Claim Of Trademark Infringement Cannot Be Used To Avoid Arbitration In Trademark Licensing Dispute: Delhi HC

The Delhi High Court has referred a trademark infringement and passing off suit filed by Singapore-based Utracon Corporation against its former Indian subsidiary, Ucon PT Structural System Private Limited, and other parties to arbitration.

The court held that a party cannot avoid arbitration merely by including a claim for relief that may not independently be arbitrable.

Justice Purushaindra Kumar Kaurav observed that the dispute centred on the continued use of the trademark after the licence expired, rather than its registration or cancellation. The court held:

“The core of the suit is the post-term use of the marks by an ex-licensee and its affiliates. A party cannot avoid an arbitration agreement merely by adding a relief which, by itself, may not be arbitrable.”

Utracon claims to have adopted the “UTRACON” trademark in 1998, with registrations in India dating back to August 14, 2012. Its former subsidiary, incorporated in Chennai in 2004, was permitted to use the trademark and other intellectual property under a licence agreement executed on March 22, 2012.

The agreement provided for a 10-year term effective from April 1, 2011. According to Utracon, the licence expired on March 31, 2021, requiring the subsidiary to stop using the marks and change its corporate name.

Utracon alleged that the company continued using the mark after the licence expired and that its directors incorporated affiliated companies using “UTRACON” in their names. Ucon disputed the allegations, claiming that the licence had been extended.

Ucon also argued that the trademark dispute was connected to a Sale of Shares Agreement executed on the same date. The Supreme Court appointed a sole arbitrator on April 30, 2026, to resolve disputes arising from that agreement. Ucon contended that continuing with the trademark suit could lead to parallel proceedings and conflicting findings.

Opposing arbitration, Utracon argued that its suit concerned statutory and common law rights in its registered trademark and that infringement and passing-off actions were not arbitrable.

The high court distinguished between disputes over the registration or cancellation of a trademark and contractual disputes over the right to use it. While registration and cancellation affect rights against the world at large, disputes between parties over their contractual rights concern the parties to the agreement.

Utracon was not challenging its trademark registration or seeking cancellation. The dispute instead concerned whether the former licensee could continue using the mark and whether the licence had been extended.

The court also held that provisions of the Trade Marks Act, 1999 and the Copyright Act, 1957 specifying the courts before which infringement suits may be filed do not create an exclusive forum that bars arbitration.

The court further held that the presence of other parties who had not signed the licence agreement did not prevent the entire dispute from being referred to arbitration. Utracon had described the former subsidiary and other companies as a “single economic unit”, alleging that they were involved in the continued use of the marks.

Whether the affiliated companies and directors were ultimately bound by the arbitration agreement would be decided by the arbitral tribunal.

The court allowed the application under Section 8 of the Arbitration and Conciliation Act, 1996, and referred the dispute to arbitration under Clause 14 of the licence agreement, which provides for arbitration under the Singapore International Arbitration Centre Rules.

The court held that the outcome would be the same even if Section 45, rather than Section 8, applied. It left the question of the juridical seat of arbitration and the applicable rules and law to the arbitral tribunal.

Clarifying that it had not decided the merits of the trademark dispute, the court noted that its observations were prima facie. The suit and all pending applications were disposed of.