We are pleased to bring to you a guest post by Roshan Santhalia ruminating on the question of whether a cease-and-desist notice before instituting a trademark or copyright infringement suit should be issued or not. Roshan is a practising counsel, who has been practising for the last 12 years before the Supreme Court and the Delhi High Court. His predominant areas of practise are Arbitration, Commercial and Intellectual Property Laws. He completed his B.A. (Hons) LLB from NALSAR, Hyderabad in 2011 and MSc from Oxford, UK in 2012. Views expressed are those of the author’s alone.
Would Sending a Cease-and-Desist Notice Harm Your Chances of Securing an Ex Parte Ad Interim Injunction? Some Perspectives
It is common knowledge that in trademark and copyright infringement cases, time is of the essence. In most cases, the plaintiff (aggrieved party whose trademark or copyright has been infringed) rushes to the court as soon as they get to know about the alleged infringement. The moot question then is whether before filing the Suit for Injunction and Damages, should the Plaintiff send a cease & desist notice. Would sending such a notice harm or hamper their chances in any manner to secure an ex-parte ad-interim injunction on the first date of listing of the suit before the Hon`ble High Court/ District Court?
Importance of This Question
This question is crucial because securing an ex-parte ad-interim relief is important for the aggrieved parties considering the loss of lacs and crores of rupees per day because of the infringement. Furthermore, the continuous sales done by the violating party flood the market with infringing products where they are sold at a fast pace on a regular basis.
Interestingly, there is also a procedural reason that is crucial for the grant or refusal of the ex-parte ad-interim injunction to the aggrieved party. This is especially true for the High Court of Delhi, Bombay, and Madras (where IPR suits are directly examined by the original/commercial side of the High Court) and has to do with the system of listing of matters. In most cases, it is common experience that a post-notice hearing is done after 3 – 4 weeks from the date of the first hearing. In some High Courts, this period can be much longer running into months due to the high pendency of cases (and institution of fresh cases).
Therefore, this essentially means that if the ex-parte ad-interim injunction is not granted on the first date of hearing, the aggrieved party may have to wait for a relatively long period of time to get a post-notice hearing where he or she gets a chance to secure an ad interim injunction against the sale of the similar / copied products. This in a lot of cases would render the entire exercise and purpose of pursuing legal remedy against the alleged violating party futile because by the time a proper hearing is given in the matter (at the interim stage), the market would have flooded with the infringing products and the aggrieved party would have suffered immense damage.
Position of Law
The answer to the above-mentioned question is fairly vexed and not a straightforward one. The position of law that emanates from judgments of the Hon`ble Delhi, Madras, and Bombay High Courts is that sending a cease-and-desist notice should not prejudice the case of the plaintiff to secure an ex-parte ad-interim order. However, this is subject to the following caveats:
A. The similarity/copying should be slavish and of a high degree between the product of the plaintiff and the product of the defendant. This essentially relates to the “prima facie case” factor which is a standard governing all cases where Order 39, Rule 1, 2 and 3 is decided. In the absence of a strong prima facie case, whether or not a cease-and-desist notice was sent in the first place pales into insignificance.
B. There should not be any delay in filing of the Suit post the sending of the cease-and-desist notice in all those cases where the defendant blatantly ignores it and continues to infringe and sell the alleged similar products in the market.
Therefore, theoretically, the position of law is fairly clear that sending of a cease-and-desist notice would not as such prejudice the case of the Plaintiff to secure an ex parte ad interim relief provided the above-mentioned is satisfied.
Benefits of Sending a Cease-and-Desist Notice
There are some clear benefits of sending of a cease-and-desist notice to the violating party before filing a Suit for Injunction. Some of these benefits are:
A. There is a strong chance that the violating party may on the receipt of the cease-and-desist notice stop the sale of the infringing products in the market. This is especially true for those cases where the similarity between the competing products is clear and slavish. In cases of egregious violation, the aggrieved party understands the limited defences it can take before a court of law and hence, chooses to stop the violation immediately on receipt of the cease-and-desist notice.
However, it is important that the cease and desist notice is comprehensive and clearly depicts the alleged infringement through illustrations and appropriate photographs. This will ensure that the violating party at the outset has knowledge of the breach of intellectual property law which they have committed and hence, may not choose to continue with the infringement.
B. There is also a possibility that on the receipt of a cease-and-desist notice, the violating party may approach the aggrieved party for settlement. Mediation talks may ensue wherein the violating party agrees to compensate (on mutually negotiated terms) and also agrees to make substantial changes to the competing product so that there is no further infringement of the products of the aggrieved party. Once again, it will be important for the aggrieved party to send a comprehensive and clear cease-and-desist notice to increase its chances of getting the violating party on the table for a possible out-of-court settlement.
In both the above cases, the aggrieved party will save on legal costs, court fees, and most importantly valuable time which will be required in case the aggrieved party has to file a Suit for Injunction and Damages before the appropriate court.
How Sending a Cease-and-Desist Notice May Decrease the Chances of Securing an Ex Parte Ad Interim Relief
Having set out the benefits of sending a cease-and-desist notice, it is also important I mention that sending such a notice may not only lead to positive possibilities for the aggrieved party. In some cases, especially where the predominant purpose of the aggrieved party is to seize the infringing material of the violating party, it may be better if no cease-and-desist notice is sent in the first place. This is because a cease-and-desist notice will give a chance to the violating party to either sell the infringing goods at a heavily discounted price in the open market or dispose of the goods in any other manner so that the same is not seized by the local commissioner appointed by the Court.
A Suit for Injunction and Damages should be directly filed without serving any cease-and-desist notice so that on the first date of the hearing itself, an ex-parte order for the appointment of a local commissioner is made by the Hon`ble Court which can urgently visit the premises of the violating party and seize the infringing material. It will be apposite for me to mention here that only when the aggrieved party is confident about their case and it is prima facie clear that there is a high degree of similarity/copying done by the violating party, should the aggrieved party take the chance of not sending the cease-and-desist notice and should directly the court for an ex-parte ad-interim injunction. This is so because if there is no strong prima facie then in all likelihood no ex-parte ad-interim injunction would be granted by the Court thereby defeating the entire purpose of not sending the cease-and-desist notice in the first place.
However, where the predominant purpose of the aggrieved party is to injunct the violating party from selling the infringing goods then in all such cases it is advisable that a cease-and-desist notice is issued by the aggrieved party before it files a Suit for Injunction and Damages.
My Perspective as to What Could Be the Best Possible Course of Action Which the Aggrieved Party Should Adopt in Such Cases
In my subjective opinion, the right course of action would be to issue a cease-and-desist notice giving a time of not more than 7 – 15 days to the violating party to stop the infringing activity and stop the sale of similar/copied goods. The cease-and-desist notice should clearly mention that if the violating party fails to adhere to the above then the aggrieved party shall be constrained to file a Suit for Injunction and Damages before the appropriate court.
This will serve two purposes:
a. This will ensure that if there is any chance of pre-litigation settlement between the parties then the same is exhausted before the parties enter the litigation arena. In some cases, it may also result in the aggrieved party not needing to go to the courts at all because the violating party may stop the selling of the infringing goods.
b. This will also ensure that if and when the aggrieved party does file the Suit for Injunction and Damages and asks for an ex-parte ad-interim relief on the first date of hearing, then in all those cases, the Hon`ble Court can be explained that only a short time to act as per the notice was given to the aggrieved party vide the cease-and-desist notice. Hence there is no delay as such by the aggrieved party (from the date of knowledge of infringement) in approaching the Hon`ble Court seeking ex-parte ad-interim injunction.
Needless to mention the above suggestion is by way of general guidance in such matters and every case would be unique as per its facts which will require a contextualized and specific strategy for the same.