Exide Industries Limited vs. Exide Corporation, U.S.A. & Ors.

18th December, 2017 - 11:19 am Categories: India Intellectual Property News & Updates Trademark 0 Comments

The case Exide India v Exide US brings into effect the perplexing issue of Trademark law. The dispute dates back to 1997 when the US based Company ‘Exide Technologies’ entered the Indian market post Liberalisation, where Indian company ‘Exide Industries’ was already present over the decades in the local market selling automobile batteries under the trademark “EXIDE”. As soon as the US based company started its operation in India, Indian company “Exide Industries” filed a suit for infringement of trademark in Delhi High Court. After a significantly long and much converse legal conflict, the Court in 2012 restrained Exide Technologies from using “Exide” trademark in India. Exide Technologies further filed an appeal to Division Bench against the judgement of 2012, which was though dismissed but the Division Bench held that there was neither infringement nor passing off done by Exide Technologies as both the commercial ventures were genuine users of the mark. Further to this decision, Exide Industries filed an appeal before the Hon’ble Supreme Court, which was disposed off by the court, as the parties to the dispute opted for an out of court settlement. The foremost dispute of the case was as to who is the real owner of the mark EXIDE.

The case is important as it includes the aspect of prior-use of identical trademark by two commercial entities and its legitimate ownership. The case involves a significant concept of trademark law according to which the prior use and adoption of trademark show distinctiveness of the trademark on account of sale of the goods in market which makes the seller, owner of the trademark. The Delhi High Court single judge held that the trans-border use of the trademark by the registered owner of a mark in a particular jurisdiction does not make him the owner in another jurisdiction where the similar mark is in simultaneous use by other local registered proprietors with proven prior use of that trademark. But subsequently the Division Bench declared the judgement to be impugned and thus held that the trans-national use of the trademark is one of the significant aspects to look for the ownership of the trademark and also the goodwill of the trademark continues to be with the assignor of the trademark even if it is assigned to some other company for use in another jurisdiction.

Case background:

M/s. Electric Storage Battery Company (ESBC) was incorporated in USA in 1888 and subsequently was granted the trademark ‘EXIDE’ in USA. It incorporated a subsidiary company in UK in 1891 named as M/s. Chloride Electric Storage Co. Ltd. (CESCO) which was permitted to use the trademark as it was a subsidiary of the parent US Company. Later, CESCO was also granted registration of trademark ‘EXIDE’ in UK. In 1947, following an order of a US District Court, ESBC and CESCO broke connection but CESCO continued to have right to use trademark ‘EXIDE’ pursuant to an agreement between the two. CESCO started selling batteries under the name ‘EXIDE’ in India and subsequently in 1942 it was granted registration of the trademark ‘EXIDE’ even in India. CESCO is the parent company of the present plaintiff company to which the trademark was transferred. In 1978, by executing a deed of assignment, trademark ‘EXIDE’ was assigned to the present plaintiff company. Thereafter, the plaintiff company applied for transfer of registration of trademarks in its favour which was also granted. Therefore, it was selling batteries under the name ‘EXIDE’ for quite a long time in India.

After liberalisation, when US company Exide Technologies started selling batteries under the name ‘EXIDE’ in India, The Indian Company brought a suit for infringement and passing off against it which became a long drawn battle.The ownership of the trademark EXIDE was the primary issue in this case. The Indian Company Exide Industries claimed ownership on two grounds:

• It was the registered owner of the trademark in India. This ownership was transferred from the transferor-company.
• It was the prior user of the trademark in India and thus it acquired the ownership of the trademark ‘EXIDE’ in India.

Similarly the US based company, Exide Technologies claimed the ownership on two grounds:

• It is the parent company (US based ESBC) of the former transferor-company (UK based CESCO) which owned the trademark ‘EXIDE’ and thus only Exide Technologies have the exclusive right of the ownership of the trademark ‘EXIDE’ even in India.
• The trademark ‘EXIDE’ is registered in its name in about 130 countries and thus it is the worldwide owner of the trademark. As the company has a transnational existence, it is the real owner of the trademark ‘EXIDE’ even in India.

In the present case, the concept of prior use was applied, which implied that the plaintiff company was using the trademark by selling batteries under the name ‘EXIDE’ in India. The defendant claimed that it was the owner of the trademark in India as well because it was the parent company of the transferor-company from which the plaintiff acquired the trademark ‘EXIDE’ and the defendant pleaded that it had not abandoned its right by not using the trademark in India and instead didn’t use the trademark in India for long period of time because of some ‘special circumstances’. The court did not accept the Defendant’s plea as it failed to show any ‘special circumstances’ for not using the mark over such sufficiently long period of time in India. The result was that the court accepted the fact that the transferor-company was manufacturing batteries under the name ‘EXIDE’ in India from around 1960 from which the plaintiff company got the trademark assigned. Thus automatically, as far as India is concerned, the plaintiff and their predecessors are the prior users of the trademark ‘EXIDE’.

Judgement:

The Delhi High Court in 2012 through Valmiki Mehta, J. restrained Exide US from using the Exide mark in India and held the plaintiff as the legitimate user and owner of the mark in India due to its prior use by plaintiff. Both, infringement and passing off by US Company Exide Technologies were confirmed by the court. The Defendant’s plea of non-use of trademark in India due to special circumstances was also rejected as Court observed that the Defendant failed to establish any special circumstances.

However, the case came up as an appeal to the Division Bench of Delhi High Court which considered both the issues, the prior use of the trademark by Exide Industries and whether Exide Technologies is liable for the infringement and passing off. Relying on the landmark Supreme Court judgement like Cadila Healthcare, Dyechem v Cadbury and Durga Das Sharma v Navratan Pharmaceutical laboratories, the court inferred that passing off and infringement are both different concepts wherein, an impression of deception or confusion relating to the manufacture or origin of the goods is created in the minds of the buyers. Court observed that the trademark ‘Exide’ used by both the parties is identical, and both were genuine users of the mark. The judgement of the court was quite inventive and only one of its kind wherein the court outlined that US based Company was kept out of the Indian market due to trade restrictions but however on record of evidence Exide Batteries manufactured by Exide US was substantially known in India as well. Another point that the Court illustrated was that though, through an assignment deed, the mark was assigned to Exide India, yet the goodwill in the mark was retained by Exide US because the agreement did not specifically transfer the goodwill. Thus, the transnational reputation was highlighted and the court allowed Exide US to be in possession of the goodwill of the trademark ‘EXIDE’ despite of transfer of rights of ownership of the trademark. At the end, the court confirmed that there was no circumstance of passing off or infringement by the Exide US as it had legitimate rights to the mark. The court termed the use of the mark by Exide Technologies as “bona fide and legitimately concurrent”. Moreover, the counterclaim against Exide India was not maintainable since they were the registered owners of the mark in India.

The order of the division bench was further stayed by the Supreme Court after an appeal was filed by Exide Industries. The apex court restrained the Exide Technologies (defendant) from using the mark until the final adjudication of the matter but the parties before the decision of the court brought about an out of court settlement.

Present scenario and analysis:

In the event of widespread reputation through immense technology (internet, websites), globalisation and restructuring of Indian market, Exide case comes as an exception and as a tenet that considers territorial character of Trademark above trans-border reputation. The Delhi High Court judgement of 2012 clearly delineated that the territorial prior use of the trademark by a registered user in one jurisdiction weighed more than the worldwide reputation of the trademark used by another registered user in other jurisdictions. The case was twirled when the Division Bench restored the rights to the mark to both competing proprietors in a way. By this case, the true scope and effect of concurrent use of an identical trademark for similar products in different jurisdictions were brought into light. Both concurrent users of the identical trademark in different jurisdictions were held to be the legitimate users in their respective jurisdictions. The allowed of the retained goodwill for substantiating bona fide claim to the mark was an exclusive and unique approach.

However, out of the court settlement by the parties clearly marked an end to the hopeful jurisprudence in cases of use of identical trademark by different commercial proprietors in different jurisdictions. The parties mutually agreed subject to certain terms and conditions to fully and finally settle all disputes and their rights and obligations with respect to the mark in the way set out in the agreement. As a result of the settlement, the Supreme Court disposed off the case without a proper jurisprudence on the issue.

Source:

Author: Ms. Pratistha Sinha, Intern at Khurana and Khurana Advocates and IP Attorneys and can be reached at anirudh@khuranaandkhurana.com.