The Kansai Nerolac Precedent: Battling Bad-Faith Trademark Registrations in Nepal

The facts: a brand locked out of its own name

Kansai Nerolac entered Nepal through a joint venture — and discovered that a local firm had already registered the 'Kansai Nerolac' trademark and even a company under the same name at the Office of the Company Registrar. The DOI refused the genuine owner's application: the mark was 'taken'. The venture sold its paint as KNP — initials, because the brand itself was unusable — and litigated.

The pattern was familiar to Nepalese practice: preemptive registration of a foreign brand's name by an insider or opportunist, done cheaply at the DOI, held against the day the brand arrives and must pay — or stays locked out. What was not familiar, before this case, was a Supreme Court ruling that dismantled the squatter's arithmetic.

• Local entity registered 'Kansai Nerolac' as mark and company name
• The genuine venture was denied registration and sold as KNP for years
• The case climbed to the Supreme Court — and reset Nepalese trademark law

Holding one: what 'deceptive similarity' means in Nepal

The Court's formulation — cited ever since in oppositions and cancellations — identifies three situations that constitute deceptive similarity: (a) the mark or its words are identical; (b) the mark is presented with alterations — a prefix or suffix added, a letter copied in the middle or at the end, small additions — where phonetic similarity outweighs the dissimilarity; (c) the mark is presented so that it appears similar at first impression.

The test is functional, not arithmetic: the question is what the alteration does to the ordinary consumer's ear and eye. 'Nerolac' with a syllable shuffled, a star added, a prefix bolted on — all are attempts to capture the sound and reputation of the mark while retreating behind cosmetic difference. The Court called the practice what it is: presentation to deceive.

Holding two: bad faith voids the statute of limitations

The holding that matters most to brand owners is procedural: the Court held there is no time limitation for revoking a trademark registration where (a) a trademark or foreign trademark was registered in bad faith, (b) the company's or Office of Company Registrar's conduct was unfair from the beginning, or (c) the registration process was malafide on its face.

The effect is to remove the squatter's favourite defence — 'the mark has been registered for years, challenge it too late.' Bad faith, once established, keeps the registration revocable forever. For foreign brand owners the practical consequence is strategic: the passage of time is not the enemy; the absence of evidence of the original bad faith is. Corporate filings, product history, and the squatter's own conduct at registration are the evidence — and they survive, which is why the claim does too.

• No limitation period where registration was mala fide at origin
• 'Too late' is not a defence against bad-faith registrations
• Evidence of original bad faith — corporate filings, conduct — is what wins

Holding three: a squatted registration lasts only until challenged

The Court's third holding closes the loop: where a foreign trademark is registered by a local industry, that registration is valid until the foreign company challenges it — the foreign owner's proprietary right 'does not end for all time' by virtue of the local registration. The squatter holds a default position, not a permanent one; the foreign brand's delay affects the interim, not the ultimate, ownership.

Read together, the three holdings build a coherent anti-squatting doctrine: deceptive similarity is defined broadly enough to catch cosmetic disguises; bad faith removes any time bar; and challenge restores the true owner's position. The Kansai Nerolac precedent is why bad-faith cancellation is now a viable — and eventually successful — route for foreign brands in Nepal, and why the smart money files its Nepalese application before the squatter ever gets the chance.

The playbook this precedent enables

For brand owners facing a squatted or lookalike mark today, the precedent maps onto a concrete sequence: assemble the evidence — home registrations, product history, the squatter's corporate filings and conduct at registration; screen the register for every variation the squatter and its affiliates hold (squatters rarely file once); file the cancellation or opposition on deceptive similarity plus bad faith, pleading the no-limitation rule expressly; and parallel-track the enforcement — DOI orders and customs alerts work alongside the register battle. Kansai Nerolac won, eventually, and the win is durable because the precedent gives every case after it the arguments that case had to invent.