FAO No. 228/2005 Page 1 REPORTABLE * IN THE HIGH COURT OF DELHI AT NEW DELHI + FAO NO. 228/2005 Date of Decision: 16 th January, 2007 . M/S ANSUL INDUSTRIES .. APPELLANT Through: Dr. Abhishek Manu Singhvi, Sr. Advocate with Mr. S.K. Bansal, Mr. Nalin Talwar, Mr. Tarun Singla, Mr. Suwarn Rajan, Mr. Ajay Amitabh Suman & Mr. Pankaj, Advocates. VERSUS M/S SHIVA TOBACCO COMPANY .. RESPONDENT Through: Mr. C.A.Sundram, Sr. Advocate, Mr. N.K. Kaul, Sr. Advocate with Mr. Gurvinder Singh & Ms. V. Mohini, Advocates. CORAM: HON'BLE MR. JUSTICE SANJIV KHANNA 1. Whether Reporters of local papers may be allowed to see the judgment? 2. To be referred to the Reporter or not ? YES 3. Whether the judgment should be reported in the Digest ? YES SANJIV KHANNA, J: 1. The appellant, M/s Ansul Industries, and the respondent, M/s Shiva Tobacco Company, both manufacture and sell chewing tobacco. Chewing tobacco manufactured/sold by the appellant is marketed under the trade mark 'Udta Panchhi' and the FAO No. 228/2005 Page 2 chewing tobacco manufactured/sold by the respondent is marketed under the brand name 'Panchhi Chaap'. 2. The respondent claims that they started using the brand name 'Panchhi Chaap' in 1973 and is also the registered user of the said trade mark label under the Trade and Merchandise Marks Act, 1958 (hereinafter referred to as the Act) since in 1974. The appellant claims his lineage to the trade mark 'Udta Panchhi' through Mr. Krishan Bansal, father of Mr. Anand Bansal, sole proprietor of the appellant. It is claimed that Mr. Krishan Bansal adopted the trade mark 'Udta Panchhi' in March, 1982. 3. Learned trial court by the impugned order dated 30th July, 2005 has allowed application of the respondent under Order XXXIX, Rule 1 and 2 of the Code of Civil Procedure, 1908 (hereinafter referred to as the Code, for short) and restrained the appellant from using the mark “Panchhi”. While doing so, learned trial court has held that the respondent being a prior user and a registered owner of the mark “Panchhi” is entitled to injunction against the appellant notwithstanding the delay in approaching the Court and in filing the suit for permanent injunction. The respondent filed the suit for permanent injunction against the FAO No. 228/2005 Page 3 appellant in 1997. 4. Number of contentions have been raised by the appellant and the respondent. For proper appreciation, I have discussed these contentions under different heads : (A) Whether the marks 'Udta Panchhi' and 'Panchhi Chaap' are deceptively similar. 5. In a world where consumer has bewildering choices and options to purchase products, manufacturers and dealers have used marks to identify their products and distinguish them from others. With passage of time manufacturers and traders acquire goodwill associated with the marks. Common law protects invasion into the proprietary rights of a trader/manufacturer who has acquired goodwill in a mark. On invasion of the said proprietary right, the owner or the proprietor of the mark has right to initiate passing off action against the infringer. This action is based on deceit and the proprietor in order to succeed has to prove actual passing off or that the use of the mark had actually caused confusion or damage. He is also to prove and establish that the mark is associated and identified with the goods of the said proprietor and the infringer is using the said mark or a deceptively FAO No. 228/2005 Page 4 similar mark with the object of inducing customers to buy goods that do not belong to the proprietor. 6. The above quasi proprietary right in common law was given statutory recognition under the Act. On registration of a mark, the registered proprietor is entitled to enforce his statutory right against the infringer without having to establish and prove goodwill in the mark and its association with the claimant. On registration of the mark, certain statutory rights flow from the statute. When a statutory right is challenged, the registered proprietor is entitled to initiate action for infringement. 7. In Anglo-Dutch, Colour & Varnish Works Pvt. Ltd. v. India Trading House, AIR 1977 Delhi 41, this Court after referring to decisions of the Supreme Court has laid down the following tests for comparing two marks:- “(i) The question whether the two marks are so similar as likely to cause confusion or deceive is one of the first impression. It is for the court to decide this question. (ii)The question has to be approached by applying the doctrine of fading memory, i.e., form the point of view of a man of average intelligence having imperfect recollection (iii) Whether the overall visual and phonetic similarity of the two marks is likely to deceive FAO No. 228/2005 Page 5 such man or cause confusion that he may mistake the goods of the defendant for those of the plaintiff. (iv) The other questions are:- (i) Who are the persons who are likely to be deceived, and (ii) What rules of comparison are to be adopted in judging whether such resemblance exists.” 8. The question of infringement under Section 29 of the Act is decided whether the mark of the defendant is ‘likely to deceive or cause confusion’. In Amritdhara Pharmacy v. Satya Deo Gupta AIR 1963 SC 449 Supreme Court referring to Kerly on Trade Marks, 8th Edn. Observed : “For deceptive resemblance two important questions are: (1) who are the persons whom the resemblance must be likely to deceive or confuse, and (2) what rules of comparison are to be adopted in judging whether such resemblance exists. As to confusion, it is perhaps an appropriate description of the state of mind of a customer who, on seeing a mark thinks that it differs from the mark on goods which he has previously bought, but is doubtful whether that impression is not due to imperfect recollection.” 9. Supreme Court also quoted Parker, J. in Pianotist Co. Application, Re, as under— “You must take the two words. You must judge FAO No. 228/2005 Page 6 of them, both by their look and by their sound. You must consider the goods to which they are to be applied. You must consider the nature and kind of customer who would be likely to buy those goods. In fact, you must consider all the surrounding circumstances; and you must further consider what is likely to happen if each of those trade marks is used in a normal way as a trade mark for the goods of the respective owners of the marks. If, considering all those circumstances, you come to the conclusion that there will be a confusion, that is to say, not necessarily that one man will be injured and the other will gain illicit benefit, but that there will be a confusion in the mind of the public which will lead to confusion in the goods — then you may refuse the registration, or rather you must refuse the registration in that case.” 10. Case law on the subject was examined by the Supreme Court in Cadila Health Care Ltd. Vs. Cadila Pharmaceuticals Ltd., reported in 2001(5) SCC 73. It was held that it was necessary to apply both the visual and phonetic or sound tests. The question whether the two marks were likely to cause confusion and deception in the mind of the buyers was decided on the basis of first impression. It was observed: “With respect, we are unable to agree that the principle of phonetic similarity has to be jettisoned when the manner in which the competing words are written is different and the conclusion so arrived at is clearly contrary to the binding precedent of this Court in Amritdhara case AIR 1963 SC 449, where the phonetic similarity was applied by judging the two competing marks. Similarly, in Durga Dutt Sharma case AIR 1965 SC 980, it was observed that: FAO No. 228/2005 Page 7 “In an action for infringement, the plaintiff must, no doubt,make out that the use of the defendants mark is likely to deceive, but where the similarity between the plaintiffs and the defendants mark is so close either visually, phonetically or otherwise and the court reaches the conclusion that there is an imitation, no further evidence is required to establish that the plaintiffs rights are violated.” 11. Thus it is well settled that when the question whether the mark causes or is likely to cause deception or confusion arises before a Court, the standard applied is not that of a vigilant consumer or a trader, but standard of an unwary normal customer of the said product. The Court has to consider and examine whether a consumer of the product is likely to be deceived or confused after examining broad and dominant features of the two marks and whether there is overall similarity that is likely to mislead a purchaser. Both the marks have to be considered as a whole. 12. Question of confusion cannot be decided by keeping the two marks by each other and noting similarities and differences between the two marks. Right in a trade mark is with reference to trade and commerce. Question of deception and confusion has to be examined and dealt with from commercial point of view. The law gives protection to the FAO No. 228/2005 Page 8 proprietor of the trade mark if there is likelihood of deception or confusion. The impression created by looking at the two marks and the significant feature and idea behind the two marks that would be formed in the mind of the purchaser is the relevant criteria. Similarity and affinity in sound is also an important criteria. Ocular comparison is not decisive. Sound test is important as customers ask for the goods by name. 13. Even when action for passing of under common law is initiated, the essential features of both the marks are taken into consideration to examine whether the alleged infringer is passing of his goods as that of the other and causing injury to goodwill and business of the other. 14. Chewing tobacco is used by illiterate and semi literate consumers. We have to examine the question of deception or confusion or likelihood thereof, from the eyes of the said consumers. The word “Panchhi” in the mark 'Udta Panchhi' and 'Panchhi Chaap' enjoy prominence and is the focal point of the two marks. Colour of the packing may be different but likelihood of deception and confusion is likely to result due to phonetic similarity and the use of the word “panchhi” in both the marks. The shop keepers selling chewing tobacco in many FAO No. 228/2005 Page 9 cases will be illiterate or semi literate. Invariably customers ask for product of this kind by its name “Panchhi”. Some consumers are also likely to believe that the two products are from the same source.Picture of the flying bird is another essential feature of the two marks, which is common to both. Thus, there cannot be any doubt that deception or confusion is likely to arise in view of the similarity in the trade mark 'Udta Panchhi' and 'Panchhi Chaap'. (B) Whether injunction should be denied on the ground of delay and laches. 15. This was a core question on which parties had addressed arguments in great depth and detail. 16. A few prima facie facts may be noticed. Partnership firm Shiva Tobacco Company of Mr. Shiv Prasad Aggarwal, Mr. Rattan Kumar Aggarwal, Mr. Mahender Kumar Bansal and Mr. Rajender Mohan (minor) adopted the trade mark 'Panchhi Chaap' and started marketing chewing tobacco under the said mark. They applied for registration of the said mark, which was allowed on 13th July, 1977 with effect from 6th July, 1974. 17. Mr. Krishan Bansal, father of Mr. Anand Bansal, as per the appellant started marketing chewing tobacco under the mark FAO No. 228/2005 Page 10 'Udta Panchhi' on 12th March, 1982. At that time he was doing business as a sole proprietor of Bansal Tobacco Store. 18. The suit for injunction was filed by the respondent on 15th May, 1997. On this ground it was submitted by the appellant that the suit was filed after nearly 15 years from the date the predecessor in interest of the appellant, i.e. father of Mr. Anand Bansal, adopted the trade mark 'Udta Panchhi' for selling chewing tobacco. 19.However, the respondent had submitted that laches or delay was not a good ground to deny injunction in a case of infringement. It was stated that in case of a registered mark, question of delay and laches was not relevant as the suit/injunction application is based upon a statutory right. Secondly, delay by itself was not material unless there was acquiescence or consent. Lastly, the appellant was guilty of deceitful and dishonest initial adoption or fraud and, therefore, not withstanding allegation of acquiescence, injunction must follow. 20. The appellant, on the other hand, submitted that delay and laches was an important factor, when an owner of trade mark allows and permits third parties to market and sell their FAO No. 228/2005 Page 11 products under a similar trade mark. In these circumstances principles of acquiescence apply. Reference was made to doctrine of reverse confusion. It was pointed out that the sales of the appellant were much more than the sales of the respondent. 21. Whether delay or laches can non - suit, a proprietor of a trade mark or dis-entitle him from claiming interim injunction or injunction, has been subject matter of controversy and discussion in several decided cases. These judgments may now be noticed. 22. This court in the case of Fair Deal Corporation (P) Limited versus Vijay Pharmaceuticals, reported in 1985 PTC 80, vacated the interim injunction granted in favour of the plaintiff, after holding that by conduct the plaintiff had allowed the defendant therein to believe that it could market its products under the mark, which it was contended, offended the registered mark. A similar approach has been adopted in Gillette Company and Others versus A.K. Stationery and Others reported in 2001 PTC 513. In this case reference was made to earlier decision of this Court in Shri Gopal Engineering and Chemical Works versus P.O.M.X Laboratory reported in AIR 1992 Delhi 302 and Peshawar Soap and FAO No. 228/2005 Page 12 Chemicals Limited versus Godrej Soap Limited reported in 2001 PTC 21. However, while dealing with these two cases, learned judge noticed that in the case of Shri Gopal Engineering (supra) there was unexplained delay coupled with concurrent use and in the case of Peshawar Soap (supra), there was acquiescence and the rival was allowed to build up his reputation. Acquiescence it was held gave legal legitimacy to the non-exclusive user of the descriptive word, which if contemporaneously challenged, would have entitled the first user to injunction. Reference was made to judgment of the Supreme Court in Wander Limited and Another versus Antox India Private Limited reported in (1991) PTC 1 SC, wherein it was held that object of interlocutory injunction was to preserve status quo but at the same time the Court can on the basis of prima facie case restrain the defendant from causing injury to the plaintiff. The Court while doing so, had to weigh the need of the plaintiff and the defendant and determine the balance of convenience. In other words, the Court had to consider equities and prejudice which were likely to be caused by granting an interim injunction order. 23. In the case of Standard Electricals Limited versus Rocket FAO No. 228/2005 Page 13 Electricals and Another reported in (2004) 28 PTC 26, another single Judge of this court after examining the principles governing grant of ad interim injunction, inter alia, held that as both the parties had been using the mark “standard” for last 20 years and there was no constructive or visual resemblance and goods of both the parties were advertised and prima facie had carved out market for each product and had not caused any confusion or deception in the trade, interim injunction should not be granted. It was held that balance of convenience was not in favour of the plaintiff therein. However, learned Judge also noticed that delay or laches by itself alone was not a good ground to refuse interim injunction. It was held that common law remedy for passing off action cannot be defeated by delay or inaction itself. In the said case, the Court also found that a number of other parties had been using the trade mark “standard” with suffix and pre-fix in relation to electrical, allied or cognate goods but that had not caused any confusion and deception in the minds of the consumers/traders and, therefore, prima facie it was held that the marks were not similar and identical so as to cause deception. FAO No. 228/2005 Page 14 24. In the case of Shri Gopal Engineering (supra), Jaspal Singh, J. invoked the doctrine vigilantivus non- dorminentibus suppetit (If you want law to help, you must keep awake) to deny interim relief of injunction. However, the Court noticed decision of this Court in Hindustan Pencils Private Limited versus India Stationery Products Company, reported in AIR 1990 Delhi 19, and held that in the said case the use of the mark was fraudulent and on coming to know of infringement the plaintiff therein had filed an application for cancellation of the registration of the copyright. It was held that the defendant 's adoption of the mark in Shri Gopal case was honest and concurrent and there was nothing to show that the presence of the defendant had caused any prejudice. 25. In the case of Hindustan Pencils Private Limited and Others versus Universal Trading Company reported in 2000 PTC 561, a Division Bench of this court noticed that both the parties had been using the same mark for nearly 20-26 years and it was held that the goods belonging to the two parties did not belong to the same category and, therefore, there was no question of deception or confusion. The registration of mark in favour of one party, did not apply to the goods manufactured FAO No. 228/2005 Page 15 and sold by the other party. The Court also came to the conclusion that there was honest concurrent user covered by Section 12(3) of the Act. Another ground that persuaded the Court to dismiss the appeal was that an application for registration of trade mark was moved by the defendant therein, to which opposition was filed but the same was abandoned by the plaintiff. The business of the defendant thereafter had expanded and prospered and, therefore, he would have suffered serious prejudice and hardship in case interim injunction was granted. 26. In the case of Swarn Singh Trading versus Usha Industries and Another reported in AIR 1986 Delhi, 342, Division Bench of this Court held that delay in matter of applying for injunction in some cases could be fatal. However, while dealing with a statutory right, delay itself did not destroy the right to apply for injunction. An exclusive right to use registered trade mark cannot be reduced to a nullity. However, in a case of a similar mark as opposed to the same mark, concurrent user coupled with delay could be a ground to refuse injunction. Here again the Court carved out an exception and held where common public could be deceived FAO No. 228/2005 Page 16 into purchasing goods belonging to the registered proprietor, it was the duty of the court to protect the registered mark. The Court should not refuse injunction even if there was some delay when the mark was the same as it would tantamount to permitting a fraud being practiced on the unwary customers. 27. Reliance was also placed by the appellant on the decision of the Karnataka High Court in the case of Rangoon Chemical Works Private Limited versus Royal Medicals reported in (1997) PTC 17. In this case the learned Judge noticed that there was inordinate delay of at least 20 years in filing the suit, though the products of the defendant therein had been in the market for nearly three decades and, therefore, balance of convenience was not in favour of granting injunction, as the party seeking injunction had remained quiet and allowed the other side to expand and develop its business. Asking the defendant after three decades of hard work to change and adopt a different mark would have caused a serious hardship. 28. In the Power Control Appliances versus Sumeet Machines Private Limited reported in (1994) 2 SCC 448, the plea taken by the second user was that of an implied consent or at least waiver. It was stated that the registered owner had dis-entitled FAO No. 228/2005 Page 17 himself from grant of equitable relief by reason of unexplained delay and suppression of facts. It was also stated that the balance of convenience was in favour of the second user. The Supreme Court referred to Section 30(1)(b) of the Act and held that acquiescence was one of the defences available. Acquiescence it was held was standing by, when another person was evading the proprietor's rights and was spending money on his trade mark. Acquiescence was course of conduct inconsistent with claim for exclusive rights on a trade mark. It implied positive act and not merely silence or want of any action. Acquiescence was only a facet of delay and was established when the registered owner knowingly stands by and allows the second user to build up an important trade. Acquiescence it was held leads to an inference of grant of a licence, sufficient to create a new right in the second user. In such cases, it was necessary to establish that the registered owner stood by and knowingly allowed the second user to proceed and spend money in ignorance of the fact that the registered owner had right and means to insert the said right. Distinction was made between mere negligence and acquiescence. FAO No. 228/2005 Page 18 29. In Midas Hygiene Industries (P) Limited versus Sudhir Bhatia reported in (2004) 3 SCC 90, it was held that in cases of infringement of trade mark, normally an injunction order must follow and mere delay in bringing an action was not sufficient to defeat right to injunction. Grant of injunction also follows when prima facie it was established that adoption of mark itself was dishonest. It may be relevant to state here that in the case Midas Hygiene Industries (P) Limited, Division Bench of this Court had held that delay and laches had dis- entitled the plaintiff to grant of interim injunction. 30. This Court in the case of Hindustan Pencils Limited versus India Stationery Products Company and Another, (1989) PTC 61 had observed that inordinate delay by itself was not analogous or similar to laches. Mere passage of time cannot constitute laches but if, the alleged infringer was lulled into a false sense of security and the alleged infringer had acted relying upon the said lapses, question of laches can be examined and gone into as the Court always has discretion to pass an interim injunction order. While dealing with the concept of acquiescence, it was explained that the same was different form delay and laches. Reference was made to the FAO No. 228/2005 Page 19 explanation given by Kerly on Trade Marks, wherein it was observed that in a classic case of acquiescence, the proprietor knowing his rights does nothing, that the infringer ignores them. The Proprietor had encouraged the infringer with the result that the infringer acts upon his mistaken belief and worsens his position. Kerly held that until and unless the conduct of the proprietor was unconscionable, defence of acquiescence or laches was not sufficient. Kerly, however, made a distinction between the defence based on delay and laches and cases where a mark has become “public juric”. Reference was also made to Electrolux versus Electrix reported in 71 RPC 23 wherein five different pre-requisites for establishing acquiescence in the nature of fraud were required to be considered and