Bombay HC Reaffirms Prior User Rights: Sun Pharma v. Nectar Life Care

In Sun Pharmaceutical Industries Ltd Vs NECTAR LIFE CARE [COMIPL/28038/2025], the Bombay High Court refused to grant an ad-interim injunction to the plaintiff, reinforcing the limits of statutory trademark registration against established common law rights of prior user.

The Intersection of Statutory Rights and Common Law Priority

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The litigation in Sun Pharmaceutical Industries Ltd v. Nectar Life Care highlights a fundamental tension in Indian intellectual property law: the reconciliation of the exclusive rights granted by Section 28 of the Trade Marks Act, 1999, with the protection of prior commercial users under Section 34. The plaintiff, a global pharmaceutical leader, sought to leverage its registered status to exclude the defendant from the marketplace. However, the Bombay High Court demonstrated that registration is not an absolute barrier to competition. The Court affirmed that statutory rights are derivative and inherently limited by the existing rights of third parties who have built market equity prior to the applicant’s filing.

This dispute underscores that in the hierarchy of trademark protection, the temporal priority of commercial usage remains a bedrock principle of the Act. While registration offers a procedural advantage in shifting the burden of proof, it does not extinguish the rights of a senior user. The Court’s refusal to grant an injunction serves as a vital reminder to brand owners that the Register of Trademarks is a record of claims rather than a definitive statement of ownership that can override prior existing commercial activity.

The Statutory Shield: Analyzing Section 34 as a Legislative Carve-Out

Section 34 of the Trade Marks Act functions as a critical safeguard against the overreach of registered proprietors. It creates a carve-out that protects the interests of those who have invested in the development of a mark before the current proprietor entered the market. By ensuring that a registered owner cannot interfere with a prior, continuous user, the legislature protects established commercial entities from disruptive litigation initiated by companies that may have simply filed an application earlier or expanded into a category later.

In interpreting this provision, the Court drew heavily from the Supreme Court’s jurisprudence in S. Syed Mohideen and Neon Laboratories. These precedents establish that the Act is not meant to displace the common law rights that predate registration. The judicial consensus is that registration acts as a shield, not as a sword capable of obliterating the legitimate, prior commercial endeavors of others. By applying these principles, the Bombay High Court ensured that the defendant’s 2018 entry into the market, supported by objective commercial data, acted as a full defense against the plaintiff’s subsequent registered rights.

Judicial Scrutiny: Evaluating Evidentiary Forensics in Modern IP Litigation

The strength of a defense under Section 34 rests almost exclusively on the quality of evidence. In an era where digital evidence is easily manipulated, the Court required Nectar Life Care to provide, and successfully verified, a chain of custody for its commercial records. The reliance on third party verified GST invoices and FSSAI manufacturing logs provided the necessary objective truth that the Court demanded.

The Court specifically noted the authenticity and the temporal continuity of the documentation provided by the defendant. This serves as a vital lesson for parties in similar disputes: internal sales records are often viewed with skepticism, whereas state sanctioned tax documents and regulatory filings serve as high value evidence that effectively bridges the gap between claims of use and the fact of use.

The production of continuous GST invoices from 2018 coupled with manufacturing batch records and regulatory licenses establishes a prima facie case of prior, uninterrupted commercial exploitation of the mark that cannot be dislodged by a subsequent registration.

Hon’ble Mr. Justice R. I. Chagla, Bombay High Court

The Ratio Decidendi: Subservience of Registration to Prior Use

The Court’s decision rests on the recognition that the Trade Marks Act is a framework designed to protect the source identifying function of a mark, which is fostered through use, not through a certificate. The ratio decidendi affirms that if a defendant can prove prior use, the statutory monopoly granted under Section 28 is essentially qualified. This distinction is vital for practitioners who often encounter plaintiffs acting under the misconception that their registration grants them an absolute right to control all commercial use of a similar mark, regardless of the defendant’s market history.

Under the scheme of the Trade Marks Act, registration under Section 28 is expressly subservient to the rights of a prior user protected under Section 34, reflecting the common law principle that proprietary rights in a mark are acquired by use and not merely by registration.

Hon’ble Mr. Justice R. I. Chagla, Bombay High Court

Interim Relief: Applying the Triple Test and Balance of Convenience

The plaintiff’s failure to satisfy the tripartite test for an ad-interim injunction under Order XXXIX of the Code of Civil Procedure highlights the difficulty of securing such relief when a viable defense exists. The balance of convenience was clearly tilted in favor of the defendant, given the potential for the permanent closure of an established, ongoing business. The Court correctly identified that where damages are a sufficient remedy, the extraordinary remedy of an injunction is inappropriate.

Furthermore, the Court’s order to maintain accounts serves as a pragmatic resolution. By requiring Nectar Life Care to account for its sales, the Court ensures that if the plaintiff eventually succeeds at trial, they are not left without a remedy. This approach reflects a judicial policy favoring the preservation of business continuity during the pendency of a suit, especially when the defendant has demonstrated a credible, non-infringing basis for their business activities.

Strategic Implications: The Role of Section 57 Rectification

The defendant’s decision to pursue Section 57 rectification proceedings alongside its defense in the infringement suit is a highly effective tactical maneuver. It forces the plaintiff to defend the validity of its own registration, thereby shifting the dynamic of the litigation from a defensive posture to one of active challenge. This is a common, yet often overlooked, strategy in Indian IP litigation. By initiating an action to cancel or limit the plaintiff’s mark, the defendant effectively neutralizes the primary weapon in the plaintiff’s arsenal.

For defendants, the message is clear: do not simply react to a suit. A proactive challenge to the validity of the registered mark through the Intellectual Property Division serves to pressure the plaintiff, potentially leading to earlier settlements or a withdrawal of the infringement claim as the risks to the plaintiff’s registration become apparent.

Also Read: Karnataka HC Sets Aside Injunction: ‘Section 34’ Protects Prior Users

Corporate Due Diligence: A New Standard for Pre-Launch Clearances

The outcome in this case highlights a critical gap in traditional corporate IP due diligence. Many in-house counsel and law firms continue to rely solely on the Trademark Registry as the definitive source of truth for “clearance.” This case proves that a clean registry search is no guarantee of immunity from legal challenge. The presence of unregistered users in the market remains a potent threat to any brand, regardless of the size or registration status of the entity.

In-house counsel must adopt a multi-layered investigative approach for every new brand rollout. This includes monitoring not just the Registry, but also:

• E-commerce transaction data: Identifying active sellers who may not be registered owners.
• Regulatory compliance databases: Cross-referencing FSSAI, MSME, and pharmaceutical license databases.
• Digital footprints: Analyzing B2B and B2C web search results for traces of the mark in historical trade directories.
• Geographic reach assessment: Evaluating if local or regional players are using the mark in specific zones that could trigger a prior user defense.

This case serves as a definitive case study in how, in the Indian market, the reality of trade beats the fiction of a registry entry. For any corporation planning a national or international launch, failure to account for these “unseen” prior users is a professional risk that can no longer be ignored. The judiciary has made it clear that those who enter the market first, regardless of their documentation status, will be protected by the law, leaving those who rely blindly on registration with a difficult path forward.