[SpicyIP Tidbit] Clean Hands versus Relevant Facts – The Tale of Injunctions
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[This post is authored by Mohamed Thahir Sulaiman. Thahir is a third year BALLB (Hons) student from the National Law School of India University, with interests in corporate law and technology law. His previous posts can be accessed here.]
Image from hereThe division bench of the Delhi High Court (“DHC”) recently refused to grant an interim injunction to Quantum Hi-Tech in a trademark infringement matter, despite finding a prima facie case of infringement of its mark “Quantum” by LG. The ruling is noteworthy since the DB had all the reasons to interfere with the outcome of the commercial court, but still it refused to pass an interim injunction, holding that Quantum Hi-Tech approached it with unclean hands. This post examines the reasoning behind the decision and considers whether the invocation of the “clean hands” doctrine was appropriate given the circumstances.
Background Facts:
The appellant, Quantum Hi-Tech Merchandising Private Limited, filed a suit seeking a permanent injunction against LG Electronics India, alleging infringement and passing off of its trademarks “QUANTUM” and “QUANTUM DISPLAY.” Quantum asserted that it owned registrations for “QUANTUM”, both as a word mark and a device mark, and therefore sought an ad-interim injunction to restrain LG from using the impugned marks.
The Commercial Court rejected the injunction application, holding that no case of infringement was maintainable against LG (Para 11.1). On appeal, however, the DHC reversed the Commercial Court’s finding, holding that a case of infringement was made out – yet the DHC declined to grant the ad-interim injunction due to the doctrine of clean hands.
The DHC’s disagreement with the Commercial Court’s finding that no case of trademark infringement was made out based on two findings. First, LG had expressly acknowledged in its affidavit that it had used and promoted the impugned marks since April 2015 (Para 19.4). This admission, in the Court’s view, was itself sufficient to prove commercial exploitation (Para 19.8). Second, relying on the Supreme Court’s (“SC”) “dominant part” principle from K.R. Chinna Krishna Chettiar v. Shri Ambal & Co. (1969), the DHC observed that “QUANTUM” constituted the “main part” of the Quantum’s registered device mark (Para 19.8). As LG was using the same word in respect to goods falling within the same class (Para 19.13), the DHC concluded that, on merits, the appellant had a “sustainable case for injunction”.(Para 19.14).
Despite this, the DHC ultimately refused to grant such relief, finding that Quantum had not approached the court with clean hands. The DHC found that while Quantum claimed registration for “QUANTUM” both as a word mark and a device mark, its original application for registration had been made only for the device mark. Yet, for unknown reasons, the appellant claimed to have a registration for the word mark “QUANTUM” as well, without any explanation or proof. On this basis, the DHC held the word mark “QUANTUM” standing in the appellant’s name to be invalid and concluded that the appellant had deliberately concealed this fact when approaching the court.
Therefore, invoking the doctrine of clean hands, the DHC dismissed the appeal observing that observing that by concealing material facts, Quantum had forfeited its opportunity to obtain interlocutory relief (Para 19.15).
Should the “Clean Hands” Doctrine Have Been Invoked?
While the DHC’s decision may appear to be a straightforward rejection of an application seeking interim injunctive relief, its significance lies in how it clarifies the scope of the doctrine of clean hands and the circumstances in which it should be invoked.
Although the DHC held that injunctive relief could be granted on merits, it went on to refer to the SC’s decision in Seema Arshad Zaheer & Ors. v. Municipal Corporation of Greater Mumbai & Ors. (2006), highlighting that:
“Temporary injunction being an equitable relief, the discretion to grant such relief will be exercised only when the plaintiff’s conduct is free from blame and he approaches the court with clean hands.”
Accordingly, when a party approaches the court after concealing material facts or irregularities (or with “unclean hands,” if you will), the court is well within its discretion to refuse interim relief. Similarly, where both parties are found to have approached the court without clean hands, the court may simply decline to entertain the case (as discussed here).
Thus, the DHC’s decision underlines the importance of the doctrine of clean hands: a court need not grant injunctive relief even when it is justified on merits, if the party seeking relief is found to have suppressed material facts.
Lingering Questions
A closer examination of the facts suggests that the answer may not be as clear and unambiguous as the DHC presents it to be.
It is to be remembered that the appellants were found to have concealed the fact that they had a valid registration only for the trademark “QUANTUM” as a device mark and not as a word mark. However, the Court’s finding on the existence of a prima facie case for injunction was based on the application of the dominant part test to the appellants’ validly registered device mark. The issue of whether “QUANTUM” was registered as a word mark had no bearing on the question of whether an injunction ought to be granted.
Therefore, unlike prior cases such as Kent RO Systems Ltd. v. Gattubhai (2022), where the finding of concealment directly influenced the denial of interim relief, the concealment in the present case had no apparent bearing on the merits of granting such relief. In this context, it would have helped the DHC if it had clarified how the concealment of not having a validly registered word mark was material to the grant of an injunction, when it appears to have been irrelevant. This reasoning would have been further strengthened had the DHC also clarified what exactly constitutes a “material fact” for the purpose of denying injunctive relief due to the overriding effect of the “clean hands” doctrine.
By failing to do so, and by refusing to grant injunctive relief solely on the ground of concealment (despite the injunction being otherwise justified on merits), the DHC appears to have delivered a decision unfair to the appellant, based on what seems to be an unnecessary invocation of the doctrine of clean hands.