Wednesday 25 January 2017

India: Delhi High Court Grants Injunctive Relief to Montblanc but denies Damages, in Online Counterfeit Case

In its recent decision dated January 04, 2017 in Montblanc Simplo GmbH V. Gaurav Bhatia & Ors., CS (OS) 2563/2013, Hon’ble Ms. Justice Deepa Sharma of the Delhi High Court has restrained an e-commerce website going by the name WWW.DIGAAZ.COM from manufacturing, selling, advertising and directly or indirectly dealing in Montblanc’s writing instruments, wallets, watches, leather goods, jewellery or any other goods bearing the trademark of the company.

Brief Background

The Plaintiff, Montblanc Simplo GmbH is a company incorporated under the laws of Germany having its registered office at Hamburg. It is engaged in the manufacture, distribution and sales of writing instruments under the trademarks MONTBLANC, MEISTERSTUCK and variations thereof. The Plaintiff’s trademarks also include ‘the Star Device’ which is a white stylized six-pointed star with rounded edges, and the ‘Three Ring Device’ comprising of three metallic bands around the circumference of the pen which are located near the middle of the body of the pen cap. The Plaintiff is the registered proprietor of these trademarks and others in India as well as in other countries across the world.

In July 2013, the Plaintiff came to know through its sales/service team in India that the Defendants were selling counterfeit products of the Plaintiff’s writing instruments on their website at discounted rate of 75% representing the products as original products of the Plaintiff, although the Plaintiff had never sold its products at discounted rate. Hence, the present suit.

Plaintiff’s Submissions  

  1. Plaintiff purchased a writing instrument, namely, the MEISTERSTUCK CLASSIQUE from the Defendants’ website, which was being sold at 75% discount and wrongly represented as a product of the Plaintiffs. Upon inspection and examination by Plaintiff, the product was found to be a counterfeit.
  2. The price of original MEISTERSTUCK CLASSIQUE is INR 30,000 (Approx. USD 440*) whereas the Defendants were selling knock-offs of the same for INR 6,860 (Approx. USD 100.61*) on their website. Further, the color combination of the Defendants’ instrument was different than that of the original product. Also, the tip of the refill of the Defendants’ writing instrument had a plastic ball which is different than that of the Plaintiff’s original product and the quality of the Defendants’ product was much inferior to the Plaintiff’s original. The serial numbers on the product were also fabricated by the Defendants.
  3. Plaintiff claimed that due to sale of Defendants’ counterfeit products, Plaintiff suffered loss in business and is also losing reputation and confidence and trust of their clients. Plaintiff claimed damages worth INR 2,005,000 (Approx. USD 29,405*).
Defendants filed their Written Statement however, subsequently, stopped appearing in Court and were proceeded ex-parte.

Court’s Observations:

  1. Plaintiff’s brand MONTBLANC is a widely recognised luxury brand and Plaintiff has a goodwill and reputation in the brand. It is also proved on record that the public identifies Plaintiff’s products from its trade dress which includes the ‘Star device’ and the ‘Three Ring device’. Plaintiff is also the registered proprietor of the trademarks MONTBLANC, MEISTERSTUCK, Three Ring Device and others.
  2. Plaintiff also proved on record its cautionary notice published in India, and extracts from the Defendants’ website displaying the counterfeit products of Plaintiff’s trademarks, alongwith invoice of purchased counterfeit products and photographs of the counterfeit products and warranty cards.
  3. Court also considered some of the consumer complaints filed against the Defendants including of one customer who had purchased counterfeit watches from them and had subsequently lodged a complaint before the Cyber Crime Cell of the Chandigarh Police under Sections 406, 420 of the Indian Penal Code and Section 66A of the Information Technology Act. The Police had also seized a good number of counterfeit products from the Defendants, and Defendant nos. 1 and 2 (directors of Defendant no. 5 company, Digaaz e-Commerce Pvt. Ltd.) were also arrested by the Cyber Cell.
  4. The Court finally observed that the Plaintiff had proved that the Defendants were counterfeiting its goods and thereby, infringing its trademarks.

In view of the above, the Court granted relief of permanent injunction against the Defendants as sought by the Plaintiff and also restrained them from passing off their counterfeit products as that of the Plaintiff. However, the Plaintiff’s claim for damages amounting to INR 2,005,000 (Approx. USD 29,405) was rejected with the observation that the Plaintiffs have not produced sufficient evidences to show the extent of actual damages suffered by them due to the act of Defendants. The said judgment of the Delhi High Court is available here.

[*@ 1 USD = INR 68.18] 

Concluding Remarks

It is no secret that the Indian market is home to large number of counterfeit goods. The most popular counterfeit markets are clothing, shoes, watches, leather goods, jewellery, mobile phones and hardware like pendrives and speakers etc. Popular international brands like Louis Vuitton, Gucci, Burberry, Tiffany, Prada, Hermes, Chanel, Dior, Yves St. Laurent and Cartier are frequently pirated. In the past, brands like Hermes, Cartier, Gucci and Louis Vuitton have also taken legal recourse to battle counterfeiting.

Reportedly, the fake luxury goods market in India is increasing at a rate of 40-45% annually. There is much speculation that underground mafia connected with terrorism, women and child trafficking get most of their funding through the counterfeit market. Hence, this is an issue not to be taken lightly.

India: Mother Dairy given ‘well-known’ mark status by the Delhi High Court

In a recent case decided by the Delhi High Court, Justice R.K. Gauba granted a permanent injunction in favor of Mother Dairy (hereinafter referred to as the ‘Plaintiffs’), restraining the use of its trademark/trade dress by the S.K. Raheem & Others (hereinafter referred to as the ‘Defendants’). One of the key factors providing a firm basis to the Court’s conclusion was that Mother Diary is a ‘well-known mark’.

Brief Facts of the Case:

The Plaintiff is operated and financed by the National Dairy Development Board (hereinafter referred to as the ‘NDDB’) under the Operation Flood programme to facilitate the selling of milk and milk product at reasonable prices.

Since 1974, the Plaintiff has been selling various products such as curd, milk, ice cream and butter under the Trade name ‘Mother Dairy’. It has also obtained registration of 17 of its products, majorly under classes 29 and 30.

With reference to the Plaintiff’s market share, it contended that they have invested a significant amount of money and efforts in advertising and marketing with a blue-colored logo since 2003, resulting in the logo becoming a major recognition factor with the product and the associated goodwill. It has set up around 14,000 retail outlets and 845 exclusive outlets and has a market share of 66% in the relevant market in Delhi.

Plaintiff’s Submissions:

The Plaintiff contented that they learned in June 2010 about the Defendants use of a deceptively similar mark under the name of ‘VINAY MILKS’. It was further stated that the Plaintiffs sent a cease and desist notice to the Defendants on July 13, 2010, to which an indeterminate response was received. A further letter dated August 21, 2010, was sent by the Plaintiffs claiming its trademark, logo, trade dress and packaging being used by the Defendants, to the Defendants failed to respond.

As a result, this suit was initiated stating that the acts of the Defendants have resulted in passing off, trademark infringement as well as copyright infringement for the use of the Plaintiff’s logo and tarnishment/dilution of their well-known mark. The said conduct on the part of the Defendants makes them liable for passing off, trademark infringement as well as copyright infringement for the unauthorized use of the mark

Decision of the Court:

Since the Defendants did not file any written submissions, even after the due service of summons, the Court decided to proceed ex-parte against the Defendants.

The Court started its observation by stating that the Plaintiff was the undisputed sole owner of all the rights relating to the packaging/logo associated with the products, referring to the fact that it has received trademark and copyright registration for the same. Also, the blue colored Mother Dairy Logo, which is in question has acquired sufficient distinctiveness to be easily associated and recognized with the products of the Plaintiff by the consumers. This gives rise to the inexorable conclusion that the logo has acquired the status of a ‘well-known’ mark.

The Court agreed with the contentions of the Plaintiff that the trademark/trade dress is deceptively similar and can also create a likelihood of confusion in the concerned market. Also, referring to the fact that both the products are similar and marketed through the same market channels.

On these grounds, the Court held that the Plaintiff has successfully discharged the burden and have successfully proved that the conduct of the Defendants are violative of the Plaintiff’s rights and also have caused damage to the Plaintiff and tarnished its goodwill and reputation. While, the Court granted a permanent injunction against the Defendant, however, it refused to order the granting of damages as the Plaintiff was unable to collect any meaningful evidence in support of these prayers. It was stated that on the basis of a solitary witness no damages could be granted by the Court to the Plaintiff.
IP4Kids – a CSR initiative of S.S. Rana & Co., participates at the Innovation Festival 2017

The National Science Centre, Delhi, recently organized the Innovation Festival 2017, at Pragati Maidan, New Delhi from January 21-24. The NSC is a unit of the National Council of Science Museums (NCSM), which is an autonomous body under the Ministry of Culture of the Government of India. It is a pioneering institute engaged in the popularisation of science among the people of India in general and among the students in particular.

The event was aimed to foster a passion and aptitude for science and technology and to provide a unique platform to creative innovators. The Festival comprised of an Innovation Fair providing people with an opportunity to showcase the most innovative products made by them in the past. Hobbyist, enthusiasts, students, amateurs, as well as professionals of all ages and gender participated in the Festival. The festival also organized mini parallel events such as, Build from Scrap, Robofest, Creative Robo Design, Robo Training cum Contest, Innovative Challenge, Stage Blast, Family Science Quiz, Popular Science lectures, Idea Contest and a Hands-on Minds-on Session.

S.S. Rana & Co., also participated in the Innovation Festival through its CSR initiative “”, a sensitization program to spread awareness about Intellectual Property Rights among the young generations. In this sensitization program, the firms IP4Kids team interacted with kids, teachers, and young grassroots innovators. IP4Kids also received support from the World Intellectual Property Organization in the form of its publications for distribution at the fair which was received widely by the young innovators.

Around 500 people visited the stall put up by our firm and a special session was organized by the NSC where volunteers from the firm contributed and delivered a presentation on the “Importance of Intellectual Property”. A very interactive and positive response was received from all the participants and the visitors. Towards the end of the ceremony the firm was awarded a memento for participating in the fest and spreading awareness about Intellectual Property among the younger generation. The said award was conferred Prof. Harinder P. Singh, Director, Cluster Innovation Centre.  

Friday 13 January 2017

The Paymark battle: A curious case of Brand envy

On November 18, 2016, the American online payment solution company PayPal, had opposed an Indian electronic commerce and payment system company, Paytm’s trade mark application, numbered 2370686 with the Indian Trademark Office. They marked Paytm’s trademark as “deceptively and confusingly similar to PayPal” due to a similar colour scheme. Additionally, PayPal questioned the intent of Paytm which according to them is to allegedly, feed on the fame and popularity gained by PayPal.

PayPal asserted in their opposition notice[1], that they have been using the trademark “PayPal” across the world since the year 1999. PayPal contended that they are global leaders in online payment solutions that adopted its name in the year 1999 and started operations in India in the year 2000. However, PayPal claim to have adopted the two tone color combination only in 2007. Paytm on the other hand commenced its business as an e-commerce platform in India in the year 2010, and they applied for the said trademark on July 18, 2016.

PayPal submitted that their mark is well-known and they are the only proprietors of their mark that is renewed from time to time and their registrations are validly subsisting. Owing to this, PayPal claims all exclusive rights to use their mark and all marks determinative of their mark. PayPal then drew an analogy between their and Paytm’s mark highlighting that their trademark possesses a distinctive double tone blue colour scheme since 2007 and they have used the same in several other countries. PayPal also contended that their mark is known and recognised by public at large.

Nonetheless, the submissions made by PayPal in their Notice of Opposition are the following:
  • PayPal opposed the registration of Paytm on the grounds of deceptive similarity between their marks as PayPal is a well-known mark under section 2(1)(zg)[2] of the Act. The first syllable of PayPal’s well-known mark is dark blue in colour and the second syllable in a lighter hue of blue. The same specification is common in Paytm’s mark.
  • Secondly, both marks begin with “Pay” which may lead the end users to associate Paytm with PayPal even though the second syllable is different for both the marks.
  • Even though the second syllables of both the marks are dissimilar but the marks are of similar length. Such an adoption and/ use of the impugned mark by Paytm is likely to cause confusion and deception to the users and is far from bonafide adoption and use in trade. Additionally, owing to the above similarities, the consumers may mistakenly believe that the applicant Paytm is affiliated or associated with the opponent. Moreover, such adoption or use is likely to weaken the brand equity of PayPal’s mark.
Therefore, as per PayPal the adoption of the Trademark by Paytm is neither honest nor in good faith. PayPal’s supposition of Paytm’s conduct as dubious and devoid of good faith urged them to ask the Registrar for refusing the trademark application filed by Paytm. It would be interesting to note further developments in this case especially in light of the fact that Paytm, which is an acronym of the phrase “Pay through Mobile” was first filed on a proposed to be used basis way back in July, 2009.

For the ease of convenience of our readers, we have listed below in tabular form the important trademarks filed by both PayPal and Paytm at the Trademarks Registry, and a comparison of the same -

List of Paytm’s Marks

List of PayPal’s Marks


Ohter Mark containing the Word "Pay"

[2]well known trade mark”, in relation to any goods or services, means a mark which has become so to the substantial segment of the public which uses such goods or receives such services that the use of such mark in relation to other goods or services would be likely to be taken as indicating a connection in the course of trade or rendering of services between those goods or services and a person using the mark in relation to the first-mentioned goods or services.
To P(L)AY or not to P(L)AY. Delhi High Court and Bombay High Court Tell You.

It is no secret that the wrath of copyright societies like IPRS, PPL, Novex and the recent ISRA have been faced by all major hotels and event organizers in the past few years, especially during the festive seasons and around Christmas-New Year’s Eve. The recent turn of events in the Delhi High Court and the Bombay High Court may be a relief for few as issues related to the much long-sought clarity to and transparency in the functioning of these societies/ alleged associations have been finally addressed.

In a writ petition being W.P. (C) No. 12076/2016 titled M/s. Event and Entertainment Management Association (EEMA) V. Union of India & Ors., EEMA (hereinafter, ‘Petitioner’) approached the Delhi High Court for issue of a writ of mandamus, directing the Union of India (hereinafter, ‘Respondent No. 1’) to hold an enquiry against other Respondents, namely, Indian Performing Rights Society/ IPRS (hereinafter, ‘Respondent No. 3’), Phonographic Performance Ltd./ PPL (hereinafter, ‘Respondent No. 4’) and Novex Communications (hereinafter, ‘Respondent No. 5’), for the alleged violation of Section 33 of the Indian Copyright Act. The Indian Copyright Office was the Respondent No. 2 herein.

Submissions of the Petitioner 
  • Section 33 of the Copyright Act requires no person or association of persons, to take part in the issue of licenses of any copyrighted works on behalf of copyright owners. Copyright societies are essentially entities, which administer issuing of licences for copyrighted works on behalf of copyright owners.
  • Respondent nos. 3 & 4 were once registered Copyright Societies as per the Copyright Act, but are not registered anymore and are hitherto liable for acting in contravention of Section 33 of the Copyright Act, because of the fact that they have continued to take part in the business of issuing licenses even after lapse of their registration in 2013.
  • Petitioner also submitted that Respondent no. 5 was never registered as a Copyright Society.
Submission of the Respondents
  • Respondent no. 1 submitted that they have already initiated appropriate enquiry against Respondent nos. 3, 4, and 5 on having received complaints of violation against them.
  • Respondent no. 1 also submitted that, as an interim measure, a public notice has been displayed on the website of the Department of Industrial Policy and Promotion (DIPP) informing the public that Respondent nos. 3 and 4 are no longer registered as Copyright Societies.
(The said public notice as available on the DIPP website is available here.)
Decision of the Court

Hon’ble Mr. Justice Sanjeev Sachdeva, of the Delhi High Court, vide his interim order dated December 23, 2016, restrained the Respondent nos. 3, 4, and 5 from acting in contravention of Section 33 of the Copyright Act, i.e. from issuing or granting licenses in breach of S.33 of Act, till the next date of hearing. The Court also directed Respondent nos. 1 and 2 to take action in accordance with the law for any breach of provisions of Section 33 by Respondents nos. 3, 4, and 5. The relevant order can be found here.

Further Proceedings

The above injunction order dated December 23, 2016 passed by Justice Sanjeev Sachdeva was challenged by IPRS, PPL and Novex (the Respondents/ Applicants), who sought for the said order to be vacated. The matter was heard by Hon’ble Mr. Justice Najmi Waziri of the vacation bench of the Delhi High Court.

Submissions by the Respondents/ Applicants
  • The Respondents/ Applicants relied upon some orders passed in their favour by the Delhi High Court such as (i) CS(COMM) No. 328/2016 Novex Communication Pvt. Ltd. V. Hotel Crowne Plaza decided on April 7, 2016; (ii) CS(COMM) No. 385/2016 Novex Communication Pvt. Ltd. V. The Royal Plaza decided on April 22, 2016; (iii) CS(COMM) No. 1086/2016 Novex Communication Pvt. Ltd. V. M/s. Sky Lounge Bar-Svenska Design Hotel decided on August 8, 2016; (iv) CS(COMM) No. 1150/2016 Novex Communication Pvt. Ltd. V. M/s. Pegs Down & Ors. decided on August 28, 2016; (v) Novex Communication Pvt. Ltd. V. M/s. Hype, New Delhi & Anr.; (vi) Novex Communication Pvt. Ltd. V. M/s. The Lodhi Hotel & Anr.; and (vii) Novex Communication Pvt. Ltd. V. M/s. The Suryaa Hotel & Anr. (all dated August 30, 2016); (viii) TM No. 13795/16 Novex Communication Pvt. Ltd. V. M/s. ITC Maurya, New Delhi & Anr.; (ix) TM No. 13793/16 Novex Communication Pvt. Ltd. V. M/s. Holiday Inn Hotel & Anr.; (x) TM No. 13794/16 Novex Communication Pvt. Ltd. V. M/s. Pride Plaza Hotel & Anr. and (xi) TM No. 13792/16 Novex Communication Pvt. Ltd. V. M/s. Dusit Devarana & Anr. (all dated September 19, 2016); (xii) Order dated September 24, 2016 passed in Novex Communication Pvt. Ltd. V. M/s. Park Plaza & Anr.; and (xiii) order dated October 18, 2016 passed in CS No. 3325/16.
  • The Government of India’s inquiry is only against IPRS and not PPL, however, the latter’s request for withdrawal of the application for re-registration as a Copyright Society has not been conceded as yet.
  • The Respondents/ Applicants are legitimate assignees of copyrighted works or are duly authorized agents of copyright owners and seek to enforce their rights under Section 18(2) and Section 30 of the Copyright Act. The websites of Respondents/ Applicants show that they are the owners of approximately one million songs and other copyrighted works. The Copyright Act protects the rights and interests of an owner of a copyright; that insofar as such owner exercises its rights under Section 18(2) and/or Section 30 read with Section 19 of the Copyright Act, there is no bar to the copyright owner or his agents or an assignee from monetizing the copyrighted works.
  • First proviso to Section 33(1) of the Copyright Act secures the rights of a copyright owner to continue to have the right to grant licenses in respect of his own works consistent with his obligations as a member of the registered copyright society.
Submissions by the Petitioner 
  • The order dated December 23, 2016 of the Single Judge of the Delhi High Court restrained the respondents/ applicants from carrying on or issuing or granting licenses of copyrighted works as a Society, therefore, they cannot carry out similar activity by subterfuge, in any other method.
  • The Government of India has rightly initiated proceedings against them in terms of its Office memorandum dated October 16, 2016.
  • The Respondents have all along refused to disclose any documents to substantiate their claim of assignments of copyrights or shown any documents to substantiate their claim of assignments of copyrights or shown any documents that they are authorized agents of specific works by copyright owners. Further, the assignment deeds would have to be in the mode prescribed under Section 19 of the Copyright Act. Consequently, in the absence of any such document or assignment deed showing their rights as assignees or authorized agents, the Respondents/ Applicants cannot seek to exploit or monetize or otherwise recover monies of the copyrighted works from the public at large.
  • Petitioner relied upon the judgment of the Bombay High Court in Leopold Café & Stores V. Novex Communications Pvt. Ltd. (decided on July 17, 2014) to urge that the present Respondents cannot carry out the business of issuing or granting licenses for copyrighted works which was exploited under Section 33 of the Copyright Act. However, the Petitioner fairly conceded that a legitimate assignee under Section 18(2) of the Copyright Act or a duly authorized agent under Section 30 can exploit and monetize the copyrighted works or otherwise seek protection of copyright.
Decision of the Vacation Bench of Delhi High Court

Vide its interim order dated December 29, 2016, the vacation bench of the Delhi High Court comprising of Hon’ble Mr. Justice Najmi Waziri did not vacate the earlier order dated December 23, 2016 passed by Justice Sachdeva. However, the learned vacation bench, relied on the decision in Leopold Café & Stores v. Novex Communications Pvt. Ltd. of the Bombay High Court to observe that the right under Section 30 is not obliterated by the prohibition in Section 33 and both must exist harmoniously. Thus, a copyright owner or his “legitimate” agent/ assignee is entitled under Section 30 of the Act to issue licenses and collect license fees. As an interim compensatory arrangement, Justice Waziri directed EEMA to pay copyright fees/ royalties to IPRS, PPL and Novex under Section 30 of the Copyright, which is reserved for owners of copyrights, with the express rider directing IPRS, PPL and Novex to prove their ownership over the copyrights when called upon to do so, and also providing a process for issuing licences and obtaining royalties in the immediate interim period as under:
  1. EEMA members/the event organizer will provide PPL/IPRS/Novex a list of songs that they intend to play BEFORE the event on mail. Accordingly, the respondents are to issue their invoices.
  2. The respondents (PPL/IPRS/Novex) will need to confirm in writing if they own the tracks mentioning the assignment no./details on the invoice.
  3. The event organizers will pay the amount before the event as per mutual negotiation with the copyright owner.
  4. The license issuing company/entity shall provide proof by way of legal agreements within 7 days of the invoice, to the satisfaction of the event organizer.
  5. In case the event organizer is not satisfied by the proof provided, a refund can be claimed through the courts. The money will not be appropriated till such time that the matter is mutually resolved.
  6. Additionally, PPL/IPRS/Novex are required to put up a detailed list on their website listing all songs they own including the names of the authors/producers they have acquired them from, along with the dates of validity of the contract until December 31, 2016.
  7. In addition to this, the licensing companies, without fail, also need to upload the valid legal agreements by which they claim ownership of these tracks, by December 31, which will be available for all to see and check.
  8. The Court instructed PPL/IPRS/Novex to set up an online payment gateway within 1 month of this hearing wherein stakeholders will be able to easily obtain permissions online.
IPRS was given a period of 15 days to complete this entire process.

The order dated December 29, 2016 of Justice Najmi Waziri is available here.

Concluding Remarks

Miscellaneous reporting of the above order dated December 29, 2016 by various newspapers caused much confusion as to whether it dilutes the injunction granted by Justice Sachdeva on December 23, 2016. The cumulative effect of the above discussed two orders is to maintain the status quo as it existed prior to their passing. The entire drift of things is clearly to bring higher standards of transparency in the system by requiring the collecting societies to publish the complete list of songs along with the assignment deeds.

Pursuant to the Court’s orders, PPL has now uploaded a list of entities who have entered into assignment deeds with it, alongwith copies of the assignment deeds, and also the list of works over which it claims rights. IPRS has also uploaded a list of its assignment deeds. This is definitely a positive step as prospective licensees can now go through these websites to ensure that they are paying the right entity and hence, avoid multiple payments for the same works.

The case is fixed for further proceedings on April 24, 2017.

Proceedings before the Bombay High Court

In Phonographic Performance Limited (PPL) V. Manuj Agarwal & Ors. [Suit (L) No. 1190 of 2016 and Notice of Motion (L) No. 3623 of 2016], the vacation bench of the Bombay High Court comprising of Hon’ble Mr. Justice A. K. Menon dealt with a similar issue, in context of the highly popular Sunburn Festival 2016 which is usually held during the New Year’s celebration period. In this case, the Respondents gave an undertaking to pay to the Plaintiff (PPL) any amount that may be determined to be payable to the Plaintiff in respect of the said events. The relevant order dated December 27, 2016 is available here.

Meanwhile, in a combined order dated December 21, 2016 in the cases PPL V. Welcom Hotel Rama International (ITC) & 4 Ors., PPL V. Corum Hospitality & 4 Ors., PPL V. Mynokos Blu & 4 Ors., PPL V. British Brewing Company Pvt. Ltd. & 4 Ors., PPL V. YMCA International Centre & 4 Ors., PPL V. Neon The Disc & Ors., PPL V. Impresario Entertainment & Hospitality Pvt. Ltd. & 4 Ors., PPL V. J.W. Marriott & 4 Ors., PPL V. Titos Resorts & Hospitalities Pvt. Ltd. & 4 Ors. and PPL V. K-2 Club and Lounge & Ors., Hon’ble Mr. Justice G.S. Patel of the Bombay High Court demanded more transparency in the dealings of collecting societies and emphasized upon the need to make available all details related to copyrighted works to prospective licensees. He observed that in matters of copyright enforcement, it is necessary especially in this digital age with its proliferation of material to ensure the maximum possible transparency, and “a person who needs a license must know for what he needs that license and from whom, and at what rate”.

Justice Patel further made it clear that event organizers and hosts cannot use copyrighted works without paying the license fee to the owner, whosoever that may be. Even while stating so, he agreed with the suggestion on behalf of the event organisers/ hosts to deposit the sum against the proposed license fee in court rather than directly paying the collecting societies till the suit is disposed off. The said order dated December 21, 2016 is available here.
Toyota Fails to Establish Trans-Border Reputation for Prius: Delhi High Court

A Division Bench of the Delhi High Court constituting of Hon’ble Mr. Justice Pradeep Nandrajog and Hon’ble Mr. Justice Yogesh Khanna recently held that Toyota (Respondent herein) had failed to establish trans-border reputation of its trade mark PRIUS when Prius Auto Industries (Appellants herein) adopted their name, and therefore, the Appellants could not be held guilty of passing off Toyota’s trademark.

Brief Facts/Background:

The Respondent instituted a suit against Prius Auto Industries (Defendant No. 3 therein), its two partners Deepak Mangal (Defendant No. 1 therein) and Sandeep Verma , and its sister concern Prius Auto Accessories Pvt. Ltd. pleading infringement of its trademarks TOYOTA, INNOVA and the TOYOTA DEVICE and passing off of the trade mark PRIUS. The Respondent claimed that the Appellants were selling auto parts meant for use in different brands of automobiles manufactured and sold by Toyota and were marketing spare parts using the registered trademarks of Toyota. Toyota sought an injunction to restrain the Appellants from manufacturing or selling auto parts using identical or deceptively similar trade marks as that of Toyota.

The Appellants filed a common written statement claiming that using the words of Toyota and Innova on the packaging material was not as a trademark but to merely inform the consumers that a particular automobile part was suitable for a particular brand of motor vehicle manufactured and sold by Toyota. They further contended that Prius being a word in dictionary meaning prior in use, was the motivation to adopt the word Prius as the trademark, and the same was registered by Prius Auto Industries on March 30, 2002 claiming usage since July 01, 2001.

Learned Single Judge granted ex-parte ad-interim injunction restraining the appellants from using the trade mark Toyota, Innova, Prius and the Toyota device in respect of auto parts and accessories. The order was vacated on March 19, 2010. Toyota took the matter in appeal, registered as FAO(OS) 248/2010, which was disposed of by the Division Bench on August 10, 2010, imposing an interim arrangement wherein the Appellants were restrained from using the trademarks Toyota and Innova except for the purpose of identifying that their product could be used in cars and that the Appellants were required to mention the company name after “Genuine Accessories”.

Thereafter, the Ld. Single Judge framed the issues, and the parties led their evidence and the trial concluded. After such conclusion, the Ld. Single Judge disposed off the suit on July 16, 2016. The Learned Single Judge held that Prius Auto Industries was guilty of infringing on Toyota's trademarks based on the goodwill and reputation that had been acquired by them and that the mark PRIUS by Toyota had acquired trans-border reputation and restrained the Prius Auto Industries from manufacturing, selling, or using the trademarks PRIUS, TOYOTA and INNOVA alongwith paying Rs. 10 Lakhs as compensation to Toyota. Aggrieved by the said judgment/decree dated July 16, 2016, the Appellants/ Original Defendants filed the present appeal being RFA(OS) 62 of 2016, challenging part of the impugned judgment and decree, regarding use of the trademark/word mark PRIUS which forms a part of their corporate name, and that there was no trans-border reputation of the trademark PRIUS as claimed by the Respondent in 2001, when they had commenced their business under the name/mark Prius Auto Industries. It should be noted that no relief was sought regarding being restrained from using Toyota, the Toyota device and Innova as trademarks and only use them for identification purposes.

Appellant’s (Prius Auto Industries) Contentions:

The Appellant preferred an appeal against the order of the Ld. Single Judge on the following grounds:
  1. That the word PRIUS is publici juris and that was proof that the adoption of Prius in the corporate name of the Appellant was honest and bonafide as they were the first company to introduce chrome plated accessories and motor parts in India, and were looking for a name which would serve as the equivalent of the Hindi words “Pehla Prayas” when they came across the word Prius in the dictionary.
  2.  That not all motor vehicles sold in different jurisdictions abroad under different trade marks become known in India and therefore there is no trans-border reputation in India of motor vehicles sold in foreign jurisdictions by Toyota. The Appellants counsel further submitted that the documents and publications considered by the Ld. Single Judge to establish trans-border reputation of Prius are all post April, 2001, when Prius Auto Industries had commenced its business or were not in circulation in India when the Appellant Company was incorporated.
  3. The articles being relied on by the Respondent to establish Trans-border reputation in India were released in the years when there was low internet penetration in India, and there is no evidence as to how many people accessed the websites in question when the articles were published/uploaded.
  4. That mere evidence of brochures circulated in India were not enough to prove trans-border reputation where goods under the trade mark were not sold in India.
  5. That law declared by the Supreme Court in the decision reported as SCR 1963 484 Amrit Dhara vs. Satya Deo Gupta required it to be held that the suit filed was not only hit by laches but there was acquiescence by Toyota in allowing appellants to build reputation of the trade mark Prius concerning their goods.
  6. That whereas Toyota’s application for registration of the trade mark Prius was still pending, the appellants had obtained a registration of trade mark Prius in the year 2001 and benefit of said registration as contemplated by Section 28 of the Trade Marks Act, 1999 would be available to the appellants.
  7. That since admittedly appellants were using the trade mark Prius since April, 2001 and the suit was filed in December, 2009, i.e. after more than eight years of the mark being used, the test of likelihood of confusion had not to be applied. The test to be applied was actual confusion being proved.
Respondent’s (Toyota) Contentions:
  1.  That though the word Prius was a word in the dictionary as of the year 2000, its origin is clearly Latin, therefore, its absorption in English language was not of such a nature and to such an extent that a person, either in the general public or in the automobile industry trade, would be using it or would be aware of it. The word is not an apt description for an automobile. It is therefore an arbitrary and fanciful mark and thus it deserves a strong protection.
  2. That when Toyota launched the hybrid car Prius in the year 1997 it became a global event because concerns of environmentalists were likely to be met and this became global news. Further, it was contended that as per Section 56 of the Evidence Act, 1872, a fact which a Court will take judicial notice of need not be proved and that as per Section 57 a Court shall take judicial notice of matters of public history and for which the Court may resort for its aid to appropriate books or documents of reference. The Counsel for the Respondents drew a parallel with the drug Viagra, whose reputation was held by this Court in Pfizer Products Inc. case (supra), to have spread like fire in the forest just after it was launched and which came to be known as a wonder drug, learned counsel urged that same would be the position in the instant case.
  3. There was dishonesty in adopting the trade mark Prius by the appellants because the family of defendant No.2 was in the trade of auto parts for over ten years when defendants No.1 and 2 adopted the trade mark Prius. From the fact that appellants were also infringing the trade marks Toyota, Innova and the Toyota logo, it was urged that cases of multiple copying were also an evidence of dishonest appropriation.
  4. That the entire path taken on deciding on the name Prius as seen in the affidavit by way of examination in chief of the Defendant No. 1 therein, Deepak Mangal, wherein he explains that since it was their first venture in producing chrome plated automobile parts they wanted a name that would be along the lines of the Hindi words “Pehla Prayas” translated as “first attempt” in English, and thereafter came across the word Prius in a dictionary and chose it as their company name.
  5.  The fifth contention urged was that the triple identity test being fulfilled in the instant case, a very strong case against the appellants for grant of injunction was made out. The triple test being: identity in the goods (motor vehicles and spare parts in relation thereto); goods sold in the same market; and the class of buyers being the same.
  6.  That where dishonesty in adoption of a well-known trade mark was established, principles of equity which afford a protection in the form of acquiescence or waiver in favour of the offender, would not be applicable.
  7. The seventh argument was that the appellants cannot invoke the benefit of Section 28(3) of the Trade Marks Act, 1999, because the statutory provision comes into play when both parties are bona-fide registered proprietors of a trade mark and neither can sue the other, but each can sue third parties. The adoption in the instant case not being bona-fide and honest, learned counsel urged that the protection envisaged by the Section would not be available to the appellants.

Decision of the Division Bench

The Division Bench observed that the law on trans-border reputation requires two facts to be established. The first is reputation in foreign jurisdictions of the trade mark. The second is knowledge of the trade mark due to its reputation abroad in a domestic jurisdiction. The reason being a trade mark is territorial in its operation. If its reputation spills over beyond the territories of its operation the benefit thereof can be claimed in an action of passing off. The corollary of the finding that newspaper reporting of the event of Prius car launched in Japan in the year 1997, and further sales in the year 1998 and 1999 being not with much prominence would be that the knowledge would be limited to the class of persons associated with the trade in automobiles. The trade mark has to build a reputation in the form of public confidence in the goods and therefore the association of the mark with the source of the goods. Toyota has led no evidence of money spent in advertisements in India of the Prius car before it was sold for the first time in India in the year 2010.

The Division Bench further observed that issues of trans-border reputation or likelihood of confusion decided in various cases cited before the Bench and even in cases not cited arose before the Court either in quia timet actions or when the defendants had just entered the market. At that point of time, the issue could obviously be decided on the test of likelihood of confusion, but in a case of the kind at hand where the appellants had been selling the goods under the offending trade mark for nearly ten years when the suit for injunction was filed, there must be evidence of actual confusion.

The Division Bench also observed that the argument that dishonesty of the appellants is writ large from the fact that they brazenly infringed Toyota’s registered trade mark Toyota, Innova and the Toyota logo, overlooks the fact that the appellants had been selling auto parts under the trade mark Prius since April 2001, and till December 2009 when the suit was filed there was a constant rise in the sales figures which by December 2009 would be around Rs. 4.5 crores for the period 2006 till December 2009. However, It is possible that manner of representation to write that the goods are compatible may appear to one as a trade mark use and to another as a non-trade mark use. The Division Bench observed that this would not be evidence of dishonesty, and that this line of reasoning adopted by Toyota is an ancillary line of reasoning and not the main plank. It is intended to support the main plea of dishonesty in adoption sought to be proved through trans-border reputation and lack of credibility in the justification given by the appellants as to how defendants No.1 and 2 adopted the trade mark Prius motivated by the words ‘Pehla Prayas’.

The Division Bench observed Toyota has failed to establish trans-border reputation of its trade mark Prius in India when appellants adopted the same. The Division Bench found credibility in the justification given by the appellants as to how they adopted the word prius which was publici juris in the year 2001.

The Division Bench also observed that the justification in the written statement is, not that it was the first (Pehla) business venture of the appellants. The justification given is that the appellants were the first in India to manufacture add-on chrome plated accessories. The word ‘Pehla’ was used in said context of the first manufacturer and not the first business venture. The word ‘Prayas’ was used as an attempt in the context of the manufacture and not the business venture. The Division Bench held if a word is publici juris and a person gives good justification as to how he appropriated a word as a trade mark, relating to the state of mind of the person, unless the testimony of the person is discredited, a Court would have no option but to accept the statement made on oath because the fact is of a kind which a person can prove by stating the truthfulness thereof on oath. And if, as in the instant case, there is proof that the word was publici juris it lends assurance to the claim. The Division Bench further held that the logical line of reasoning for finding a catchy trademark for Pehla Prayas would lead from Pehla meaning first, to the English word Prior, and thereafter Prius, and therefore the Division Bench did not find any blemish in the logic of the search and the reasoning.

The Division Bench gave the following order in view of all the observations and submissions:

“We accordingly allow the appeal with respect to the limited issues which were argued in the appeal concerning the trade mark Prius and set aside the decree as per para 207(i) but limited to the injunction issued relating to the trade mark Prius. Since the appellants did not challenge the injunction order, which we find is upon a condition, concerning the trade mark Toyota, the Toyota device and the trade mark Innova, said part of the injunction granted is retained. Mandatory injunction as per para 207 (ii) is set aside.”