Infosys Limited vs. Southern Infosys Limited

Facts

• Before the Delhi High Court (“DHC”), Infosys, a giant in the IT sector, (“Plaintiff”) filed a suit against Southern Infosys (“Defendant”) for using “Infosys” in their corporate name.[1]
• Infosys claimed this as an infringement on their registered trademark, damage to their brand reputation, and misled consumers.
• Southern Infosys argued that “Infosys” is a generic term for information systems, that Infosys waited over 20 years to sue (acquiescence), and their businesses operate in different areas, reducing confusion.

Issue

1. Whether Southern Infosys Limited’s use of “Infosys” in its corporate name infringe upon Infosys Limited’s registered trademark “Infosys”?

Arguments Advanced

Plaintiff: Infosys

• Infosys claimed that Southern Infosys’ use of “Infosys” in their corporate name (“Southern Infosys Limited”) infringes upon their registered trademark “Infosys” under Section 29(5) of the Trademarks Act, 1999. This section specifically addresses the use of a registered trademark as part of a corporate or trade name dealing in goods or services for which the trademark is registered. They also relied on the case of Daimler Benz Aktiegesselschaft v. Hydo Hindustan.[2]
• Infosys highlighted their extensive use and registration of “Infosys” across multiple classes (including Class 9 for computer hardware) since 1981. This establishes their prior rights and strong brand reputation.
• The close similarity between “Infosys” and “Southern Infosys Limited” would likely mislead consumers, causing them to believe the companies are affiliated. This could dilute the value and distinctiveness of the “Infosys” trademark.

Defendant: Southern Infosys Limited

• Southern Infosys argued that Infosys’ significant delay (over 20 years) in filing the lawsuit weakens its case. They point to legal principles of laches and acquiescence, suggesting Infosys’ inaction implies they tacitly consented to their use of “Infosys” as illustrated under the case of M/s Power Control Appliances & Ors v. Sumeet Machines Pvt Ltd.[3]
• Southern Infosys argued that “Infosys” is merely a descriptive term for “information systems” and lacks distinctiveness. They reference a circular issued by the Department of Company Affairs (May 13^th, 1999) permitting such terms in company names under specific conditions.
• Southern Infosys contended that their business activities primarily involve services (Class 42) and not the goods (Class 9) covered by Infosys’ trademark registration. This distinction supposedly negates trademark infringement.
• Southern Infosys further argued that Infosys did not disclose a previous cease-and-desist notice of 2020 in the lawsuit, suggesting potential concealment.

Court’s Findings

• The DHC ruled in favour of Infosys, finding Southern Infosys’ use of “Infosys” in their corporate name a trademark infringement.
• The DHC focused on Section 29(5) of the Trademarks Act, 1999. This section prohibits the use of a registered trademark as part of another company’s name if it operates in related fields. Here, “Infosys” was a registered trademark, and both companies were involved in technology-related sectors, satisfying the requirements for infringement.
• It acknowledged Infosys’ extensive use and registration of “Infosys” since 1981. This established their prior rights and strong brand reputation in the market.
• It evaluated the similarity between “Infosys” and “Southern Infosys Limited.” The dominant element, “Infosys,” remained the same. This high degree of similarity created a strong likelihood that consumers could be misled into believing the companies were affiliated, potentially diluting the value of Infosys’ trademark.
• Southern Infosys’ argument regarding Infosys’ delay in filing the lawsuit was considered. The court acknowledged the delay but found it insufficient to extinguish Infosys’ rights, especially since the infringement was ongoing. Legal doctrines like laches and acquiescence were deemed inapplicable due to the continuing nature of the infringement.
• The DHC rejected the argument that “Infosys” lacked distinctiveness. Although the term might seem descriptive initially, the DHC recognized the concept of “acquired distinctiveness” as per the case of T.V. Venugopal vs. Ushodaya Enterprises Ltd. and Ors.[4] Extensive use by Infosys had likely given the term a secondary meaning, making it a recognizable brand in the relevant market.
• Southern Infosys’ argument regarding distinct business activities (Class 42 – services vs. Class 9 – goods) was viewed as insignificant. The DHC highlighted that both companies operated in the technology sector, creating a sufficient connection for potential consumer confusion.
• The DHC considered Southern Infosys’ claim about Infosys not disclosing a previous cease-and-desist notice. While non-disclosure is not ideal, the court did not find it a major factor influencing the overall infringement verdict.

Conclusion:

Given the strong brand reputation of “Infosys,” the similarity of names, and the potential for consumer confusion, the court has granted an injunction. This injunction restrains Southern Infosys from using “Infosys” in their corporate name, although a grace period of four months has been allowed for them to transition to a non-infringing name. This case underscores the significance of protecting established trademarks. It also clarifies that even if a term appears initially descriptive, extensive use and brand recognition can bestow legal protection against similar usage by competitors.

[1] CS(COMM) 257/2024, Judgment dt. May 27, 2024.

[2] 1993 SCC Online Del 605.

[3] 1994 (2) SCC 448.

[4] (2011) 4 SCC 85.