The legal battle between IMS Learning Resources Pvt. Ltd. and Young Achievers concerns the alleged infringement and passing-off of the trademark "IMS." The dispute highlights key issues regarding trademark rights, licensing, and the consequences of breaching agreements. This analysis examines the case's facts, legal issues, submissions, and judicial reasoning, providing a comprehensive understanding of the court's decision.

Background:
IMS Learning Resources Pvt. Ltd., established in 1977, is a leading provider of coaching for competitive examinations. The plaintiff registered its trademark "IMS" across various classes and established goodwill in educational services. Young Achievers, the defendant, operated as a franchisee of IMS under agreements in 2007 and 2010. Following the termination of the franchise relationship in 2011, disputes arose over the defendant's continued use of the IMS trademark, prompting the plaintiff to file a suit for permanent injunction, infringement, and damages.
 

Case Summary

Brief Facts of the Case:

• Plaintiff's Operations: IMS is a prominent brand in coaching for management entrance exams and operates over 100 centers across India.
• Franchise Agreement: The plaintiff and defendant entered into agreements allowing the defendant to use the IMS trademark for a coaching center in Meerut.
• Termination: By mutual consent, the agreement was terminated on February 1, 2011, with the defendant signing an Exit Paper agreeing to cease use of the IMS trademark.
• Dispute: Despite the termination, the defendant continued to use the trademark, rebranded as "IMS Young Achievers," and published advertisements creating confusion among consumers.

Issues Raised:

• Trademark Ownership: Whether the plaintiff is the proprietor of the "IMS" trademark.
• Infringement: Whether the defendant's use of "IMS Young Achievers" constitutes infringement, being an ex-franchisee.
• Passing Off: Whether the defendant's actions mislead consumers and harm the plaintiff's goodwill.

Plaintiff's Submission:

• The defendant admitted to signing the Exit Paper and acknowledged IMS as the plaintiff's trademark.
• Continued use of the mark "IMS Young Achievers" misleads consumers into believing an association with the plaintiff.
• The defendant's actions amount to infringement, passing off, and dilution of the plaintiff's goodwill.
• The defendant acted dishonestly by attempting to free-ride on the plaintiff's reputation.

Defendant's Submission:

• Claimed that "IMS" is a commonly used term in education and lacks distinctiveness.
• Asserted that the plaintiff had no prior goodwill in Meerut and the defendant's use of "IMS Young Achievers" was distinct.
• Argued that its clients are sophisticated and unlikely to be misled.
• Claimed compliance with the Exit Paper by rebranding and creating a new syllabus.

Judgments Referred and Their Context:

• Amritdhara Pharmacy vs. Satya Deo Gupta (1962 SCC OnLine SC 13): Established that marks must be compared as a whole to determine the likelihood of confusion.
• Kaviraj Pandit Durga Dutt Sharma vs. Navratna Pharmaceutical Laboratories (1964 SCC OnLine SC 14): Highlighted the distinction between infringement and passing off actions.
• Corn Products Refining Co. vs. Shangrila Food Products Ltd. (1959 SCC OnLine SC 11): Emphasized the importance of the first impression in determining trademark similarity.
• Pankaj Goel vs. Dabur India Ltd. (2008 SCC OnLine Del 1744): Discussed deceptive similarity and its impact on consumer perception.

Reasoning of the Judge: Trademark Ownership: The plaintiff's extensive use and registrations established ownership of the "IMS" trademark.Infringement by ex franchise: The defendant's mark "IMS Young Achievers" was deceptively similar to the plaintiff's trademark, causing confusion. The Defendant, being ex Franchisee, can not use the Trademark, post Termination of Franchisee Agreement.Passing Off: By using "IMS," the defendant misrepresented an association with the plaintiff, harming its goodwill.Dishonest Conduct: The defendant's actions, including misleading advertisements and unauthorized use of the trademark, demonstrated bad faith.

Decision: The court held in favor of the plaintiff, granting a permanent injunction restraining the defendant from using "IMS" or any deceptively similar mark. The defendant was directed to pay damages for infringing the plaintiff's trademark and passing off its services as those of the plaintiff.

Concluding Note:
This case underscores the importance of respecting intellectual property rights, particularly in franchise relationships. It highlights the legal consequences of breaching agreements and the necessity for clear branding practices to avoid consumer confusion. The judgment reinforces trademark protection as a means to preserve goodwill and prevent unfair competition.

Case Title: IMS Learning Resources Pvt. Ltd. vs. Young Achievers
Date of Order: January 20, 2025
Case No.: CS(COMM) 602/2018
Neutral Citation: 2025:DHC:282
Court: High Court of Delhi
Judge: Hon’ble Ms. Justice Mini Pushkarna

Disclaimer:
The information shared here is intended to serve the public interest by offering insights and perspectives. However, readers are advised to exercise their own discretion when interpreting and applying this information. The content herein is subjective and may contain errors in perception, interpretation, and presentation.

Written By: Advocate Ajay Amitabh Suman, IP Adjutor - Patent and Trademark Attorney
Email: [email protected], Ph no: 9990389539