FAO (OS) 334/2008 Page 1 of 22 THE HIGH COURT OF DELHI AT NEW DELHI Date of decision: 11.09.2009 FAO (OS) 334/2008 PIONEER NUTS AND BOLTS PVT. LTD ..... Appellant Through: Mr. N.K. Kaul, Sr. Adv. with Mr. Sanjeev Singh, Mr. Amit Kumar Singh, Ms. Shikha, Mr.Karan Mehta, Mr. Amit Jha, Advocates versus M/s.GOODWILL ENTERPRISES ..... Respondent Through: Mr. Shailen Bhatia, Ms. Anita Kapur & Mr. Amit Jain, Advs. CORAM: HON'BLE THE CHIEF JUSTICE HON'BLE DR. JUSTICE S.MURALIDHAR 1. Whether Reporters of the local newspapers may be allowed to see the judgment? No 2. Whether to be referred to the Reporter or not? Yes 3. Whether the judgment should be reported in the Digest? Yes JUDGMENT S. Muralidhar, J. 1.This appeal is directed against the impugned judgment and order dated 25th April, 2008 passed by the learned single Judge rejecting I.A. No. 780/2007 filed by the appellant seeking an ad interim injunction against the Defendant infringing and passing off its registered trademark „TUFF‟ and „TUFF LABEL‟. 2. The parties are referred to by their status in the suit, i.e. the Appellant is referred to as the Plaintiff and the Respondent as the Defendant. FAO (OS) 334/2008 Page 2 of 22 3. The Plaintiff states that it adopted the trademarks „TUFF‟ and „TUFF LABEL‟ on 1st June 1996 in relation to nuts, bolts, screws and studs. Its application for registration of the mark „TUFF‟ in Class-6 goods was made on 11th February 1998, advertized in the Trademarks Journal No. MEGA-1 on 25th August, 2003 and Registration (under No. 791109) was granted in respect of the mark „TUFF‟ on 14th May, 2004 effective 11th February 1998. The Plaintiff‟s application for registration of the mark „TUFF LABEL‟ was advertised in the Trade Marks Journal No. 1328 Suppl. (5) dated 30th March 2005 and granted registration (under No. 1073841) in Class 6 goods on 19th September 2005 effective 15th January 2002. The Plaintiff asserts that it is the owner and the proprietor in the artistic features in TUFF LABEL. The Plaintiff states that its copyright in TUFF LABEL is registered under the Copyright Act 1957 under A-74315/2005. The Plaintiff claims that it has been honestly and bonafide using the marks continuously in the course of trade since their adoption. 4. According to the Plaintiff, the goods manufactured by it have been accredited with ISO 9001:2000 certification by the TUV South Asia Private Limited. The Plaintiff claims to have acquired and built up its reputation and goodwill in relation to the products on which the marks are used. It advertizes its products through an exclusive website www.tuffbolt.com. It claims that its goods maintain the highest level of quality and precision. It states that it has spent a substantial amount on publicity and that its marks have acquired secondary significance denoting the said goods and business of the Plaintiff. It is asserted that the marks „TUFF‟ and „TUFF LABEL‟ FAO (OS) 334/2008 Page 3 of 22 have become distinctive and well known trademarks within the meaning of Sections 2(1)(zg) and 11 of the Trade Marks Act, 1999 („TM Act‟) in relation to the said goods and business. 5. The Defendant is stated to have adopted an identical/deceptively similar trade mark „TUFF LABEL‟ and „TUFF & TUFF‟ in relation to screws (self taping). A copy of the impugned mark adopted by the Defendant is placed on record. It is averred that the Defendant‟s marks are identical to and deceptively similar in each and every respect: i.e, phonetically, visually, structurally and in the basic idea and essential features. It is alleged that by adopting the impugned mark, the Defendant had infringed and passed off the Plaintiff‟s proprietary rights in the marks. 6. The Plaintiff has placed on record copies of the Defendant‟s applications advertised in the Trade Marks Journal. The first is application No. 1301515 dated 10th August, 2004 by Hereet Singh trading as Goodwill Enterprises for the mark „TUFF‟ in respect of “Screws (Self Tapping)” advertised in the Trade Mark Journal No. 1331 dated 1st June, 2005. In the column „proposed to be used‟, it is indicated: “(DELHI)”. There is an additional representation dated 31st January 2007 made by Harpreet Singh in this application for registration of the mark in Class 12 goods claiming user since 1991. The second is application No. 9427887 dated 27th July 2000 by Harpreet Singh, Hardev Singh and Kushwant Singh trading as Good Will Industries claiming user since 1st April 1995 in respect of the mark TUFF for Screw (Self Tapping) published in the Trade Marks Journal No. 1345 dated 1st June FAO (OS) 334/2008 Page 4 of 22 2006. It is stated in the advertisement that the application is to be associated with Application No. 1030155. The third is an application No. 1302920 dated 16th August 2004 by Harpreet Singh trading as Goodwill Enterprises published in the Trade Mark Journal No. 1351 dated 1st September 2006 for an identical mark „TUFF‟ in respect of „Screws (Self Tapping)‟ in which the user is claimed from 1st January 1991. The fourth is application No. 1307257 dated 6th September 2004 by Hereet Singh trading as Goodwill Enterprises published in the Trade Marks Journal No. 1361 dated 1st February 2007 for the mark TUFF for “Self Tapping Screws included in Class 6” and which claims user since 31st December 1991 in Delhi. The fifth is application No. 1365632 dated 21st June 2005 by Harpreet Singh in respect of the mark TUFF for “all types of screws” with user claimed since 17th June 2005 and published in the Trade Marks Journal No. 1338 Suppl. dated 15th January 2006. The depiction of the label bearing the mark TUFF in each of the applications referred to is identical. 7. It is stated that the Plaintiff became aware of the Defendant‟s impugned adoption of the trade mark „TUFF LABEL‟ in respect of same class of goods through the aforementioned advertisements in the Trade Marks Journal. It lodged a Notice of Opposition against the Defendant‟s trade mark application No. 1301515. The enquiry in the trade by the Plaintiff revealed that the Defendant had not yet commenced using the impugned trade mark in relation to the impugned goods and, therefore, the Plaintiff had not been able to lay its hands on the impugned goods with the impugned trade mark „TUFF LABEL‟. The Defendant sent a letter dated 7.12.2006 to FAO (OS) 334/2008 Page 5 of 22 the Plaintiff requesting it to change the trade mark „TUFF‟ claiming that the Defendant was engaged in the business of manufacturing of fasteners under the trade mark „TUFF and TUFF‟ whereas in the trade mark application, the Defendant had filed one label depicting the trade mark „TUFF LABEL‟. In its letter dated 7.12.2006, the Defendant claimed to be a partnership concern. 8. It was averred by the Plaintiff that the adoption by the Defendant of the impugned trade mark was dishonest and fraudulent and since it was in the same line of business and for similar goods, the Defendant was taking advantage and trading upon the reputation and goodwill of the Plaintiff with a view to causing confusion and deception in the market and passing off its goods and business as those of the Plaintiff. On the above averments, permanent injunction was sought by the Plaintiff to restrain the Defendant from manufacturing, selling, advertising or displaying directly or indirectly the fasteners, screws, screws (self taping) nuts, bolts, studs and all allied and cognate goods falling in class-6 as well as class-12 or any other class of goods under the impugned trade mark „TUFF LABEL‟ and „TUFF and TUFF‟. The other prayer was for injuncting the Defendant from violating Plaintiff‟s copyright involved in the trade mark/label and order for delivering up of the impugned goods and business bearing the impugned trade mark and label including packaging, stickers, boxes and any other incriminating material including display boards and sign boards. A further prayer was for rendition of accounts and an order for decree of damages in the sum of Rs.20,00,500/-. FAO (OS) 334/2008 Page 6 of 22 9. By order dated 22.1.2007, the learned single Judge passed an ex parte order restraining the Defendant from using, marketing, selling, offering for sale, advertising or displaying the trademarks or labels of the Plaintiff in respect of fasteners, screws, screws (self taping) nuts, bolts, studs and all allied and cognate goods till further orders. In the written statement, it was pointed out that Harpreet Singh is a partner of M/s Goodwill Enterprises and his mother Mrs. Rajinder Kaur had originally floated another firm M/s Goodwill Fasteners which had dealt in self taping screws. That firm had adopted the trade mark „TUFF‟ for self taping screws in the year 1991. It is claimed that the firm had advertized the trade mark „TUFF‟ in „The Hindu‟ on 26.12.1993. It was also advertized in Gujarat Samachar on 26.12.1993. The Post Office granted the Grams „TUFF‟ on 27.8.1994 to M/s Goodwill Fasteners. The firm was, however, closed on 31.3.1996. It is stated that Harpreet Singh formed another partnership firm with his brother Shri Kushwant Singh and father S. Hardev Singh under the name of M/s Goodwill Industries in 1994. M/s Goodwill Industries started using the trade mark „TUFF‟ in the year 1995. In the year 2002, Harpreet Singh formed another firm with himself, his mother Smt. Rajinder Kaur, cousin Gurpreet Singh and brother Kushwant Singh which was named M/s. Goodwill Enterprises, i.e. the Defendant herein. Since 2003, M/s Goodwill Enterprises has been using trade mark „TUFF‟. Thus, it is clear that the family of S. Harpreet Singh had been doing business under the trade mark „TUFF‟ in one or other firm since 1991 and that the firms Goodwill Fasteners and Goodwill Industries are the predecessors in interest of the Defendant Goodwill Enterprises. S. Harpreet Singh was a common partner in all these firms. FAO (OS) 334/2008 Page 7 of 22 10. In order to show continuity of the use of the trade mark „TUFF‟ by the family of S. Harpreet Singh, the Defendant has placed on record the price lists, letters from dealers, trade enquiries and renewal of telegraphic address „TUFF‟ etc. Reference was also made to the advertisement taken out by M/s Goodwill Industries of the trade mark „TUFF‟ in 1999 in Rajasthan Patrika. The Defendant claims to be within its right to use the trade mark „TUFF‟ and questions the locus of the Plaintiff to file the suit. It is alleged that the Plaintiff was aware of the prior use of the trade mark „TUFF‟ by the Defendant and, therefore, did not reply to the letter dated 9.12.2006 written by the Defendant to the Plaintiff. It is pointed out that the Plaintiff really never called upon the Defendant to stop the use of the trade mark „TUFF‟ at any stage. Therefore, the Plaintiff was estopped from seeking an injunction to prevent the Defendant from using the said mark. It is stated that although in the Application No.1301515 in class-12, the Defendant had stated that it was proposing to use the mark, this was in fact an error since the mark was already being used since 1991. It is submitted that a wrong advertisement cannot change the factual averments. It is further contended that the registrations granted in favour of the Plaintiff are later to the adoption of the trade mark by the Defendant. It is further submitted that the Plaintiff‟s registration No.1073841 in class 6 is of a device of bolt, whereas the Defendant was not using the device of bolt. It is not in dispute that in addition to the documents filed along with the plaint, during the course of hearing, learned counsel of the Plaintiff placed reliance on the additional documents in the form of sales tax registration certificates of 1996, sales and income tax returns from 1996 onwards and excise registration certificate. FAO (OS) 334/2008 Page 8 of 22 11. The learned Single Judge noted that injunction should ordinarily follow the infringement of a registered trade mark, subject to two exceptions contained in the TM Act. The first exception being Section 28 which was to the effect that if both the Plaintiff and the Defendant are owners of registered trademarks, an action for infringement will not follow and only a passing off action can be maintained. The other exception was Section 34 which mandated that the proprietor of a registered mark cannot restrain the use of an identical mark by any person in relation to goods or which that person or predecessor in title had been continuously using from a date prior to the use of the first mentioned trade mark in relation to those goods by the proprietor or predecessor in title. The learned single Judge found that the two trademarks used by the parties were identical. While the Plaintiff used it for nuts, bolts, screws and studs, the Defendant used it for one kind of screw. It was held that the pictorial representation of the mark is closely identical in both cases. 12. The question was whether the Defendant had made out a case for prior use. The learned Single Judge noted that trade mark registration was given to the Plaintiff in 2005 with effect from 1998 and 2002. Copyright registration was obtained in 2005. Although the earliest use of the disputed mark was claimed by the Plaintiff to be 1996, the invoices and bills produced were of the years 2004 onwards. The income tax and sales tax returns from 1996 onwards mentioned the Plaintiff‟s income and sales but not its products. On the other hand, the Defendant had been able to show three advertisements, two of 26.12.1993 and one of 1999, trade enquiries of 1993, 1994 and 1995 and different invoices pertaining to Calcutta and Madras. The Plaintiff‟s FAO (OS) 334/2008 Page 9 of 22 case was that the Defendant was a squatter and merely advertising the mark but never using it. Referring to the judgment in Revlon Inc. v. Sarita Manufacturing Company AIR 1998 Delhi 38, it was held by the learned single Judge that the dissemination of knowledge of a trade mark in respect of a product through advertisement in media amounts to use of the trade mark whether or not the advertisement is coupled with the actual existence of the product in the market. The learned single Judge negatived the argument of the Plaintiff about the advertisements produced by the Defendant amounting to no credible evidence of user. 13. The other issue was of prior user. The learned single Judge relied on the copies of the partnership deeds where Harpreet Singh was shown as partner of the firm from 1991 in relation to the business and the product. Reliance was placed on the judgment in Swaran Singh v. Usha Industries (India), AIR 1986 Del 343 and Mocolube India Ltd. v. Maggon Auto Centre, 2008 (36) PTC 231 (Delhi) to hold that the Plaintiff has been able to establish prima facie existence of registration in its favour, in relation to the subject marks, with effect from 1998 and 2002. Yet there was no credible evidence of proof of the use of the mark from that period; the materials were sketchy. It was held that the Plaintiff had not produced any material to show that it had used the mark prior to 1998. On the other hand, the Defendant has “prima facie shown that the mark was advertized in 1993 and 1999 and trade enquiries through original letters, indents, etc. existed in 1993, 1994, 1995 onwards”. The issuance of telegraphic name „TUFF‟ by the Postal Department in 1994, 1995 was also noticed and it was held that the FAO (OS) 334/2008 Page 10 of 22 Defendant was “prima facie continuously using the marks since 1993 at least, enabling it to the benefit of Section 34 of the Act.” Accordingly the injunction was refused. 14. We have heard the submissions of Mr. Neeraj Kishan Kaul, leaned Senior counsel for the appellant and Mr. Shailen Bhatia, learned counsel for the Defendant. It is pointed out by Mr.Kaul that the Plaintiff had placed on record bills showing user of the mark since 1996. The Defendant had merely inserted two advertisements soliciting dealer enquiries. The mere obtaining of a telegraphic address for a couple of years did not amount to user of the mark. In any event, this was not a continuous user of the mark since there was no document produced by the Defendant after 1995 except a telegraphic address registration in 1997, a single newspaper advertisement in 1999 and in any event, the absence of any document of user from 1999 till date, the unregistered partnership deed of three different firms which by themselves never mention the impugned trade mark „TUFF‟ could not be relied upon. Moreover, without any valid deed assigning the impugned trade mark by one firm to the other, it could not be said that the Defendant was continuously using the mark. 15. On the other hand, Mr. Bhatia relies on Section 34 of the TM Act to contend that the Defendant was using the mark even prior to 1998. He relies upon the newspaper advertisements issued by the Defendant in 1993, the allotment to it of the telegraphic address „TUFF‟ in 1994, 1995, 1997, the partnership deeds and the receipt by it of trade enquiries. Copies of the FAO (OS) 334/2008 Page 11 of 22 indents of the Defendant‟s distributors mentioning the word „TUFF‟, the price lists of the Defendant mentioning the word „TUFF‟ and the trade mark applications filed in 1991 are all relied upon to show prior user. It is submitted that user later to 1998 is irrelevant because the law requires that the Defendant to show user prior to the date of grant of registration of the trade mark in favour of the Plaintiff. 16. Relying upon Section 2(2) (c) of the TM Act, as interpreted in Hardie Trading Ltd. & Anr. v. Addisons Paint and Chemicals Limited, (2003) 11 SCC 92, it is submitted by Mr.Bhatia that the advertisements issued by the Defendant in the newspapers prior to 1998 constitutes prior user. Reliance is placed on Wander Ltd. & Anr. v. Antox India (P) Ltd., 1991 PTC 1 (SC) to contend that need for protection of registered trade mark must be weighed against the corresponding need of the Defendant to be protected against the injury resulting from his being prevented from exercising his legal rights for which he cannot be adequately compensated. It is asserted that the Defendant has honesty of adoption. 17. Before the contentions of the parties are discussed, this court would briefly recapitulate the law. In Smith Bartlet and Co. v. The British Pure Oil Grease and Carbide Co. Ltd., (1934) 51 RPC 157, a distinction was drawn between the standard of proof of continuous prior user of an unregistered trade mark as required in an infringement action and that required in a rectification proceeding. The standard requited to defeat an infringement action was more stringent and rigorous. It was observed that FAO (OS) 334/2008 Page 12 of 22 Section 41 of the Trade Marks Act of the United Kingdom (which required like Section 34 TM Act continuous prior user) had put “the owner of a registered Trade Mark in a very exceptional position, whether he has used the mark or not, and he is entitled to the exclusive user of it unless under the proviso to Section 41 somebody else is able to show, not an occasional user from a date anterior to the user by the owner of the registered trade mark, but a continuous user by him.” 18. In Amaravathi Enterprises v. Karaikudi Chettinadu, 2008 (36) PTC 688 (Madras) (DB), it was observed that apart from prior continuous use of the trade mark and trade name, the Defendant seeking to set up a defence of prior use under Section 34 of the TM Act had to also prove the volume of sales. In Veerumal Praveen Kumar v. Needle Industries (India) Pvt. Ltd., 2001 (21) PTC PTC 889 (Delhi), a Division Bench of this Court emphasized that a trade mark does not arise from the mere use of a word or words or a formula or a mark. It had to be shown that in relation to particular goods, there is a course of trading and that a goodwill connecting the trader with the goods by the reason of the trade mark under which the goods are marketed has resulted. It was observed: “it follows that where, in relation to particular goods, there is no such course of trading as to give rise to goodwill, there is no interest to be protected by a trademark and no such mark can subsist in vacuo.” 19. In Revue Trade Mark (1979) RPC 27, the question was whether there had been use of the trade mark within the meaning of Section 26 of the Trade Mark Act of the United Kingdom. It was observed that mere offers FAO (OS) 334/2008 Page 13 of 22 for sale and orders resulting from such offers do not constitute the use of a trade mark. It was necessary that the proprietor of the trade mark, by the time an offer for sale is published, should “take positive steps to acquire goods marked with the trade mark” for then he would have done enough for his combined actions to constitute use on, or in relation to goods. These observations were approved by the learned single Judge of the Calcutta High Court in Kabushiki Kaisha Toshiba (Toshiba Corporation) v. Toshiba Appliances Co. 1994 (14) PTC 53 (Cal), where a reference was made to the observations of Falconer, J. in Hermes Societe Anonyme v. B.H. Ries Ltd., 1982 RPC 425. It was observed in the latter case that the issuance of a series of advertisements as part of an introductory campaign may be use of the mark in the course of trade but “not upon the goods or in physical relation thereto”. It was observed that this exposition of the law would equally be applicable in India. This part of the judgment of the learned Single Judge was not been disturbed by the Division Bench of the Calcutta High Court and later by the Supreme Court in Kabushiki Kaisha Toshiba v. Toshiba Appliances, (2008) 37 PTC (SC). Likewise in Harold Radford, (1951) 68 RPC 221, it was held that the mere issuance of an advertisement would not constitute a user of the mark. It was observed that otherwise the proprietor of a trade mark might, without having any goods to offer, advertise its marks at periodical intervals and thereby prevent any attack being made upon the mark. It was emphasized that “use of a mark in advertising media must be concurrent with the placing of the goods in the market if it is to be regarded as a trade mark”. FAO (OS) 334/2008 Page 14 of 22 20. This interpretation of law equally applies as far as TM Act is concerned. The definition of „trade mark‟ even under Section 2(1)(zb) of the 1999 Act means a mark “which is capable of distinguishing the goods or services of one person from those of others”. Therefore, the use of a mark that is not capable of distinguishing the goods of such proprietor of the trade mark would not qualify for the protection under the TM Act. 21. The reference in the impugned judgment of the learned Single Judge to Revlon Inc. case (supra) was not apposite. It was observed in the said case that dissemination from the knowledge of a trade mark in respect of a product through advertisement in media amounts to use of the trade mark whether or not the advertisement is coupled with the actual existence of the product in the market. However, the facts of that case show that the Plaintiff was the registered owner of the trade mark and its goods did exist abroad. The goods being perfumes under the mark Revlon, Charlie, Intimate etc. had a proven trans-border reputation. The