Case: National Bell Co. &amp; Anr Vs. Metal Goods Mfg. Co. (P) Ltd. &amp; Anr

1. These two appeals, under certificate, are directed against the common judgment and order of the High Court of Punjab, dated February 25, 1965, passed in fur letters Patent appeals filed by the two appellants companies and the respondent-company against the judgment and order of a learned Singly Judge of the High Court.2. The said appeals were the outcome of two applications filed in the High Court under Section 111 of the Trade and Merchandise Marks Act, XLIII of 1958 (referred to hereinafter as the Act), for rectification of the register in respect of two registered Trade marks, Nos. 161543 and 161544, registered on November 20, 1953, in respect of cycle bells manufactured by the respondent-company. Registered Trade Mark No. 161543 was the numeral 50 and Trade Mark No. 161544 was the figure Fifty.3. The two appellant-companies carry on business in Kapurthala in Punjab. One of them the National Bell Co. Ltd., claimed to be manufacturing bells with numerals 33, 50, and 40 inscribed on them since 1957 and the other M/s Gupta Industrial Corporation since 1947, with numerals 20, 50 and 60 inscribed on cycle bells manufactured by it. The two applications for rectification arose out of suits filed in the District Court, Lucknow, by the respondent-company against the two appellant-companies on the ground of infringement of its said registered Trade Marks the numeral 50 and the figure Fifty. On April 24, 1961, the District Court stayed the said suits at the instance of the appellant-companies giving them time for filing the said rectification applications in the High Court.4. The grounds alleged in the application were (1) that the numerals 50 and the word Fifty" were common to the trade at the time of the original registration and were therefore not distinctive of the bells manufactured by the respondent-company, (2) that many other manufacturers in the market were using the numeral 50 and word Fifty on or in relation to cycle bells and therefore, the distinctiveness of the said marks in relation to the bells, manufactured by the respondent-company, if any, had been lost, (3) that the respondent-company did not get the registration of these marks with any bona fide intention of using them in relation to their cycle bells and that in fact there had been no bona fide use of the said Trade Marks in relation to their goods before the date of the applications. They also alleged that the respondent-company had fraudulently declared at the time of registration that they were the originators or proprietors of the said two marks 50 and Fifty. Both sides led evidence, oral and documentary, the latter including several price-lists from the possession of some of the dealers in cycle spare parts.5. The learned Single Judge, who in the first instance tried the application, found on a consideration of the evidence that cycle bells with different numerals and in particular the numeral 50 were being sold in the market before the respondent-company put its cycle bells with the numeral 50 and the figure Fifty inscribed on them in the market and continued to be sold right up to 1952 when import of foreign manufactured cycle bells was prohibited, and that despite such prohibition those cycle bells were being sold in the market as late as 1958, presumably from old stocks still lingering in the market, though not from any new imported stock. The learned Single Judge also found that there was no evidence of the original registration having been fraudulently obtained by the respondent-company, that there was no averment by the appellant-companies that Lucas or any other concern had obtained registration of any mark either of the numeral 50 or the figure Fifty, and that therefore clause (a) of Section 32 did not apply. He further found that clause (b) of Section 32 also did not apply. He held, however, that the trade mark, namely, the numeral 50 was not at the commencement of the proceedings distinctive of the goods of the respondent-company as (a) numerals are prima facie not distinctive except in the case of textile goods as recognised by Part III of the Trade and Merchandise Marks Rules, 1959 and (b) that the numeral 50 was being commonly used by several dealers and manufacturers subsequent to the registration thereof by the respondent-company and that therefore, the registered trade mark, the numeral 50 was hit by clause (c) of Section 32. So far as the trade mark of the figure Fifty was concerned, he held that there was no evidence that it was used by other parties wither prior to or after the registration thereof by the respondent-company and in that view declined to rectify of expunge the trade mark Fifty as seven years had already elapsed by the time the rectification proceedings were launched and could not, therefore, be challenged on the ground of absence of distinctiveness as laid down in Section 32. The learned Single Judge, on the basis of his aforesaid conclusions, cancelled the trade mark No. 161543, i.e. of the numeral 50.6. In the appeals filed against the said judgment the Division Bench of the High Court held : (1) that though the use of the numeral 50 in relation to cycle bells dated back at least 30 years as in the case of Lucas and certain other foreign concerns, the imports of such goods stopped from about 1952, though some bells were being sold till 1958 presumably from the remaining previous stock, (2) that the numeral "50" in connection with those foreign made bells was never intended as a trade mark but was used only as an indication of the type or quality and (3) that statement Exs. R-2, R-3 and R-4 produced by the respondent-company showed that sales of its bells with the trade marks 50 and "Fifty" inscribed on them had risen form the value of Rs. 19, 644 in 1949-50 to Rs. 14.83 lakhs in 1961-62. The Division Bench agreed with the Trial Judge clause (a) Section 32 did not apply as there was no question of the original registration having been fraudulently procured in 1953. It also held that the trade marks in question could not be cancelled merely on the ground that if their registration had been opposed they would not have been registered, and that therefore, the question for determination was whether it was liable to cancellation in view of Section 32(c), which lays down that the section would not apply in cases whether the trade mark in question was not distinctive at the commencement of the proceedings. According to the Division Bench, the word "commencement of proceedings" in clause (c) of Section 32 mean the commencement of the infringement suits filed by the respondent-company as the proceedings for cancellation were the offshoots arising from those suits, that therefore, the situation in respect of Section 32(c) had to be assessed in the light of the state of affairs existing in 1959. According to the Division Bench, the earliest use of the mark 50 by any concern other than Lucas and other foreign manufacturers was in 1953 by M/s. Indian Union Manufacturers Ltd. The respondent-company, however, had field a suit against that company in 1954 which resulted in a compromise, dated February 5, 1955, where under the said company recognised the exclusive right of the respondent-company to the use of the words Fifty, Thirty and the numerals 50 and 30, while the respondent-company recognised the right of the said company to the exclusive use of the words and numerals Thirty one, Forth one and Fifty one and 31 41 and 51 that the respondent-company had also in 1956 similarly taken action against K. R. Berry and Co. of Jullundur for use by that company of the mark Five 50. The suit, however, had to be withdrawn in 1958 on account of lack of jurisdiction of the Banaras Court where it was filed, though no fresh suit was filed against that company, the respondent-company had opposed an application by that company for registration of the mark Five Fifty" before the Registrar and that application was then pending in 1962, and lastly, that the respondent-company had filed in 1959 the two suits against the appellant-companies out of which these rectification proceedings arose. The Division Bench held that though there was some evidence of the use of the numeral 50 be certain other concerns after 1953, no importance could be attached to such breaches as there was hardly any evidence as to when the infringers started manufacturing and the extent of their manufacture and sales, and that the correct principle applicable in such cases was that a few unchallenged, scattered infringements by a number of traders did not render a registered trade mark common. As regards the earlier use of the Fifty and the numeral 50 by Lucas and other foreign concerns, the Division Bench held that they were not the registered trade marks of those companies and that those concerns had used those marks as merely type marks. Though the idea of using 50 and Fifty was not the original idea of the respondent-company when it obtained registration in 1953, the foreign concerns had ceased importing the goods and though sales of these belles continued until 1958, such sales were from the stock still remaining unsold. Such sales could not be in any appreciable bulk. Even if the idea of using the two marks might have been conceived by the respondent-company from the marks used by Lucas and other foreign concerns, there was no question of any piracy of infringement of those marks as the respondent-company was the first to convert what were originally type marks into registered trade marks. Lastly, it held that the statements of sales produced by the respondent-company demonstrated that its sales had been steadily increasing and that some concerns, finding the use by the respondent-company of its marks 50 and Fifty highly successful, had sought in recent years to take advantage of the popularity of the cycle bells of respondent-company by imitating its marks. This fact, however, could not mean that either in 1959 when the respondent-company filed the suits of in 1961 when rectification proceedings commenced, the marks had ceased to be distinctive in relation to the goods of the respondent-company or were, therefore, liable to cancellation under Section 56 by reason of clause (c) of Section 32. Accordingly, the Division Bench allowed the respondent- company appeals and set aside the order of the learned Single Judge cancelling the registration of its trade mark No. 161543 in respect of the numeral 50 and dismissed the appeals of the appellant-companies.

Court's reasoning:
But both the learned Single Judge and the Division Bench clearly found, (i) that there was no evidence of any fraud having been committed by the respondent-company at the time of the registration; (2) that there was no averment by the appellant-company, mush less any evidence that Lucas or any other foreign concerns had obtained registration of trade marks either of the numeral 50 or the word Fifty, that the indication, 30, 61 and 50, etc. for distinguishing one type of bell from the other manufactures by them and (3) that about a year prior to the registration of the trade marks in question in 1953 foreign bells were prohibited from being imported. Obviously, therefore, the evidence as to purchases and sales by the dealers examined by the appellant-companies related to bells which had remained unsold from out of the stock earlier imported. As regard the bells called "Gupta 50" said to have been manufactured by one of the appellant-companies since 1947, no evidence was led to show either the extent of manufacture or sale between 1947 and 1953 or thereafter from which the High Court could be asked to draw any inference as to the likelihood of deception or confusion. Though there was some evidence that foreign made bells such as Lucas "30", "50" and "61" were being sold as late as 1958, such sales must have been few and far between as they could only be from the remaining stock out of the earlier imports. Such sales could hardly be considered as evidence showing a likelihood of confusion or deception as contemplated by Section 11(a). In fact, the evidence was that purchasers used to call those bells not by their numerals but simply as Lucas bells and those manufactured by the respondent-company as "Asia bells" and in some cases "Asia 50". As against the voluminous sales by the respondent-company shown by the statement filed by if for the years 1949-50 to 1961-62, there was no such corresponding evidence indicating the sales of other bells with numerals, such as "50" inscribed on them from which any likelihood of confusion or deception could be deduced. Regarding deception, there was indeed no evidence whatsoever in that regard. There was no question of piracy also on the part of the respondent-company as argued by counsel as there was nothing to show that Lucas or any other foreign concerns used this numeral except for distinguishing one type of bell from another manufactured by them. In our view, clause (a) of Section 11, therefore, is clearly not attracted.There then remains the question whether clause (c) of Section 32 applies, i.e., that the trade marks were not at the commencement of the proceedings distinctive of the goods of the respondent-company. The distinctiveness of the trade mark in relation to the goods of a registered proprietor of such a trade mark may be lost in a variety of ways, e.g., by the goods not being capable of being distinguished as the goods of such a proprietor or by extensive piracy so that the marks become public juries. The principle underlying clause (c) of Section 32 that the property in a trade mark exists so long as it continues to be distinctive of the goods of the registered proprietor in the eyes of the public or a section of the public. If the proprietor is not in a position to use the mark to distinguish his goods from those of others or has abandoned it or the mark has become so common in the market that it has ceased to connect him with his goods, there would hardly be any justification in retaining it on the register. The progressive increase in the sales of Asia Fifty and Asia 50 bells from 1949-50 and onwards together with the evidence of witnesses examined by the respondent-company shows that the said trade marks distinguished the goods of the respondent-company from those of other manufacturers in the field. Under Section 32 (c) the marks have to be distinctive at the commencement of the proceedings prima facie the expression "commencement of the proceedings" would mean the commencement of proceedings in which the question as to the conclusive character of the registration, as laid down in Section 32 arises. Such a question may arise in a suit for infringement of the trade mark in which the registered proprietor may rely on Section 32 to prove his title to the registered trade mark as also in rectification proceedings filed as a result of such a suit or otherwise, and the period of seven years would have to be calculated according to the particular proceedings in which the conclusive nature of the validity of registration is relied on. In the present case, whether the crucial date for the purpose of Section 32 (c) is taken to be 1959 when the suits were filed or 1961 when the appellant-companies took out the rectification proceedings it makes no difference as it is not possible from the evidence on record to say that the trade marks in question were not or had ceased to be distinctive. The indication, on the contrary, is that they were distinctive. This is to be found from the zeal with which the respondent-company tried to maintain its right in them. The evidence shows that when the respondent-company found in 1954 that M/s. Indian Union Manufacturers Ltd., Calcutta, had been inscribing the word Fifty on its bells, it at once filed an infringement action. The action ended in a compromise by which the said company acknowledged the respondent-companys rights in its trade marks of Fifty and 50. Again, when the attention of the respondent-company was drawn to an advertisement "Five 50", it addressed a notice to the manufacturers of those bells. The case of the respondent-company was that Gupta Industrial Corporation started using the word Fifty on its bells in 1958 and not in 1948 as contended by Mr. Desai. In the absence of any evidence as to the extent of manufacture and sale of those bells it would not be possible to say with any certainty that the respondent-company did not come to know about it till 1958 and therefore, presumed that Gupta Corporation had started using the word Fifty on its bells in that year. According to the appellant National Bell Co., it went into production only in 1957 and in 1956 the respondent-company commenced action against it. A similar notice of infringement followed by a suit was also given to M/s. Berry and Co., but the suit became infructuous on account of lack of the jurisdiction of the Court of Banaras where it was filed. This evidence negatives any abandonment of trade marks of letting infringements go unchallenged or misleading the other manufacturers that the respondent-company would not interfere if they were to use the same marks. Rights in a mark can, of course, be abandoned by its owner but so long as the remains the registered proprietor of the mark and carried on the business to which the mark is attached, a plea of abandonment if difficult to sustain. It would however, be a different matter if it is shown that there were repeated, undisturbed infringements. The evidence in the present case does not show that there were repeated breached which went unchallenged though known to the proprietor. Mere neglect to proceed does not necessarily constitute abandonment if it is respect of infringements which was not sufficient to affect the distinctiveness of the mark even if the proprietor is aware of them [See Re Farina ((1879) 27 WR 456)]. Where neglect to challenge infringement is alleged, the character and extent of the trade of the infringers and their position have to be reckoned in considering whether the registered proprietor is barred by such neglect. [See Rowlant v. Mitchell. ((1897) 14 RPC 37)] The plea of common use must fail, for to establish it the use by other person should be substantial. Though evidence was produced by the appellant-companies to show that there were other bells in the market with Fifty or 50 inscribed on them no evidence was led to show that the use of the word Fifty or the numeral 50 was substantial. In these circumstances, it is impossible to sustain the contention founded on clause (c) of Section 32.18. Under Section 56, the power to rectify is undoubtedly discretionary. Where such discretion has been properly exercised, a court of appeal would refuse to interfere. In the present case, however, the Trial Court did to appreciate the principle embodied in Section 32 and 11, with the result that the Division Bench was justified in interfering with discretion exercised by the Trial Court.