Mere Importer Cannot Claim Monopoly Over Manufacturer’s Trademark: Delhi High Court Refuses Interim Injunction To ‘STELLADEXIN’ Trademark Owner

“Prior User Rights Override Trademark Registration – Sale Of Genuine Goods Is Not Infringement” – In a significant decision Delhi High Court refused to grant an interim injunction in favour of the plaintiff, which had sought to restrain the defendants from using the trademark ‘STELLA’. Justice Amit Bansal held that the Chinese manufacturer, defendant no. 5 (Stella Industrial Co. Ltd.), was the prior adopter and continuous user of the marks ‘STELLA’ and ‘STELLADEXIN’ in India since 2013.

The Court observed that “the defendant no. 5 is entitled to protection under Section 34 of the Trade Marks Act, 1999 as a continuous prior user, overriding the plaintiff’s later trademark registration.”

Applying the principle of international exhaustion under Section 30(3) of the Trade Marks Act, the Court further held that the sale of genuine products does not amount to trademark infringement.

The plaintiff, M/s Products and Ideas (India) Pvt. Ltd., claimed trademark rights over the word mark ‘STELLADEXIN’ in India for commercial kitchen equipment. This mark was originally associated with Stella Industrial Co. Ltd., a Chinese company and defendant no. 5 in the case.

The plaintiff relied on an exclusive agency agreement signed with the Chinese manufacturer since 2017. However, the said agreement was terminated on November 13, 2024. Subsequently, the plaintiff filed this suit alleging that Nilkamal Ltd. (defendant no. 1) and Cambro-Nilkamal Pvt. Ltd. (defendant no. 2) were selling goods under the mark ‘STELLA’, which was deceptively similar to their registered trademark ‘STELLADEXIN’.

The plaintiff sought a permanent injunction and interim relief to restrain the defendants from using the mark.

“Prior User Rights Under Section 34 Override Subsequent Trademark Registration” – Delhi High Court

The Court decisively held that Stella Industrial Co. Ltd. (defendant no. 5) was the “prior adopter and user” of the mark ‘STELLA’ and ‘STELLADEXIN’ in India since 2013, predating the plaintiff’s claimed usage starting from 2015.

Justice Amit Bansal observed: “The defendant no. 5 would be entitled to the defence under Section 34 of the Trade Marks Act being a continuous prior user since 2013, before the use by the plaintiff or the date when the plaintiff obtained registration.”

The Court noted that invoices produced by defendant no. 5 demonstrated sales of products bearing the ‘STELLA’ and ‘STELLADEXIN’ marks in India through Mittal International since 2013, whereas the plaintiff’s earliest evidence dated only to 2017.

Trademark Registration Doesn’t Confer Monopoly Against the True Owner

Rejecting the plaintiff’s plea that their trademark registration conferred monopoly, the Court clarified:

“The plaintiff has merely been one of the resellers of defendant no. 5’s products in India… similar to defendant no. 2, who is importing products from defendant no. 5.”

It further stated: “It is axiomatic that the sale of the goods by defendant no. 2, who is nothing but an authorised reseller of the defendant no. 5, cannot amount to infringement.”

International Exhaustion Principle Applies – Section 30(3) of the Trade Marks Act

The Court invoked the principle of international exhaustion, stating that importing and selling genuine goods does not constitute trademark infringement under Section 30(3) of the Trade Marks Act.

Quoting precedent, the Court referred to the landmark case Kapil Wadhwa v. Samsung Electronics Co. Ltd., 2012:DHC:6136:DB, where the Delhi High Court upheld the principle that once goods are placed in the market anywhere in the world by the trademark owner, their further sale is not restrained by trademark rights.

The Court reiterated: “Any person in India has the right to legally import goods from abroad bearing the trademarks of an entity and sell the same in India. Such sale of original goods by an authorized reseller/importer would not amount to trademark infringement.”

This view was further reinforced by Seagate Technology LLC v. Daichi International, 2024:DHC:4193.

Effect of Termination of Exclusive Agreement

The Court recorded that the exclusive agency agreement between the plaintiff and the Chinese manufacturer had been validly terminated on 13th November 2024.

Justice Bansal observed: “Post termination, the plaintiff cannot claim exclusivity over the mark in India. The plaintiff’s claim of monopoly over ‘STELLADEXIN’ is untenable when defendant no. 5 continues to be the rightful owner and prior user.”

Balance of Convenience Favouring Defendants

Denying interim relief, the Court held: “The balance of convenience is in favour of the defendants as grant of an interim injunction would prevent the defendants from using the Stella Marks, which have been used by defendant no. 5 in India since 2013.”

The Delhi High Court vacated its earlier interim injunction dated 27th August 2024, which had restrained the defendants from using the mark ‘STELLA’.

Specifically, the Court held:

“The interim injunction order passed by this Court on 27th August 2024 stands vacated. Defendants shall be permitted to sell goods under the marks ‘STELLA’, ‘STELLADEXIN’ and related device marks in India.”

Accordingly:

• Applications for interim injunction (I.A. 37339/2024 and I.A. 49076/2024) filed by the plaintiff were dismissed.

• Application (I.A. 41504/2024) filed by defendant no. 2 for vacation of the interim injunction was allowed.

The Court emphasized that these findings are “only for the purpose of adjudication of the interim applications and would have no bearing on the final outcome of the suit.”

The Delhi High Court reaffirmed that prior user rights trump trademark registrations when it comes to ownership and infringement disputes under Indian trademark law. Further, the Court underscored the settled position that the sale of genuine goods under an authorised distribution channel does not constitute trademark infringement, applying the international exhaustion principle.

This judgment is a critical precedent for trademark disputes involving manufacturers, importers, and exclusive distributors, especially in the context of global commerce.

Date of Decision: 1st July 2025