Vesting of Proprietary Rights in a Trademark Contingent on Registration Ceases Upon Revocation of License and Abandonment of Application.

The Appellant (AIL) and Respondent No. 1 (KL) were originally under joint management until a division in 2002.

Under a 2002 Agreement, KL held ownership of the 'KAMDHENU' mark, but AIL was permitted to adopt and register 'AL KAMDHENU GOLD' as its proprietor.

AIL applied for registration in 2002 but the application was abandoned in 2008.

Meanwhile, KL obtained registrations for 'KAMDHENU GOLD' and 'KAMDHENU GOLD TMT' despite an earlier undertaking to withdraw its application.

In 2021, the parties entered into a new license agreement for 'KAMDHENU NXT'.

Following a termination notice issued by KL on 19.09.2024, AIL filed a suit for passing off and specific performance of the 2002 Agreement, while KL filed a counter-suit for infringement.

The Single Judge dismissed AIL’s interim injunction application and allowed KL’s, leading to this appeal.

1. Whether the 2002 Agreement constituted an absolute assignment of the mark 'AL KAMDHENU GOLD' or a contingent license arrangement.

2. Whether the 2021 Agreement novated the 2002 Agreement, thereby extinguishing AIL's rights to the mark.

3. Whether AIL established prior use and goodwill in the mark 'AL KAMDHENU GOLD' to sustain a passing off action.

4. Whether KL’s registered trademarks were infringed by AIL’s use of the impugned mark.

Section 62 of the Indian Contract Act, 1872, regarding the novation of contracts through mutual intention.

Section 48(2) of the Trade Marks Act, 1999, concerning the enurement of goodwill from a permitted user to the registered proprietor.

Section 28 and 29 of the Trade Marks Act regarding the rights of registered proprietors and infringement.

Procedural principles for appellate interference in discretionary orders were derived from Wander Ltd. v. Antox India (P) Ltd. and Pernod Ricard India (P) Ltd. v. Karanveer Singh Chhabra.

The Court observed that under Clause 24 of the 2002 Agreement, AIL’s ownership was contingent upon "final registration," which AIL failed to secure by allowing its 2002 application to be abandoned in 2008.

AIL failed to provide evidence of actual use of the mark on goods between 2002 and 2024, utilizing it only in statutory notices, which does not constitute goodwill for passing off.

While AIL argued the 2002 Agreement was not fully novated by the 2021 Agreement, the Court held that the 2024 termination notice effectively revoked any consent for AIL to use the 'KAMDHENU' formative mark.

Since KL is the registered proprietor of 'KAMDHENU GOLD,' AIL's use constituted prima facie infringement.

The Court found KL's 2024 application for 'AL KAMDHENU GOLD' (including AIL's initials) to be in bad faith, as KL had never used that specific variation.

The Court modified the relief by restraining KL from using the specific mark 'AL KAMDHENU GOLD' during the pendency of the suit and directing that KL's use of 'KAMDHENU GOLD' and 'KAMDHENU GOLD TMT' would be subject to the final outcome of the suit without claiming equity.

The Court clarified that all findings are prima facie and do not bind the final adjudication.