Settlements, Acquiescence, and Section 29(5): Decoding the Madras High Court's ORBIT Ruling

Case Title: Amit Agarwal & Anr. v. Shiv Kumar Gupta & Anr.

Court: Madras High Court

Date of Decision: 24 February 2025

Citation: 2025:MHC:532

BACKGROUND

The Madras High Court dealt with a dispute over the use of the trade marks “ORBIT” and “ADL ORBIT” in the cable and wires industry. The 1st plaintiff, Mr. Amit Agarwal, is the registered proprietor of these trademarks and the Director of Seetu Orbit Cable India Pvt. Ltd., the 2nd plaintiff, which uses the marks in trade since 1990.

In August 2024, the 1st defendant, Shiv Kumar Gupta, filed three applications for registration of trademarks which prominently featured the word “ORBIT.” In his power of attorney, he described himself as a partner of ADL Orbit Cable (India), the 2nd defendant. Upon discovery of this, the plaintiffs discovered that the erstwhile partners of the 2nd defendant had already entered into a settlement agreement recognising plaintiffs’ rights over the Trade Mark/ Trading style – ORBIT. The plaintiff accordingly issued cease-and-desist notices and subsequently filed a civil suit with interim applications seeking injunctions against trademark infringement and passing off.

PLAINTIFF’S CONTENTIONS

1. Settlement Deed of 2019

The plaintiffs strongly relied on a settlement recorded before the Additional District Judge, Delhi in October 2019, in which the 2nd defendant (represented by its then-partners) had:

• Acknowledged the plaintiff's ownership of the trademarks "ORBIT" and "ADL ORBIT";
• Undertaken to cease all use of the mark or deceptively similar variants, including as part of a tradename.

2. Trademark Includes Tradename

Relying on Sections 2(2)(c) and 29(5) of the Trade Marks Act, the plaintiffs argued that use of a registered trademark within a tradename (especially in connection with goods) also constitutes infringement.

3. No Acquiescence

The plaintiffs rejected the defendants’ claim of acquiescence, explaining that any invoices issued post-settlement were based on purchase orders issued prior to settlement, and thus did not amount to acquiescence and the invoices issued in 2020 were issued to an entirely distinct entity and thus did not amount to knowledge, nor acquiescence.

DEFENDANT’S CONTENTIONS

1. Acquiescence and Knowledge

Defendants claimed the plaintiffs were aware of the continued use of “ADL Orbit Cable (India)” even after the 2019 settlement and did not object—constituting acquiescence.

2. Tradename vs Trademark

They argued that they had not used the plaintiffs’ trademarks per se, but only the tradename, which should be treated separately. They also pointed out that the prayers in the interim application did not explicitly seek relief against use of the tradename.

3. Procedural Lapse – Section 12A

The defendants claimed that the plaintiffs failed to comply with Section 12A of the Commercial Courts Act, 2015, which mandates pre-institution mediation.

4. Suppression of Material Facts

They alleged that the plaintiffs had suppressed earlier litigation (e.g., CS(Comm.) No.504/2024 and 1002/2024), which constituted material facts and ought to have been disclosed in the plaint.

DISCUSSION

• Acquiescence – The court observed that the invoice copies submitted by the defendants are prima facie indicative of the knowledge of existence of the defendant 2 however it does not amount to acquiescence. The November 2019 invoices were too close to the date of the settlement and lacked context (i.e., missing purchase orders). The later invoices, issued by a different entity (Orbit Wire and Cable India Pvt. Ltd., incorporated by the plaintiffs), indicated but did not prove acquiescence.
• Trademark vs Tradename – With regards to the contention that the defendants do not use the trademark ORBIT or ADLORBIT and the prayer of the Plaintiff do not seek relief against use of tradename, the court held that the plaintiff’s reliance on section 2(2)(c) and Section 29(5) and the contention that use of the trading name in relation to the sale of goods also constitutes use and infringing use is not devoid of merit and cannot be brushed aside.
• Section 12A – The court deemed that seeking interim relief without initiating pre-institution mediation was justified as the defendant failed to provide any evidence to support their user claim since 1997 and also failed to respond to the notices issued by the plaintiffs
• Interim injunction – The court held that a strong prima facie case is made out against the defendants, the balance of convenience is in favour of the plaintiffs and irreparable hardship would be caused to the plaintiffs unless the order of interim injunction is extended until disposal of the suit.The court, however, directed the injunction to come into effect after a lapse of period of 60 days granting the defendants time to carry out necessary activities to change their trade name in the meanwhile.
• 2019 Settlement – The court emphasized the binding nature of the 2019 agreement, wherein the defendants had unambiguously agreed not to use the mark or tradename. The defendant No. 1 is bound by the agreement even though he was not a partner when the partnership firm entered into the agreement. The existence of this clear contractual restraint significantly influenced the court’s decision to grant relief.
• Suppression of Material Facts – The court noted that although it would have been appropriate for the plaintiffs to disclose past suits, there was no material suppression that warranted vacating the interim injunction. The court observes that C.S.(Comm.)No.504 of 2024 is against a different partnership firm called M/s.OCI Cables India and C.S.(Comm.)No.1002 of 2024 was filed by one Mr. Lokesh Tayal against the first Plaintiff for the use of the trademarks OCI and associated marks.

LEGAL IMPLICATIONS

Tradename Use Can Constitute Trademark Infringement

The Court reaffirmed that use of a registered trademark within a tradename, particularly in relation to the sale of goods, can constitute infringement under Section 29(5) of the Trade Marks Act, 1999. Businesses can no longer evade trademark liability by embedding a protected mark in their business name and claiming it's not used “as a mark.”

Binding Nature of Settlement Agreements

The Court gave significant weight to a prior settlement agreement (executed in 2019), where the defendants had agreed not to use the marks “ORBIT” and “ADL ORBIT.” Even though the 1st defendant was not a partner at the time of the agreement, the Court held him bound by the obligations of the firm. A firm’s continuity binds future or incoming partners to obligations undertaken earlier, strengthening the enforceability of such agreements.

Strict threshold for proving acquiescence

The Court clarified that mere knowledge or isolated business transactions post-settlement do not constitute acquiescence or waiver of rights. It emphasized the need for clear, sustained, and knowing inaction to establish acquiescence.

Flexibility in Compliance with Section 12A

Failure to prove use of marks and not responding to cease and desist notices were held to be enough grounds to waive off Section 12A.

Balanced Approach to Interim Injunctions

Although the Court granted an injunction, it recognised the potential hardship to the defendants and therefore delayed the operation of the injunction for 60 days, allowing time to change their tradename. This reflects a pragmatic and equitable approach to enforcement, balancing the rights of trademark owners with the operational realities of the infringing party.