Can Non-Use of a Trademark Fuel a Passing Off Claim? Delhi High Court Says No

Summary

Sana Herbals Private Limited ("Sana Herbals") sued Mohsin Dehlvi and Dehlvi Remedies Pvt Ltd ("Dehlvi Remedies") for passing off, alleging it had built up substantial goodwill in the NOKUF cough syrup mark over 25 years while the respondents lay dormant. The Delhi High Court, affirming the Commercial Court's denial of interim injunction, held that because Dehlvi Remedies had used the NOKUF mark from 1994, before Sana Herbals was even incorporated, Sana Herbals could never establish the threshold requirement of goodwill prior to the defendant's adoption. The ruling also clarifies that non-use of a registered mark, without more, is not a defence a plaintiff can deploy in a passing off suit; that remedy lies in rectification under Section 47 of the Trade Marks Act, 1999.

Background

Some trademark battles are lost not at trial, but at the very threshold on the question of who got there first. This dispute over the cough syrup mark NOKUF is one such case: a story where 25 years of active use by one party collides with the prior claim of another that barely surfaced for five years before going quiet.

Mohsin Dehlvi (“Dehlvi”), through Dehlvi Remedies Pvt Ltd (“Dehlvi Remedies”), claimed use of the NOKUF mark from as early as 1994, applied for its registration in June 1996, and obtained registration eventually with effect from that date. Sana Herbals Private Limited (“Sana Herbals”) was incorporated in October 1997, initially as a licensed manufacturer for Dehlvi Remedies under a Manufacturing Agreement dated November 1997. Sana Herbals later claimed that a September 1999 Assignment Deed transferred all rights in the NOKUF mark to it. Dehlvi Remedies denied executing the Deed.

A fire destroyed Dehlvi Remedies’ factory in 2003. The company was struck off the Register of Companies in 2007 and restored only in 2019, following which Dehlvi Remedies’ pending registration application was revived and the NOKUF mark registered in its favour in September 2020. In the intervening decades, Sana Herbals had used the mark continuously, obtained registration of NOKUFSYRUP (with effect from May 2015), and built up what it described as substantial goodwill in the NOKUF brand.

When Dehlvi signalled an intention to re-enter the market under NOKUF / KufNo Syrup in 2024, Sana Herbals filed a suit as a quia timet action before the Commercial Court, Tis Hazari. The Commercial Court declined interim injunction in December 2024. Sana Herbals appealed to the Delhi High Court.

Questions Before the Court

• • • Whether, given Dehlvi Remedies’ registered and prior-user claim, an infringement action was maintainable by Sana Herbals
    • Whether the Assignment Deed dated 19 September 1999 validly transferred rights in the NOKUF mark to Sana Herbals under the Trade and Merchandise Marks Act, 1958
    • Whether non-use of the NOKUF mark by the respondents between 1999 and 2024 amounted to abandonment, entitling Sana Herbals to passing off injunction
    • Whether Sana Herbals could establish the goodwill element required for a passing off action, given the respondents’ prior use

Sana Herbals’ Arguments

• • • As the registered proprietor of NOKUFSYRUP and continuous user of NOKUF since 1999, Sana Herbals had built up extensive, uncontested goodwill in the mark over 25 years
    • Dehlvi Remedies had not used the NOKUF mark from 1999 onwards. It had no drug manufacturing licence until 2024, was struck off the company register from 2007 to 2018, and had never issued a cease-and-desist notice against Sana Herbals during this period
    • Relying on Neon Laboratories v. Medical Technologies Ltd (2016) 2 SCC 672, a prior user holds superior rights even over a subsequent registered proprietor
    • The respondents, by executing the Assignment Deed, failing to use the mark, purchasing NOKUF products from Sana Herbals between 2000 and 2004, and acquiescing for 25 years, had abandoned the NOKUF mark thereby supporting injunction on grounds of abandonment and acquiescence.

Dehlvi Remedies’ Arguments

• • • Dehlvi Remedies adopted NOKUF in 1994 and applied for registration in 1996, much before Sana Herbals was incorporated; it was the prior author of the mark
    • Sana Herbals’ use of NOKUF under the Manufacturing Agreement was expressly on behalf of and for Dehlvi Remedies; Clauses 8 and 9 of the Agreement acknowledged that all trademark rights remained with Dehlvi Remedies
    • The Assignment Deed was denied; even if valid, it transferred trademark rights without goodwill, rendering it void under Section 38(1) of the Trade and Merchandise Marks Act, 1958, which required goodwill to accompany any trademark assignment
    • Questions of abandonment fall within Section 47 rectification proceedings, not an Order XXXIX injunction application
    • Sana Herbals’ own invoices on record, of which only 14 were independent third-party sales, were insufficient to demonstrate substantial goodwill

Court’s Observations and Analysis

At the outset, the Court confirmed that no infringement action could lie against Dehlvi Remedies, which holds a subsisting registration of NOKUF. Applying S. Syed Mohideen v. P. Sulochana Bai (2016) 2 SCC 683 and its own recent ruling in Vaidya Rishi India Health (P) Ltd v. Suresh Dutt Parashar (2025 SCC OnLine Del 6147), the Court held that Section 28(3) of the Trade Marks Act bars infringement suits between two registered proprietors, though a passing off action under Section 27(2) remains available.

Sana Herbals placed considerable reliance on Neon Laboratories, wherein it was held that a prior user in the market can resist a registered proprietor who remained dormant. The Court, however, found that Neon Laboratories actually operated against Sana Herbals. The Supreme Court’s ruling in that case was explicitly premised on situations where the defendant’s user post-dated the plaintiff’s user. Here, Dehlvi Remedies’ user of NOKUF ran from 1994, before Sana Herbals was incorporated. The Court held that the situation was, in the Supreme Court’s own words, “unassailably favourable” to Dehlvi Remedies.

The Court further scrutinised the 1999 Assignment Deed and found it prima facie unenforceable. Since the Deed predated the Trade Marks Act, 1999 (which came into force in 2003), its validity fell to be tested under Section 38(1) of the 1958 Act, which, unlike Section 39 of the current Act, required that goodwill accompany any trademark assignment. The Deed transferred only the right to use the mark and made no reference to goodwill. The Court held that whether goodwill could be read in from surrounding circumstances was, at best, a triable issue and not a basis for interim relief.

Sana Herbals argued that 25 years of non-use by Dehlvi Remedies amounted to abandonment, entitling it to injunction. The Court disagreed and restated the foundational rule that, in a passing off action, goodwill must be established prior to the defendant’s adoption of the mark. Since Dehlvi Remedies used NOKUF from 1994 and Sana Herbals did not exist until 1997, this threshold was impossible to meet.

The Court also firmly held that non-use, with intent to abandon, is a ground for removing a registered mark under Section 47, a remedy that involves factual inquiry in dedicated proceedings, not at the interim injunction stage. Abandonment cannot be deployed as a sword in a passing off suit.

Findings

In view of the observations and the arguments presented by both parties, the Delhi High Court held that:

• • • No infringement claim could lie against Dehlvi Remedies, which holds a subsisting registration of the NOKUF mark, in accordance with the Trade Marks Act, 1999
    • The Assignment Deed dated 19 September 1999 was prima facie unenforceable at the interim stage, as it did not transfer goodwill alongside trademark rights as mandated by Section 38(1) of the Trade and Merchandise Marks Act, 1958
    • Sana Herbals could not establish the goodwill element required for a passing off action, since Dehlvi Remedies had commenced use of the NOKUF mark in 1994, before Sana Herbals was incorporated
    • Non-use of the NOKUF mark by Dehlvi Remedies did not give rise to any passing off right in favour of Sana Herbals; the appropriate forum to raise abandonment would be through Section 47 rectification proceedings
    • The appeal was dismissed with no order as to costs, and the Commercial Court’s denial of interim injunction was upheld

Case Citation: Sana Herbals Private Limited v. Mohsin Dehlvi & Anr., FAO (COMM) 77/2025, High Court of Delhi, decided on 5 January

Authored by Gaurav Mishra, IP Attorney, BananaIP Counsels