[This post is authored by SpicyIP intern Shravya Pandre. Shravya is a third year BA.LLB. Hons. student at The National Academy of Legal Studies and Research, Hyderabad. Her previous post can be accessed here.]
While interim injunctions seem to be the go-to remedy in India against IP infringements, negotiation as a means to resolve IP disputes rarely gets the same traction. The recent Delhi High Court order in Mankind Pharma Ltd. v. A2 Lifesciences & Anr. (pdf) is an apt example of how negotiations can assist in the timely resolution of IP disputes and address issues that may take years to address in court. Mankind Pharma alleged that A2 Lifesciences infringed its registered trademark “HEALTH OK” by using a confusingly similar mark, “ALL OK+,” along with similar trade dress, including colour combinations, packaging design, and product shapes. Mankind Pharma argued that this creates a likelihood of confusion among consumers, damaging their established goodwill and reputation. The Delhi High Court granted an interim injunction against the A2 Lifesciences, restraining them from manufacturing or selling products with the infringing mark (pdf). Consequently, A2 Lifesciences sought to vacate the injunction, submitting that they were willing to change the impugned trade dress and argued that the competing marks were dissimilar. Eventually, the parties agreed to negotiate wherein Mankind Pharma relinquished their claim against A2 Lifesciences’ use of the “All OK+” trademark.
Order XXXIX Rule 4: Silver Bullet for Interim Injunctions
Interim injunctions are crucial in trademark disputes to safeguard the plaintiff’s rights while the case is under judicial consideration. These injunctions temporarily restrain the defendant from continuing allegedly infringing activities until the final resolution of the matter. Order XXXIX, Rules 1 & 2 of the Civil Procedure Code, 1908, empowers courts to grant interim injunctions when the plaintiff demonstrates a prima facie case, balance of convenience, and irreparable injury. Unfortunately, interim injunctions are often granted without sufficient reasons and are nightmare to vacate/ modify (see some of the previous posts on the blog on interim injunctions here.)
Speaking of vacating an injunction, under Order XXXIX Rule 4 of CPC, an application can be filed if a party is dissatisfied with the order. The same happened in this case, as A2 Lifesciences filed an application proposing to change its trade dress and also argued that the marks “HEALTH OK” and “ALL OK+” aren’t similar. This application proved to be a crucial turning point as subsequently, the parties initiated a settlement process and intimated to the Court that they had amicably settled the matter. The compromise decree (linked above) states that it is agreed between the parties that A2 Lifesciences shall be free to use the trademark “ALL OK+” so long as the trade dress is not similar to that of Mankind’s product.
Role of Mediation in IP Disputes
Mediation benefits financially weaker parties, like small businesses, in trademark disputes with large conglomerates by reducing litigation costs and risks. For instance, a small business might agree to modify branding instead of incurring high legal costs. Such agreements often let both parties coexist, with conglomerates permitting limited use of similar marks in non-competing markets, fostering practical, mutually beneficial resolutions. (Read more about it here)
The Commercial Courts Act, 2015 (CC Act) mandates pre-institution mediation for certain commercial disputes. This gives parties an opportunity to resolve disputes amicably before starting formal litigation, reducing the burden on courts and encouraging cost-effective resolution of disputes.
The Supreme Court in Yamini Manohar v. T K D Keerthi has directed that attempts to bypass the statutory mandate of pre-litigation mediation should be checked to the satisfaction of the court as to whether an urgent interim injunction is actually required. Further, it took note of Patil Automation (P) Ltd. v. Rakheja Engineers, wherein it was held that Section 12-A of the CC Act is mandatory. In IP cases, courts have adopted an oscillating view on this requirement. While sometimes, after careful scrutiny of the plaint and accompanying documents, courts have directed the plaintiff to go through the pre-institution mediation route (for instance HP HC in Novenco Building & Industry A/S v. Xero Energy Engineering Solutions Private Ltd. & Another (covered here by Samridhi), sometimes Courts have held that allegations of trademark infringement pre-supposes urgency to dispense the requirement of pre-institution mediation under the CC Act (see Kohinoor Seed Fields India Pvt. Ltd. v. Veda Seed Sciences Pvt. Ltd.). (Interested readers can check this piece by Disha Thakkar to understand the overall shift in approach towards pre-institution mediation in commercial cases and the structural gaps impacting the efficient implementation of the provision.) Interestingly, the recently proposed amendments to the CC Act state that once an interim relief is granted in cases seeking urgency, the Court shall refer the parties to mediation as under Section 12A(1), thus ensuring that mediation is not eliminated from the scheme of affairs.
Coming back to the case in hand. The present case highlights how mediation can result in swift dispute resolution but it’s also worth noting that Mankind sought an exemption from instituting pre-litigation mediation, which was allowed alongside an exemption from advance services to A2 Lifesciences. For a case for exemption from advance service under the proviso to Rule 22 of the Delhi High Court Intellectual Property Rights Division Rules, 2021, to be made out, the plaintiff must demonstrate to the Court that irreparable injury would result if advance service were made on the defendant in accordance with the rule. In hindsight, the matter would’ve perhaps been settled faster if pre-mediation was allowed. Thus, it also raises a question based on which the Court decided that “irreparable harm” was imminent enough to allow exemption from the pre-mediation process in the present case.
H/t to an anonymous reader for sharing this development with us.