'Sachamoti' Trademark Battle: Delhi HC Backs Registered Owner Over Company in Family Dispute

New Delhi - In a significant ruling that underscores the principles of prior use and the evidentiary weight of trademark registration, the Delhi High Court has upheld an interim injunction restraining Sabu Trade Pvt. Ltd. (STPL) from using the well-known 'Sachamoti' trademark. The decision, delivered by a Division Bench on October 13, affirms a Single Judge's order and solidifies the position of Rajkumar Sabu, the registered proprietor of the mark, in a protracted legal battle rooted in a complex family business dispute.

The judgment provides critical insights for intellectual property practitioners, particularly those navigating disputes where brand ownership is contested between family members and corporate entities that have evolved from legacy family businesses. The court’s refusal to interfere with the well-reasoned interim order highlights the high threshold required for appellate intervention in such matters.

The Genesis of the Dispute: A Family Affair

The legal conflict stems from competing claims over the 'Sachamoti' brand, a household name for sabudana (sago) products. On one side is Sabu Trade Pvt. Ltd., a company incorporated in 1993, along with several family members who serve as its directors. STPL asserted that it was the rightful owner and had been using the mark since its inception in the early 1990s.

On the other side is Rajkumar Sabu, a former director of STPL, who presented a much longer history for the brand. He contended that the business was originally established in 1972 by his mother, Chandrakanta Sabu, under the banner of a proprietorship firm named Shiv Trading Co. (STC). According to his plea, the trademark rights were formally transferred to him in the late 1990s, and he subsequently secured multiple registrations for the 'Sachamoti' mark and its associated labels.

This divergence in historical claims set the stage for a classic trademark battle, pitting a corporate entity's claim of long-standing use against an individual's claim of prior use and formal registration, all within the intricate dynamics of a family feud. The suit was originally filed by Rajkumar Sabu in 2016, seeking a permanent injunction against STPL for trademark infringement.

The Single Judge's Injunction and the Appeal

After years of litigation, a Single Judge of the Delhi High Court granted an interim injunction in March 2024, restraining STPL and its directors from using the 'Sachamoti' mark. The Single Judge found that Rajkumar Sabu had successfully established a strong prima facie case, with the balance of convenience tilting in his favor.

Dissatisfied with this outcome, STPL and the other defendants filed an appeal before a Division Bench, challenging the injunction. The appellants, represented by Senior Advocate J. Sai Deepak, argued that STPL was the rightful owner and that the Single Judge had erred in granting the restraining order. The respondent, Rajkumar Sabu, represented by Senior Advocate Chander M. Lall, defended the injunction, arguing it was based on a solid foundation of documentary evidence and settled legal principles.

The Division Bench's Rationale: Prior Use and Prima Facie Ownership

The Division Bench meticulously examined the evidence and legal arguments before concluding that the Single Judge's order was neither perverse nor arbitrary. The court’s reasoning was anchored in two fundamental pillars of trademark law: the sanctity of registration and the principle of prior use.

The court gave significant weight to Rajkumar Sabu’s multiple trademark registrations for 'Sachamoti'. Citing Section 31 of the Trademarks Act, 1999, the bench noted that these registrations serve as prima facie evidence of ownership and validity. This statutory presumption created a formidable initial advantage for the respondent. As the court observed:

“The fact is that the mark “SACHAMOTI” and the copyright in the label are registered in favour of the respondent. The same shall enure to the benefit of the respondent insofar as the rights flowing under Sections 28 and 29 of the Act, is concerned, at least as of now.”

Furthermore, the court scrutinized the evidence of first use. Rajkumar Sabu produced invoices and other commercial documents dating back to the 1980s under the name of Shiv Trading Co., which predated STPL's earliest documented use of the mark in 1990. This evidence was crucial in establishing him as the prior user, a cornerstone principle in trademark law that often prevails over subsequent use, even by a corporate entity.

The High Bar for Appellate Interference

A key legal takeaway from the judgment is the court's reinforcement of the limited scope of appellate review for interim orders. The Division Bench cited the precedent set in Sona Mandhira Pvt. Ltd. & Anr. v. Sona BLW Precision Forgings Ltd. & Ors. , emphasizing that an appellate court should not interfere with the discretionary orders of a lower court unless the findings are "perverse, arbitrary, or capricious."

The bench found that the Single Judge had undertaken a detailed analysis of the pleadings and documents, and the conclusions drawn were based on a plausible view of the evidence presented. Since the appellants failed to demonstrate any perversity in the lower court's reasoning, the Division Bench saw no grounds to substitute its own discretion for that of the Single Judge. This judicial restraint is a critical principle that ensures stability and predictability in interim relief matters.

Legal Implications and Conclusion

The Sabu Trade Private Limited v. Rajkumar Sabu & Anr. case serves as a powerful cautionary tale for family-run businesses. It illustrates the potential for severe disputes when intellectual property assets are not clearly and formally assigned during transitions from proprietorships or partnerships to corporate structures. The informal understandings that may govern a family business can crumble under legal scrutiny, leaving the brand vulnerable.

For legal professionals, the ruling reaffirms the paramount importance of: 1. Securing Trademark Registration: Registration is not merely a formality; it is a powerful legal shield that provides a statutory presumption of ownership under Section 31 of the Trademarks Act. 2. Maintaining Meticulous Records: The ability of Rajkumar Sabu to produce evidence of use from the 1980s was instrumental. Counsel should advise clients to preserve all historical records of brand use, including invoices, advertisements, and correspondence. 3. Formalizing IP Transfers: When a family business incorporates, all IP assets, including trademarks, must be formally and unambiguously transferred to the new entity through legally sound assignment deeds to avoid future ownership disputes.

By dismissing the appeals and upholding the injunction, the Delhi High Court has ensured that the status quo will be maintained until the suit is fully adjudicated. The 'Sachamoti' mark will, for now, remain under the exclusive control of its registered proprietor, Rajkumar Sabu, reinforcing the enduring strength of prior use and registration in the complex arena of trademark law.

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Case Title: Sabu Trade Private Limited v. Rajkumar Sabu & Anr. Case No: FAO(OS) (COMM) 61/2024

For the Appellant: Senior Advocate J Sai Deepak with Advocates Lalltaksh Joshi, Luv Virmani, Ananya Sanjiv Saraogi

For the Respondent: Senior Advocate Chander Lall with Advocate Divyakant Lahoti, Vindhya Mehra, Samridhi Bhatt and M Ananya Mohan