Towards Evolving a Culture of Damages: Analysing the Christian Louboutin Verdict of the Delhi High Court

On December 12, 2017, the Delhi High Court delivered a crisp 21-paragraph ex parte decree against the defendants in a suit for infringement of the “Red Sole” trademark instituted by the global luxury retail brand Christian Louboutin. Apart from granting injunctive reliefs to the brand owner/plaintiff against the defendants and declaring the Red Sole trademark well-known, the Court also awarded damages to the plaintiff to the tune of INR 1,63,000, and INR 8,63,790 as costs. While the judgement warrants analysis with respect to the Court’s reasons for declaring the Red Sole mark well-known, my primary interest is in understanding the Court’s approach to and basis for grant of damages and costs, an aspect of IP litigation I had discussed in brief almost two years ago.

The discussion on principles that govern award of damages begins at Paragraph 18 of the judgement, which extracts, for the most part, portions of a Division Bench’s judgement in Hindustan Unilever Limited Vs. Reckitt Benckiser India Limited (2014). The DB judgement in turn discussed the principles laid down in two English decisions, namely Rookes v. Barnard, [1964] 1 All ER 367 and Cassell & Co. Ltd. v. Broome, 1972 AC 1027. Both these English decisions, in effect, (a) clarified the object of award of exemplary/aggravated/punitive damages, (b) identified the circumstances for and condition precedents to grant of such damages so as to avoid ad hocism, and (b) diluted the vindictive/retributory character of such damages by underscoring the fact that ultimately the award benefited a private party.

While Rookes identified the categories of cases where award of exemplary damages was justified, the specifics of the considerations and their nuances were educatively articulated in Cassell. For instance, Cassell cautioned that in order to establish a case for exemplary damages, it wasn't sufficient for the plaintiff to merely peg his case under the categories identified in Rookes. Further, the first order of business in assessing damages was to compute actual or compensatory damages and then ask oneself whether such damages were adequate compensation to the plaintiff in light of the defendant’s conduct and the benefit it had accrued to the latter. Only when this question was answered in the negative, it would be appropriate for the Court to award exemplary damages.

Importantly, in assessing the adequacy of the exemplary damages and its intended deterrent character, the total sum i.e. damages inclusive of actual and exemplary components, must be considered, and not the exemplary component alone. In other words, computation of exemplary damages may be construed as an exercise in rounding off the final sum to an extent that the figure has a punitive punch to it, as opposed to a mere pinch. Clearly, these principles are meant to remind Courts of the nature and purpose of exemplary damages and temper any misplaced sense of retribution. In this regard, the clarification that damages remain a civil remedy, and not criminal, even when exemplary, is profound.

Notwithstanding the fact that the Hindustan Unilever judgement was delivered by the DB in the backdrop of a suit for commercial disparagement, the stellar principles distilled by it, with approval, from the two English decisions, lend themselves to general application to civil suits. Further, the DB’s express disapproval of the approach adopted in Times Incorporated v. Lokesh Srivastava makes Hindustan Unilever the new standard to be observed in award of exemplary damages, which is perhaps a banal observation as on date given that the judgement was delivered in 2014. One just hopes that the spirit of rigour and caution which typify this standard reflect in every suit where damages are awarded.

In the facts of the Christian Louboutin case, the Court did not award exemplary damages. Perhaps, the facts of the case did not warrant such an award, and to precisely drive home this point to the Plaintiff the Court chose to extract Hindustan Unilever. That being said, the computation of actual damages by the Court is based on quite a few assumptions, whose basis is unclear. Extracted below is Paragraph 19 of the judgement where computation of damages was undertaken by the Court based on affidavits filed on behalf of the Plaintiff:

“19. As regards the relief of damages and costs, an affidavit has been filed by the Constituted Attorney of the plaintiff and considering the downloaded copies of facebook post of defendant No.5 exhibited as Ex.PW-1/28 (colly) it can safely be held that the defendants No.3 and 5 are carrying on the business in the infringing goods for at least 15 months. 23 and 22 pairs of infringing shoes have been recovered from the premises of defendant No.3 and 5 respectively which can be sought for in any given month of the year.

As per the independent Investigator, the pair of shoes from the shop of defendant No.3 was bought for ₹700/- and from the shop of defendant No.5 for ₹1,795/-. Thus, considering the turnover of defendant No.3 as ₹2,41,500/- for 15 months and that of defendant No.5 for ₹5,92,350/- and taking the margin of profit being 25% on the illegal turnover, the profit earned by defendant No.3 would be ₹15,093/- and that of defendant No.5 would be ₹1,48,088/-.”

Although this was an ex parte proceeding, perhaps the Court could have considered examining the Plaintiff’s Constituted Attorney and the “independent investigator” whose affidavits were relied upon for computation of damages. Further, since 23 and 22 infringing pairs of shoes were recovered from the premises of the Defendant No. 3 and Defendant No. 5 respectively, the Court assumed that the Defendants would have sold such numbers in any given month of the year. If only 10 infringing pairs each had been recovered, would the Court have treated these figures as the quantum of monthly infringing sales by the Defendants? The Court has also assumed the profit margin of the Defendants to be 25%, the basis for which has not been articulated in the decision. An ex parte proceeding may lack the adversarial push-back from the absent party, but that does not give the Court greater latitude with its assumptions either for or against the absent party or the party which is present. Or does it? Which takes us to a different, but important question of how does a Court render a balanced verdict in an ex parte proceeding. This is an issue I will address in a later post.

Coming back to the decision, while the DB’s exhortations on exemplary damages were perhaps not relevant to the case at hand, the underlying rigorous approach to award of damages advocated by the DB was certainly relevant, which, some might say, does not reflect in the Court’s application to the facts of the case. 

Trademark Remedies under the Companies Act, 2013

The erstwhile Companies Act, 1956 provided for certain trademark remedies under Sections 20 and 22. Section 20 spelt out the criteria for names which were deemed “undesirable” for registration as company names and Section 22 provided the mechanism for rectification of a company name. A more rationalized framework for rectification is available under Section 16 of the current Companies Act, 2013.

Extracted below is Section 16 of the 2013 Act:

16. (1) If, through inadvertence or otherwise, a company on its first registration or on its registration by a new name, is registered by a name which,—

(a) in the opinion of the Central Government, is identical with or too nearly resembles the name by which a company in existence had been previously registered, whether under this Act or any previous company law, it may direct the company to change its name and the company shall change its name or new name, as the case may be, within a period of three months from the issue of such direction, after adopting an ordinary resolution for the purpose;

(b) on an application by a registered proprietor of a trade mark that the name is identical with or too nearly resembles to a registered trade mark of such proprietor under the Trade Marks Act, 1999, made to the Central Government within three years of incorporation or registration or change of name of the company, whether under this Act or any previous company law, in the opinion of the Central Government, is identical with or too nearly resembles to an existing trade mark, it may direct the company to change its name and the company shall change its name or new name, as the case may be, within a period of six months from the issue of such direction, after adopting an ordinary resolution for the purpose.

(2) Where a company changes its name or obtains a new name under sub-section (1), it shall within a period of fifteen days from the date of such change, give notice of the change to the Registrar along with the order of the Central Government, who shall carry out necessary changes in the certificate of incorporation and the memorandum.

(3) If a company makes default in complying with any direction given under sub-section (1), the company shall be punishable with fine of one thousand rupees for every day during which the default continues and every officer who is in default shall be punishable with fine which shall not be less than five thousand rupees but which may extend to one lakh rupees.

From the provision, it is clear that while Clause (b) of sub-Section (1) allows only a registered proprietor of a trademark to apply to the Central Government for rectification of the name of a company whose name is identical to or “too nearly resembles” the registered trademark, the remedy under Clause (a) is not limited to a registered proprietor of a trademark. In other words, a company whose name is not a registered trademark too could invoke Clause (a) to seek rectification of the name of another company whose name is identical or too nearly resembles its own. This is an additional expeditious remedy to a suit for passing off if the trademark is used as a company name by a third party.

The remedy under Clause (a), which was available even under Section 22 of the erstwhile 1956 Act (albeit through a circuitous procedure), has probably been provided for in recognition of and as a counterpart to the action for passing off available to owners of unregistered trademarks under the Trademarks Act, 1999. That said, it is to be borne that while Clause (b) permits a registered proprietor of a trademark to apply for rectification of a company's name even if the former does not use the registered trademark as a company name, the remedy under Clause (a) is available only if both the applicant for rectification and the company against whom rectification is sought, use the trademark as company names. In this sense, the remedy under Clause (a) is narrower. On the positive side, while under Clause (b) a registered proprietor is required to make an application for rectification within three years of incorporation or registration or change of name of the company with respect to whom the rectification is sought, there appears to be no such limitation period under Clause (a).

The rule that corresponds to Section 16 is Rule 8 of the Companies (Incorporation) Rules, 2014 (which came into force on April 1, 2014) that enumerates detailed criteria to be mandatorily considered in deeming a proposed company name undesirable for registration under the Companies Act. Interestingly, Rule 8(2)(a) also deems undesirable a name which includes a trade mark that is subject of an application for registration under the Trademarks Act, 1999, unless the consent of the applicant for trademark registration has been obtained and produced by the promoters of the company.

Rule 8(2)(b), among other things, also bars a proposed company name which:

A. is identical with or too nearly resembles the name of a limited liability partnership 

B. resembles closely the popular or abbreviated description of an existing company or limited liability partnership

C. is identical with or too nearly resembles the name of a company or limited liability partnership incorporated outside India and reserved by such company or limited liability partnership with the Registrar of Companies under Section 4 of the Act (read with Rule 9)

D. is identical to the name of a company dissolved as a result of liquidation proceeding and a period of two years have not elapsed from the date of such dissolution

E. is identical with or too nearly resembles the name of a limited liability partnership in liquidation or the name of a limited liability partnership which is struck off up to a period of five years

F.  is generic to the trade

G. contains only the name of a continent, country, state, city

Clearly, Section 16 and Rule 8 seem designed to provide expeditious alternatives to suits for trademark infringement and passing off in so far as the use of marks as company names in concerned. I haven’t thus far come across an order passed by the Central Government in an application under Section 16 and I am not sure orders passed under Section 22 of the erstwhile 1956 Act were or are available on the website of the Ministry of Corporate Affairs. If they are not, they ought to be made available because it is important to know the quality of reasoning adopted by the Ministry in allowing or rejecting such applications. I request readers to share any such orders that they may be aware of. 

Distinction between Falsification and Falsely Applying a Trademark

Section 102 of the Trademarks Act 1999 defines as to what constitutes falsification of a trade mark and falsely applying a trade mark. Section 103 prescribes penalties for falsification and falsely applying a trademark. Both provisions are part of Chapter XII of the Act which deals with Offences and Penalties. Reproduced below is Section 102:

102. Falsifying and falsely applying trade marks.—

(1) A person shall be deemed to falsify a trade mark who, either,—

(a) without the assent of the proprietor of the trade mark makes that trade mark or a deceptively similar mark; or

(b) falsifies any genuine trade mark, whether by alteration, addition, effacement or otherwise.

(2) A person shall be deemed to falsely apply to goods or services a trade mark who, without the assent of the proprietor of the trade mark,—

(a) applies such trade mark or a deceptively similar mark to goods or services or any package containing goods;

(b) uses any package bearing a mark which is identical with or deceptively similar to the trade mark of such proprietor, for the purpose of packing, filling or wrapping therein any goods other than the genuine goods of the proprietor of the trade mark.

(3) Any trade mark falsified as mentioned in sub-section (1) or falsely applied as mentioned in sub-section (2), is in this Act referred to as a false trade mark.

(4) In any prosecution for falsifying a trade mark or falsely applying a trade mark to goods or services, the burden of proving the assent of the proprietor shall lie on the accused.

Based on a clear reading of sub-section 1 of Section 102, it is evident that the said sub-section deals with “making” of a mark which is either identical or deceptively similar to an existing trade mark (registered or unregistered, as stated in the definition of a trademark in Section 2(1)(zb)(i) for the purposes of Chapter XII). It must be noted that the reference here is to the making of the mark itself and not to its application to goods or in relation to services (“application” of the trade mark for the purposes of this Chapter is enumerated in Section 101). Therefore, the act of manufacture of the mark without the consent of the proprietor of the trade mark is deemed as falsification of the trade mark. Further, the said sub-section also includes within the scope of falsification any unauthorized alteration, addition or effacement of a genuine trade mark.

In contrast, sub-section (2) of Section 102 deals with falsely applying/using an existing trade mark or its deceptively similar variant without the assent of its proprietor. Sub-section (3) of Section 102 classifies both a falsified trade mark and a falsely applied trade mark under the category of “false trade marks”.  It must be noted that the prohibition under Section 102 does not appear to be restricted to the class of goods or services in connection with which the proprietor of the genuine trade mark uses the trade mark. In other words, a person who applies/uses a false trade mark in any class of goods or services could attract the prohibition of Section 102. To this extent, the scope of the bar under Section 102 appears to be wider than Section 29.  

Further, sub-section (4) of Section 102 takes the position that when an accused is confronted with the use of a false trade mark, the lack of the proprietor’s consent shall be presumed and the burden is on the accused to rebut the said presumption. That said, sub- section (1) of Section 102 makes a reference to a “deceptively similar” mark and not merely a similar mark. Does the use of the word deceptively require the proprietor of the mark to establish malafide intent on the part of the accused to deceive the public to make a case under Section 102? Considering that the use of a deceptively similar mark also constitutes infringement within the meaning of Section 29 (if the mark is registered), it would be interesting to understand the practical evidentiary import of the words deceptively similar. I will discuss this in the next post.    

Delhi High Court: Prima Facie Territorial Jurisdiction for Passing Off may be based on Statements made in a Legal Notice

On May 7, 2014, in an appeal from an order of a Single Judge returning the plaint for want of jurisdiction in an action for passing off filed by LT Foods Ltd against Heritage Foods India Ltd over the mark "HERITAGE", a Division Bench of the Delhi High Court held that so long as the plaint contains necessary pleadings to establish the territorial jurisdiction of the Court, it cannot be returned for want of jurisdiction. Following are the relevant extracts from the decision:

“6. It would be evident from the above paragraphs that the appellant/plaintiff had averred the following:-

1. That the plaintiff/appellant received a cease and desist notice from the defendant alleging infringement and passing off of its trade mark HERITAGE;

2. That the defendant had started selling rice under the trade mark HERITAGE;

3. That in the notice dated 4.3.2011 issued by the defendant to the plaintiff, the defendant had stated that the goods of the defendant under the trade mark HERITAGE were being sold or supplied directly or indirectly throughout the length and breadth of the country;

4. That in view of the statement made by the defendant/respondent in the legal notice dated 4.3.2011, the plaintiff/appellant stated that the defendant had admitted that it also sold and supplied goods directly or indirectly in Delhi as Delhi would be included in the length and breadth of the country.

7. On the basis of the above four aspects which have been clearly and categorically averred by the plaintiff/appellant in the said plaint, it has been contended that this Court would have territorial jurisdiction to try the Suit even in respect of a passing off action apart from an action based on the cease and desist notice itself.

8. It is well settled that in examining the case from the stand point of Order 7 Rule 10 CPC the plaint must be taken as it is and the averments made therein must be accepted as true. Only if, on assuming the averments made in the plaint to be true and correct, the Court comes to the conclusion that it would not have territorial jurisdiction, could the plaint be returned for filing the same in a Court having jurisdiction. The Court while examining this aspect of the matter cannot go beyond the facts stated in the plaint. In other words the Court cannot examine any defence contained in the written statement filed on behalf of the defendants. The principles for rejecting a plaint under Order 7 Rule 11 or returning a plaint under Order 7 Rule 10 CPC, are more or less similar. Observations of the Supreme Court in the case of Exphar SA v. Eupharma Laboratories Ltd., A.I.R. 2004 SC 1682 are apposite and they are reproduced herein below:

"9. Besides when an objection to jurisdiction is raised by way of demurrer and not at the trial, the objection must proceed on the basis that the facts as pleaded by the initiator of the impugned proceedings are true. The submission in order to succeed must show that granted those facts the Court does not have jurisdiction as a matter of law. In rejecting a plaint on the ground of jurisdiction, the Division Bench should have taken the allegations contained in the plaint to be correct"

Para 6 of the decision reveals that territorial jurisdiction was sought to be established by the Appellant/Plaintiff on the basis of the statements made by the Respondent/Defendant in the latter’s cease and desist notice to the Plaintiff that its goods bearing the impugned trademark were available “directly and indirectly across the length and breadth of the country”. The Court held that territorial jurisdiction could be established at the prima facie stage on the basis of such statements. Below is the relevant observation of the Court:

“13. Ms Prathiba Singh, the learned senior counsel, also pointed out that while in paragraph 26 of the plaint there is mention of the „cease and desist‟ notice dated 04.03.2011, there is also mention of the appellant’s / plaintiff’s reply to the said notice dated 19.04.2011 where the plaintiff has denied the statement of the defendant in the said notice dated 04.03.2011 to the effect that the defendant sold or supplied, directly or indirectly, the goods bearing the trade mark "HERITAGE" throughout the length and breadth of the country. However, we feel that this does not enable the respondent / defendant, at this prima-facie stage, to detract from the position that the respondent / defendant had, in the said notice dated 04.03.2011, clearly stated that it had sold the goods under the said trade mark "HERITAGE" directly or indirectly throughout the length and breadth of the country which, obviously, would include Delhi as well. Whether the respondent / defendant can explain this admission and explain the circumstances so that it is not bound by it is a matter for trial. But at this prima-facie stage, the appellant / plaintiff has founded his cause of action on passing off on this admission on the part of the respondent / defendant and it is immaterial that the appellant / plaintiff had in its reply to the notice taken a contrary view.”

One critical lesson that could be drawn from the decision is that statements must not be made in a legal notice without application of mind and without understanding their legal implications in a court of law. 

Delhi High Court Restrains the use of Anchor’s mark “ALL ROUND” in P&G’s Oral B products

In an 18-page decision pronounced on May 9, 2014, a Single Judge on the Original Side of the Delhi High Court granted an interim injunction in favour of Anchor Health and Beauty Care Pvt Ltd restraining Proctor and Gamble from using Anchor’s registered trademark “ALL ROUND” in connection with P&G’s Oral-B products. The injunction was granted in a suit filed in 2013 by Anchor against P&G. 

Anchor’s grievance was that the use of the expression as part of “ORAL B ALL AROUND PROTECTION” and “ORAL B ALL ROUNDER” by P&G in connection with the latter’s toothpaste and brush amounted to infringement of Anchor’s registered trademark “ALL ROUND”. 

Following were P&G’s defences:

1.       That the mark “ALL ROUND” was descriptive and common to the trade for which Anchor had failed to establish secondary significance. Further, P&G’s use of “ALL ROUND” was descriptive in nature and not in a trademark sense.

2.       That a rectification petition had been filed by P&G against Anchor’s registration on the mark;

3.     That P&G’s use of “ALL ROUNDER” and “ALL AROUND PROTECTION” was not deceptively similar to the Anchor’s registered mark “ALL ROUND”, and that Anchor had no registration for the expression “ALL AROUND PROTECTION”;

4.       Since the descriptive expression “ALL AROUND PROTECTION” was being used as an adjunct to Anchor’s primary trademark ANCHOR, there was no malafides in P&G’s use of the expression.

Following were Anchor’s rebuttals:

1.       P&G had a registered trademark in the US on “ALL AROUND PROTECTION” and had applied for one on “ALL ROUNDER” in India;

2.       The fact that Anchor had used “ALL ROUND” along with its primary mark did not in any way undermine its claim over “ALL ROUND”. Further, the law did not require Anchor to use ALL ROUND in a stand-alone manner and that it could be in conjunction with any other mark.

The Court’s observations:

1.       P&G’s own registrations on and applications for “ALL ROUNDER” and “ALL AROUND PROTECTION” undermined their contention that “ALL ROUND” was descriptive and common to the trade.

2.       In the facts of the case, the packaging of P&G revealed that “ALL AROUND PROTECTION” was being used by P&G as a stand-alone mark, and not in a descriptive sense.

3.       Since Anchor was indeed using ALL ROUND as part of ALL ROUND PROTECTION, P&G’s argument of non-use was ill-founded.

4.       P&G’s use of ALL ROUNDER and ALL AROUND PROTECTION was deceptively similar to Anchor’s ALL ROUND since the essential feature of the latter’s mark was being used by P&G. Consequently, a case of prima facie infringement had been established.

5.       Balance of convenience was in favour of Anchor since P&G had barely introduced the product in the market at the time of the filing of the suit.

6.       Accordingly, P&G was given four weeks time to take the necessary steps to comply with the injunction.

Division Bench of the Delhi High Court Holds a Registered TM Owner can sue another Registered Owner for Infringement

On April 29, 2014, in a Regular First Appeal (RFA) preferred against the rejection of a plaint by the Court of first instance under Order 7, Rule 11 of the CPC, a Division Bench of the Delhi High Court held that an action for infringement by one registered proprietor of a trademark against another registered proprietor is maintainable under the Trademark Act, 1999, subject to the conditions under Section 124 of the Act being satisfied.

In the facts of the case, both the Plaintiff and the Defendant had registrations on the mark "HERITAGE" in Class 30. The appeal was preferred by the Plaintiff against the order of the Learned Single Judge who held that Section 28(3) of the Act prohibited a registered proprietor of a trademark from suing another registered proprietor. In other words, according to the Learned Single Judge, the only cause of action that a registered owner may have against another registered owner is that of passing off, but not infringement. 

This proposition was rejected by the Division Bench in light of Section 124(1)(b) of the Act which clearly refers to a situation where a suit for infringement is filed by a registered TM owner against another. To this end, the Division Bench cited the decision of the High Court in Clinique Laboratories LLC and Anr. Vs. Gufic  Ltd. and Anr. (April 9, 2009) in which after a detailed discussion on Sections 28(3), 30(2)(e) and 124(1)(b) of the Act, it was held that a suit for infringement by a registered TM owner is indeed maintainable against another registered TM owner. In fact, it was further held that Section 124(5) permits the grant of an interim injunction as well in such a suit for infringement.

Extracted below are the relevant observations from the Clinique decision which was subsequently applied in Mrs.Rajnish Aggarwal & Ors. v. M/s Anantam and most recently in Abbott Healthcare v. Raj Kumar Prasad on April 25, 2014:

“8. In my view, Section 29 of the Act providing for infringement of the registered trademark does not contemplate infringement by another registered proprietor. Sections 29(1), (2) & (4) expressly provide that "registered trademark is infringed by a person who, not being a registered proprietor ..........." Though, Section 29(5) which has been newly introduced in the 1999 Act does not use the same language but in my view the same would be irrelevant for the present purposes. Section 30 (2) (e) further fortifies the said position by expressly providing that the registered trademark is not infringed where the use being as one of two or more trademarks registered under the Act which are identical or nearly resemble each other and in exercise of the right to use of that trademark given by registration thereof. However, Sections 28(3), 29 & 30(2) (e) cannot be read in isolation. If the intent was that there could be no action for infringement against the registered proprietor, the legislature while giving the right for rectification before the Registrar would not have in Section 31 made the registration as only prima-facie evidence of validity thereof. If that had been the intention all that would have been said is that as long as the registration exists it is valid, without any question of prima-facie or not. Then the courts would have had to wait for the outcome of the rectification proceedings.

9. Registration has been made only prima-facie evidence of the registration otherwise being in accordance with the Act under Section 31(1) as contended by senior counsel for plaintiff but I find that even Section 28 (1) while being subject to other provisions of Act, further provides that "registration of the trademark, if valid, give to the registered proprietor" exclusive right to use the trademark. Thus the validity of registration can be gone into, wherever permissible under the Act. Section 124(1) (b) also indicates that it was within the contemplation of the legislature that there could be a suit for infringement of trademark where the defendant takes a plea under Section 30 (2) (e) i.e. that use by him is not infringement because of his mark being also registered. The legislature while further providing for stay of suit in such cases, in sub Section (5) expressly provided that such stay would not preclude the court from making any interlocutory order. Section 31 r/w the scheme of 124 leads to an un-escapable conclusion that (A) there can be a suit for infringement against the registered proprietor (B) that upon the defendant taking the plea of his registration and of there being thus no infringement, such suit has to be stayed awaiting the rectification proceedings and (C) the court is empowered in such case to pass any interlocutory order. The court while passing interlocutory order will necessarily have to prima facie adjudicate the validity of the two competing registrations. Upon inquiry, it was informed that the Registrar while trying the rectification application has no power to grant interim relief. The legislature under Section 124 (5) has thus empowered the court under Section 124 (5) to grant injunction against use of a registered trademark also if the court is satisfied of the invalidity thereof. Though in view of Section 31, the test would be much stricter;

10. In my opinion, unless the provisions are so read, effect cannot be given thereto.

11. Once having reached a conclusion that registration is only prima facie evidence of validity, it is axiomatic that if the court is satisfied otherwise on the basis of material on record and in the facts of the case, the court is empowered to injunct use of registered trademark also. I do not find any reason to limit/restrict the applicability of sub Section (5) as suggested by the senior counsel for the defendant, in the absence of the legislature providing so. If the legislature had felt that there could be no infringement by a registered trademark, there was no need to provide for such a suit as in Section 124 (1) (b) and (i). In fact, sub-clause (i) of 124 (1) shows that the suit can be instituted even where the rectification proceedings are pending i.e. where the plaintiff is even at the time of institution of the suit aware of the defendant having a registered trademark.

12. I also find merit in the contention of the senior counsel for the plaintiff with reference to Section 31 (2) of the Act. Section 31 (2) suggests that the court notwithstanding registration being prima- facie evidence of validity as provided in Section 31(1) can hold the registered trademark to be invalid. The court can hold the registration to be invalid, on any ground or for non compliance of any of the conditions for registration provided under the Act. It further provides that if the invalidity of registration is averred for the reason of non compliance of Section 9 (1), i.e. of evidence of distinctiveness having not been submitted before the Registrar, then the party pleading validity of registration shall be entitled to give evidence in legal proceedings where validity is challenged, of the mark having acquired distinctiveness on date of registration. Section 32 permits evidence of acquisition of distinctive character within the meaning of Section 9(1) post registration, also being led in such proceedings. It follows that where validity of registration is challenged on grounds other than provided in Section 9(1) of the Act, the test is whether the criteria laid down in such other provisions of the Act, for registration has been satisfied or not. Since, Section 124 otherwise provides for stay of proceedings in such suit and only permits passing an interlocutory order, such finding of invalidity naturally has to be on the touchstone of principles for interlocutory order only and not as at the time of final decision of the suit, in as much as the finding in the rectification proceedings has been otherwise made binding in the suit and on all aspects of validity i.e. under Section 9 as well as under Section 11.

13. Neither counsel has cited any direct judgment on this aspect. Nor have I been able to find any.

14. I thus conclude that a suit for infringement of registered trademark is maintainable against another registered proprietor of identical or similar trademark and in such suit, while staying the further proceedings pending decision of the registrar on rectification, an interim order including of injunction restraining the use of the registered trademark by the defendant can be made by the court, if the court is prima facie convinced of invalidity of registration of the defendant’s mark.”

Therefore, from the above, it is clear that so long as the validity of the defendant’s trademark registration has been challenged either prior to the institution of the suit, or such a challenge has been raised in the plaint by the plaintiff who is also a registered TM owner, a suit for infringement by a registered TM owner is maintainable against another registered TM owner.

Delhi High Court declares “Brahmos” as a Well-known Mark and restrains FIIT JEE from using it

On February 24, 2014, in a 32-page decision delivered in a suit for trademark infringement instituted by Brahmos Aerospace Private Limited against FIIT JEE limited, the Delhi High Court declared the plaintiff’s mark “BRAHMOS” as well-known and granted an interim injunction restraining the defendant from using the trademark BRAHMOS in relation to educational activities or as part of its domain name and in any manner which could cause confusion and deception.

As most of our readers must be aware, the plaintiff is a joint venture between the Defence Research and Development Organization (DRDO) of India and the Federal State Unitary Enterprise of Russia, with DRDO being the majority shareholder. The plaintiff is popularly known as the manufacturer of the world’s fastest supersonic cruise missile, Brahmos.

The first defendant is a popular private institution which coaches students who aspire to successfully crack the Joint Entrance Examination (JEE) conducted by the prestigious Indian Institutes of Technology (IITs). The second defendant is USA University Quest (UUQ) which partners with the FIIT JEE to help Indian students secure admissions to US universities.

It was the plaintiff’s case that its well-known trademark BRAHMOS was being used by the defendants in connection with their aptitude tests, which had led to actual confusion. Further, according to the plaintiff, the mark BRAHMOS was being used by the plaintiff in connection with its training and education programmes as well. Consequently, according to it, the likelihood of confusion was higher. To this end, the plaintiff cited instances wherein it had received queries from students asking if taking the Brahmos aptitude test of the defendants would improve their chances of securing employment with the plaintiff.

The defendants contended that:

A.       the mark BRAHMOS was not being used as a trademark, but was used only to indicate a connection in the course of trade. Further, FIIT JEE continued to be used by the first defendant as its flagship trademark, and BRAHMOS was being used only in connection with one of the several aptitude tests conducted by it.

B.      the plaintiff and the defendants were in entirely different spheres of activity. Consequently, there was no possibility of confusion and deception and that the use was bonafide.

C.      BRAHMOS was not a distinctive mark since terms such as “Brahmo Samaj” have been in vogue for a long time.

D.      the Plaintiff was using Brahmand and not Brahmos, for its training programmes. Therefore, there could be no confusion/deception in the field of education/training.

The Court took the view that the trademark BRAHMOS was not a dictionary word, but a coined word, a portmanteau formed from the names of the rivers Brahmaputra and Moskva.

Citing the decisions in Bloomberg Finance LP vs. Prafull Saklecha & Ors and Rolex Sa vs. Alex Jewellery Pvt. Ltd. and Ors, the Court relied upon Section 29(4) to conclude that the mark BRAHMOS was well-known and that the defendants’ use of the mark was “without due cause”/valid justification. The Court rejected the defendants’ contention that their use of the mark was not in a trademark sense given that it was being used in the course of trade. Consequently, the defendants were restrained from the using the mark in any manner which could cause confusion/deception.

It is to be noted that sub-sections (1)-(4) of Section 29 do not require the mark to be used as the flagship mark for it to be infringing. Only Section 29(5) deals with use of the mark as a trade name, or part of the trade name, or as the name of his concern or a part thereof by the defendant in respect of identical goods or services. However, "use in the course of trade" being broader in scope, includes use of the mark as a tradename or as part of the tradename or business concern by the defendant.

Pepsodent v. Colgate: Comparative Advertising War

After fighting a bitter war on comparative advertising under the erstwhile Monopolies and Restrictive Trade Practice Act, 1969 between 1997 and 2003 which was settled, leading toothpaste brands Pepsodent (of Hindustan Unilever Limited) and Colgate (of Colgate-Palmolive) are at it again.

The last time around Pepsodent had claimed that its toothpaste was "102% better than the leading toothpaste" in germ-fighting capabilities. In its latest advertisement, Pepsodent has directly named Colgate claiming that its toothpaste Pepsodent Germicheck is 130% better than Colgate's product.

It remains to be seen if Colgate will treat this as commercial disparagement besides bringing it within the meaning of infringement under Section 29(8) of the Trademarks Act, 1999. 

After the Rin v. Tide campaign of HUL, this is yet another instance in recent times of HUL resorting to comparative advertising. Writing elsewhere on the Rin v. Tide campaign in February 2010, following is what I had stated on the position of the law on comparative advertising:

“In my last post, I had discussed in brief the recent advertisement for Hindustan Unilever’s detergent brand "Rin", in which a rival brand "Tide" figures prominently. Quite a few comments to that post referred to the Horlicks v. Complan judgment of the Delhi High Court. However, a more recent decision of the Delhi HC on the issue of comparative advertisement is available, namely the one delivered in the case of Dabur India v. Colortek Meghalaya (February 2010).

In this judgment, it was the case of the Appellant Dabur that its mosquito repellent brand “Odomos” was disparaged by an ad of the respondent Colortek which owned the rival brand “Good Knight”. The Division Bench of the Delhi High Court affirmed the Single Judge’s decision that there was no disparagement of Odomos in the impugned ad. Consequently, no injunction was granted against the respondent Colortek. To support its decision, the Court referred to a host of Supreme Court decisions on various aspects of the issue.

The Court first discussed the limits of “commercial speech”, as set out by the Supreme Court in Tata Press v. MTNL (1995); according to the Supreme Court, “commercial speech” is guaranteed as part of freedom of speech under Article 19(1)(a) of the Constitution. Although, the Supreme Court in that case did not define “commercial speech”, it was stated that advertisement would fall under one of the species of such speech.

It was observed that dissemination of information about a particular product was necessary since it enabled the public to evaluate its options. The Supreme Court in its turn referred to the US decision of Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council (1975) and said that it is almost settled law in the United States that though "commercial speech" is entitled to the First Amendment protection, the Government was completely free to recall “commercial speech" which is false, misleading, unfair, deceptive and which proposes illegal transactions.

In another case of Colgate v. Hindustan Lever (1999), the Court explained that although a seller has the latitude to represent his product in such a manner that he attracts more customers than he normally would have, such latitude would translate into description and “reasonable assertion” of the product, but not to misrepresentation. In other words, factual representations are perfectly legitimate.

The Apex Court went a step further to state that “commendatory expressions” are not dealt with as serious representations of fact.

When the SC says that “commendatory expressions” are not dealt with as serious representations of fact, it does not mean that such representations are untrue or misleading. On the contrary, what it means is that such representations cannot be taken seriously and that there is no obligation on the part of the seller to the customer with regard to the true quality, rather standing of goods merely because the seller has resorted to puffing.

To support this, the Apex Court relied on a rule of civil law, "simplex commendatio non obligat" , which means simple commendation can only be regarded as a mere invitation to a customer without any obligation as regards the quality of goods. In other words, every seller is entitled to call his goods “world’s best”, “Indian’s no.1”, “world-class quality” and so on.

However, the Supreme Court also cautioned that these principles are by no means conclusive since, by and large, cases of puffing are borderline cases, and that there exists a very thin line which separates puffing from falsehood.

In a nutshell, although commercial speech is available under the Indian Constitution to every seller, if the advertisement is false, unfair, misleading or deceptive, the seller is not entitled to seek protection behind “commercial speech”.

Having referred to the SC decisions, the Delhi High Court then referred to its earlier Pepsi v.Cola decision (2003), where it held that although a seller is entitled to glorify his product, in the process, he is not to denigrate or disparage a rival’s product.

The Court further cited Halsbury which states thus:

"It is actionable when the words go beyond a mere puff and constitute untrue statements of fact about a rival’s product."

The Court also cited its decision in a case of comparative advertising involving Dabur and Wipro, where it held as follows:

“It is one thing to say that the defendant's product is better than that of the plaintiff and it is another thing to say that the plaintiff's product is inferior to that of the defendant."

It is probably a corollarial conclusion wherein the seller is entitled to say he is better than the rest of his competition, and therefore, he is entitled to claim that he is better than a particular competitor as well.

Summing up these decisions, the Court laid down the following three-step test:

1. What is the intention behind the advertisement as deciphered from the storyline and the message ostensibly sought to be conveyed?

2. Is the manner of advertisement or comparison by and large truthful or does it falsely denigrate or disparage the rival’s product?

3. Finally, does the ad have the overall effect of promoting the seller’s product or showing the rival in poor light?

This particular decision of the Delhi High Court is very comprehensive because not only does it sum up the position of the law citing various sources, but also is progressive in its approach for it recognises the impact of the electronic medium. This is reflected in its observation that since the reach and influence of the medium is phenomenal, the advertiser has to per force walk a tightrope. He has to constantly ask himself if the ad runs the risk of having the effect, intended or unintended, of disparaging the rival’s product.

The Court did not stop here, but went further and said:

“we feel that notwithstanding the impact that a telecast may have, since commercial speech is protected and an advertisement is commercial speech, an advertiser must be given enough room to play around in (the grey areas) in the advertisement brought out by it. A plaintiff (such as the Appellant before us) ought not to be hyper-sensitive as brought out in Dabur India. This is because market forces, the economic climate, the nature and quality of a product would ultimately be the deciding factors for a consumer to make a choice. It is possible that aggressive or catchy advertising may cause a partial or temporary damage to the plaintiff, but ultimately the consumer would be the final adjudicator to decide what is best for him or her.”

This observation in a way balances interests of both the seller and the rival, and is of critical importance since it acknowledges market realities, which is a pleasant change for Indian Courts (One hopes that someday a similar sentiment will be adopted in “hardcore” IP matters).

More importantly, the underpinning of this observation is again the good of the consuming public.

Applying the above-stated principles to the facts of the Rin v. Tide controversy, one must assess and analyse the Rin advertisement objectively sans the mischievous light in which the media tends to portray such ads and the vicarious pleasure we derive as humans in seeing two competitors duke it out in full public glare.

One is unable to take a strong call here on this specific case because the question of “overall effect” of the ad is very subjective and one can never be sure of side-stepping the allegation, rather the minefield of arbitrariness in such cases.

On one hand, we could say that since Rin’s contentions are backed by tests of an independent lab, they are factual. A "balanced" view could say that the ad does not really disparage Tide, it merely has an element of mischief in it. I might even say that all mischief is not necessarily disparagement and I think considering the times we live in, what with reality shows and all, ads can no more be plain Jane representations of facts. Therefore, it could be argued that they are entitled to go beyond that, provided they are within the limits of decorum.

And on the other hand, the reference to Tide and its tagline may be seen as mockery. If, despite Rin's claims being grounded in facts, the primary focus of the advertisement is not facts such as the independent lab's tests, there is a chance that Rin (HUL) could be held liable for disparagement.

In other words, in judging the "overall effect" of the ad, the Court may have to look into the question of what caught or catches the eye or attention of the audience. Is the ticker which mentions independent lab tests prominent enough for the average viewer of imperfect recollection to see and remember? If the answer is a no, it probably establishes disparagement.

Further, Tide could seek to distinguish the Delhi HC's Dabur judgment on factual grounds saying that the reference to the rival brand in that case was not as obvious and as direct as it is in the Rin ad. Consequently, it could be argued that the accommodative view taken by the Court in the Dabur case cannot be the standard applicable for this case.

I realise, that in cases like these, counterpoints are bound to exist and thrive; but the one thing that comes out from such instances is that, as audiences, we still look for our own modern-day versions of the Colosseum and gladiators.”

“Innocent Infringement” under the Trademarks Act, 1999

Last week I was asked if “innocent infringement” is a defense that is recognized under our Trademarks Act, 1999. This was a question I had never had the occasion to deal with, so I looked up the Act. Section 135(3) of the Act does provide for innocent infringement as a limited defense to the extent that it stipulates that a Court shall not grant relief by way of damages (other than nominal damages) or an account of profits in the following situations:

1.       Where the mark asserted is a certification trademark or collective mark;

2.       Where the defendant in a suit is able to prove his ignorance of the trademark registration or the Plaintiff’s status as a registered user;

3.       Where the defendant ceased to use the mark without any delay as soon as he was apprised of the registration.

Defenses 2 and 3 are available even in passing off actions, which the provision expressly provides for. Clearly the provision does not (and logically cannot) preclude grant of injunctive relief. However, while punitive damages cannot be awarded to the plaintiff owing to this provision, what does “nominal damages” translate to? Since the term used is “nominal damages”, it is not in the nature of costs.

Are there any tests laid down to determine what would amount to a slap on the wrist, instead of a rap on the knuckles? I welcome the opinion of our readers on the issue.

Full Bench Opinion of the Delhi High Court on Designs and Passing Off

On May 15, 2013, the Full Bench of the Delhi High Court delivered its 47-page majority opinion and 94-page minority opinion on three questions referred to it concerning the Designs Act, 2000 and passing off. Following were the questions referred to the full Bench:

(1) Whether the suit for infringement of registered design is maintainable against the another registered proprietor of the design under the Designs Act, 2000;

(2) Whether there can be availability of remedy of passing off in the absence of express saving or preservation of common law of Designs Act, 2000 and more so when the rights and remedies under the Act are statutory in nature; and

(3) Whether the conception of passing off as available under the trademarks can be joined with the action under the Designs Act when the same are mutually inconsistent with that of remedy under the Designs Act.

Following are the conclusions of the majority opinion delivered by Justice Rajiv Shakdher in Paras 34 and 35 

34. On various issues raised we may crystallize our opinion as follows:

(i) A plaintiff could institute a suit for infringement of a design against a defendant, who was also a holder of a registered design. The expression "any person" found in Section 22 of the Designs Act would not exclude a subsequent registrant as, according to us, no such words of limitation are found in said Section.

(ii) The plaintiff would be entitled to institute an action of passing off in respect of a design used by him as a trade mark provided the action contains the necessary ingredients to maintain such a proceeding. The argument that such a suit could be instituted only after the expiry of the statutory period provided under Section 11 of the Designs Act, does not find favour with us. This is for the reason that in a given fact situation the plaintiff may have commenced the use of the design as a trademark after its registration. While Section 2(d) of the Designs Act excludes from the definition of a design, any trademark which is defined as such in clause (v) of sub-Section (1) of Section 2 of the 1958 Act or property mark, as defined in Section 479 of the IPC, or any artistic work as defined in clause (c) of Section 2 of the Copyright Act -the use of the design as a trademark post its registration, is not stipulated as a ground for cancellation under Section 19 of the Designs Act.

(ii) (a) In this context we must note the argument of Ms Singh, learned amicus, that passing off action may perhaps be maintainable provided the mark has attained secondary meaning. In our opinion, the issue before us is limited to whether a remedy by way of passing off action would be available qua a registered design used as a trademark by the plaintiff - we are not inclined to comment on the quality of evidence which may be required, if at all, to be produced by the plaintiff to prove whether the mark has acquired the necessary secondary distinctive meaning, for him to secure success, in the action instituted in that behalf.

(iii) We are also of the view that a composite suit for infringement of a registered design and a passing off action would not lie. The Court could, however, try the suits together, if the two suits are filed in close proximity and/or it is of the view that there are aspects which are common to the two suits. The discretion of the court in this matter would necessarily be paramount.

36. Accordingly, our answers to the three issues are as follows:

ISSUE No.I: A holder of a registered design could institute a suit against a defendant who is also in possession of a registered design

ISSUE No.II: A holder of a registered design can institute an action for passing off.

ISSUE No.III: The two actions cannot be combined in one suit

Following are the conclusions of Justice Manmohan Singh in Para 134 of his minority opinion:

a) A suit by the registered proprietor of Design for infringement of the registered design is not maintainable against another registered proprietor under the Designs Act, 2000 in so far as the registration covers the same features of the shape and configuration of the same article under the Design.

b) The remedy of passing off in so far as it relates to claim of protection for shape of articles is not available for the purposes of enforcement of rights and remedies under the Design Act. The said remedy is clearly absent under the Designs Act considering the avowed objective of the Act of 2000 which is to provide limited protection with no unnecessary extension.

c) The remedy of passing off in so far as it relates to claim of protection for shape of articles cannot be joined with the suit for infringement of the registered Design. The said remedy of passing off is available in alternative to the statutory protection conferred by the Design Right. For the purposes of the same, the suitor has to elect between the two inconsistent rights and remedies having distinct objects and policies.

Following were the additional opinions expressed by Justice Singh:

a) Notwithstanding the above said conclusion in (b) and (c), the remedy of passing off would continue to be available along with the infringement of registered designs and can be joined with the same in order to prevent consumer confusion which may be caused by the use of trade mark, get up, trade dress or in any other manner excepting the shape of the goods which is or was forming the subject matter of the registration of the Design.

b) The remedy of the passing off in so far as the shape of the article is concerned shall also be available even during currency of the design monopoly or even after the expiry of same to the extent that the claim of the feature of the shape is not covered within the novelty claim under the Design monopoly rights and the said claim of the protection qualifies all the necessary ingredients of the Trade Mark.

c) A remedy of passing off in so far as the shape of the article is concerned shall not be available even after the expiry of the Design to the extent the said feature of the shape of the article is covered within the novelty claim as made under the Design Right as after expiration of the Design, the novel shape claimed under the Design Act goes in public domain.

We will shortly undertake an analysis of the opinion. I thank Ms.Sneha Jain for sharing the decision with me.