Sunday, 6 May 2018

India: Dismissal of the Suit on the Ground of Non-Filing of Assignment of Trademarks in Favour of the Indian Company: Levi Strauss v. Rajesh Agarwal

Recently, Hon’ble Justice Pratibha Singh of the Delhi High Court in the case of Levi Strauss & Co. v. Rajesh Agarwal, held that the dismissal of the suit on the ground of non-filing of assignment of trademarks in favour of the Indian Company, was erroneous and contrary to law as the Indian Company along with the Holding Company ought to be treated as `one economic entity’.
Brief Facts
  • Levi Strauss (hereinafter referred as ‘the Plaintiff’) is the registered proprietor of the trade marks “LEVI’S”, “LEVI STRAUSS”, derivatives and labels thereof.
  • It claims to be using the trade mark since 1850 and claims to be one of the well-known brands for wearing apparels, particularly jeans.
  • The Plaintiff filed the suit for permanent injunction in the Delhi District Court restraining the infringement of trademark, copyright and passing off in respect of the Plaintiff’s trademark “LEVI’S”, “LEVI STRAUSS”, derivatives and labels thereof (hereinafter `trade marks').
  • According to the plaint, the Defendant was selling wearing apparels bearing identical logos and devices as of the Plaintiff. The Plaintiff, thus, prayed for permanent injunction and damages.
  • Firstly, on October 3, 2001, an ex-parte ad-interim injunction was granted which continued until the disposal of the suit. In addition, a Local Commissioner was also appointed to visit the premises of the Defendant located at Hyderabad to make an inventory of the infringing products. The said Local Commissioner had filed his report on October 6, 2001.
  • By an order of the Ld. Additional District Judge dated November 28, 2006 (hereinafter referred to as ‘impugned order’) the suit filed by Levi Strauss was dismissed. The grounds of refusal were:

o   The Local Commissioner, who had sized the infringing goods of the Defendant at Hyderabad, had not been examined by the Plaintiff.
o   No assignment was placed on record to show that the Plaintiff Company had assigned its mark to Levi’s Strauss India Pvt. Ltd., an affiliate entity of the Plaintiff in India. 
  • Thus, resulting in this appeal. Vide order dated May 28, 2007, in the present appeal, it was directed that the injunction granted on October 3, 2001 would continue. Thereafter, the appeal was admitted on October 23, 2007.

  • Whether the Defendant is guilty of infringing Plaintiff’s trademark?
  • Whether the non-filing of the assignment of the trademarks in favour of the Indian Company was erroneous in the eyes of the law?

Infringing Marks

The original labels bearing the infringing marks, seized from the Defendant premises:

Plaintiff’s Contentions
  • It was submitted that the impugned order is erroneous in its findings. It relied on Order 26 Rule 10 (2) of the Code of Civil Procedure (hereinafter referred to as the ‘CPC’) to support its contention that the Commissioner’s report is evidence in the suit and can be admitted as evidence even without the Commissioner being examined.
  • Further, regarding the sales and advertising expenditure as also the assignment in favour of the Indian subsidiary is concerned, it submitted “that the Plaintiff entity which has filed the suit is itself the registered proprietor of the trademarks and has been using the said marks globally either by itself or through its various affiliates and subsidiaries across the world. The Plaintiff and all its affiliate/associate companies ought to be treated as one economic entity, inasmuch as the businesses are conducted by the Plaintiff in different countries through such companies but the marks are continued to be owned by the Plaintiff itself. Thus, affiliates and subsidiaries use the marks with the permission from the Plaintiff and there is no requirement of showing any assignment in favour of such affiliated/subsidiary companies”.

Defendant’s Contentions
The Defendant did not appear. Hence, the suit proceeded ex-parte.

Court’s Decision
  • The Court took note of the detailed report dated October 12, 2001, filed by the Local Commissioner.  “In the said report, the Commissioner categorically records that there were 57 pairs of jeans bearing the infringing marks and logos which were found at the premises of the Defendant which were bearing the infringing marks and labels. The said infringing products were handed over on superdari to the Defendant. The Local Commissioner has also placed on record the original labels bearing the infringing marks, seized from the Defendant premises”.
  • Further, it held that “the Local Commissioner is in fact a representative of the Court itself and it is for this reason that Order 26 Rule 10 (2) of CPC clearly provides that once the Commissioner has filed the evidence along with his report the same shall be treated as evidence in the suit and shall form part of the record”.
  • Relying on Harbhajan Singh v. Smt. Shakuntala Devi Sharma and Misrilal Ramratan Mansukhlal v. A. S. Shaik Fathimal, it held that in the absence of any challenge by the Defendant to the report of the Local Commissioner, the law does not require its examination.
  • Relying on the concept of `one economic entity' as enunciated in Kiran Jogani & Anr. 2004 (28) PTC 347 (Del), it held that the dismissal of the suit on the ground of the non-filing of the assignment of the trademarks in favour of the Indian Company, was erroneous and contrary to law as “in this day and age where businesses are conducted globally, it cannot be held that carrying on of business through local affiliates precludes protection of trademarks and other intellectual property of the original owner. Irrespective of the entities using the marks in various countries and territories due to business exigencies, the marks used are the same and are entitled to be protected. The business in different countries, for the purpose of protection of trade marks, is to be taken as a `single source' as the fundamental concept of trade marks is to act as a `source identifier'. The brands and marks signify the source and in turn signify quality products. The trust that is placed by the consumers is in the brand or the marks which transcend beyond the names of the entities selling or advertising the products locally.” Finding the case to be of identical copying, the Court allowed the appeal, awarding permanent injunction against the Defendant and costs of INR 14,750/- (USD 180 approx.) in favour of the Plaintiff.
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