_________________________________________________________________________________________________ FAO(OS)484 & 497/2008 Page 1 of 37 * IN THE HIGH COURT OF DELHI AT NEW DELHI + FAO(OS) No.484/2008 & CM Nos.17352/08, 3429/09 RHIZOME DISTILLERIES P. LTD & ORS. ....Appellant through Mr. Rajiv Nayyar, Sr. Adv. with Ms. Tusha Malhotra, Adv. versus PERNOD RICARD S.A. FRANCE & ORS. ...Respondent through Mr. Sudhir Chandra, Sr. Adv. with Mr. Hemant Singh, Ms. Mamta R. Jha & Mr. Manish K. Mishra, Advs. A N D +FAO(OS) 497/2008 & CM 17697/2009 DURGA LIQUORS INDIA(P) LTD .…Appellant through Mrs Srikala G.Kumar, Adv. versus PERNOD RICARD S.A.FRANCE AND OTHERS ….Respondent through Mr. Sudhir Chandra, Sr. Adv. with Mr Hemant Singh and Ms Mamta R. Jha Advs. % Date of Hearing : October 14, 2009 Date of Decision : October 23, 2009 CORAM: * HON'BLE MR. JUSTICE VIKRAMAJIT SEN HON'BLE MR. JUSTICE V.K. JAIN _________________________________________________________________________________________________ FAO(OS)484 & 497/2008 Page 2 of 37 1. Whether reporters of local papers may be allowed to see the Judgment? Yes 2. To be referred to the Reporter or not? Yes 3. Whether the Judgment should be reported in the Digest? Yes VIKRAMAJIT SEN, J. 1. On October 14, 2009, Learned Counsel for the Appellant in FAO(OS) 497/2008 had concluded arguments by making a statement to the effect that she has instructions to adopt the arguments addressed by Mr Rajiv Nayyar, Learned Senior Counsel appearing for the Appellant in FAO(OS) 484/2008. This Appeal has been filed by the Defendants who the learned Single Judge had restrained from manufacturing, selling, offering for sale, advertising, directly or indirectly dealing in whisky or any other alcoholic beverages under the trademark Imperial Gold or the impugned label/trade dress pertaining thereto or any other trademark/label/trade dress as may be deceptively similar to the trademark of the Plaintiff/Respondent viz. IMPERIAL BLUE, IMPERIAL RED or ROYAL STAG. 2. The competing or offending products are whiskies belonging to the rival parties, which are bottled in the following styles, first front and second back:- _________________________________________________________________________________________________ FAO(OS)484 & 497/2008 Page 3 of 37 _________________________________________________________________________________________________ FAO(OS)484 & 497/2008 Page 4 of 37 3. The Plaint describes the action as a suit for permanent injunction restraining infringement of registered trademark, copyright, passing off, dilution, unfair competition, rendition of accounts of profits , deliver-up etc. The Plaintiffs are indeed a part of an international group selling sundry alcoholic beverages across the Globe. Some of their brands are not only well-known but are leaders in the market, such as ROYAL SALUTE, CHIVAS REGAL, BEEFEATER, BALLANTINES, KALHUA, BLENDERS PRIDE etc. It is averred that one of the most popular whiskies sold by the Plaintiffs in India since 1997 is IMPERIAL BLUE which is a registered trademark and has “come to be associated with, and become a quintessential part of the plaintiff no.1 successful and firmly established business of manufacture and sale of whisky.” IMPERIAL BLUE appears to have been accorded registration in the Benelux and Nepal. So far as India is concerned, the following chart is fully informative:- REGISTRATION IN INDIA Trade Mark Regn. No. Date Class Goods IMPERIAL BLUE 751781 12/02/1997 33 Spirits and liquers IMPERIAL BLUE 1318300 01/11/2004 32 Drinking water included in class 32 IMPERIAL BLUE 1282836 07/05/2004 9 Compact discs, audio and video cassettes, _________________________________________________________________________________________________ FAO(OS)484 & 497/2008 Page 5 of 37 photograph records etc. IMPERIAL RED 1377908 17/08/2005 32 Beers, minerals and aerated waters and other non alcoholic drinks, fruit drinks and fruit juices, syrups and other preparations for making beverages included in class 32 4. The Plaint further sets out the turnover of IMPERIAL BLUE for the period 1998 to 2007 which increased manifold from Rupees 12.80 crores to Rupees 317.88 crores. As is to be expected, promotional and marketing expenses incurred by the Plaintiffs also run into several crores of Rupees. The Plaint then unfolds that “international whisky manufactured and marketed by the plaintiff is under the trademark ROYAL STAG which is very popular in the lower price segment and best known for smooth taste..... the trademark ROYAL STAG is coined mark having no significance or meaning in common parlance and no correlation to the character or quality of whisky marketed thereunder”. The Plaintiffs have obtained registration for the trademark ROYAL STAG internationally as well as in India. In this regard, it is pleaded in the Plaint that ROYAL STAG label constitutes an original artistic work within the meaning of _________________________________________________________________________________________________ FAO(OS)484 & 497/2008 Page 6 of 37 Section 2(c) of the Copyright Act, 1957. Since the Plaintiffs have an extensive trade use since 1995 ROYAL STAG has become distinctive of the whisky marketed by and originating from the Plaintiffs and is also available in the United Arab Emirates, Benelux, Bulgaria, Romania, Oman, Hong Kong, Vietnam etc. In paragraph 23 of the Plaint, it has been asserted that it had “come to the knowledge of the plaintiffs in 2nd week of September, 2008 that the Defendants are manufacturing, bottling and/or selling whisky bearing the trademark Imperial Gold which is an imitation of the trademark IMPERIAL BLUE and IMPERIAL RED and using trade dress which is an imitation of ROYAL STAG trade dress in respect of colour combination, get up, shape and design of bottle and ROYAL STAG label”. It is this activity of the Defendants that the Plaintiffs are aggrieved with. 5. It is next disclosed in the Plaint that the Defendants Imperial Gold is an imitation of and is structurally, as well as phonetically, deceptively similar to the Plaintiffs reputed trademark IMPERIAL BLUE and the registered trademark IMPERIAL RED. Secondly, the Defendants have imitated the ROYAL STAG whisky label, both so far as front and the rear panels are concerned. _________________________________________________________________________________________________ FAO(OS)484 & 497/2008 Page 7 of 37 6. The contention of the Defendants/Appellants is that there has been a deliberate suppression and concealment of facts in the Plaint, especially in the context of the contents of paragraph 31 thereof. Therein it has been pleaded that the cause of action for institution of the present suit arose in the 2nd week of September 2008 when the plaintiffs‟ field force discovered sale of Imperial Gold whisky in Hyderabad and Delhi markets. Emphasis has been laid on the admission in that paragraph that the plaintiffs had come across the trademark registration applications when they were advertised in the Trademark Journal by the Registrar. Although no date is given in this paragraph, a perusal of paragraph 30 makes it evident that that incident pertains to February, 2008. It is pleaded that at that time no goods of the Defendants were found in the market. 7. Mr. Rajiv Nayyar, learned Senior Counsel for the Appellant/Defendant has contended that the Defendant had applied under Class-32 in October, 2003 and in class-33 in January, 2006 and registration was received in April, 2005 and April, 2006 respectively. An application for Rectification came to be filed by the Plaintiff as late as in 2008 and the suit was filed on 3.11.2008. Our attention has also been drawn to the display of a Notice dated 28.10.2006 by the Excise Department pertaining to the Defendant‟s Imperial Gold. Letter dated _________________________________________________________________________________________________ FAO(OS)484 & 497/2008 Page 8 of 37 7.3.2006 had been addressed to the Commissioner of Prohibition & Excise, Hyderabad, by Liquors India Limited which appears to be the bottlers of the Plaintiff since 2001. The letter, inter alia, states that it had been noticed “that M/s. Durga Liquors India (Private) Limited, with Rhizome Distillery tie up is coming up with a similar label Imperial Gold whisky. If the label is approved we will be in trouble for our brand in the market which is similar to our label. In view of the above we earnestly request you to not to approve the label Imperial Gold Whisky of M/s. Durga Liquors India (Private) Limited, with Rhizome Distillery tie up which is imitating our label and oblige”. The letter dated 14.3.2006 of Liquors India Limited addressed to Commissioner of Prohibition & Excise, Hyderabad is indeed telling so far as the Plaintiffs are concerned since it states as follows:- Sir, Sub : Withdrawal of objection filed for Label Registration - Regarding With reference to the above we have filed an objection letter for the approval of the Label submitted by the M/s.Durga Liquors India(P) Ltd., (i.e.) Imperial Gold Whisky. We submit that they have submitted us the papers in which they have obtained the registration Trade Mark much earlier than us and other relevant papers in which we have convinced. _________________________________________________________________________________________________ FAO(OS)484 & 497/2008 Page 9 of 37 In this regard we submit that we withdraw the objection filed and oblige. It was predicated on these communications that learned Senior Counsel for the Appellants has imputed full knowledge to the Respondents of the Appellants‟ brand, ROYAL Imperial Gold as early as May, 2006. Mr. Sudhir Chandra, learned Senior Counsel for the Respondents/Plaintiffs, has sought to explain away these communications on the ground that Liquors India Ltd. is only their bottler in that region and nothing else. Even if that is so, it is difficult to believe that Liquors India Ltd. would not have informed the Respondents of the subject matter of their Communications since the agency was directly related to the liquor business. Significantly, a credible response to the factum of the grant of registration to the Appellant to the trademark in Class-32 in April, 2005 relating back to October, 2003 is conspicuous by its absence. 8. The second plank of challenge to the case presented by the Plaintiffs is that they were fully aware of the Defendants‟ action towards any registration of their trademark. In paragraph 31 of the Plaint, it has been averred that the Plaintiffs came across the trademark registration application filed by Defendant No.1 for registration of trademarks RHIZOME IMPERIAL WHITE, RHIZOME IMPERIAL RED and RHIZOME IMPERIAL _________________________________________________________________________________________________ FAO(OS)484 & 497/2008 Page 10 of 37 GREEN towards end of October, 2007 consequent upon their publication by the Registrar of Trademarks. The Plaintiffs accordingly opposed all three applications and the outcome of their opposition is awaited. It is next pleaded that on 16.2.2008 the Plaintiffs came across the application for registration of RHIZOME Imperial Gold on their publication in the Trademark Journal. As in the case of other brands, the Plaintiffs‟ case is that they made enquiries as to whether whisky under the said trademark RHIZOME Imperial Gold was being sold, as a consequence of which they gained knowledge of sales in Delhi and in Hyderabad. It is argued that the Plaintiffs have deliberately suppressed the Appellants‟ substantial sales of liquor since 2006. The withdrawal of objections by Liquors India Limited on 14.3.2006 has been emphasised in this regard. The contention is that since the Plaintiffs had allowed the Appellants to build a reputation and substantial sales for its brand, an injunction ought not to have been granted. Our attention has been drawn to the grant of a registration from the Registrar of Trademarks for ROYAL Imperial Gold on 27.4.2005 in Class-33 with effect from 26.12.2002. It also appears that the Deputy Registrar of Copyright had certified the Appellants‟ label for RHIZOME Imperial Gold. _________________________________________________________________________________________________ FAO(OS)484 & 497/2008 Page 11 of 37 9. The third ground of attack is that no exclusivity can be claimed for the use of the word IMPERIAL which is not just to be found in common parlance, but is also an obvious choice for whisky etc. because of the laudatory effect it has on the product. 10. Learned counsel for the Appellants has also contended that the impugned Order tramples upon the statutory power of the Intellectual Property Appellate Board (IPAB), to which an Appeal against a registration under the Trade Marks Act, 1999 („TM Act‟ for short) has been provided for in Section 124. Section 124 of the TM Act has also been relied upon to canvass that decision viz.-a-viz. objections pertaining to the invalidity of such a registration is the preserve of the IPAB. The first sub- section of Section 124 directs that where there is a plea in a plaint for invalidating a trademark, in the event that rectification proceedings are pending, the suit would be stayed and if no such proceedings are pending and the Court is satisfied that the plea regarding the invalidity of the registration of the subject trademark is prima facie tenable, the Court would raise an issue regarding the same and thereupon adjourn the case for a period of three months from the framing of the issue in order to enable the concerned party to apply to the IPAB for rectification of the registration. The Appellants have buttressed arguments by referring to Section 28 of the TM Act, the first _________________________________________________________________________________________________ FAO(OS)484 & 497/2008 Page 12 of 37 sub-section of which reposes the right to obtain relief in respect of infringement of a registered trademark to the person in whose favour the registration has been granted. Where both parties have received registration of their respective trademarks, the third sub-section ordains that neither of them would be able to setup a case against the other based only on the registration. It seems to us that it was for these reasons that the Plaintiffs had given up its challenge predicated on infringement, and had rested its case for the grant of an injunction on the common-law relief of passing off. This is evident from paragraph 12 of the impugned Judgment where it has been mentioned that though the suit is for infringement of trademark as well as for passing off, for the purpose of the interlocutory application, the plaintiffs are pressing for injunction on account of passing off alone and the relief of injunction may be granted in favour of the plaintiffs and against the defendants on account of passing off. It is, therefore, not permissible to permit Mr. Sudhir Chandra, learned Senior Counsel for the Respondents, to press the argument that the use of the word IMPERIAL by the Appellants amounts to infringement as well as passing off. In these circumstances, it is significant that the legal opinion, as it presently stands, is that while the use of IMPERIAL may not be important when _________________________________________________________________________________________________ FAO(OS)484 & 497/2008 Page 13 of 37 considering the relief of infringement, since both adversaries have received registration for this word, it assumes grave proportions for the purposes of the relief of passing off. 10. The learned Single Judge has passed a detailed Judgment after perusing a plethora of precedents cited at the Bar, returning a finding that the Defendants are clearly guilty of passing off. The conclusion is based on several considerations, including that “it is undisputed that the plaintiffs adopted the trademark IMPERIAL BLUE in the year 1997 and since then the said trademark has become distinctive of the plaintiffs‟ product; the plaintiffs have a huge turnover in the sum of Rupees 317 crores in the year 2007; the plaintiffs have registered trademark for IMPERIAL BLUE and IMPERIAL RED; that the defendants have either used discarded bottles of the plaintiffs with Seagram embossed on the bottom of the bottle or have wilfully, fraudulently and dishonestly manufactured the same”. It has been noted that, on the contrary, the Defendants have emerged in the market in April, 2006, that is, a decade after the launch of the Plaintiffs‟ product. As both the parties are manufacturing and selling whisky in the same area and targeting the same section of consumers, the learned Single Judge was not impressed with the aspect of delay and laches for the reason that the market research disclosed that the Defendants‟ product _________________________________________________________________________________________________ FAO(OS)484 & 497/2008 Page 14 of 37 was not available even in the year 2000 and that it was only in September, 2008 that the Plaintiffs have come across the Defendants‟ trademark Imperial Gold. The learned Single Judge has commented that there is not an iota of evidence on record to prima facie indicate the launch of the Defendants‟ product in the year 2006. Reliance has been derived from Midas Hygiene Industries(P) Ltd.-vs- Sudhir Bhatia, (2004) 3 SCC 90, wherein it has been opined that “in cases of infringement either of trademark or of copyright, normally an injunction must follow. Mere delay in bringing action is not sufficient to defeat grant of injunction in such cases. The grant of injunction also becomes necessary if it prima facie appears that the adoption of the mark was itself dishonest”. Most significantly, the learned Single Judge has held that the argument on behalf of the Defendants/Appellants is untenable that the word “IMPERIAL” is a generic term and hence publici juris. In its opinion, the word IMPERIAL would be “generic only if it is used by a member of the royal family, but certainly it will be arbitrary when applied to a whisky and that too, a whisky other than scotch, and furthermore a whisky in the lower price segment”. The learned Single Judge has found the employment of the prefix RHIZOME irrelevant, keeping in view the overall trade dress of the rival bottles. The learned Single Judge has also _________________________________________________________________________________________________ FAO(OS)484 & 497/2008 Page 15 of 37 rejected the argument that Section 124(5) precludes the Court from granting an injunction, but in view of the specific noting that the claim for infringement had been given up, this debate, in our opinion, has become superfluous. The learned Single Judge voiced the opinion that sub-standard whisky may prove to be more injurious than a sub-standard medicinal or pharmaceutical product, and may lead to lethal consequences, even a wholesale disastrous one. With respect to the learned Single Judge, this is not the case presented by the Plaintiffs and may not be factually correct since neither product is injurious to health due to their respective quality, without prejudice to the general debate relating to the pernicious nature of alcohol in general. These observations are indeed a window to the reasons which pervaded the mind of the learned Single Judge to grant the injunction. 11. We will first deal with the contentions centring upon the trade dress of the Plaintiffs ROYAL STAG and the Defendants‟ RHIZOME IMPERIAL BLUE. It seems to us that the similarities of both labels are such that a customer of modicum memory and mental capacity would become confused in distinguishing between them. Learned counsel for the Appellants had immediately conceded the point, and had offered to change the label as well as the shape of the bottle. Bottles can be of myriad _________________________________________________________________________________________________ FAO(OS)484 & 497/2008 Page 16 of 37 configuration; they can be round, square, rectangular, flat or cylindrical bodied, or slim or tall. Bottles can have a long neck or otherwise, and can be of clear glass or burgundy or green or any other colour. Learned counsel for the Appellants has stated that the Appellants are willing to colour their bottles amber and make them in a short neck shape. Indeed, photographs of the bottles in which the Appellants are presently marketing its whisky, have been placed on record and it appears that one of them is amber with a red cap. So far as the label is concerned, learned Senior Counsel has filed a variety of samples, one of which is in gold and amber with RHIZOME Imperial Gold written in the same font and size on a Shield in contradistinction to the impugned label in which RHIZOME was in a different colour and smaller size than Imperial Gold which was also written in a swirl or ribbon style which was conceivably confusing with the ROYAL STAG label. Since there is now no similarity between the ROYAL STAG and RHIZOME Imperial Gold labelling, we are satisfied that the Defendants can no longer be accused of passing off so far as these two marks/labels are concerned. 12. The question still remains whether passing off is possible predicated on the Plaintiffs‟ other product, viz. IMPERIAL BLUE, and the fact that the Appellants/Defendants product is _________________________________________________________________________________________________ FAO(OS)484 & 497/2008 Page 17 of 37 RHIZOME Imperial Gold. Although it has not been argued by Mr. Sudhir Chandra, it is worthy to note that the registration accorded to the Appellants is Rhizome Imperial Gold (not in block letters), whereas the Plaintiffs mark is in block letters IMPERIAL BLUE. We should not be understood to hold that such a difference would be sufficient to distinguish one product from another, but when several such features exist, even a consumer of average intellect may be able to make segregation. In this light, the Appellants are directed to adhere to the start case style in contradistinction to block/all uppercase/all capital style. 13. We are reminded of the decision of the Court of Appeal in McCain International Limited –vs- Country Fair Foods Limited, 1982 PTC 156. The learned Single Judge had granted interlocutory relief in a passing off action. The Plaintiff avowedly was the first to launch „chipped potatoes‟ in the market which rather than being fried could be baked in the oven or cooked in a grill. The competing brands were „McCain Oven Chips‟ and „Country Fair Oven Chips‟. The Court of Appeal was of the opinion that the case was similar to the term „Flaked Oatmeal” in Parsons –vs- Gillespie, 1898 AC 239 which was seen as descriptive. Reference was also made to the use of the word “slip-on” which was also found to be descriptive; or Hedley‟s _________________________________________________________________________________________________ FAO(OS)484 & 497/2008 Page 18 of 37 Malted Milk as against Horlicks Malted Milk. We think it noteworthy that it was reiterated that it was essential for a trader to add a prefix or suffix, preferably showing origins in order to get any protection in respect of a word which is descriptive. Reference was also made to Office Cleaning Service Ltd. –vs- Westminster Window and General Cleaners Ltd., (1946) 63 RPC 39 where the rivals were using “Office Cleaning Services” and “Office Cleaning Association”. The opinion was that where a fancy word has been chosen as a part of the name and if another trader adopts that fancy name that may be seen as inviting confusion. Keeping all these precedents in view, the Court of Appeal concluded that the use of the word „Oven Chips‟ was descriptive and the prefix of „McCain‟, „Country Fair‟ or „Birds Eye‟ were sufficient to distinguish the products. We are not faced with the employment of descriptive words but the underlying rationale is apposite, namely, that if words of common parlance are used, exclusivity cannot be claimed and secondly the use of a prefix would invariably result in distinguishing the rival products. 14. S.M. Dychem Ltd. –vs- Cadbury (India) Ltd., (2000) 5 SCC 573 is pressed into support by learned counsel for the Defendants. In that case the Plaintiffs used the word „Piknik‟ for some time and when it discovered that the Defendants was _________________________________________________________________________________________________ FAO(OS)484 & 497/2008 Page 19 of 37 marketing „Cadbury Picnic‟, an injunction was prayed for and granted. The Division Bench, however, reversed the Order and this has received the imprimatur of the Supreme Court by a detailed judgment. The presence of „Cadbury‟ was, in their Lordships‟ opinion, sufficient reason to decline injunction. The learned Single Judge has reproduced 54th paragraph of S.M. Dychem Ltd., but with due respect, had not applied the Judgment to the extent that it compelled. The said paragraph reads as follows and is extracted for obvious reasons:- 54. As to scope of a buyer being deceived, in a passing off action, the following principles have to be borne in mind. Lord Romer, LJ has said in Payton & Co. v. Snelling Lampard & Co. (1900) 17 RPC 48 that it is a misconception to refer to the confusion that can be created upon an ignorant customer. The kind of customer that the Courts ought to think of in these cases is the customer who knows the distinguishing characteristics of the plaintiff's goods, those characteristics which distinguish his goods from other goods in the market so far as relates to general characteristics. If he does not know that, he is not a customer whose views can properly be regarded by the Court. [See the cases quoted in N.S. Thread & Co.