ii) remove hoardings interlinking the marks; and (iii) geo-block websites containing "SUPERON" so they are inaccessible outside India.

Both parties were directed to file compliance affidavits within four weeks.

01Facts

Sanjay Mehra (SM) and Sharad Mehra (SDM) were directors of Superon Schweisstechnik India Ltd.

¶ 3

Following a family settlement, the business was divided: SM received exclusive rights to use the trademark "SUPERON" within India, while SDM received exclusive rights for its use outside India.

¶ 4

On 27.04.2023, the parties executed Terms of Settlement (TOS) before a Division Bench of the Delhi High Court to resolve pending disputes.

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Clause 4 of the TOS prohibited SDM from using "SUPERON" in India in any manner, subject to a narrow exception for export-related documentation under Clause 7.

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Clause 6 prohibited both parties from "interlinking" their respective brand divisions or companies directly or indirectly, including on social media.

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Both parties subsequently filed cross-contempt petitions alleging wilful disobedience of the TOS.

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SM alleged SDM was using "SUPERON" on LinkedIn and physical hoardings in India without geo-blocking his website.

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SDM alleged SM was "interlinking" the marks "SUPERON" and "STANVAC" on physical hoardings and social media.

¶ 44, 48

02Issues

i.1. Whether the use of a trademark on social media platforms and websites accessible within a restricted territory constitutes "use" of the mark in that territory under the TOS.

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ii.2. Whether the prohibition against "interlinking" group companies and brands in the TOS is restricted to electronic media or extends to physical advertisements and hoardings.

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iii.3. Whether the court in its contempt jurisdiction can mandate geo-blocking of websites to ensure compliance with territorial trademark restrictions.

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iv.4. Whether the use of the term "SCHWEISSTECHNIK" by SDM constitutes contempt in the absence of a specific prohibitory clause in the TOS beyond the company name.

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03Law Applied

The court applied the principle that wilful disobedience of an undertaking or settlement terms recorded by a court amounts to civil contempt.

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Regarding trademark "use," the court relied on Tata Sons Private Limited v. Hakunamatata Tata Founders, holding that the mere presence of a website in a geography and the ability of customers to access it constitutes "targeting" and "use".

¶ 51

It further cited N.R. Dongre v. Whirlpool Corporation to establish that advertisement in media amounts to the use of a trademark regardless of the physical availability of the product.

¶ 52

On contempt jurisdiction, the court applied Balwantbhai Somabhai Bhandari v. Hiralal Somabhai, affirming that courts can issue directions to nullify advantages secured through contumacious conduct.

¶ 89

Noorali Babul Thanewala v. K.M.M. Shetty, which allows courts to direct a contemnor to "purge the contempt".

¶ 91

Provisions in the judgment · 4 · Linked ones open on LawLens

Companies Act, 2013 Section 241 Section 242

Trade Marks Act, 1999 Section 29

Transfer of Property Act, 1882 Section 52

04Reasoning

The court reasoned that because Clause 4 of the TOS creates an absolute embargo on SDM using "SUPERON" in India (save for narrow export exceptions), any digital presence accessible in India—such as LinkedIn posts or non-geo-blocked websites—violates the TOS.

¶ 54-55

The court rejected SDM’s defense that disclaimers on websites were sufficient, noting they did not override the express territorial restriction.

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It held that geo-blocking is a "logical and inevitable corollary" of the TOS to prevent digital spillover into SM’s exclusive territory.

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Regarding SM’s conduct, the court dismissed the argument that "interlinking" prohibitions applied only to electronic media; the use of the word "OR" and the phrase "directly or indirectly" in Clause 6 indicated the restriction encompassed physical hoardings where SM displayed "SUPERON" and "STANVAC" together.

¶ 80-82

the court found no contempt regarding the term "SCHWEISSTECHNIK," as the TOS only prohibited its use in SDM’s company name, not its general use.

¶ 78