Trade dress essentially
refers to the visual appearance of the product. This includes the package,
shape, pattern, design, graphics and even the combination of colors which
effects its sensual features. Since the product packaging plays a key role in
grabbing the attention of the consumer after which the consumers recognize the
brand’s products by the packaging, the protection of the same from competitors becomes
really important. For this reason, the proprietors get the trade dress of their
product registered. The concept of trade dress originated from the US
Legislation, The Lanham Act, wherein even the unregistered trade dress can be
protected. The Trade Marks Act, 1999, does not contain a separate provision for
trade dress and the same is included in the new definition of trade mark. It
states that a mark consists of the shape
of goods, packaging or combination of colors or any combination thereof.
Trade dress protection
is intended to protect consumers from packaging or appearance of products that
are designed to imitate other products; to prevent a consumer from buying one
product under the belief that it is another. For E.g., Apple Inc. recently
secured the registration over the design of its flagship Apple Stores as trade
dress.
The Plaintiff is
entitled to injunction, damages, accounts and even the infringing units. In majority
of the cases where the counterfeit products use the same or similar packaging
the courts do not award compensatory damages on account of loss of actual
sales. Coordinate Benches of Delhi High Court had in 2008 awarded such damages
of INR 100,000 (USD 1469 approx.) in M/s
General Electric Company v. Mr. Altamas Kha & Others. Similarly, in
2005, in Microsoft Corporation v. Yogesh
Papat & Anr. the Bench awarded a sum of INR 1,900,000 (USD 27922
approx.) for loss of profit to the Plaintiff. Recently, the Hon’ble Delhi High
Court awarded a compensation of INR 33,16,320 (USD 48766 approx.) to the Plaintiff
on account of loss of actual sales.
Sandisk LLC, & Anr Vs. Transton
On
May 10, 2018, the Hon’ble Delhi High Court, in the case of Sandisk LLC, Anr vs.
Transton, passed an order granting compensation
of INR 33,16,320 (USD 48766 approx.) for loss of sales to Sandisk LLC,
& Anr (hereinafter referred to as the “Plaintiff no. 1” and “Plaintiff no.
2” respectively), holding that Transton (hereinafter referred to as the
“Defendants”) were using the registered trademark and product packaging of the
Plaintiffs’ to sell its counterfeit products.
Brief Facts
- The Plaintiff no. 1 is a company founded in 1998 and is the world’s largest providers of flash memory storage solutions under the house mark SANDISK. Plaintiff no. 2 is a registered user of the trademark SanDisk and the Red Frame Logo belonging to Plaintiff no. 1
- Plaintiff no. 1 has been extensively and continuously using the trademark globally since 1995 and in India since 2005. It possesses both common law trademark rights as well as trademark registrations for the mark SanDisk worldwide. It is also the registered proprietor of a variety of word marks and device marks in India including the SanDisk logo and the Red Frame logo, since 2003 under Class 9 of the Trade Marks Act, 1999 and all these trademarks are valid and subsisting.
- On October, 2017, upon inquiry by the Plaintiff, an investigator found that the Defendant was dealing in loose microSDHC cards which appeared to be “counterfeit products” and were “in a packaging identical to the Plaintiff No. 1’s packaging”. The aforesaid microSDHC cards were sold to the Plaintiffs’ investigator, in retail packaging under a kaccha invoice.
- The Plaintiff seeks permanent injunction restraining infringement of its trade mark SanDisk and Red Frame Logo, passing off, rendition of account of profits, damages, delivery up, etc. against the Defendant.
- On October 13, 2017, this Court granted an ex parte ad interim injunction in favor of the Plaintiffs and appointed a Local Commissioner to visit the premises of the Defendant.
- On October 17, 2017, the Local Commissioner visited the premises of the Defendants and seized 493 units of MicroSDHC cards bearing the Plaintiff’s trademark and packaging. The same were sealed and were given by the Local Commissioner on Superdari to the Defendant.
- Vide order dated April 3, 2018, the Defendant was proceeded ex-parte and the ad interim injunction was confirmed till the disposal of the suit.
Issues
- Whether the mark and product packaging as used by Defendant amounts to infringement of Plaintiff’s trademark and product packaging?
The Packaging of Parties[1]
The key elements of the
Plaintiff’s product (memory card) packaging are
- Red product packaging with white lettering.
- A “Red Frame Logo” which describes the capacity of the memory card on the top right corner.
- The SanDisk logo in a unique font in white lettering prominently at the bottom.
Plaintiffs’ Contentions
- The counsel for Plaintiffs’ submits that an analysis of the sample products procured by the investigator reveals that the same were counterfeited.
- It was contended that the Defendant had infringed upon the statutory rights of the Plaintiffs’ by copying each and every element of the Plaintiffs product and/or product packaging, with the sole intent of duping unwary customers by selling counterfeit products and to ride on the Plaintiffs reputation and goodwill.
Submissions
The Plaintiffs
submitted their ex-parte evidence by
way of an affidavit of Mr. Vishal Garg, the Constituted Attorney of the
Plaintiffs. The affidavit deposed the costs claimed as follows: -
S.
NO.
|
PARTICULARS
OF LOSS
|
AMOUNT
PRAYED (Rs.)
|
1.
|
Actual
lost sales[2]
|
33,16,320
|
2.
|
Punitive
damages[3]
|
67,00,000
|
3.
|
Cost
of litigation[4]
|
10,31,125
|
Court’s View
- The Court is of the view that due to extensive use, the Plaintiffs’ mark SANDISK, and Red Frame logo have acquired reputation and goodwill globally as well as in India.
- On the basis of the pleadings, documents as well as the evidence on record, the Court held that the Defendants were using the registered trade mark of the Plaintiffs and its product packaging to sell counterfeit products with the view to trade upon and benefit from the reputation and goodwill of the Plaintiff’s mark and pass off its services as that of the Plaintiffs.
- The Court opined that the use of the Plaintiffs’ mark by the Defendants is bound to cause incalculable losses, harm and injury to the Plaintiff and immense public harm.
- Keeping in view the evidences stating the costs on account of loss of actual sales, the Court decreed a compensation of INR 33,16,3321 (INR 2,72,360*6) along with costs relating to lawyer fees and court fees and delivery of the 493 units of infringing goods as seized by the Local Commissioner.
- Keeping in view the judgments of this Court in Super Cassettes Industries Private Limited v. HRCN Cable Network 2017 (72) PTC 556 [Del] and in Hindustan Unilever Limited Vs. Reckitt Benckiser India Limited, 2014 (57) PTC 495 [Del] [DB], the Court did not grant any punitive damages to the Plaintiff.
[1] As averred in the plain by the
plaintiff / as mentioned in the decision of Delhi High Court dated 10th
May, 2018
[2]
on
the basis on quantity of units seized by the local commissioner, the Defendant
had been doing business for at least
6 months prior to the institution of the present suit. The actual value of
products will be Rs. 2,76,360. The value of stocks for 6 months will be Rs.
33,16,320 (2,76,360 * 6)
[3]
damages
on account of loss of business, loss of confidence and trust of customers and
loss of “image”
[4]
court
fees, costs for drafting and filing lawsuits; costs of appearances; costs for all
forms of service; costs for Local
Commission proceedings
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