Introduction:

In M/S Products And Ideas (India) Pvt. Ltd v. Nilkamal Limited And Ors (CS(COMM) 715/2024), the Delhi High Court addressed a crucial issue in trademark law concerning parallel imports and the rights of resellers. The plaintiff, claiming exclusive rights to the trademark ‘STELLA’ for induction cookers in India, sought an injunction to restrain defendant no. 2 from selling induction cooktops bearing the same mark. According to the plaintiff, it had entered into an Exclusive Agency Agreement with defendant no. 5, the original equipment manufacturer (OEM) of ‘STELLA’-branded products, which purportedly granted the plaintiff exclusive rights to sell these products in India since 2015. The plaintiff further claimed that it had registered the ‘STELLA’ trademark in India and had been using the mark continuously and exclusively, thereby establishing statutory and commercial rights that defendant no. 2 was infringing upon by selling induction cookers bearing the identical mark.

Arguments:

The plaintiff argued that its exclusive agreement not only gave it the right to use the mark but also to stop others, including other dealers, from selling the products under the ‘STELLA’ brand in India. Represented by Senior Advocate J. Sai Deepak, the plaintiff contended that since they had valid trademark registrations and exclusive rights through their agreement, defendant no. 2’s sale of identically branded goods amounted to infringement, misleading consumers into believing the goods originated from the plaintiff, and harming the plaintiff’s reputation and business interests.

On the other hand, defendant no. 2, represented by Senior Advocate Arvind Nigam, argued that both the plaintiff and defendant no. 2 were sourcing identical induction cookers from defendant no. 5—the OEM and rightful owner of the ‘STELLA’ mark. Defendant no. 2 asserted that the Exclusive Agency Agreement cited by the plaintiff did not grant any exclusive right to register the mark or stop other authorized dealers from selling the same products. Defendant no. 2 emphasized that they were not branding products on their own but importing genuine ‘STELLA’ goods from defendant no. 5, selling them in India through the authorized distribution channel, which cannot constitute trademark infringement. They stressed that the plaintiff’s claim was essentially an attempt to create an illegal monopoly over genuine goods of a brand they did not own, effectively restraining parallel imports despite both dealers operating with authorization from the trademark proprietor. Defendant no. 2 cited Section 30 of the Trade Marks Act, 1999, arguing that trademark rights are exhausted once goods are sold by or with the consent of the trademark owner, and reselling such genuine goods does not amount to infringement. Defendant no. 5, represented by Sanjeev Kumar Singh and team, clarified its position unequivocally: it is the original owner of the ‘STELLA’ mark worldwide and sells the same induction cookers to both the plaintiff and defendant no. 2 for resale in India, with neither dealer having an exclusive right. Defendant no. 5 confirmed that the plaintiff’s agreement did not grant exclusivity nor permission to apply for registration of the mark in India. Defendant no. 5 further argued that it has been continuously selling products under the ‘STELLA’ brand since 2013, years before the plaintiff’s alleged exclusive use from 2015, and therefore, under Section 34 of the Trade Marks Act, 1999, it enjoyed the defense of prior continuous use.

Judgement:

Justice Amit Bansal, after considering detailed submissions from all parties, held that defendant no. 5’s rights as the prior user of the ‘STELLA’ mark in India since 2013 could not be undermined by the plaintiff’s later trademark registration. The Court observed that Section 34 clearly protects a prior user from infringement claims even if another party subsequently registers the mark. Justice Bansal reasoned that since both the plaintiff and defendant no. 2 were purchasing genuine ‘STELLA’ products directly from defendant no. 5 or its authorized channels, the sale of such original goods by either party cannot amount to infringement. He noted that “any person in India has the right to legally import goods from abroad bearing the trademarks of an entity and sell the same in India,” and that “sale of original goods by an authorized reseller/importer would not amount to trademark infringement.” The Court rejected the plaintiff’s assertion of exclusivity, finding that the Exclusive Agency Agreement only licensed the plaintiff to sell but did not confer exclusive rights or authorization to register the trademark. Furthermore, the High Court highlighted that the plaintiff had failed to establish that defendant no. 2 was using the ‘STELLA’ mark in its own right; rather, like the plaintiff, defendant no. 2 was merely reselling genuine products of defendant no. 5. The Court found no evidence of counterfeit goods, misrepresentation, or independent branding by defendant no. 2. The judgment emphasized that trademark law aims to protect consumers from confusion about the source of goods, not to allow one reseller to claim monopoly over genuine goods of a brand owned by a third party. It clarified that if goods are genuine, sold with the consent of the trademark owner, and no alterations are made to the mark or product, there can be no infringement under the Trade Marks Act. Accordingly, the Court vacated the interim stay it had previously granted against defendant no. 2’s sales and directed that the main suit will proceed on August 11, with parties free to present evidence on any residual issues. This ruling not only settled the present dispute but also reinforced that authorized resellers cannot weaponize trademark registrations to block each other from selling genuine goods imported from the trademark owner.