* THE HON’BLE SRI JUSTICE V.V.S. RAO AND THE HON’BLE SRI JUSTICE B.N.RAO NALLA WRIT PETITION No.1025 of 2009 % 05.03.2010 Between: M/s.Variety Dry Fruit Stores, rep.by Sri Hasmukh J Thakker … Appellant AND M/s.Variety Agencies, Rep.by Sri Ashok J Thakker …Respondent Counsel for petitioner: Sri N.Subba Reddy, Senior Counsel Counsel for Respondent: Sri D.Prakash Reddy, Senior counsel for Peri Prabhakar < Gist: > Head Note: ? CITATIONS: 1. (2002) 3 SCC 65 : AIR 2002 SC 275 2. (2006) 8 SCC 726 : AIR 2006 SC 3304 3. AIR 1922 Cal 160 4. AIR 1923 Mad 330 5. AIR 1928 Rangoon 144 6. AIR 1929 Lahore 169 7. 1996 (4) ALD 732 8. 1963 (2) An.W.R. 203 9. AIR 1970 SC 2062 10. AIR 1974 AP 274 11. 1990 (Supp) SCC 727 12. 1994 Supp (3) SCC 215 13. AIR 2001 SC 2083 14. (2004) 5 SCC 257 15. 2005 (4) ALD 263 16. 1987 (1) ALT 592 17. 1996 (TLS) 102135 18. 2001 (TLS) 125406 19. 2005 (TLS) 1319615 20. 2008 (TLS) 140279 21. AIR 1930 Bom 216 22. AIR 1932 Bom 516 23. (1979) AC 731 24. (1994) 2 SCC 448 25. AIR 1994 Delhi 239 26. AIR 1995 Delhi 300 27. 1994 PTC 83 28. 1999 PTC (19) 160 (DB) 29. 1998 PTC (18) (DB) 30. 1998 PTC (18) 698 31. (1957) 2 MLJ 573 THE HON’BLE SRI JUSTICE V.V.S.RAO AND THE HON’BLE SRI JUSTICE B.N.RAO NALLA CIVIL MISCELLANEOUS APPEAL No.1025 OF 2009 05.03.2010 BETWEEN: M/s.VARIETY Dry Fruit Stores, Rep.by Sri Hasmukh J Thakker … Appellant AND M/s.Variety Agencies, Rep. by Sri Ashok J Thakker … Respondent THE HON’BLE SRI JUSTICE V.V.S.RAO AND THE HON’BLE SRI JUSTICE B.N.RAO NALLA CIVIL MISCELLANEOUS APPEAL No.1025 OF 2009 JUDGMENT: (per Hon’ble Sri Justice V.V.S.Rao) The VARIETY dispute in this miscellaneous appeal is between two half blood brothers fighting with full blood for the name ‘VARIETY’ to use it as a prefix to the dry fruits business, they do separately. The appellant was unsuccessful in getting a prohibitory order against the respondent and hence this appeal. Background The factual background to the extent necessary may be noticed by referring to the parties as they appear before us and while referring to various documents as marked by the Court below. Jamnadas Devji started M/s.VARIETY Dry Fruit Stores in Secunderabad in 1955 in a rented premises No.2-4-1, M.G.Road, Secunderabad. He had four sons and four daughters. The respondent (defendant) is one of them. After the death of first wife, Jamnadas married Smt Jaya Ben. The appellant (plaintiff) is son through second wife. Under Ex.A.9, dated 03.02.1968, elder brother of respondent joined as a partnership business, which was reconstituted as ‘VARIETY Dry Fruit Stores’. About ten years thereafter under Ex.A.11, dated 16.04.1977, the respondent also joined as a partner in the business. A decade thereafter elder brother retired from the firm. The respondent and Jamnadas were reconstituted into a new firm. Under Ex.A.14, dated 02.04.1990, the firm was dissolved. The respondent relinquished his rights in the partnership including trade name, trade quota, trade licences and other benefits enjoyed by the firm as on 31.03.1990. Jamnadas continued the business. He executed Will, Ex.A.15, dated 28.05.1996 bequeathing 50% to his second wife and 50% in Goodwill and tenancy rights to appellant. The Will was modified by Codicil, Ex.A.16, dated 20.06.1996 giving Jaya Ben’s share of 50% in the business also to the appellant after her death. Jamnadas died on 17.12.1998. Under Ex.A.17, dated 13.01.1999, Jaya Ben relinquished her 50% share in ‘VARIETY Dry Fruit Stores’ in favour of the appellant. After relinquishing his right in the business under Ex.A.14, the respondent statedly in 1990 commenced and established the business in the name and style ‘M/s.Variety Agencies’ dealing in the dry fruits and canned foods. In March, 2008, appellant obtained registration of trade mark ‘VARIETY Dry Fruit Stores’ under Exs.A.1 and A.2 dated 08.03.2008 and 27.03.2008 respectively in respect of various food and non-food varieties included in clauses 29 and 30 under the Trade Marks Act, 1999. As noticed supra, the respondent carried business by name ‘Variety Agencies’, which according to the appellant being strikingly similar to the registered trade mark of the appellant led to immense confusion amongst the purchasing public. It is alleged that respondent obtained purchase orders from M/s.Bharati Airtel Limited and M/s.Kiran Kotak and Company, Mumbai taking advantage of confusion created and similarity in two trade names. The appellant administered warnings to the respondent, in vain. When the appellant initiated necessary action to approach the Court, the respondent requested for not doing so and entered into a Deed of Settlement on 19.10.2008 (not marked) accepting the ownership of the appellant to the trade mark ‘VARIETY Dry Fruit Stores’. He agreed to relinquish the right on the trade name/trade mark ‘VARIETY’. The respondent also agreed to withdraw the trade name ‘Variety Agencies’. Court Dispute In spite of executing settlement deed, the respondent carried on business. The appellant filed the suit for infringement and passing off and also sought ad interim injunction in I.A.No.963 of 2009 restraining the respondent from using the trade mark ‘Variety Agencies’ or in any other form or any other trade mark deceptively similar to that of the appellant’s trade mark ‘VARIETY Dry Fruit Stores’. The respondent opposed ad interim injunction. He denied the allegations of infringement and passing off. He denied any exclusive right to appellant to use the word ‘VARIETY’ to the exclusion of the respondent as the latter is engaged in the business ‘Variety Agencies’ for the last twenty years since 1990. His case was that the word ‘Variety’ being of generic nature cannot be assumed to be coined by the appellant. He also alleges that his business is different, in that besides being supplier of dry fruits and canned foods, he is a distributor cum stockists for Bicco, Sanghi Foods, Cremica Products, Wickfield Products, A.K.Products, Swastik Products, Mohan Mecans, MORTON, Golden Crown, ELLEMAK etc. He further alleged that there is no similarity of the trade mark ‘Variety’ as respondent is doing business for two decades that the document executed by and between the family members do not deprive him of establishing the business as is evidenced by the mention of ‘Variety Agencies’ in Ex.A.15, Will. He however did not dispute these agreements while disputing the legality of the settlement deed on 20.10.2008. He relied on Section 14 of Specific Relief Act, 1963, opposing grant of injunction. Court Order Whether the appellant is entitled for ad interim injunction restraining the respondent from using the trade mark ‘Variety Agencies’ as prayed for? This point was considered by the Court of I Additional Chief Judge, City Civil Courts, Secunderabad. The Court below considered Exs.A.1 to A.27 and Exs.B.1 to B.13 – marked with the consent of the parties – came to conclusion that the appellant failed in proving prima facie case and balance of convenience, the respondent had been carrying on the business ‘Variety Agencies’ since 1990, that the appellant did not approach the Court with clean hands and that the appellant never raised objection for the business carried on by the respondent and accordingly dismissed the interlocutory application. The reasoning for the said order is as follows. As per the admitted case, both the petitioner and respondent are doing the business in dry fruits and other food items by using the word “Variety” in their trade name. The step brother of the petitioner also using the word “Variety” and doing the cloth business. The other contention of the respondent is that the petitioner filed the present petition because earlier the respondent’s shop was located in a sub-lane towards Prenderghast Road and at that time the petitioner never had any objection any due to widening of the road, the general public are coming more and more to the shop of the respondent as a means of convenience and there is no confusion or deception or similarity that the respondent gained in the business. During the course of arguments, the learned counsel conceded that the profit of the respondent in the business is more than the petitioner and this must be the reason for the petitioner to approach the court by filing the suit for grant of perpetual injunction and for damages. Admittedly, the respondent has not started the business recently and it is within the knowledte of the petitioner that the respondent has been doing the business since 1990, and the petitioner has not approached the Court with clean hands. Thus, the petitioner failed to prove prima facie case and balance of convenience is in favour of the respondent. Therefore, the petitioner is not entitled for equitable relief of injunction. Arguments Counsel for the appellant Sri N.Subba Reddy relies on Exs.A.1 and A.2, the two certificates of registration of trade mark under Section 23(2) of the Act read with Rule 62(1) of the Trade Marks Rules, 2002 (the Rules, for brevity) and submits that two certificates are conclusive proof of ownership of trade mark of the appellant. When once such certificate is granted, the owner acquires a right in rem and an obligation is cast on all others not to use the trade mark. Nextly, relying on Exs.A.13 to A.17 he contends that the respondent retired from the firm ‘VARIETY Dry Fruit Stores’ by reason of Ex.A.14, Dissolution Deed, whereunder he agreed to relinquish all his rights in the business, trade name, trade quota and trade licences and therefore, he cannot carry on the business in the trade name ‘VARIETY’. According to the counsel, the appellant acquired exclusive right to trade name ‘VARIETY’ even under Exs.A.15 and A.16 – the Will and Codicil respectively, as well as Ex.A.17; Relinquishment Deed; executed by his mother Jaya Ben. It is his further contention that the Deed of Settlement between the appellant and respondent is admissible in evidence and the same disentitles the respondent from using the word ‘VARIETY’ as the appellant has acquired Certificate of Registration under the Act. Lastly, he submits that the respondent having relinquished right and interest in the trade name under Ex.A.14 and having agreed not to use the name ‘VARIETY’ under Deed of Settlement continues to violate the obligation causing legal injury to the appellant warranting grant of injunction against infringement and passing off. He placed reliance on Laxmikant V. Patel v Chetanbhai Shah[1] and Ramdev Food Products Private Limtied v Arvindbhai Rambhai Patel[2]. Senior Counsel Sri D.Prakash Reddy appearing for respondent made the following submissions. The word ‘VARIETY’ is descriptive name and is of generic nature. It is not coined by the appellant as a distinct word. When the respondent is doing business in the name of ‘Variety Agencies’ for the last two decades, he cannot be restrained from using the name ‘VARIETY’ especially when there is no registration of the word ‘VARIETY’ and the trade mark which is registered as ‘VARIETY Dry Fruit Stores’. According to senior learned counsel, Section 15 of the Act contemplates such registration if the proprietor of a trade mark claims to be entitled to the conclusive use of a part of the trade mark as well. He relies on Exs.A.13 to A.17 in support of the contention that even the parents and other family members recognised the factum of respondent doing the business as ‘Variety Agencies’. He nextly submits that as per Section 34 of the Trade Marks Act, the registration of the trade mark does not take away the vested rights of the respondents who is in the business for the last twenty years. He contends that the conduct of the parties, the vested rights of the respondent and absence of exclusive right to use the word ‘VARIETY’ disentitle grant of any injunction. Learned senior counsel has also placed before this Court a compilation of the following decisions. Shid Chandra v Goud Chandra[3], Rama Pillai v Pulasthiam Pillai[4], Maung Pu v Moung Po Thant[5], Sarwan Singh v Mt.Malan[6], Surana Commercial Company v Food Corporation of India[7], Mallaiah Rajeshwar & Co v Gangadhar & Co[8], F.Hoffimann-La Roche & Co v Geoffrey Manners & Co[9], Teju Singh v Shanta Devi[10], Wander Limited v Antox India Private Limited[11], J.R.Kapoor v Micronix India[12], Uniply Industries Limited v Unicorn Plywood Private Limited[13], Godfrey Philips India Limited v Girnar Food & Beverages (P) Limited[14], Chennai Hotel Saravana Bhavan v Hotel Saravana Bhavan[15], Rama Powerloom Tape Industries v Associated Cotton Tape Industries Marketing Company[16], Panacea Biotec Limited v Recon Limited[17], Virumal Pravin Kumar v Needle Industries (India) Limited[18], Rasiklal Manikchand Dhariwal v Kishore Washwani[19], Pioneer Nuts & Bolts Private Limtied v Goodwill Enterprises[20], Samrathrai v Kasturbhai[21] and Bhagvan v Hiraji[22]. Principles for grant of Injunction for Infringement and passing off (a) The Act and the Rules Trade Marks Act recognises and enforces an important Intellectual Property Right (IPR). Section 2(zb) of the new Act which came into force from 15.09.2003 defines trade mark means, ‘a mark capable of being represented graphically and which is capable of distinguishing the goods or services of one person from those of others. Trade mark also means a registered trade mark or a mark used in relation to goods or services for the purpose of indicating a connection in the course of trade between the goods or services and some person having the right as proprietor to use the trade mark’. ‘Trade mark’ also means a mark used in relation to goods or services for the purpose of indicating the connection in the course of trade between the goods or services and some person having the right either as proprietor or by way of permitted users to use the mark and includes certification trade mark or collective trade mark. ‘Certification trade mark’ means a mark capable of distinguishing the goods or services certified by the proprietor regarding mode of manufacture of goods, for purpose of services, quality or accuracy or other characteristics of goods. ‘Collective mark’ is a trade mark distinguishing the goods or services or members of association, which is the proprietor of the mark from those of others. Chapter III of the Act enumerates procedure for registration of a trade mark either any person claiming to be proprietor or a person desirous of registering a trade mark. When once the trade mark is registered and a certificate is issued under Section 23(1) and (2), it creates rights as well as obligations. These are dealt with by Chapter IV of the Act. In addition to conferring exclusive right to the use of trade mark (Section 28(1)). The owner of the trade mark is also entitled to seek remedy in civil law and/or criminal law. Chapter XII deals with an offences and penalties for violating right to trade mark and Chapter XIII especially Section 134 deals with remedy in civil law by way of a suit for injunction for infringement of the trade mark or passing off a trade mark or any other matter relating to right in a trade mark. (b) Civil Liability and Criminal Culpability Section 29 describes nine kinds of infringement of trade marks in each of its nine subsections. These are 29. Infringement of registered trade marks.-(1) A registered trade mark is infringed by a person who, not being a registered proprietor or a person using by way of permitted use, uses in the course of trade, a mark which is identical with, or deceptively similar to, the trade mark in relation to goods or services in respect of which the trade mark is registered and in such manner as to render the use of the mark likely to be taken as being used as a trade mark. (2) A registered trade mark is infringed by a person who, not being a registered proprietor or a person using by way of permitted use, uses in the course of trade, a mark which because of- (a) its identity with the registered trade mark and the similarity of the goods or services covered by such registered trade mark; or (b) its similarity to the registered trade mark and the identity or similarity of the goods or services covered by such registered trade mark; or (c) its identity with the registered trade mark and the identity of the goods or services covered by such registered trade mark, is likely to cause confusion on the part of the public, or which is likely to have an association with the registered trade mark. (3) In any case falling under clause (c) of sub-section (2), the court shall presume that it is likely to cause confusion on the part of the public. (4) A registered trade mark is infringed by a person who, not being a registered proprietor or a person using by way of permitted use, uses in the course of trade, a mark which- (a) is identical with or similar to the registered trade mark; and (b) is used in relation to goods or services which are not similar to those for which the trade mark is registered; and (c) the registered trade mark has a reputation in India and the use of the mark without due cause takes unfair advantage of or is detrimental to, the distinctive character or repute of the registered trade mark. (5) A registered trade mark is infringed by a person if he uses such registered trade mark, as his trade name or part of his trade name, or name of his business concern or part of the name, of his business concern dealing in goods or services in respect f which the trade mark is registered. (6) For the purposes of this section, a person uses a registered mark, if, in particular, he- (a) affixes it to goods or the packaging thereof; (b) offers or exposes goods for sale, puts them on the market, or stocks them for those purposes under the registered trade mark, or offers or supplies services under the registered trade mark; (c) imports or exports goods under the mark; or (d) uses the registered trade mark on business papers or in advertising. (7) A registered trade mark is infringed by a person who applies such registered trade mark to a material intended to be used for labelling or packaging goods, as a business paper, or for advertising goods or services, provided such person, when he applied the mark, knew or had reason to believe that the application of the mark was not duly authorised by the proprietor or a licensee. (8) A registered trade mark is infringed by any advertising of that trade mark if such advertising- (a) takes unfair advantage of and is contrary to honest practices in industrial or commercial matters; or (b) is detrimental to its distinctive character; or (c) is against the reputation of the trade mark. (9) Where the distinctive elements of a registered trade mark consist of or include words, the trade mark may be infringed by the spoken use of those words as well as by their visual representation and reference in this section to the use of a mark shall be construed accordingly. Section 101 describes the meaning of applying trade mark and trade descriptions and Section 102 describes falsifying and falsely applying trade marks. A perusal of these penal provisions would show that in one way or other, they deal with various types of infringements of trade mark. Both of these are culpable and punishable under Sections 103 to 109. Section 110 is an exception to Sections 102 to 105 and read as under. 110. No offence in certain cases The provisions of Sections 102, 103, 104 and 105 shall, in relation to a registered trade mark or proprietor of such mark, be subject to the rights created or recognised by this Act and no act or omission shall be deemed to be an offence under the aforesaid sections if, - (a) the alleged offence relates to a registered trade mark and the act or omission is permitted under this Act; and (b) the alleged offence relates to a registered or an unregistered trade mark and the act or omission is permitted under any other law for the time being in force. Sections 134 and 135 of the Act read together provide for remedies in case of infringement of registered trade mark or passing off arising out of the use by the defendant of any trade mark, which is identical or deceptively similar to plaintiff’s trade mark. The order of injunction which includes an ex parte injunction (Section 135(2) of the Act) is an effective remedy available to the person wronged. In addition to injunction, the remedy of damages or an account of profits or both can be ordered subject to Section 135(3) of the Act, which provides for possible defences a defendant might plead. Therefore, when an ex parte ad interim injunction is asked in a suit for injunction for infringement or passing off, the Court has to keep in mind Sections 29, 103 to 109 and 135 of the Act. Any infringement or any criminal culpability resulting from such infringement or passing off certainly causes legal injury to the proprietor/owner of the registered/unregistered trade mark and as an interlocutory measure, the wrongdoer can be injuncted. (c) Precedent law In common law passing off (like a form of infringement) is a tort. Conceptually a man is not to sell his goods or services under pretence that they are those of another man. In Erwen Warnink BV v Townend & Sons (Hull) Ltd.,[23], the House of Lords pointed out five elements of passing off – (i) Misrepresentation, (ii) Made by the trader in course of trade, (iii) the prospective customers of goods or services, (iv) which is calculated to impart the business or goodwill of another trader, and (v) which causes actual damage to business or goodwill of redressal seeker. Another common type of infringement is colourable imitation of a tool or machine. The innocent buyer will be carried away with colourable imitation and hence such adoption facilitates passing off without actual knowledge of the infringer. Except in the case of collective trade marks, joint ownership of trade mark is unknown. Even if there are joint owners the trade mark can be used for the benefit of all and not in rivalry. “It is settled principle of law relating to trade mark that there can be one mark, one source and one proprietor. It cannot have two origins, which cannot be used in rivalry and in competition with each other.” (Power Control Appliances v Sumeet Machines (P) Ltd.,[24] and Ramdev Food Products (supra)). Implied consent to use of the trademark acquiescence, plea of honest concurrent user, denial of monopoly in the trade mark, non- infringement, invalid registration are some of the defences available to infringement. But the registered trade marks passed through a full examination. Therefore, high presumption of validity and claims testing the validity of registration are rare. These are some of the aspects. In Diamler Benz Aktiengesellschaft v Hybo Hindustan[25] a manufacturer of underclothes started to use the trade mark BENZ for his goods. BENZ was a famous trade mark for motor cars. Diamler Benz filed a suit against Hybo Hindustan seeking an injunction restraining them from using BENZ in relation to the under clothes they were marketing. A single judge of the Delhi High Court granted an interim injunction restraining them from using BENZ in relation to the under clothes they were marketing, until the decision of the suit. In an appeal to a Division Bench of the Delhi High Court the order of the Single Judge was stayed. Diamler Benz then appealed to the Supreme Court. The Supreme Court held that the “Division Bench of the High Court was not justified in granting stay of the operation of the order of the learned Single Judge during the pendency of the appeal. The case was settled by a compromise and Hybo Hindustan was given three months to dispose of the stocks of underclothes. Thereafter, they were restrained by a permanent injunction from using “BENZ”. This case for the first time extended the scope of the relief that a