The Delhi High Court has ruled that the adverse impact on business operations or plans to launch an IPO cannot be a valid reason to set aside an interim injunction in a trademark infringement dispute.

 A division Bench comprising Justices Navin Chawla and Harish Vaidyanathan Shankar made this clear while hearing an appeal filed by Newgen IT Technologies. The company had challenged a district court order that restrained it from using the trademark “Newgen”, which was already in use by the respondent in the same business domain.

 “In the present case, while the appellant has strenuously contended that the injunction has brought its business operations to a standstill and jeopardised its IPO plans, we are not persuaded by this line of argument,” the court held. “The appellant cannot be permitted to continue deriving commercial benefit from a mark that, in our considered view, is similar to that of the respondent and clearly warrants restraint through injunctive relief.”

The legal battle stems from a dispute between Newgen IT Technologies (the appellant) and VCARE InfoTech Solutions and Services (the respondent). Both companies operate in the field of software product development in India and had previously entered into a partnership agreement.

After the agreement was terminated, the appellant adopted the name “NewGen IT Technologies”, prompting the respondent to approach the district court, alleging trademark infringement. The lower court found that the name adopted by the appellant was identical to that of the respondent and was likely to mislead or confuse consumers. Consequently, an ex-parte ad-interim injunction was issued against the appellant, the news report said.

In its appeal, Newgen IT Technologies argued that it had been using the mark “NEWGEN IT” since 2017, both in India and internationally, and that the respondent had raised no objection until the dispute arose. However, the high court sided with the district court, agreeing that the two marks were “strikingly similar” and that both companies operated in the same sector.

 “Coupled with this is their association as partners under the Partnership Agreement. This similarity is capable of causing confusion in the minds of an average consumer, thereby justifying the grant of an ex-parte ad-interim injunction in favour of the Respondent/Plaintiff,” the Bench observed.

The court further noted that the appellant began using the term “NEWGEN” around the time the partnership with the respondent ended. This timing, according to the Bench, raised serious doubts about the genuineness of the adoption, 

As the judgment stated, the timing “cannot be considered as a bona fide adoption".

International use no defence without local reputation

On the argument that the respondent had knowledge of the appellant’s use of the mark in other jurisdictions, the court emphasised the territorial nature of trademark rights.

 “It must be remembered that trademark protection is territorial in nature; the use of the mark in one jurisdiction does not ipso facto lead to the generation of goodwill or protection in the other jurisdiction,” the court held. It added that protection in another country can only be extended if there is demonstrated use or transborder reputation of the mark in that jurisdiction — criteria the appellant failed to meet, the news report said.

Finding no merit in the arguments advanced by Newgen IT Technologies, the Delhi high court dismissed the appeal, allowing the interim injunction granted by the district court to remain in force.