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2009 DIGILAW 1005 (MAD)

Nakoda Dairy (P) Ltd. v. Kewal Chand Vinod Kumar & Others

2009-04-06

M.JEYAPAUL

body2009
Judgment Common Order: 1. O.A.No.557 of 2008 is filed seeking injunction restraining the respondents and their agents from infringing the applicants trade mark Nakoda by using it as their trade mark, e-mail id/trading style or corporate name/service mark, letter heads, exhibits or any other stationery material containing the trade mark Nakoda or issuing advertisements under the brand name Nakoda or by using any other trade mark which is in any way visually, phonetically or deceptively similar to the applicants registered trade mark Nakoda in the course of their trade and business pending disposal of the suit. 2. O.A.No.558 of 2008 is filed seeking an order of injunction restraining the respondents or their agents from passing off the respondents goods under the trade name, mark Nakoda with any suffix or prefix and in any manner passing off and/or enabling others to pass off the respondents goods as and for the applicants goods or doing any act or deed calculated to deceive the consumers pending disposal of the suit. 3. Application No.4354 of 2008 is filed seeking to vacate the order of ad interim injunction granted in O.A.No.558 of 2008 in C.S.No.497 of 2008 on 30.4.2008. 4. Application No.4355 of 2008 is filed seeking to vacate the order of ad interim injunction granted in O.A.No.557 of 2008 in C.S.No.497 of 2008 on 30.4.2008. 5. To avoid confusion, the plaintiff, who has filed the applications seeking orders of injunction is referred as plaintiff and the defendants, who have filed the applications seeking to file applications seeking to vacate the orders of injunction are referred as defendants. 6. The case in brief of the plaintiff is as follows:- The plaintiff is engaged in sale and distribution of milk and other milk products. They started their business wayback in November 1978 at Kumbakonam and extended their business activity to Bangalore, Pudhucherry and Hyderabad. They originally started business in the name of Sree Nakoda Stores on 210. 1978. Then it became a Private Limited Company in the name and style of Nakoda Distributors Private Limited in the year 1998. Nakoda Distributors Private Limited applied for trade mark Nakoda in respect of milk and milk products and obtained certificate of registration on 20.5.2004. They originally started business in the name of Sree Nakoda Stores on 210. 1978. Then it became a Private Limited Company in the name and style of Nakoda Distributors Private Limited in the year 1998. Nakoda Distributors Private Limited applied for trade mark Nakoda in respect of milk and milk products and obtained certificate of registration on 20.5.2004. In the year 2006, Nakoda Dairy Private Limited was formed to do exclusive business in milk and other milk products in the name and style of Nakoda Dairy Private Limited and the same was incorporated at Bangalore. The trade mark of Nakoda Distributors Private Limited was assigned to the plaintiff M/s.Nakoda Dairy Private Limited on 29. 2005. The plaintiff has acquired enormous goodwill. They have also been awarded ISO 90012000 certification in the year 2007. Their business has increased many fold both in India and abroad. They are also engaged in extensive promotion exercise. The defendants are unauthorisedly and illegally using the trade mark of the plaintiff while selling their milk products to the public which is per se illegal and mala fide and is bound to cause deception and confusion among the public. The word Nakoda used by the plaintiff is associated by the public with the milk and other dairy products sold by them. The defendants are infringing upon the registered trade mark of the plaintiff with mala fide intention of capitalising on the huge success of the plaintiff. Therefore, the plaintiffs have sought for injunction restraining the defendants from using their trade mark and also from passing off their products in the trade name of the plaintiff. 7. The counter case of the defendants, in brief, is as follows:- The plaintiff has suppressed very vital facts and obtained orders of injunction from this court. The second defendant Company filed a cancellation application dated 30.8.2007 against M/s. Nakoda Distributors Private Limited before the Intellectual Property Appellate Board, Chennai. The present suit is not maintainable as appropriate proceedings in respect of cancellation of the trade mark Nakoda is pending before the competent court. The proceedings of the suit is liable to be stayed by this court under section 124(1)(b)(i) of the Trade Marks Act, 1999. The plaintiff filed a suit in O.S.No.8240 of 2007 before the Principal City Civil cum Sessions Judge, Bangalore claiming identical relief against the defendants. The proceedings of the suit is liable to be stayed by this court under section 124(1)(b)(i) of the Trade Marks Act, 1999. The plaintiff filed a suit in O.S.No.8240 of 2007 before the Principal City Civil cum Sessions Judge, Bangalore claiming identical relief against the defendants. They sought for withdrawal of the suit with liberty to file fresh suit. However, the above suit was withdrawn without any liberty given to the plaintiff to file a fresh suit. The plaintiff has not come to this court with clean hands. The defendants started using their trade mark Nakoda in the year 1978 itself. They applied for trade mark registration for the brand name Nakoda but the same was not properly followed up. In the year 1998, the label "Nakoda Dairy Special" was registered under the Copyrights Act. Under section 45 of the Trade Marks Act, registration of assignment is mandatory. No entry has been made so far by the registry under section 45(1) of the Trade Marks Act, 1999 regarding the assignment. Therefore, the alleged assignment cannot be admitted in evidence before the court of law as per section 45(2) of the Trade Marks Act, 1999. Even as per the own showing of the plaintiff, their predecessors started using the trade mark only from 13. 2004. Whereas, the defendants have been using the trade mark since 1978. The Original owner of the trade mark was trading in Spencers Goods, Nippo Batteries and other general goods in the year 1978. Defendants 1 to 3 have earned great deal of goodwill for their products. The defendants are prior users. The defendants have spent several crores of rupees for the development of their goodwill and mark. Their turnover exceeded a sum of rupees fifty crores. They have got wide network of milk products both in India and abroad under the brand name Nakoda. Therefore, the defendants have sought for dismissal of both the applications filed by the plaintiff. 8. Suppression of material facts:-Learned counsel appearing for the plaintiff would submit that each and every act of infringement gives rise to a different cause of action. Therefore, the plaintiff is entitled to lay a suit before this court. The non-reference to the earlier suit before the court at Bangalore on a different cause of action does not non-suit the plaintiff of their claims. 9. Therefore, the plaintiff is entitled to lay a suit before this court. The non-reference to the earlier suit before the court at Bangalore on a different cause of action does not non-suit the plaintiff of their claims. 9. Per contra, learned counsel appearing for the defendants would vehemently submit that it is true that the plaintiff is entitled to initiate action for infringement for every act of infringement committed by the defendants, but, they cannot suppress the material fact that they filed an earlier suit before the court at Bangalore and the same was withdrawn as dismissed without any liberty given to them to file a fresh suit over there. 10. The Supreme Court in M/S. Bengal Waterproof Ltd. V. M/S. Bombay Waterproof Mfg. Co. ( AIR 1997 SC 1398 ) has observed as follows:- ."It is obvious that such infringement of a registered trade mark carried on from time to time would give a recurring cause of action to the holder of the trade mark to make a grievance about the same and similarly such impugned passing off actions also would give a recurring cause of action to the plaintiff to make a grievance about the same and to seek appropriate relief from the Court. It is now settled that an action for passing off is a common law remedy being an action in substance of deceit under the Law of Torts. Wherever and whenever fresh deceitful act is committed the person deceived would naturally have a fresh cause of action in his favour. Thus every time when a person passes off his goods as those of another he commits the act of such deceit. Similarly whenever and wherever a person commits breach of a registered trade mark of another he commits a recurring act of breach of infringement of such trade mark giving a recurring and fresh cause of action at each time of such infringement to the party aggrieved." 11. For every recurring cause of action, infringement and passing off actions are permissible. Therefore, there cannot be any legally sustainable plea that action for infringement and passing off cannot be sustained in the court of law. 12. The vital question which arises for consideration is whether there is any suppression of fact which goes to the disadvantage of the defendants. For every recurring cause of action, infringement and passing off actions are permissible. Therefore, there cannot be any legally sustainable plea that action for infringement and passing off cannot be sustained in the court of law. 12. The vital question which arises for consideration is whether there is any suppression of fact which goes to the disadvantage of the defendants. Here is a case where the plaintiff, of course, approached the court at Bangalore and obtained an order of injunction. Thereafter, the plaintiff sought for withdrawal of the suit with liberty to file fresh suit on the same cause of action. But, of course, the said suit was dismissed as withdrawn. It is not a case where the plaintiff was unsuccessful before the court at Bangalore and thereafter approached this court hoodwinking the defendants and obtained an order of injunction in their favour ex parte. Pleading a different cause of action before this court, the plaintiff could very well approach this court seeking an order of injunction as against the defendants. Therefore, the suppression of the earlier suit filed by the plaintiff before the Bangalore Court is not so material to prejudice the interest of the defendants. Even if the plaintiff has disclosed the fact that a suit was already laid and an order of injunction was obtained ex parte against the defendants herein, the court would definitely entertain a plea for an order of injunction. Therefore, it is concluded that there is no suppression of material fact which goes to the root of the adjudication of the application filed by the plaintiff. 13. Right to defend the trade mark during pendency of cancellation proceedings before the Intellectual Property Appellate Board:- Learned counsel appearing for the plaintiff would submit that the rectification proceedings pending before the Intellectual Property Appellate Board do not bar the plaintiff to file a suit and obtain an order to protect their proprietorship of the registered trade mark. 14. Per contra, the learned counsel appearing for the defendants would vehemently submit that the entire proceedings before this court will have to be stayed and no order of injunction can be granted when a challenge has been made with respect to the certificate of registration issued to the plaintiff for the trade mark Nakoda. 15. 14. Per contra, the learned counsel appearing for the defendants would vehemently submit that the entire proceedings before this court will have to be stayed and no order of injunction can be granted when a challenge has been made with respect to the certificate of registration issued to the plaintiff for the trade mark Nakoda. 15. There is no dispute to the fact that the second defendant has challenged the registration of trade mark Nakoda by the plaintiff before the Intellectual Property Appellate Board, Chennai. The legal question as to whether this court is mandated to stay the proceedings as contemplated under section 124 of the Trade Marks Act, 1999, will be dealt with separately in the appropriate application which was already filed by the defendants. The court has now embarked upon the question as to whether an application for injunction can be entertained in the face of cancellation proceedings already initiated by the defendants as against the plaintiff for the issuance of the registration certificate in their favour for the trade mark Nakoda. 16. The Supreme Court has ruled out in S.M. Dyechem Ltd. V. Cadbury (India) Ltd ( AIR 2000 SC 2114 ) that the pendency of Rectification Proceedings under section 124 of the Trade Marks Act, 1999 does not bar the right to file a suit and obtain interim orders to protect the interest of the registered trade mark holders. The Rectification Proceedings may take its own time for its termination. An unscrupulous trader may prolong the Rectification Proceedings pending before the Intellectual Property Appellate Board. But, such an illegal action on the part of the trader shall not accord premium in his favour. Therefore, pendency of Rectification Proceedings cannot be a valid defence for the infringement action initiated by the proprietor of the trade mark and for obtaining an order of interim injunction. 17. Fate of the action for infringement and passing off when the Transfer of assignment is pending registration:- The plaintiff Company was incorporated at Bangalore in the year 2006. Nakoda Distributors Private Limited, who obtained certificate of registration of the trade mark Nakoda on 20.5.2004, executed an assignment deed on 29. 2005 assigning the trademark Nakoda in favour of the plaintiff Nakoda Dairy Private Limited. 18. Nakoda Distributors Private Limited, who obtained certificate of registration of the trade mark Nakoda on 20.5.2004, executed an assignment deed on 29. 2005 assigning the trademark Nakoda in favour of the plaintiff Nakoda Dairy Private Limited. 18. It is useful to refer to the decision of the Delhi High Court in M/S. Modi Threads Ltd. vs. M/S. Som Soot Gola Factory (AIR 1992 DELHI 4) wherein it has been held as follows:- "It is true that the plaintiffs application for getting transferred the registered trade mark in its name in the office of the Registrar is still pending but that does not debar the plaintiff to protect the violation of the aforesaid trade mark at the hands of unscrupulous persons by filing an action in court of law for injunction. It is, prima facie, clear to me that during the interregnum period when the application of the plaintiff is kept pending for consideration by the Registrar of Trade Marks the dishonest persons cannot be allowed to make use of the said trade mark in order to get themselves illegally enriched earning upon the reputation built up qua that trade mark by the predecessor-in-interest of the plaintiff." 19. It has been held in Grandlay Electricals (India) Limited v. Vidya Batra (1998 PTC (18) 646) as follows:- "Now the question which is precariously perched on the tip of the tongue is as to whether the plaintiffs in view of the above stated circumstances have got a right to maintain an action for the infringement of their trade mark "GRANDLAY". My answer to the above question is a positive yes. It is manifest from the evidence and the facts canvassed above that the trade mark "GRANDLAY" fell to the share of the plaintiff Shri Bihari Lal Batra vide the award dated December 5, 1985. Subsequently through the retirement deed dated October 22, 1988 Shri Sudhir Batra and Shri. K.L. Batra relinquished their rights and interests in the partnership property including the trade mark "GRANDLAY" in favour of the plaintiff Shri Bihari Lal Batra. The plaintiffs herein have further applied to the Registrar of Trade Mark for their names being entered in the register of Trade Marks as a proprietor of the impugned trade mark No.214129 in Cl.9 from October 22, 1988 onwards. The said matter is still sub-judice and no order thereon has so far been passed. The plaintiffs herein have further applied to the Registrar of Trade Mark for their names being entered in the register of Trade Marks as a proprietor of the impugned trade mark No.214129 in Cl.9 from October 22, 1988 onwards. The said matter is still sub-judice and no order thereon has so far been passed. Thus if no action has been taken by the Registrar of Trade Marks on the application of the plaintiffs the plaintiffs cannot be blamed therefore. Admittedly the impugned trade mark GRANDLAY CABLES was a registered trade mark under No.214129 dated March 2, 1963 in Cl.9 in relation to insulated electric wires and insulated cables. It was allotted to the plaintiffs with the consent of the defendants vide the consent arbitration award dated December 5, 1985. Thus the plaintiffs have virtually become the owners and proprietors of the trade mark as per the consent of the other partners in the erstwhile partnership including the defendant Shri. C.L. Batra. Hence the defendants should not have any quarrel on the said score and I fell they cannot be permitted to raise any sort of objection on the said ground. If the plaintiffs have become the owners of the impugned trade mark which h as fallen to their share and that, too, with the consent of the defendants, whereunder they have got a right to carry on their business, it would be highly unjust and improper to allow the defendants to object to the suit on the ground that the plaintiffs cannot be permitted to maintain an action for infringement of their trade mark and for passing off the goods of the defendants as that of the plaintiffs under the said trade mark and trade name." 20. I am in respectful agreement with the observations of the Delhi High Court in the above cited two judgments. Pendency of Transfer Proceedings before the Registrar cannot at all be a bar as contended by the learned counsel appearing for the plaintiff to lay an infringement and passing off action and obtain an order of interim injunction as otherwise, unscrupulous traders, who infringe the trade mark would go scot-free during the pendency of the Transfer Proceedings pending before the Registrar. Therefore, it is held that the plaintiff is not debarred from canvassing their plea for interim injunction even during the pendency of the Transfer Proceedings initiated by the plaintiff before the Registrar. Therefore, it is held that the plaintiff is not debarred from canvassing their plea for interim injunction even during the pendency of the Transfer Proceedings initiated by the plaintiff before the Registrar. At any rate, the plea of the defendants against the backdrop of section 124 of the Trade Marks Act, 1999 is reserved for adjudication in the appropriate application which has already been filed by the defendants. 21. Prior user:- Under section 34 of the Trade Marks Act, 1999, a vital right on the prior user of the trade mark has been well recognised. Even a registered trade mark holder cannot lawfully interfere with or restrain the use of the trade mark by the prior user. The Registrar is bound to register the trade mark of the prior user even if the very same trade mark was already registered in favour of a person whose use is of recent origin. Prior registration of the recent user cannot be a ground to reject the plea of the prior user to register the trade mark on the ground that he is the prior user of the trade mark. 22. The learned counsel appearing for the plaintiff would submit that the plaintiff has been using the trade mark Nakoda right from the year 1978 and that thereafter, the defendants cannot claim that they are the prior users of the trade mark Nakoda. 23. Per contra, learned counsel appearing for the defendants would contend that no substantial documents were filed on the side of the plaintiff to establish prima facie that they have been in the milk business right from the year 1978, whereas voluminous documents filed on the side of the defendants would go to establish that they have been in the trade of milk products right from the year 1978. Therefore, the right of the prior user will have to be recognised by this court. Applying the yardstick adumbrated under section 34 of the Trade Marks Act, the business activity of the defendants shall not be restrained just because the recent user of the trade mark has obtained registration certificate, it is effectively contended. 24. The plaintiff has obtained permanent account number in the name of Sree Nakoda Stores, Kumbakonam on 210. 1978 from the Director of Income Tax (Systems). A deed of partnership was entered into in the name and style of Sree Nakoda Stores on the very same day. 24. The plaintiff has obtained permanent account number in the name of Sree Nakoda Stores, Kumbakonam on 210. 1978 from the Director of Income Tax (Systems). A deed of partnership was entered into in the name and style of Sree Nakoda Stores on the very same day. It is to be noted that the partnership firm had proposed to act as agents and distributors for the Stockists of Spencer goods, Nippo Batteries and other general goods. No milk product was dealt by Sree Nakoda Stores. Therefore, as rightly pointed out by the learned counsel appearing for the defendants, Sree Nakoda Stores is not a brand name of any product. It is a business store which acted as a Distributing Agent for certain Stockists of branded and unbranded products. 25. Assessment Orders for the year 1980-81 and 1981-82 passed by the Income Tax Department were produced for perusal. In the certificate of registration issued by the Commercial Tax Department under the Tamil Nadu General Sales Tax Act on 22. 1982, it has been shown that Sree Nakoda Stores, in addition to their business in general goods, batteries, started dealing in milk products. It is pertinent to note that there was no indication that milk powder was produced by them. The plaintiff has also filed assessment orders for the assessment years 1982-83, 1983-84, 1984-85 and 1986-87. On 30.8.1983, Sree Nakoda Stores was opened at Bangalore. The invitation card would disclose that Sree Nakoda Stores was Stockists of Procter and Gamble Limited. Very specifically in the assessment order passed under the Central Sales Tax Act on 2. 1995, it has been mentioned that M/s. Nakoda Stores situated at Bangalore was dealing with drugs and cosmetics. There is no reference as to the dealing in milk powder which was referred in the certificate of registration dated 22. 1982. There is also no material to show prima facie that they continuously transacted the business atleast in selling milk powder. 26. Nakoda Distributors Private Limited was incorporated at Bangalore on 13. 1998. In form IV filed under the Central Sales Tax Act during the period 1998-99, it has been specifically mentioned that Nakoda Distributors Private Limited dealt with consumer, pharmaceutical and dairy products. They were engaged in blending, repacking and marketing of dairy products. 26. Nakoda Distributors Private Limited was incorporated at Bangalore on 13. 1998. In form IV filed under the Central Sales Tax Act during the period 1998-99, it has been specifically mentioned that Nakoda Distributors Private Limited dealt with consumer, pharmaceutical and dairy products. They were engaged in blending, repacking and marketing of dairy products. Again it is pertinent to note that never was the Company Nakoda Distributors Private Limited engaged in manufacture or production of milk products. They have acted only as wholesale distributors. 27. M/s. Nakoda Distributors Private Limited applied for registration of the trade mark Nakoda on 29. 2005 claiming user of the trade mark Nakoda since 19th March 2004. 28. The learned counsel appearing for the plaintiff would contend that the date of manufacturing of the milk products was shown as 19th March 2004 in the application form seeking registration of their trade mark. The date of manufacture is quite immaterial as far as the claim for user of the trade mark is concerned. M/s. Nakoda Distributors Private Limited have specifically claimed that they started using the trade mark itself only from 13. 2004. As per the own showing of the plaintiff, their predecessors have started using the trade mark Nakoda continuously only from 19th March 2004. Prior thereto, the predecessor of the plaintiff might have dealt with the dairy products of the others but they have indulged in serious business venture only from 19th March 2004. Therefore, they cannot now take a different stand that they have been continuously using the trade mark Nakoda for the milk products long prior to the year 2004. 29. The defendants, in their additional representation to the trade mark Registry, have specifically stated that they are not only merchants but also manufacturers of ghee, skimmed milk powder and all dairy products right from 1st April 1992. In fact their artistic work in Nakoda Dairy Special was registered and registration certificate was issued on 20.3.1998. The registration certificate issued for the artistic work Nakoda Dairy Special in the year 1998 would go to show that the defendants have been in the manufacturing business of dairy products long prior to 1998. In fact their artistic work in Nakoda Dairy Special was registered and registration certificate was issued on 20.3.1998. The registration certificate issued for the artistic work Nakoda Dairy Special in the year 1998 would go to show that the defendants have been in the manufacturing business of dairy products long prior to 1998. The defendants also filed a stray sales bill for the year 1988 and many sales bills from the year 1996 to show that they have been dealing with manufacturing business of milk products continuously at least from the year 1996 in the trade name Nakoda. 30. The plaintiff has claimed user of the trade mark Nakoda only from 13. 2004 but, the defendants have established before the court that they have officially announced that they have been manufacturing milk products in the trade name Nakoda right from the year 1992. The defendants have shown before the court by producing voluminous documents that they are the prior user of the trade mark Nakoda. Just because the predecessor of the plaintiff has registered their trade mark Nakoda in the year 2005, they cannot restrain lawfully the prior user from transacting their business in the trade name Nakoda. There is no illegal or mala fide intention on the part of the defendants in exploiting the trade mark Nakoda. Irreparable loss and damage would be caused to the business of the defendants if their long user of the trade mark Nakoda goes unrecognized. There is no deliberate intention or bad faith on the part of the defendants in using the trade mark Nakoda. 31. The plaintiff has failed to establish prima facie case. If the long user of the trade mark Nakoda is injuncted, the business carried on by the defendants atleast right from the year 1996 would definitely encounter peril. For all these reasons, I find that the plaintiffs are not entitled to orders of injunction as prayed for. 32. Therefore, Original Application Nos.557 and 558 of 2008 filed by the plaintiff seeking orders of injunction stand dismissed. Orders of injunction already granted therein in favour of the plaintiff are vacated. Consequently, Application Nos.4354 and 4355 of 2008 filed by the defendants are allowed.