Court finds no prima facie passing off or trademark infringement by Adyar Gate Hotels; ITC's acquiescence bars relief; territorial jurisdiction of Delhi Court recognized based on ecommerce presence
In a significant trademark dispute, the Division Bench of the Delhi High Court dismissed the appeal filed by ITC Limited against Adyar Gate Hotels Limited (AGH) concerning the use of the "DAKSHIN" trademark and logo. The judgment, delivered on July 1, 2026, upheld the refusal of an interim injunction sought by ITC to restrain AGH from using the "DAKSHIN" mark, which AGH has been using since 1989 in its Chennai-based restaurant.
Background:
The dispute arose after the expiry of an Operating Service Agreement (OSA) dated February 12, 1985, between ITC and AGH. Under the OSA, ITC provided consultancy and operational services for the Park Sheraton hotel in Chennai, which included the operation of the Dakshin restaurant starting April 14, 1989. The OSA required AGH to cease using ITC’s trademarks upon expiry in 2015. However, AGH continued using the "DAKSHIN" mark after the OSA ended and even registered the trademark in its own name in 2005 for restaurant services.
ITC contended that AGH’s continued use of the mark post-OSA expiry constituted trademark infringement and passing off, asserting exclusive ownership of the mark and associated goodwill. ITC also alleged copyright infringement related to the restaurant’s logo. On the other hand, AGH argued that it conceived and used the "DAKSHIN" mark from 1989 and that the OSA only engaged ITC as a service provider, making AGH the true owner of goodwill in the mark. AGH further relied on ITC’s long acquiescence to its use of the mark and the statutory bar of acquiescence under Section 33(1) of the Trade Marks Act.
Key Findings of the Court:
1. Territorial Jurisdiction:
The Court rejected ITC’s initial contention that the suit was not maintainable in Delhi due to lack of territorial jurisdiction. It held that AGH carries on business within Delhi’s jurisdiction by offering services through e-commerce platforms like Zomato, where customers in Delhi can interactively reserve tables at AGH’s Chennai Dakshin restaurant. This interactive accessibility amounts to carrying on business in Delhi under Section 20(a) of the Code of Civil Procedure, thereby conferring territorial jurisdiction on the Delhi High Court.
2. Nature of the OSA and Ownership of the Mark:
The OSA was found to be a contract of personal service, with ITC providing consultancy and operational services to AGH for a fixed service fee. ITC was not the owner or promoter of the hotel but a service provider. The Court noted that the "DAKSHIN" mark was not among the trademarks specifically owned by ITC under the OSA, which primarily covered the "Welcomgroup" and "Namaste" marks. The goodwill generated in the "DAKSHIN" mark during the OSA period enured to AGH as well, given that AGH bore the expenses of operating the restaurant and hotel.
3. Passing Off and Trademark Infringement:
The Court reiterated the classical three ingredients of passing off: prior goodwill, misrepresentation, and damage. It found that AGH commenced using the "DAKSHIN" mark in 1989, before ITC had any goodwill in the mark, which was first registered by ITC in 2000. Therefore, ITC failed to prove prior goodwill in the mark before AGH’s adoption. There was no evidence of misrepresentation by AGH or damage to ITC’s goodwill in Delhi. The Court emphasized that the question of misrepresentation and damage is triable and cannot be conclusively decided at the interim stage.
4. Acquiescence Bar to Relief:
ITC knowingly allowed AGH to use the "DAKSHIN" mark continuously from 1989 to 2023 without objection, including after the OSA expired in 2015. This long period of silence and delay constituted statutory acquiescence under Section 33(1) of the Trade Marks Act, barring ITC from seeking an injunction against AGH’s use of the mark at this stage. ITC also did not challenge AGH’s trademark registration, further weakening its claim.
5. Copyright Claim:
The Court found that the copyright registration certificate for the logo in ITC’s name was insufficient to prove ownership since the actual author was an employee of the Hindustan Times Agency (HTA). No written assignment of copyright from HTA to ITC was on record, as required under the Copyright Act. Hence, no prima facie case of copyright infringement was made out.
6. Interim Injunction and Balance of Convenience:
The Court affirmed the Single Judge’s refusal of the interim injunction, holding that ITC had not demonstrated a prima facie case on merits. The balance of convenience favored AGH, given its long and uninterrupted use of the mark and ITC’s acquiescence.
Conclusion:
The appeal was dismissed, with the Court concluding that ITC has no prima facie case for passing off, trademark infringement, or copyright infringement against AGH. The judgment clarifies important principles on territorial jurisdiction in trademark suits involving online business presence, the interpretation of operating agreements, and the application of acquiescence in trademark disputes.
Bottom line:-
Trade Marks Act - No prima facie case of passing off or trademark infringement made out where defendant’s use of the mark predates plaintiff’s claim of goodwill, and plaintiff’s acquiescence bars relief.
Statutory provision(s):
Trade Marks Act, 1999 - Sections 20, 23, 28(3), 30(2)(e), 31(1), 33(1), 57, 134
Copyright Act, 1957 - Sections 17, 19(1), 48, 62
Code of Civil Procedure, 1908 - Section 20
Commercial Courts Act, 2015 - Section 13
ITC Limited v. Adyar Gate Hotels Limited, (Delhi)(DB) : Law Finder Doc id # 2933220
