Mere Delay By Plaintiff In Initiating Lawsuit Doesn’t Amount To Acquiescence: Delhi HC Restrains Southern Infosys Limited From Using ‘INFOSYS’ Trademark

The Delhi High Court restrained Southern Infosys Limited from using ‘INFOSYS’ trademark as part of its corporate/trade name or in any other manner amounting to the infringement of trademarks of Infosys Limited.

The Court allowed the application filed by Infosys Limited against Southern Infosys Limited to prohibit it from using the said trademark.

A Single Bench of Justice Sanjeev Narula observed, “… mere delay by the Plaintiff does not automatically amount to acquiescence. Legal precedents clearly stipulate that mere delay does not constitute acquiescence. For acquiescence to be a valid defence, there must be unequivocal evidence that there were positive acts of encouragement from the Plaintiff, and not just mere silence or inaction on their part.15 Thus, without such positive encouragement or explicit consent from the Plaintiff, the passage of time before initiating legal proceedings does not automatically prevent the Plaintiff from asserting their rights.”

The Bench said that the mark ‘INFOSYS’ has been extensively used and promoted by the plaintiff globally since 1981, and thus, there is no basis for the court at a prima facie stage to hold the term ‘INFOSYS’ as generic.

Advocate Peeyoosh Kalra appeared on behalf of the plaintiff while Advocate Piyush Kaushik appeared on behalf of the defendant.

Brief Facts -

Infosys Limited (plaintiff), the registered proprietor of the trademark ‘INFOSYS’, filed a lawsuit under Section 29(5) of the Trademarks Act, 1999 to prohibit Southern Infosys Limited (defendant) from using the said trademark as part of its trade/corporate name. The plaintiff sought to protect its intellectual property rights and contended that by adopting the ‘INFOSYS’ mark within its corporate identity, the defendant was misleading consumers and eroding the unique brand equity that it had meticulously built over the years. The said trademark coined and adopted in 1981, has been in continuous and uninterrupted use.

As a result, the term ‘INFOSYS’ became exclusively associated with the plaintiff, particularly recognized as a hallmark in the technology sector. The High Court had already recognized and declared it as a ‘well-known’ mark. Hence, the plaintiff was aggrieved by the defendant’s adoption of the said mark and contended that the same constitutes infringement under Section 29(5) of the Act. The said provision explicitly prohibits the use of a registered trademark as part of a corporate name, in a manner that could imply a business connection or endorsement by the trademark owner, thus, leading to potential confusion among the public.

The High Court after hearing the arguments of the counsel remarked, “The Defendant’s failure to perform such due diligence suggests a lack of good faith. The adoption of a name so closely resembling ‘INFOSYS’—a term which was established and recognized within the industry for 17 years prior to Defendant’s adoption—appears to be a deliberate attempt to capitalize on the goodwill and reputation that the Plaintiff has developed over 17 years of continuous use. Such actions are indicative of bad faith and a clear intention to benefit from the established market presence and consumer recognition of the Plaintiff’s trademark.”

The Court further noted that the defendant company was publicly listed which implies a higher degree of scrutiny and adherence to corporate governance standards, including comprehensive checks against infringing on existing intellectual property rights, and therefore, the defendant’s oversight or neglect in this regard does not excuse the infringement.

“While the Plaintiff has indeed taken a considerable amount of time to initiate the present lawsuit, this delay does not extinguish the Plaintiff’s rights under trademark law, particularly given the continuous use of their trademark. In trademark jurisprudence, delay or laches can mitigate the remedies available to a trademark owner but does not necessarily negate the right to object to and seek protection against infringement, especially when such infringement poses a continued threat to the brand’s identity and market position”, it said.

The Court also considered the defendant’s argument of acquiescence which posited that the plaintiff, by remaining inactive for an extended period, had tacitly consented to the defendant’s use of the ‘INFOSYS’ mark within its tradename. In this regard, the Court observed that to establish acquiescence as a valid defence, it must be demonstrated that the plaintiff was aware of the defendant’s use and, through inaction, led the defendant to reasonably believe that their use was permissible.

“However, the evidence does not conclusively show that the Plaintiff actively or explicitly approved the Defendant’s use of the ‘INFOSYS’ mark. Moreover, the fact that the Plaintiff’s trademark was registered before the Defendant adopted the mark underscores that the Plaintiff had established rights that were recognizable and should have been considered by the Defendant. … the Court finds that there is insufficient evidence to support Defendant’s claim of acquiescence. While the Plaintiff did delay in taking action, there is no clear evidence that this delay amounted to an implicit approval of the Defendant’s use of the mark”, it added.

Moreover, the defendant asserted that the term ‘INFOSYS’ is merely an abbreviation of the words ‘information’ and ‘systems,’ suggesting that its usage is generic and merely descriptive of the services provided and referred a circular dated May 13, 1999, issued by the Department of Company Affairs, Central Government, which advised that terms such as “Infosys”, “Software”, “System”, “Infosystem” etc., should only be included in company names if a substantial portion of the company’s income is derived from the related activities. The Court in this regard said –

“The Court does not find merit in Defendant’s plea. The government advisory regulates the use of certain terms in corporate names to ensure they reflect the company’s business activities accurately; it does not automatically deprive these terms from acquiring distinctiveness as trademarks. Pertinently, the mark ‘INFOSYS’ has been extensively used and promoted by the Plaintiff globally since 1981, long before the issuance of the 1999 circular. Thus, there is no basis for the Court to at a prima facie stage to hold the term ‘INFOSYS’ as generic.”

The Court emphasised that the critical test for determining whether a mark is descriptive, does not hinge solely on its original, generic usage but rather on its association in the public mind over time.

“Acquired distinctiveness occurs when a term, initially considered generic or descriptive, evolves through extensive and sustained commercial use, advertising, and public recognition to signify a specific source rather than just the product or service itself. In this context, ‘INFOSYS’ has transcended its ostensibly descriptive origins to embody a unique identifier of the Plaintiff’s goods and services”, it enunciated.

The Court concluded that while ‘INFOSYS’ might have begun as a potentially descriptive term, but it has undoubtedly acquired a secondary meaning that links it indelibly to the plaintiff and the defendant’s argument that the term remains merely descriptive is, therefore, not persuasive. It observed that the defendant’s use of the mark ‘INFOSYS’ not only infringes upon the plaintiff’s trademark rights, but also risks causing confusion among consumers and diluting the trademark’s commercial value.

“Nevertheless, considering the fact that the Defendant has been using the mark for considerable period of time, in the opinion of the Court, they must be afforded sufficient time to switch over to a non-infringing trade name”, it added.

Accordingly, the High Court allowed the application, restrained the defendant from using the mark, and afforded a period of 4 months to the defendant to make the transition to a non-infringing tradename.

Cause Title- Infosys Limited v. Southern Infosys Limited (Neutral Citation: 2024:DHC:4724)

Appearance:

Plaintiff: Advocates Peeyoosh Kalra, C.A. Brijesh, V. Mohini, and Ishith Arora.

Defendant: Advocate Piyush Kaushik

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