Scotch Whisky GI Protection Clarified by Madhya Pradesh High Court

In ruling dated December 18, 2023, the Madhya Pradesh High Court provided clarification on filing an infringement suit under Section 21(1) of the Geographical Indication Act, 1999, wherein the division bench comprising of Justice Sushrut Arvind Dharmadhikari and Justice Hirdesh, emphasised that the Registered Proprietor (hereinafter RP) is not required to include the Authorized User (hereinafter AU) as a necessary party for bringing about such actions. The bench affirmed that the AU's existence does not diminish the independent rights of the RP to register and safeguard the Geographical Indication.

It is pertinent to note that the Court provided clarification regarding the rights of the Registered Proprietor to pursue infringement cases under the GI Act. The Court emphasised that “…involving the Authorized User is not obligatory when initiating legal proceedings and registration of GI gives equal recognition & rights to the RP as well as AU of obtaining the ‘right to obtain relief’ in the event of infringement of GI by any person.”

Facts of the case:

The petitioner is a company incorporated under the laws of the United Kingdom, holding additional protection granted by the Government of India under Section 22(2) of the GI Act since November 28, 2011.

The petitioner filed a GI Application no. 151 as an RP applicant for the grant of ‘Scotch Whisky’ on January 5, 2009, and it was granted the status of GI on September 23, 2010. The petitioner herein challenges an order dated 28-10-2021 issued by the Commercial Court in District Indore. The Commercial Court had partially allowed the application under Order VII Rule 11 CPC, contending that the suit for the infringement of the Scotch Whisky Geographical Indication (GI) is permissible only after impleading of “Authorised User” as mandated by Section 21 of the GI Act.

The original lawsuit was initiated to obtain a restraint order against defendants, including J.K. Enterprises, for their involvement in the manufacture, sale, or marketing of whisky that does not adhere to the standards of Scotch Whisky under the mark ‘London Pride.’ The Commercial Court ruled that the impleadment of the Authorised User is necessary for the suit to be considered maintainable.

Legal Issues:

Whether in an application under O7/R11, can the Civil Court hold non-joinder of a party to be fatal to the suit or direct for impleadment of any party as a necessary/proper party to the suit?

Whether under Section 21(1), GI Act RP can bring the suit for infringement in its own capacity or must join AU to make the suit maintainable. How should the word ‘and’ occurring under Section 21(1) be read and; conjunctively or disjunctively, as specifying two classes simpliciter, who can institute the suit for infringement of GI?

Whether the complaint disclose a cause of action under O7/R11 for it to be maintainable?

Arguments put forth by the Petitioner & Respondent:

The petitioner argued they could sue as the rightful plaintiff (RP) without including the Authorized User (AU) and cited relevant provisions and rules of the GI Act, asserting separate treatment for RP and AU. The respondent initially didn't contest AU's absence but later dropped the argument. The petitioner stressed that an O7/R11 application couldn't mandate AU's inclusion at that stage, and the Court should only consider factors specified in O7/R11.

The respondent contended, while referring to provisions and rules that only the authorised user (AU) has the right to institute a suit or claim the GI tag. Further, the defendant argued that any other entity, including the registered proprietor (RP), lacks the independent entitlement to sue for infringement without the involvement of the AU. The argument emphasises the conjunctive interpretation of Section 21(1)(a) of the GI Act, asserting that both AU and RP must be necessary parties in a suit for infringement. The defendant supports the Trial Court's direction to include AU as a party, citing the Court's inherent powers under O7/R11, CPC.

Despite the initial inclination to remand the matter to the Trial Court, both parties agreed to have all issues decided by the current Court to avoid piecemeal adjudication.

Court’s Observations- The Court initially contemplated sending the case back to the Trial Court but opted to adjudicate all issues on their merits, considering the pendency of the petition since 2021. Both parties urged a decision on the interpretation of Section 21 of the GI Act. The Court emphasised the importance of interpreting Section 21, highlighting the lack of precedents in the country since the enactment of the GI Act.

Issue 1: The Court determined that under Order 7, Rule 11 of the Civil Procedure Code, the Trial Court cannot direct the impleadment of a necessary/proper party for the continuation of the suit. The rejection or return of the plaint cannot be based on non-joinder or joinder of necessary parties as grounds specified under Order 7, Rule 11. The Trial Court is not permitted to undertake such an inquiry during this stage, and the examination of the necessity of joinder or implication of non-joinder should be done during the course or further stages of the trial, particularly at the stage of framing issues. This view has been consistently upheld by various High Courts, including the Delhi High Court, Madras High Court, Patna High Court, and Telangana High Court.

Issue 2: The Court referred to relevant legal precedents and harmonised domestic laws with international conventions. Analysing the Geographical Indications Act and TRIPS Agreement, it affirmed the equal rights of the Registered Proprietor and Authorized User in enforcing GI protection. The Court rejected the argument that the Registered Proprietor is dependent on the Authorized User and clarified their independent entitlement to GI protection. Therefore, the argument presented by the respondent asserting the exclusive role of AU lacks substance was also rejected, and the Court went on to assert that the trial court's decision requiring the impleadment of AU along with RP in the suit proceedings is also deemed incorrect in light of the discussed points. Notably, the Court interpreted the term “and” & “or” between Section 21(1)(a) and Section 21(1)(b), highlighting the RP's right to obtain relief and the exclusive right of the AU to use the registered GI. It concluded that the RP has standalone legal status and rights under the GI Act, making impleadment of the AU optional in suits under Sections 21 and 68 of the GI Act.

Issue 3:  This centres around the rejection of the petitioner's complaint under Order 7, Rule 11(a) for allegedly lacking a cause of action and this remedy serves as an independent mechanism to terminate the suit from the start.

After examining the details, the Court found a valid cause of action in the case. The person initiating the case, i.e., the registered proprietor, had the right to sue for infringement under the GI Act. The detailed statements about Scotch Whiskey and the harm caused by the other party indicated a valid reason to proceed. Furthermore, the Court noted that the failure to include the AU in a suit for infringement filed by the RP cannot be a valid reason for the rejection of the plaint under Order 7 Rule 11 of the CPC and rejected the contention that the plaint fails to disclose a cause of action and set aside the impugned order, directing the Trial Court to proceed in accordance with the law.