Delhi High Court
Sagar Ratna Restaurants Pvt Ltd vs Shree Shubh Rathnam Associates And Ors on 25 September, 2023
Author: Prathiba M. Singh
Bench: Prathiba M. Singh
$~2
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Decision: 25th September, 2023
+ CS(COMM) 226/2023 and I.A. 7292/2023, 7293/2023, 14861/2023,
15230/2023, 15231/2023
SAGAR RATNA RESTAURANTS PVT LTD ..... Plaintiff
Through: Mr. Ravi Gupta, Sr. Adv. with Mr.
Sushant Mahapatra, Mr. Rahul Kumar
& Ms. Shruthi Upprapalli Advs.
(M:9716580777)
versus
SHREE SHUBH RATHNAM ASSOCIATES AND
ORS ..... Defendants
Through: Mr. Rajive Bhalla, Sr. Adv. with Ms.
Anchita Nayyar, Adv. (M:
9811190315)
CORAM:
JUSTICE PRATHIBA M. SINGH
Prathiba M. Singh, J. (Oral)
1. This hearing has been done through hybrid mode.
2. Mr. Rajive Bhalla, ld. Sr. counsel for the Defendants raises a preliminary objection that the present suit is a contractual dispute and not a trademark dispute as it arises out of the franchise agreements dated 22nd February, 2019 and 11th July, 2021. He submits that the same is admitted by the Plaintiff in its Replication to the written statement of Defendant nos. 1-2. It is pointed out by Mr. Bhalla, ld. Sr. counsel that the Plaintiff clearly states in the Replication that the present suit is not in relation to a trademark dispute as there is a suit which has already been filed in respect of the trademark registration and common law rights before the Commercial Court, Saket being M/s Shree Rathnam Restaurants Pvt. Ltd. & Anr. v. M/s Garib Nawaz Signature Not Verified Digitally Signed CS(COMM) 226/2023 Page 1 of 6 By:RAHUL Signing Date:27.09.2023 17:57:26 Industries Pvt. Ltd., CS(COMM) 607/ 2022, between the Plaintiff and Defendant No.5.
3. Mr. Ravi Gupta submits that the present suit is based on the Franchisee agreement by which the Defendant no.1 was given the right to use the Plaintiff's intellectual property as defined in the agreement. Thus, this Court has jurisdiction to hear the present suit. The Court has heard submissions on the preliminary objection raised.
4. The definition of the Intellectual Property under the Delhi High Court Intellectual Property Rights Division Rules, 2022 is as under:
"(i) "Intellectual Property Rights (IPR) subject matter" for the purpose of these Rules, shall include:
i. Matters pertaining to Patents, Copyrights, Trademarks, Geographical Indications, Plant Varieties, Designs, Semiconductor integrated circuit layout-designs, Traditional Knowledge and all rights under common law, if any, associated therewith;
ii Matters relating to passing off, acts of unfair competition, disparagement, comparative advertising etc.;
iii. Protection of trade secrets, confidential information and related subject matters;
iv. Tortious actions related to privacy and publicity rights involving intellectual property issues; v. Matters pertaining data exclusivity, domain names and other matters relating to data protection involving intellectual property issues, as also those arising under the Act(s) as defined in Rule 2(a); vi. Matters involving internet violations relating to any of the subject matters under clauses (i) through (v) above.
Explanation:Signature Not Verified Digitally Signed CS(COMM) 226/2023 Page 2 of 6 By:RAHUL Signing Date:27.09.2023 17:57:26
(i) for the purpose of these Rules, cases pertaining to the Information Technology Act, 2000 dealing with the rights and liabilities of intermediaries, online market places, e-commerce platforms involving issues relating to any of the aforementioned subject matters, shall be deemed to be within the purview of intellectual property rights.;
(ii) intermediaries, online market places, e-commerce platforms shall be interpreted in terms of the definition contained in Section 2(w) of the Information Technology Act, 2000."
5. A perusal of the same would show that the matters pertaining to trademarks irrespective of whether the same would be on the basis of statutory or common law rights or contractual matters would be covered in the definition of 'Intellectual Property Rights (IPR) subject matter' under the Delhi High Court Intellectual Property Rights Division Rules, 2022 and shall be subject to the jurisdiction of the Delhi High Court IP Division.
6. In the present case, the definition of Intellectual Property in the franchise agreements is quite wide. The same is extracted below:
"17. Intellectual Property; shall mean and include, all marks, copyrights, patents, patent applications, trade secrets and other intellectual property rights of the Franchisor and/or of its affiliates, group companies in, upon or in relation to the Trade Marks, are all exclusive and proprietary to Franchisor and any of the content or matter or form of decoration, presentation available, and to be made available at any time, and from time to time at the Outlet, whether pursuant hereto or otherwise.
2.3 Ownership
i) Except for right to the use of the Licensed Rights and the Trade Mark License as expressly outlined in this Agreement nothing in this Agreement shall constitute or be construed as the acquisition of any ownership interest Signature Not Verified Digitally Signed CS(COMM) 226/2023 Page 3 of 6 By:RAHUL Signing Date:27.09.2023 17:57:26 or assignment of the title, or legal or moral right by the Franchisee to the Intellectual Property, Trade Marks or other property of the Franchisor and/or its Affiliates including all copyrights, patents, patent applications, trade secrets or other trademarks, Intellectual Property Rights in or upon or in relation to any of the content or matter or form of decoration, presentation available, and to be made available at any time, and from time to time at the Outlet whether pursuant hereto or to any other agreement or arrangement,
ii) The Franchisee shall arrange and obtain all required licenses at its own costs and expenses to run and operate the outlet and further acknowledgments' ownership and title , Knowhow, Trade Marks and the Intellectual Property, the usage thereof to' the Franchisee notwithstanding, shall remain vested in the Franchisor and /or its Affiliates only at all times and the Franchisee shall have no title, right or interest therein otherwise than as a Franchisee having a mere right to use the Licensed Rights in the Territory of the franchisee subject to strict adherence to the terms hereof, and of such other agreements or licenses as may be executed in regulation hereto or to the Licensed Rights, for the limited purpose of maintaining and running the Outlet during the term of this Agreement. The Franchisee shall ensure strict compliance of statutory obligations which are required for the operation of a Restaurant in the territory.
2.4 Trade Mark License The Franchisor hereby grants a non-assignable Trade Mark License to the Franchisee which shall only be effective as on the Effective Date and subject to the Franchisee undertaking and satisfying the covenants and commitments with regard to the same as stated in this Agreement. Provided however that such Trade Mark License is granted only and solely intended for the purpose of carrying out the Business by the Franchisee Signature Not Verified Digitally Signed CS(COMM) 226/2023 Page 4 of 6 By:RAHUL Signing Date:27.09.2023 17:57:26 and shall not be used for any other purpose by the Franchisee.
The Franchisee further assures, undertakes, agrees, affirms and confirms that for and during the subsistence for this Agreement he/she/ they shall not create any "website" or involve in any online activity/ social website.
4.2.8. Covenants with regard to the Trade Mark License
vi) That it shall not use any names or mark other than the Franchiser's Trade' Mark in connection with the Business and at the Outlet. The Franchisee undertakes that-it shall not use any name or mark liable to be confused with the Trade Mark of the Franchiser with respect to the conduct of the Business or the running of the Outlet, during the subsistence of this Agreement and for a further period of seven (7) years from the termination of this Agreement with respect to any other business undertaken by the Franchisee or, connected directly or indirectly with the Business, either by itself or through any Person.
vii) That the Franchisee shall not use any other trademark with respect to the running of the Business at the demised premises and on termination of this Agreement shall perform such acts and execute such documents as shall be required in order to ensure that the sole and exclusive right to use Trade Mark in the Territory of the franchisee shall remain vested in the Franchisor.
viii) That the Franchisee shall use the Trade Mark at the demised Premises and the Outlet, the display signs,. display items and other. presentational items as: are consistent with the Franchisor's standards and image, subject to applicable local laws and standards of public morality as legally required in the Territory of the franchisee.
ix)That the Franchisee shall in all its letters, and other conspicuous spaces indicate in a manner approved by the Signature Not Verified Digitally Signed CS(COMM) 226/2023 Page 5 of 6 By:RAHUL Signing Date:27.09.2023 17:57:26 Franchisor that it is carrying on its Business as Franchisee of the Trade Mark owned by the Franchisor."
7. The agreement being considered is between the franchisor and franchisee by which various IP rights have been permitted to be used by the Franchisee. In view of the definitions of Intellectual Property Rights in the franchise agreements and the Delhi High Court Intellectual Property Rights Division Rules, 2022, the present suit is retained in the Delhi High Court IP Division.
8. At this stage, Mr. Bhalla, ld. Sr. counsel also submits that insofar as Defendant No.1 and Defendant No.2 are concerned, the said Defendants are willing to perform the franchise agreements and become franchisees of the Plaintiff. Mr. Bhalla further submits that insofar as Defendant Nos. 3 to 6 are concerned, he does not have instructions to state as to whether they are willing to become licensees/franchisees of the Plaintiff or not. Let the ld. Sr. counsel seek instructions from the respective Defendants.
9. On behalf of the Plaintiff, it is, however, submitted that all the outlets of all the Defendants ought to become the franchisees of the Plaintiff and the Plaintiff is willing to negotiate the same.
10. It appears that there can be a possibility of amicable resolution of disputes in this matter.
11. Accordingly, let the parties remain present on the next date of hearing to explore the possibility of an amicable resolution. If not, the matter shall be heard on the next date.
12. List for further hearing on 11th October, 2023 at 4:00 p.m. PRATHIBA M. SINGH JUDGE SEPTEMBER 25, 2023/dj/kt Signature Not Verified Digitally Signed CS(COMM) 226/2023 Page 6 of 6 By:RAHUL Signing Date:27.09.2023 17:57:26