Macrotech Developers (formerly known as ‘Lodha Developers’) filed a trademark infringement suit against the ‘House of Abhinandan Lodha’ (HoABL). Macrotech, in the suit, has sought an injunction against HoABL from using the TM ‘Lodha’ to prevent confusion among consumers. Further, Macrotech has sought Rs. 5000 cr. in damages. Abhishek Lodha (CEO, Macrotech Developers), in this interview, has said that the suit is to ensure that the consumers are not confused that any other developer using the Lodha name is associated with Macrotech or Lodha group. Last week, the BHC appointed Justice Raveendran to mediate the dispute. In this post, I will provide a background of the dispute and explore the relevance of section 29(5) and section 35 of the TM Act in resolving the dispute.
Genesis of the Dispute
According to this report on Mint (paywalled), the Lodha siblings (Abhishek and Abhinandan) parted ways in 2015. A Family settlement agreement (FSA) was concluded wherein Abhishek Lodha was appointed as the CEO of the Lodha Group (later renamed Macrotech). Abhinandan, on the other hand, transferred his ownership to the real estate group in return for Rs. 500 crores (disputed figure). Abhinandan was also given two businesses- ‘Lodha Ventures’ and ‘Lodha FinServ.’
The dispute between the two arises due to the FSA- and brings forth the question whether Abhinandan, under the FSA, allowed to use the name Lodha in his businesses?
Abhishek, in two interviews (here and here), has argued that the FSA explicitly stated that “all brand, IPR, copyright, TMs” (whatever that means) of the Lodha business, including ‘Lodha’ and ‘Lodha group’, would belong to the Lodha Developers Private Limited (Macrotech Developers). He also argued that the FSA stipulated that Abhinandan could not use the TM or brand name ‘Lodha’ in any manner whatsoever. According to this piece, many consumers have confused HoABL with Macrotech Developers. The Lodha group has put this clarification on their website:
Abhinandan, on the other hand, argues that there was no “non-compete” clause in the FSA. According to him, FSA stipulated that “Lodha” could not be used on a standalone basis i.e. it could be used in conjunction with other terms. According to this article, Abhinandan claims that the non-compete clause operated from 2017-2022 and was limited to Mumbai and London. In 2023, another agreement was drawn upon which barred Abhinandan from using ‘Lodha’ in any capacity. Abhinandan disputes this agreement and claims that Macrotech had agreed to not object to the use of ‘Lodha’ in HoABL. Further, he argues that HoABL, unlike Macrotech, is involved in horizontal development (plotted land development) whereas Macrotech is engaged in vertical business (high-rise buildings). HoABL, he says, does not exist in locations where Macrotech developers operate and that HoABL’s clients are highly educated to understand the difference between HoABL and Lodha developers. HoABL, on their website, has written this:
However, there are reports that Abhinandan has acquired the American Centre property in South Mumbai and wants to develop it into a super-luxury residential project. This would mean that HoABL is, in fact, involved in the real estate business in Mumbai which would breach the non-compete clause. It also means that both HoABL and Macrotech are involved in vertical development. Further, HoABL has filed for registration of their TM in the same class (36- real estate affairs; 37- building construction) as Macrotech developers. (App. no.- 4700663, 5165061 and 6343034) Thus, prima facie, it does not seem that HoABL is engaged in only horizontal development but is also engaged in vertical development.
As can be seen, the TM dispute has arisen due to the lack of clarity in the FSA on who is allowed to use the name ‘Lodha.’ At this point, it’s Abhinandan’s word against Abhishek’s on what the FSA did say. I don’t have access to the suit or the terms of the FSA to dive into a deeper analysis at this point.
Protecting Brand Identity: Section 29(5)
Abhishek, in his interviews, has constantly argued that the present dispute is similar to the ‘6E’ dispute between Mahindra and Indigo. He said that Indigo, despite being engaged in a completely dissimilar business, filed the TM suit against Mahindra to protect their brand. Macrotech Developers similarly, he argues, has filed the suit to protect their brand.
Unlike the Indigo dispute, the present dispute is between two companies that offer similar goods and services. In Trademark law, it is important to determine if the mark is being used to offer goods and services similar to the ones for which it is registered. How?
Let’s assume that HoABL and Macrotech developers operate in distinct businesses. To prove infringement then, Macrotech will have to prove their case under 29(4).
Under Section 29(4) of the TM Act, there is an infringement of TM, irrespective of the dissimilarity of goods and services offered, if the registered mark:
- Similar or identical to the infringing mark; and
- reputation in India; and
- use of the mark takes unfair advantage or is detrimental to the distinctive character or repute of the mark.
However, this section requires the TM proprietor to prove ‘unfair advantage’ and ‘detriment’ to the mark before proving infringement. The TM proprietor has the burden to prove unfair advantage or detriment as well as its reputation in India (here and here). 29(4), at least relative to 29(5), is more difficult to prove.
On the other hand, if HoABL and Macrotech deal with similar goods and services (which I think they do), the case becomes easier for Macrotech to prove infringement u/s. 29(5).
29(5), in my opinion, was enacted to protect corporate brand identity since it prevents someone else from using a registered trade name or business name as part of goods or services for which the mark is registered. It is the only provision which governs infringement through trade name. 29(5), thus, seeks to prevent brand dilution and protect the identity as well as the integrity of the brand.
Section 29(5) has two ingredients to prove-
- person uses the TM as his trade name or business concern; and
- the trade or business deal with goods and services for which the mark is registered.
In Cipla Ltd. v. Cipla Industries (2017), the BHC observed that if both the conditions are satisfied, there is no requirement to prove confusion among the public, that the user is taking unfair advantage or that the use is detrimental to the distinctive character (see this post). In other words, it is a ‘no-fault’ provision where an injunction order will immediately follow upon fulfilment of the two requirements (Bloomberg v. Prafull (2013). In RPG v. Riju Ghoshal (2022), the BHC had held that 29(5) will not apply if the mark, although similar or identical, is being used to deal in goods and services different from which it is registered. (this post discusses the problems with this finding)
In the instant dispute, it is not disputed that ‘Lodha’ is being used (although in conjunction with other words) as a trade name by HoABL to offer goods and services (it can be argued identical) in respect of which the mark ‘Lodha’ is registered by Macrotech. (class 36, 37). Thus, the dispute fulfils the twin requirements u/s. 29(5).
However, this analysis is subject to what was agreed upon in the FSA, which, so far, is unclear.
Using Family Name as TM
Section 35 of the TM Act stipulates that a registered proprietor cannot “interfere with bona fide use by a person of his own name…or of the name of any of his predecessors in business.” In Precious Jewels v. Varun Gems (2014), the SC said that section 35 applies only if the name is used in a bona fide manner. What is bona fide usage? Varsha explains here that bona fide means honest use of name without the intention to deceive or encash upon someone else’s goodwill.
However, the application of 35 in this case is severely limited. In Anil Rathi v. Shri Sharma (2020), the DHC had said that only a natural person can rely upon Sec. 35. A legal entity cannot use Sec. 35 since a company, unlike an individual, can give itself a name. Further, Sec. 35 does not apply if the name has acquired distinctive or secondary meaning (The Goenka case (2009)). In case an agreement exists (FSA, MOU, Trust deed etc.) stipulating conditions for usage of family name, it will override section 35. Courts, as in Anil Rathi, attach greater sanctity to the family arrangement.
In Shri Ram Education Trust v. SRF Foundation (2016), the DHC said that “both brothers having common lineage…cannot appropriate the same to the exclusion of other.” The goodwill and reputation of the TM adopted by the predecessor will enure to his heirs who would have equal rights to adopt and use the name. The only caveat is that there must not be an agreement which excludes other heirs from using the name. In Parle Products v. Parle Agro (2008), the BHC said that where “both parties enjoy a TM due to their lineage from the family”, one cannot restrict the other from using the name. In Parle, the defendant was allowed to use the mark ‘Parle’ in the confectionary business where the Plaintiff was engaged. There was no agreement which prohibited Defendant from entering the confectionary business or using the mark Parle.
As seen above, in cases of house names, the outcome is dependent on the terms of the FSA, MOU, Trust deed or any other agreement governing the usage of the name. Thus, if the mediation fails to succeed, the outcome will depend on the terms of the FSA drawn upon in 2017 and revised again in 2023.