Back
2023 Supreme(Online)(Del) 16939
IN THE HIGH COURT OF DELHI AT NEW DELHI
NAVIN CHAWLA, J
M/S LIBERTY FOOTWEAR COMPANY – Appellant
Versus
M/S LIBERTY INTERNATIONAL – Respondent
CS(COMM) 715/2019
For the Appellants/Petitioners: Mr.Rajshekhar Rao, Mr.Kapil Wadhwa, Ms.Surya Rajappan, Ms.Tejasvini Puri
For the Respondents: Mr.Vijay Pal Dalmia, Mr.Rajat Jain, Mr.Aditya Dhar, Ms.Neelam Dalmia
Trademark rights in a partnership context may be arbitrably resolved, distinguishing between actions impacting third-party rights versus internal disputes.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 8 - Trade Marks Act, 1999 - Application for referral to arbitration made by the defendant citing a partnership agreement with an arbitration clause - The court found the claims for trademark infringement to be within the scope of arbitration, emphasizing a distinction between actions in rem and in personam. (Paras 17, 26, 38)
(B) Arbitration Applicability - The court deemed that disputes arising out of partnership agreements could be arbitrable even when they involve trademark rights, asserting that it does not bar arbitration unless expressly stated by law. (Paras 1, 24)
(C) Non-arbitrability - The court clarified that action in rem (trademark rights) does not automatically preclude arbitration, stating that disputes between partners regarding the use of trademarks are distinct from infringement actions against third parties. (Paras 24, 30)
Facts of the case:
The plaintiff sought injunctions and damages against the defendant for infringing the 'LIBERTY' trademark, which the plaintiff claimed exclusive rights over as part of their partnership. The defendant asserted that disputes should be resolved via arbitration per the partnership deed, which the plaintiff contested due to statutory restrictions under the Trade Marks Act.
Findings of Court:
The court found that the resolution of disputes concerning the partnership, including the trademark usage, fell within arbitration's purview and referred parties to arbitration.
Issues: The court addressed whether disputes about trademark usage between partners could be arbitratively determined or if they were inherently non-arbitrable.
Ratio Decidendi: The court emphasized that while trademark disputes can involve public interest considerations, in cases involving internal partnership dynamics, arbitration is suitable provided the parties seek the arbitral process.
Result: The application for referral to arbitration was allowed, and the parties were directed to arbitration under the partnership deed.
| Table of Content |
|---|
| 1. background of the dispute including trademark rights (Para 1 , 2 , 3 , 4 , 5 , 6 , 7) |
| 2. arguments regarding arbitration applicability (Para 9 , 10 , 11 , 12 , 13 , 14 , 15) |
| 3. analysis of non-arbitrability and court's reasoning (Para 16 , 17 , 18 , 19 , 20 , 21 , 22 , 23 , 24 , 25 , 26 , 27 , 28 , 29 , 30 , 31 , 32 , 33 , 34 , 35 , 36 , 37 , 38 , 39) |
| 4. referral to arbitration as a decision (Para 40) |
| 5. conclusion on the application and order (Para 41 , 42) |
CORAM:
HON'BLE MR. JUSTICE NAVIN CHAWLA
I.A.474/2020
1. This application has been filed by the defendant under Section 8 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the ‘Arbitration Act’) praying that the parties to the suit be referred to arbitration. It is the case of the defendant/applicant that there is an Arbitration Agreement in the Partnership Deed dated 08.09.2003 between the parties and the disputes raised by the plaintiff fall within the scope of the said Arbitration Agreement.
CASE OF THE PLAINTIFF
2. The plaintiff has filed the present suit, inter alia, for the following reliefs:-
“A. A decree of permanent injunction restraining the Defendant, its business associates, partners, directors, principal officers, family members, servants, agents, dealers, distributors, franchisees and anyone acting for and on their behalf from selling, offer to sell, manufacturing, advertising, promoting or in any other manner using the impugned trade name LIBERTY INTERNATIONAL, Plaintiff’s registered trade mark LIBERTY and the corporate logo 
and/or any other mark identical/deceptively similar to Plaintiff's well- known trademark LIBERTY, LIBERTY variant marks with respect to goods falling within Class 25 and any other cognate and allied goods in any manner, so as to result in infringement of Plaintiff’s registered trademark LIBERTY.
B. A decree of permanent injunction restraining the Defendant, its business associates, partners, directors, principal officers, family members, servants, agents, dealers, distributors, franchisees and anyone acting for and on their behalf from selling, offer to sell, manufacturing, advertising, promoting or in any other manner using the impugned trade name LIBERTY INTERNATIONAL, Plaintiff’s registered trade mark LIBERTY and the corporate logo 
and/or any other mark identical/deceptively similar to Plaintiff’s well- known trademark LIBERTY, LIBERTY variant marks with respect to goods falling within Class 25 and any other cognate and allied goods in any manner, so as to result in passing off or any act of Unfair Competition including resulting in confusion of any manner whatsoever.
C. For an order of delivery up of all the material bearing the impugned trademark, impugned trade name, impugned logos on packaging, labels, name, cartons, packaging material, name plates, publicity material like pamphlets, fliers, hoardings, sign boards, stationery, digital material, website, internet, social media etc. for the purpose of destruction/erasure.
D. For an order directing the Defendant to render the accounts to ascertain the quantum of unjust profits gained by Defendant;
E. For an order of damages to the Plaintiff to the tune of Rs.2,00,00,400/- damage caused to the Plaintiff’s brand equity, goodwill and reputation may be passed in favour of the Plaintiff and against the Defendant. If this Hon'ble Court directs a rendition of accounts, the Plaintiff undertakes to pay further court fees once the sum is ascertained on the Defendant's rendering true and proper accounts.;”
3. It is the case of the plaintiff that the plaintiff is a partnership firm and is the proprietor of the registered trade mark ‘LIBERTY’, amongst several other trade marks. Mr. Dheeraj Gupta, the Sole Proprietor of the defendant, is a partner of the plaintiff firm, however, he does not have any personal rights in the plaintiff’s registered trade mark ‘LIBERTY’ in any manner whatsoever.
4. It is further claimed that Mr. Dheeraj Gupta is the youngest son of Mr. Hari
