IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.BHAVADASAN WEDNESDAY, THE 17TH AUGUST 2011 / 26TH SRAVANA 1933 AS.No. 431 of 2002() -------------------- OS.1/2001 of ADDL.DISTRICT COURT, THRISSUR .................... APPELLANT(S): DEFENDANTS 1,3,4,5 & 6: ------------------------------------- 1. M/S. SAKTHI CERAMICS, ERIPPOD DESOM, ALAGAPPA NAGAR VILLAGE, MUKUNDAPURAM TALUK, REPRESENTED BY JOICY JOY, PATTATHI PARAMBIL VEEDU, P.O. CHIYYARAM, THRISSUR. 2. JOICY JOY, W/O. PATTATHI PARAMBIL JOY, CHIYYARAM, TRICHUR. 3. SIJO, S/O. PATTATHI PARAMBIL JOY, CHIYYARAM, TRICHUR. 4. SIJI, D/O. PATTATHI PARAMBIL JOY, CHIYYARAM, TRICHUR. 5. JIJO, S/O. PATTATHI PARAMBIL JOY, CHIYYARAM, TRICHUR. BY ADV. SRI.SIBY MATHEW SRI.A.A.MOHAMMED NAZIR RESPONDENT(S): PLAINTIFFS: -------------------------- 1. M/S. SUPREME CERAMICS, CHITTISSERY DESOM, NENMANIKKARA VILLAGE, THRISSUR, REPRESENTED BY ITS MANAGING PARTNER, N.U. SUKUMARAN, NJATTUVETT VEEDU, ERAVAKKAD P.O., CHITTISSERY, THRISSUR. 2. N.U. SUKUMARAN, S/O. N.R. UNNI RAVI, NJATTUVETT VEEDU, ERAVAKKAD P.O., CHITTISSERY, THRISSUR. ADV. SRI.P.VIJAYA BHANU FOR R1 & R2 SMT.P.G.REHNA FOR R1 & R2 THIS APPEAL SUITS HAVING BEEN FINALLY HEARD ON 28/07/2011, THE COURT ON 17.08.2011 DELIVERED THE FOLLOWING: P.BHAVADASAN, J. -------------------------------------------------- AS No.431 of 2002-C & Cross Objection -------------------------------------------------- Dated this the 17th day of August 2011 Judgment Defendants 1, 3, 4 and 6 in OS No.1/01 before the District Court, Thrissur, are the appellants. The suit was one based on passing off action. The parties and facts are hereinafter referred to as they are available before the trial court. 2. According to the plaintiffs, the first plaintiff firm is engaged in the manufacture of flooring tiles, decorative tiles, pottery items etc. since 24.02.1992. They sell their products under the brand name “Kathakali” and Kathakali emblem is engrossed on their products. According to the plaintiffs, they have considerable reputation in the market and a goodwill among the customers. They claim that they alone are entitled to use the brand name “Kathakali” with the emblem engrossed on the product. The allegation in the plaint is that the plaintiffs came to know that the defendants are also using the same trade name and mark AS No.431/02-C 2 and selling the same products as the first plaintiff firm does. According to the plaintiffs, the brand name and the mark adopted by the defendants are deceptively similar to the brand name and emblem used by the plaintiffs. The plaintiffs say that they have applied for registration of the trademark and the application is pending. The differences if at all between the brand name and the emblem of the defendants and the plaintiffs are negligible. The plaintiffs would allege that the product manufactured by the defendants is of an inferior quality and the brand name and emblem of the plaintiffs' firm has been adopted by the defendants to sell their goods as if they are the products of the plaintiffs. The plaintiffs have suffered loss to the tune of Rs.25,000/-. On the basis of these contentions, the suit was laid for injunction. 3. The defendants resisted the suit. They disputed the claim of the plaintiffs that they are manufacturing products under the brand name “Kathakali” from 1992 onwards. Almost all the allegations in the plaint AS No.431/02-C 3 were specifically disputed. Added to this, they also contended that “Kathakali” is not capable of being adopted as a brand name and the plaintiffs cannot have exclusive use of the said word. They also contended that the products of the defendants and plaintiffs are easily distinguishable and the brand name and emblem do not cause any confusion in the minds of the customers. They also pointed out that their products are of a different quality and in the nature of the business, normally, the purchases are made by contractors or masons, who have knowledge about the product and therefore, there cannot be any confusion regarding the product that is being sold. They also claim that their products are of high quality and are in considerable demand. According to them, they have not done any act which would cause any injury to the plaintiffs and that the plaintiffs are not entitled to any reliefs. 4. On the above pleadings, issues were raised by the trial court. The evidence consists of the testimony of PWs 1 to 4 and Exts.A1 to A17 from the side of the AS No.431/02-C 4 plaintiffs. The defendants had Dws 1 and 2 examined and Exts.B1 to B14 marked. Ext.C1 is the commissioner's report. MO1 to 11 are the material objects marked in the case. 5. On an analysis of the evidence in the case, the trial court came to the conclusion that the brand name and the emblem adopted by the defendants is deceptively similar to the one that is used by the plaintiffs and the plaintiffs being the prior user in point of time, are entitled to the reliefs sought for in the plaint. Accordingly, the suit was decreed. The said judgment and decree are assailed in this appeal. 6. The only question that arises for consideration in this appeal is whether the finding of the court below that the defendants are guilty of passing off is justified or not. 7. The learned counsel for the appellants pointed out that the court below has not adverted to the necessary ingredients to constitute the mischief of passing off. Apart from the said fact, the word “Kathakali” could not AS No.431/02-C 5 be adopted as a brand name. The learned counsel went on to point out that there is absolutely no evidence to show that the plaintiffs' firm have reputation and goodwill that could have been affected by the action of the defendants. There is also no proof of any damages having been caused to the plaintiffs even assuming that there is deceptive similarity between the brand name and emblem of the plaintiffs and the defendants. According to the learned counsel, the mere fact of infringement of trademark itself is sufficient to grant reliefs to the plaintiffs. In the case of passing off, they have necessarily to show that there are (1) deceptive similarity, (2) that the plaintiffs enjoyed good reputation and goodwill and (3) that they have suffered damages. The trial court has only considered whether the brand name and emblem adopted by the defendants is deceptively similar and having found so, decreed the suit. 8. According to the learned counsel, that is not sufficient. There should have been further proof of goodwill and reputation enjoyed by the plaintiffs so also the AS No.431/02-C 6 damages suffered by them. In support of his contentions, he relied on the decision reported in Mahavir Rice and Pulse Mills v. Jaikrishnan Trading Company (2009(4) KLT 593). Reliance was also placed on the decisions in Durga Dutt Sharma v. N.P.Laboratories (AIR 1965 SC 980), S.M.Dyechem Ltd v. Cadbury India Ltd. (AIR 2000 SC 2114), Cadila Health Care Ltd v. Cadila Pharmaceuticals Ltd (AIR 2001 SC 1952) and Indo Pharma Pharmaceutical Works Ltd v. Citadel Fine Pharmaceuticals Ltd (AIR 1998 Madras 347). It was therefore, contended that the judgment and decree of the lower court are clearly unsustainable in law. 9. The learned counsel for the respondents, on the other hand, contended that the court below has, after considering the law on the point and the precedents, come to the conclusion that there is deceptive similarity between the brand name and emblem of the plaintiffs and the defendants and that the plaintiffs were prior user in point of AS No.431/02-C 7 time and were entitled to reliefs. The learned counsel drew attention of this court to the fact that it is normal practice of the defendants to adopt such brand name and emblem which is popular and has good reputation in the market at the relevant time and try to pass off their goods under that brand name and emblem. According to the learned counsel, once it is found that there is deceptive similarity in the emblem and name adopted by the defendants, thereby constituting passing off, the rest follow. It is not necessary, according to the learned counsel, to prove that actual damage has been caused. The question as to whether damage has been caused, depends upon the facts of each case and it could be damages that is likely to be caused in future also. The learned counsel went on to point out that the evidence of PWs 1 to 4 would clearly show that the plaintiffs' firm has been producing goods from 1992 onwards and have goodwill and reputation in the market. The evidence adduced by these witnesses are sufficient to show that considerable confusion and deception is caused AS No.431/02-C 8 by the defendants' adopting the same brand name and emblem for their products as that of the plaintiffs. According to the learned counsel, even assuming there is no strict proof of damages, it can be easily presumed that due to the deceitful act on the part of the defendants, damage has been caused to the plaintiffs. In support of the said contention, the learned counsel for the respondents relied on the decision reported in Preme v. Ambujakshan (2006(1) KLT 905), Heinz Italia v. Dabur India Ltd (2007) 6 SCC 1) and T.V.Venugopal v. Ushodaya Enterprises Ltd (2011(4) SCC 85). The learned counsel drew attention of this court to the fact that the plaintiffs have produced their statement of accounts for various years to show that the act of the defendants has caused considerable damage to them. It is pointed out that no grounds are made out to interfere with the judgment and decree of the court below and the appeal is only to be dismissed. AS No.431/02-C 9 10. It is not in dispute that both the plaintiffs' and the defendants' concerns produce flooring tiles, decorative tiles, pottery items etc. The defendants have a case that their products are of a different nature and are of a superior quality. The plaintiffs also make tall claims about their products. The lower court considered the grievance of passing of in paragraphs 16, 17 and 18 of its judgment. In paragraph 19, it comes to the conclusion that the brand name and emblem used by the defendants is deceptively similar to that of the plaintiffs. It is observed in paragraph 19 of the lower court judgment as follows : “The most important contention of the defendants was that the brand name and the emblem used by the defendants is totally different and distinct from the mark used by the plaintiffs. According to DW1, the name, address and the details of the company are prominently displayed on the face of MO2. It is further stated that the product is a de-aired one. The emblem is provided in a circle in M.O.2, the ribs are wide, their numbers are few, the writing style is different and the size of the letters are AS No.431/02-C 10 also different. It was contended that from the above circumstance, MO1 is distinct and different from MO2 and no customer is likely to be deceived. It has to be noted that in all the M.Os. produced before the court, the name of the company and the addresses of the plaintiffs and the defendants are shown in detail to their respective tiles. Both the tiles have got ribe, even though the width and the number of ribe differ in each. The emblem is placed on the middle of both M.O.1 and M.O.2 and all the writings are in between the ribe in both M.Os. 1 and 2. The emblem of Kathakali is also engrossed towards middle. Even though, in M.O.2, it is within a square, in M.O.2 it is within a circle. However, both the emblems have got an inner circle which are common in both. Both the tiles admittedly have got uniform size and it is almost of the same colour. It is admitted by both sides that floor tiles have got a standard size, thickness and a common colour. It is pertinent to note that the differences between these two MOs. Viz. M.O.1 and M.O.2 can be clearly understood only when both of them are kept side by side and viewed. Even DW2 who had been dealing with the AS No.431/02-C 11 products of the defendants could identify both the tiles only with reference to the brand emblem engrossed on it. Further, it has come out in evidence that normally one dealer will set only one brand tile in a given area.” 11. The main contention raised by the learned counsel for the appellants is that in order to constitute the mischief of passing off, it is not sufficient to establish that there is deceptive similarity. The plaintiffs have to establish that they have goodwill and reputation for their products and also that as a consequence of the deceptive act, they had suffered damage. 12. It will be first useful to understand the law regarding passing off. The action of passing off is based on the principle that a person may not sell his products under the pretext that they are the goods of another man. It is a limb of intellectual propriety which protects the owners and creators of work of the intellectual creativity. While infringement of trademark is a statutory remedy, passing off is a common law remedy. For the statutory remedy, the AS No.431/02-C 12 trademark has to be a registered one. Passing off is not considered as a proprietary right. That is the remedy available against the deceitful action of another person. The gist of the concept of passing off is that the goods are in effect telling falsehood about themselves. They are saying something about themselves which is calculated to mislead. The law seeks to protect the traders against such a form of unfair competition which involves making of false or misleading representations utilising the reputation earned by somebody else. The law seeks to protect the intrusion of a rival upon the goodwill and reputation earned by another person in a business or in rendering services. It may take several decades for a person to acquire reputation and goodwill. The true basis of action for passing off is that it seeks to protect the goodwill earned by a person over a period. 13. No man has a right to put his goods for sale, representing them as the goods of a rival trader. He, therefore, is precluded from using a trademark, names or AS No.431/02-C 13 letters which may induce the clients and consumers to believe that the goods which he is selling are actually the products of someone else. 14. In Halsbury's Laws of England IVth Edition Volume 48 at page 185 Note No.297, the elements of passing off action are enumerated as follows : “Elements of the action for passing off : The necessary elements of the action for passing off have been restated by the House of Lords as being three in number : (1)that the claimant's goods or services have acquired a goodwill or reputation in the market and are known by some distinguishing feature ; (2)that there is a misrepresentation by the defendant (whether or not intentional) leading or likely to lead the public to believe that goods or services offered by the defendant are goods or services of the claimant ; and (3)that the claimant has suffered or is likely to suffer damage as a result of the erroneous belief engendered by the defendant's misrepresentation. The restatement of the elements of passing off in the AS No.431/02-C 14 form of this classical trinity has been preferred as providing greater assistance in analysis and decision that the formulation of the elements of the action previously expressed by the House. This latest statement like the House's previous statement, should not, however, be treated as akin to a statutory definition or as if the words used by the House constitute an exhaustive, literal definition of passing off and in particular, should not be used to exclude from the ambit of the tort recognised forms of the action for passing off which were not under consideration on the facts before the House.” The very same ingredients are seen mentioned in the Halsbury's Laws of India Vol.20(1) at Note 185.1358. The characteristics of a passing-off action are made mention of at Note 185.1357 in the Halsbury's Laws of India Vol.20(1), which read as follows : “An action for passing-off is a common law remedy being an action in substance of deceit under the law of tort. The following five characteristics which must be AS No.431/02-C 15 present in order to create a valid cause of action for passing-off are : (1)a misrepresentation, (2)made by a trader in the course of trade, (3)to prospective customers of his or ultimate customers of goods or services supplied by him, (4)which is calculated to injure the business or goodwill of another trader in the sense that there is a reasonably foreseeable consequence, and (5)which causes actual damage to a business or goodwill of the trader by whom the action is brought, or in a quia timet action, will probably do so.” 15. As far as a customer is concerned, it is the quality of the product that he looks for. Therefore, the source of goods or origin of goods might have a significant role to pay. A customer links the goods and services to a range of personal expectations. The modern economy promotes the word 'wide range and variety of goods and services.” It may not be possible in all cases to take efforts to gather appropriate information about the product. Under AS No.431/02-C 16 such circumstances, the brand name, trademark etc. may assume importance. 16. In the decision reported in Mahavir Rice and Pulse Mills v. Jaikrishnan Trading Company (2009 (4) KLT 593), the question as to what are the essential ingredients to be established in an action for passing off was considered and it was held as follows : “12. We may first consider as to what is meant by “passing off”. It means, as Lord Halsbury put in, 'nobody has any right to represent his goods as the goods of somebody else'. The law protects through a passing off action the goodwill between a trader and its customers, which to them are help to sustain. In normal case of passing off, the plaintiff has to prove a reputation sufficient for members of the public to be misled by the defendant's conduct into thinking that they are securing the goods or services of the plaintiff. It may not be enough for the public simply to be confused about whether it is getting the plaintiff's or the defendant's goods. The plaintiff will have to demonstrate the volume AS No.431/02-C 17 of sales and to supplement this by evidence from traders and public of the meaning that they attach to the distinguishing features of the plaintiffs' goods. The plaintiff must have some badge of recognition upon which to found his reputation. It is the plaintiff's reputation as a source of goods or services that is in issue. The starting point for deciding whether there has been a misrepresentation amounting to passing off is the understanding that the plaintiff has built up with the public. In the decision reported in Laxmikant Patel v. Chetanbhai Shah (2002(Vol.110) Com. Cases 518) it was held that the three elements of passing off action are the reputation of goods, the possibility of deception and the likelihood of damage to the plaintiff. It is also held that the same principle which apply to trade marks apply to trade names also. In the decision reported in Heiz Italia v. Dabur India Ltd (2007) 6 SCC 1), it was held that in an action for passing off, the plaintiff has to establish prior user to secure relief. There are five elements to be proved. They are i) misrepresentation ii) made by a trader in the course of a trade, iii)prospective customers of his or ultimate consumers of goods or AS No.431/02-C 18 services supplied by him, iv) which is calculated to injure the business or goodwill of another trade in the sense that this is a reasonably foreseeable consequence) v) which causes actual damage to a business or goodwill of the trader by whom the action is brought or (in a quia time action) will probably do so.” 17. As to what constitutes deceptive similarity, was considered in the decision reported in Cadila Health Care Ltd. V Cadila Pharmaceuticals Ltd (AIR 2001 SC 1952) wherein it was observed as follows : “Broadly stated, in an action for passing off, on the basis of unregistered trade mark generally for deciding the question of deceptive similarity, the following factors to be considered : a) The nature of the marks, i.e., whether the marks are word marks or label marks or composite marks i.e. Both words and label works. b) The degree of resemblance between the marks, phonetically similar and hence similar in idea. c) The nature of the goods in respect of which they are used as trade marks. AS No.431/02-C 19 d) The similarity in the nature, character and performance of the goods of the rival traders. e) The class of purchasers who are likely to buy the goods bearing the marks they require, on their education and intelligence and a degree of care they are likely to exercise in purchasing and/or using the goods. f) The mode of purchasing the goods or placing the orders for the goods, and (g) Any other surrounding circumstances which may be relevant in the extent of dissimilarity between the competing marks. Weightage to be given to each of the aforesaid factors depends upon facts of each case and the same weightage cannot be given to each factor in every case.” 18. In the decision reported in Heinz Italia v. Dabur India Limited (2007(6) SCC 1), it was held as follows : “In an action for passing off, the plaintiff has to establish prior user to secure an injunction and the registration of the mark or similar mark in point of time is irrelevant. Modern tort of passing off has five elements i.e. (1) a AS No.431/02-C 20 misrepresentation (2) made by a trader in the course of trade (3) to prospective customers of his or ultimate consumers of goods or services supplied by him (4) which is calculated to injure the business or goodwill of another trade (in the sense that this is a reasonably foreseeable consequence) and (5) which causes actual damage to a business or goodwill of the trader by whom the action is brought or (in a quia time action) will probably do so.” 19. In Preme v. Ambujakshan (2006(1) KLT 905), it is held as follows : “The principle of passing off action is that a person may sell his goods or deliver his services such as in case of a profession under a trading name or style. With the lapse of time, such business or services associated with a person acquire a reputation or good will which becomes property which is protected by courts. A competitor initiating sale of goods or services in the same name or by imitating that name results in injury to the business of one who has the property in that name. The law does not permit any one to carry on his business in such a AS No.431/02-C 21 way as would persuade the customers or clients in believing that the goods or services belong to someone else are his or are associated with it. It does not matter whether the latter person does so fraudulently or otherwise. Honesty and fair play are, and ought to be the basic policies in the world of business. When a person adopts or intends to adopt a name in connection with his business or services, which already belongs to someone else, it results in confusion and has propensity of diverting the customers and clients of someone else to himself and thereby resulting in injury. Plaintiff in a passing off action has to establish misrepresentation by the defendant to the public. It does not mean that plaintiff has to prove any mala fide intention on the part