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2014 DIGILAW 1038 (CAL)

Sunny Sales v. Binod Khanna

2014-11-10

I.P.MUKERJI

body2014
Judgment : I.P. Mukerji, J. G.A. No. 910 of 2014: This interim application is taken out in a passing off suit, by the plaintiffs. They seek an order of injunction restraining the defendant from using the trade mark “LIPU” or any other mark which is similar to it. The first plaintiff is a registered partnership firm. The second, third and fourth plaintiffs are its partners. Their place of business is at 29/1C, Bentinck Street, Kolkata-700 001. Their business relates to import of sewing machines, cutting machines etc. and selling them in the Indian market. They are sold under the trade mark “LIPU”. It is a label mark consisting of the device of a triangle on the left side of the word “LIPU”. The defendant is also an importer and seller of these machines. He also uses the mark “LIPU”. The dispute in this case is with regard to the trade mark “LIPU” used by the parties on these cutting machines. These machines, are imported from China. They are manufactured in its economic development zone. According to the plaintiffs they are using this mark from 1994, having adopted it in the same year. It is stated in paragraph-4 of the petition that this trade mark is printed on the packaging of the goods as well as on the invoices, challans, bills and other relevant documents. Now, the first question which arises for consideration is that if according to the case run by the plaintiffs, the sewing machines were imported by them from China, the mark on the machines or in any packaging material relating to them, would normally be the mark of the exporter or manufacturer. And as rightly pointed out by Mr. Jishnu Saha learned senior counsel for the defendant, an importer cannot normally claim proprietorship over the mark of an exporter or manufacturer, according to the Court of Appeal of England and Wales in Registered Trade Marks of the Apollinaris Company, Limited reported in 1891 Vol. 8 RPC 137, the Chancery Division of its High Court In the matter of the European Blaim Camera Company’s Trade Mark reported in 1896 13 RPC 600, in the matter of the Trade Mark of Elaine Inescourt (Trading as Blanche Verlaine) reported in Vol XLVI (1929) RPC 13 and Karo Step Trade Mark reported in 1977 RPC 255. 8 RPC 137, the Chancery Division of its High Court In the matter of the European Blaim Camera Company’s Trade Mark reported in 1896 13 RPC 600, in the matter of the Trade Mark of Elaine Inescourt (Trading as Blanche Verlaine) reported in Vol XLVI (1929) RPC 13 and Karo Step Trade Mark reported in 1977 RPC 255. A brand normally belongs to the proprietor of it whether he is the manufacturer or not and does not belong to the distributor [Also see Rangoli Chemfoods Pvt. Ltd. & Ors. Vs. Indo Brine Industries Ltd. reported in 2013 53PTC 606, Double Coin Holdings Ltd. & Anr. Vs. Trans Tyres (India) Pvt. Ltd. & Anr. reported in 2011 (46) PTC 194 (Delhi)]. In Double Coin Holdings Ltd. & Anr. Vs. Trans Tyres (India) Pvt. Ltd. & Anr. reported in 2011 (46) PTC 194 (Delhi) V.K. Jain, J eloquently remarked as follows:- “What is essential in this regard is that the customer should come to identify the product and the trademark affixed on it with the distributor/importer and on seeing the product he should believe that the product being purchased by him was the product of that particular distributor/importer. While considering the claim of a distributor/importer, the Court needs to keep in mind that even a foreign manufacturer can acquire domestic goodwill in the trademark in addition to the goodwill which it enjoys in foreign market. If, however, the importer/distributor is able to establish that the customer has come to identify the trademark with it rather than with the manufacturer, it may be able to claim that the ownership in the trade mark in the domestic market belongs to him despite the fact that the goods were not manufactured by it. The most important test in this regard is as to whether customer identifies the trademark with the manufacturer or with the importer/distributor, the presumption of law being that the ownership of the trademark vests in the manufacturer, who puts the mark on the product, and the onus to displace this legal presumption, being on the importer/distributor. The most important test in this regard is as to whether customer identifies the trademark with the manufacturer or with the importer/distributor, the presumption of law being that the ownership of the trademark vests in the manufacturer, who puts the mark on the product, and the onus to displace this legal presumption, being on the importer/distributor. In case, there is a dispute between the manufacturer and the distributor/importer with respect to proprietorship of a trademark, the decision of the court would depend on peculiar facts of each case, the guiding factor being that as a general rule, the brand belongs to the manufacturer and not to the importer/distributor.” Therefore the importer has to show that the mark has become inextricably connected with him in the eyes of the public. Only then he can claim proprietorship rights. This weakness in the case of the plaintiffs was sought to be overcome by them in the affidavit-in-reply. In Paragraph-11 of it, they averred that the machines were manufactured in China on the instruction of the plaintiffs. It was sought to be suggested in argument that the mark “LIPU” was imprinted on the machines, on the instructions of the plaintiffs. Mr. Chatterjee, learned senior advocate for the plaintiffs showed me a consignor copy of the consignment note dated 21st June, 2004 , being annexure ‘C’ at Page-9 of the supplementary-affidavit wherein it was stated that the plaintiffs were sending sewing machines to a consignee in Agra. He also relied upon an invoice dated 21st May, 2004 being annexure-B page 23 of the petition raised on the same consignee, wherein the sewing machine was specifically described us “LIPU”. According to Mr. Chatterjee the above consignment note related to this invoice. He relied on an even earlier invoice dated 02nd March, 1996 being annexure-B at page 7 of the said supplementary Affidavit. This invoice revealed that one cloth cutting machine “LIPU” was sought to be sold by the plaintiffs to Dutta and Dutta situated at Delhi. He also submitted that such was the association of the public of the mark “LIPU” with that of the plaintiffs, that the yellow pages, for the years 2004-2005 published by Calcutta Telephones recognised the same in their information regarding these machines. In paragraph 5 of the petition the plaintiffs have set out the growth of their turnover from 1994-1995 onwards. Whereas in 1994-1995 their turn over was Rs. In paragraph 5 of the petition the plaintiffs have set out the growth of their turnover from 1994-1995 onwards. Whereas in 1994-1995 their turn over was Rs. 41,000/- in 2011-2013 it skyrocketed to Rs. 11,38,000/-. It is most important to note the following. The plaintiffs applied for registration of the label mark on 19th October, 2012 whereas the defendant applied for registration of the same mark about ten days earlier on 09th October, 2012. The plaintiffs also applied for registration of the word mark on 13th February, 2014. All these application are pending. The defendant has claims user of the aforesaid mark from 04th June, 2007. On scrutiny of the annexures of the documents annexed to the petitioner, the affidavit-in-opposition and the affidavit-in-reply it appears that both the parties imported machines with the mark “LIPU” from more than one manufacturer or source in China. For example, in the affidavit-in-reply we come across a sale contract dated 20th September, 2005 between China Light Suit Cases bags and safety product IMP/EXP Corporation and the plaintiffs for supply of “LIPU” cutting machine. In the affidavit-in-opposition the defendant has pleaded that both the parties bought machines bearing the same mark from LINHAI New LIPU Machines Co. Ltd. Mr. Saha, learned senior advocate, for the defendant is very frank in his submission that both his client and the plaintiffs are importers and distributors. They import and distribute products of the same manufacturer. The word “LIPU” is derived from a geographical region in China. He invokes the doctrine of reverse passing off. This term is not very frequently used. But I understand that it means that a person’s passing off a product as his own having no right himself but representing that somebody else’s goods to be his. He relies on Bristol Conservatories Ltd. Vs. Conservatories Custom Built Ltd. reported in 1989 RPC 455 and John Robert Powers School Inc. & Ors. Vs. Denyse Bernadette Tessensohn reported in 1995 FSR 947 together with a Division Bench judgment of the Bombay High Court in the case of Zee Telefilms Ltd. & Anr. Vs. Sundial Communications Pvt. Ltd. & Ors. reported in 2003 (27) PTC (Bom) (DB) PTC 457. The concept of reverse passing off was discussed in Bristol Conservatories Ltd. Vs. Conservatories Custom Built Ltd. reported in 1989 RPC 455. It was a decision of the Court of Appeal of England and Walls. Vs. Sundial Communications Pvt. Ltd. & Ors. reported in 2003 (27) PTC (Bom) (DB) PTC 457. The concept of reverse passing off was discussed in Bristol Conservatories Ltd. Vs. Conservatories Custom Built Ltd. reported in 1989 RPC 455. It was a decision of the Court of Appeal of England and Walls. A particular agency had designed and constructed some conservatories. The defendants misrepresented to the public that they would supply the work of this agency. They would induce purchasers to purchase conservatories, believing them to have been designed and constructed by that agency but were in fact to be supplied by the defendants. If the above set of facts was proved then the tort of reverse passing off was deemed to have committed by the defendants, as held in that decision. In the facts of that case the appeal was allowed. The Court of Appeal of the Republic of Singapore in John Robert Powers School Inc. and Others Vs. Denyse Bernadette Tessensohn reported in Fleet Street Report 1995 at page 69 referred to this as inverse passing off. The judgment said: Inverse passing off occurs when one trader represents the goods of another trader to be his own. In Century Traders Vs. Roshan Lal Duggar & Co. a Division Bench judgment of the Delhi High Court reported in AIR 1978 Delhi 250, cited by Mr. Chatterjee it was held that in order to succeed in a passing off action the plaintiff had to establish prior use of the mark in relation to the defendant. This is an accepted proposition, for it has not been controverted by learned Counsel for the defendant. So, is the proposition of law laid down in A.J. Vulcan v. Vs. S.V. Palanichamy reported in AIR 1969 Calcutta 43, decided by Justice P.B. Mukharji and cited by Mr. Chatterjee that the Indian Trade Mark Act, 1958 or any modification thereof does not have any extra territorial operation in the sense that registration and prior use of the mark in China could not confer any benefit of any party in India. In my opinion, the point involved in this matter is absolutely different. It is not about registration of the mark in China and its use in that country and in India. It is whether the plaintiffs can be called the proprietors of the mark, in India. In my opinion, the point involved in this matter is absolutely different. It is not about registration of the mark in China and its use in that country and in India. It is whether the plaintiffs can be called the proprietors of the mark, in India. There is also no contradiction of the principle laid down in Midas Hygiene Industries (P) Ltd. And Another Vs Sudhir Bhatia And Others reported in 2004 (3) SCC Pg.19 Para 5 cited by Mr. Chatterjee that normally for the purpose of considering the grant of an order of injunction the question of delay does not matter. Now, my prima facie findings. The question is whether the plaintiffs are the proprietors of the mark LIPU in India and that any goods sold under that mark in India are associated with them. If not, the plaintiffs are merely importer and distributor of the goods with the mark belonging to an overseas manufacturer/exporter and cannot claim proprietorship or independent use of the mark. “LIPU” is a region in China. The sewing machines which were straight plate cloth cutting machines were imported from Chinese manufacturers by both the plaintiffs and the defendant. Two of these exporters/manufacturers were “Linhai New Lipu Machine Company Limited” and China Light Suit Cases bags and safety products IMP/EXP Corporation. The word “LIPU” was used by each of them. The plaintiffs averred in the petition that they were importing and selling the above machines with the trademark “LIPU” and that this trademark would appear on the machines, their packaging, invoices, challans, bills and other documents. Particular regard may be had of paragraphs 2 and 4 of the petition. Thereafter in paragraph 11 of the Affidavit-in-reply the plaintiffs tried to suggest that the mark “LIPU” was affixed by the manufacturer at the instance of the plaintiffs. Having regard to the fact that the invoices were raised by the Chinese manufacturers and that the manufacturing activity had taken place in China, it is very difficult to believe that the trade mark “LIPU” was coined by the plaintiffs and supplied by them to the manufacturers who affixed it on the goods. Particularly when the documents of the plaintiffs depict the plaintiffs to be ordinary retailers in the Central Kolkata District. Particularly when the documents of the plaintiffs depict the plaintiffs to be ordinary retailers in the Central Kolkata District. The brand “LIPU”, if it is to belong to anyone belongs to the Chinese exporter and manufacturer and certainly not to the plaintiffs or the defendant Upto now the plaintiffs have been able to show nothing to establish that the mark has become so identified with them in this country that the people of this country identify it as belonging to them and not to the Chinese manufacturer. Prima facie the case of “reverse passing off” has been made out by the defendant. Moreover, the plaintiffs claim to be using the mark from May 1994 without any registration. The defendant claim to use the same from 04th June, 2007 without registration also. The plaintiffs applied for registration of the label mark on 19th October, 2012 whereas the defendant applied for the same on 09th October, 2012. The plaintiffs applied for registration of the word “mark” only on 13th December, 2014. Registration is pending. What emerges from this is that although both the parties claim to have used “LIPU” for a considerable period of time, the concern to get the mark registered has occurred very recently, in both. The plaintiffs’ right to exclusive use of the mark ‘LIPU’ is not established at this stage. The parties can wait till the outcome of the trial, when the rights of the parties will be finally determined. In those circumstances I do not think that there is any justification for passing any interim order restraining the defendant from using the said mark. The prayer for an injunction is refused. However the defendant is directed to maintain accounts of the sale of the above machines from the date of filing of this application till the suit is decreed. The accounts are to be authenticated by a practising Chartered Accountant. The defendant is to supply copies of the current accounts to the Advocate on Record for the plaintiffs on a half yearly basis. This application is disposed of accordingly. G.A. No. 911 of 2014: The facts of this case are more or less identical to the facts in the other case (GA No.910 of 2014). The mark involved is “SUNSHINE”. The plaintiffs claim user of the mark from 3rd May, 1994 whereas the defendant claims user from 1st June, 2007. This application is disposed of accordingly. G.A. No. 911 of 2014: The facts of this case are more or less identical to the facts in the other case (GA No.910 of 2014). The mark involved is “SUNSHINE”. The plaintiffs claim user of the mark from 3rd May, 1994 whereas the defendant claims user from 1st June, 2007. The plaintiffs applied for registration of this mark on 19th October, 2011. The defendant has so applied on 13th February, 2014. The manufacturers for the plaintiffs are Hangzhow Beikemu Import & Export Co. Ltd. and China light whereas the manufacturer for the defendant is Jen Cea Industrial Co, Ltd., Taiwan. Both use “Sunshine”. In this case also, from the evidence annexed to the petition, affidavit-in-opposition and affidavit-in-reply it appears that cutting machines with the mark “SUNSHINE” were imported by both the plaintiffs and the defendants from more than one source or manufacturer in China or Singapore. For the reasons given in my judgment and order delivered today in the application GA No. 910 of 2014 the prayer for injunction in this application is also refused. The defendant will maintain accounts of their sale from the date of filing of this application till the suit is decreed to be authenticated by a practising Chartered Accountant. Half yearly current accounts should be furnished by the defendant to the plaintiffs. This application is accordingly disposed of. Certified photocopy of this Judgment and order, if applied for, be supplied to the parties upon compliance with all requisite formalities.