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2015 DIGILAW 2663 (MAD)

Lokesh Gupta v. S. Yeitish

2015-07-29

S.VIMALA

body2015
ORDER : S. Vimala, J. 1. The Applicant and the respondent were partners, having entered into Partnership, through the Partnership deed, dated 02.12.2013. They agreed to carry on partnership business under the name and style of 'Y' and L Cuisines'. The duration of the Partnership firm is determinable at the will of the partners. The main business of the partnership was to set up chain of cafes, restaurants and eating houses to provide ready and cooked food (Indian, Continental and Chinese) of different varieties, including milk products, ice-cream, jelly, etc. The Applicant issued a notice, dated 16.03.2015, intimating that he is dissolving the Firm 'Y and L Cuisines' with immediate effect. The resignation of the Applicant from the partnership, from 16.03.2015, has been accepted, by the respondent. 2. Clause 18 of the Partnership Deed, dated 02.12.2013, between the parties herein provides for resolution of disputes (during the subsistence of partnership or at any time thereafter) through Arbitration. 2.1. By the communication, dated 16.03.2015, the Applicant has requested the respondent not to use the brand name 'Ratna Cafe' (with immediate effect) claiming that the brand name belongs to his family. 3. By the communication, dated 29.03.2015, the respondent has stated that he is not guilty of infringement of trademark or passing off, as he was only a permitted user and the relevant line reads under:- "You have permitted the use of Chennai Ratna Cafe voluntarily and there was no infringement of trade mark or passing off. However all your actions calling upon me to desist the continuity of the business cannot be solved without an arbitration, dispute before an arbitrator in this regard." 3.1. By the correspondence, dated 13.04.2015, the Applicant has stated that the name 'Ratna Cafe' cannot be used for the restaurant operating at No. 104/7, Manivannan Street, Salem, and that he is ready to go for arbitration on all issues except regarding the use of the mark 'Ratna Cafe' as it was the beyond the scope of the dispute. 3.2. By the letter, dated 15.04.2015, the respondent has intimated the Applicant that there is no question of exclusion of trademark from Arbitration and that the Arbitration proceedings involves all the dispute. Only thereafter, both the parties have suggested the names of persons, who could be nominated as Arbitrators. 3.3. 3.2. By the letter, dated 15.04.2015, the respondent has intimated the Applicant that there is no question of exclusion of trademark from Arbitration and that the Arbitration proceedings involves all the dispute. Only thereafter, both the parties have suggested the names of persons, who could be nominated as Arbitrators. 3.3. Only at this stage, the Application has been filed under Section 9 of The Arbitration and Conciliation Act, 1996 (hereinafter will be referred to as 'the Act'). 3.4. Under such circumstances, O.A. No. 481 of 2015 has been filed seeking an order of interim injunction restraining the respondent, his men, agents and servants or any person acting for and on behalf of the respondent from using the trademark 'Ratna Cafe' or any other trademark/tradename, either per se, or in combination with other mark, which is identical with/deceptively similar to the trademark 'Ratna Cafe'. 3.5. A. No. 3173 of 2015 has been filed seeking for appointment an Advocate Commissioner to seize and take into custody all boards, letter heads, publicity material and every other object or material printed and/or other material bearing the trademark 'Ratna Cafe' or any other trademark which is identical/deceptively similar to the trademark Ratna Cafe. 4. It is the case of the Applicant that he is the proprietor of the Trade Mark 'Ratna Cafe'. According to the applicant, the Application for registration of Trademark (under Section18(1) Rule 25 of The Trade and Merchandise Marks Act, 1958) in respect of: (a) Preserved, Dried and Cooked Fruits and Vegetables, (b) Jellies, Jams, Milk and Other Diary Products, (c) Pickles and Other Food Items and Food Preparations for Human Consumption included in Class 29, have been made and it has been granted in the name of J. Triloknath Gupta, Sushiladevi Gupta, Meena Poddar, Ashsh Poddar and Shivam Poddar, who were trading in Partnership as 'Ratna Cafe'. Those persons are said to be the predecessor of the Applicant. 4.1. It is contended that the Applicant has been in continuous use of that trade mark, which was obtained in the name of his predecessor; that the license granted in favour of the respondent to use the trademark having been cancelled, the respondent must be prevented from using the Trademark 'Ratna Cafe'. 5. 4.1. It is contended that the Applicant has been in continuous use of that trade mark, which was obtained in the name of his predecessor; that the license granted in favour of the respondent to use the trademark having been cancelled, the respondent must be prevented from using the Trademark 'Ratna Cafe'. 5. The first contention of the learned counsel for the respondent is that the Application under Section 9 of the Act is not maintainable, as the Applicant himself has taken a stand that the dispute regarding the trademark 'Ratna Cafe' is beyond the scope of Arbitration. 5.1. Whether this contention can be accepted, after the respondent sending a written reply, dated 15.04.2015, reiterating that there is no question of exclusion of trademark from Arbitration. 5.2. No doubt, initially the Applicant has taken a stand that he is not agreeable for arbitration with regard to issue regarding Trademark, but at a later point of time, by agreeing for appointment of the Arbitrator, the applicant has impliedly agreed to arbitrate upon the issue of trademark also. 5.3. Therefore, the contention that the use of trademark 'Ratna Cafe' is not the subject matter of Arbitration and therefore, the Application under Section 9 of the Act is not maintainable cannot be accepted. 6. The learned counsel for the Applicant contended that, having regard to the objective of Section 9 of the Act, Application No. 481 of 2015, seeking injunction is maintainable. 6.1. In order to support the proposition, the decision reported in 2012-1-L.W. 372 : (2012) 1 SCC 578 (Suresh Dhanuka v. Sunita Mohapatra) is relied upon, where-under it has been held as follows:- "31. .....It is no doubt true that on behalf of the Respondent it has been claimed that the Deed of Assignment had never been acted upon and that, in any event, the same had been revoked on 25th September, 2007, when the Agreement dated 1st April, 1999, was cancelled. However, in view of the provisions of the Deed of Assignment, it is yet to be adjudicated upon and decided as to whether by virtue of the revocation of the Deed of Assignment by the Respondent, the Appellant was no longer entitled to the benefits of the Trade Mark which had been transferred to him to the extent of 50% absolutely and forever. In such circumstances, the order passed by the District Judge, Khurda, in ARBP No. 576 of 2007, restraining the Respondent from marketing her products through any person, other than the Appellant, was more apposite in the facts of the case, as the rights of both the parties stood protected till such time as a final decision could be taken in arbitral proceedings, which, in effect, is the object and intention of Section 9 of the Arbitration and Conciliation Act, 1996." 6.2. Pointing out the decision reported in (2013) 15 SCC 414 (Arasmeta Catpvie Power Company Private Limited and another v. Lafarge India Private Limited), it is contended by the learned counsel for the Applicant that, whether a dispute is arbitrable or not would also be within the jurisdiction of the Arbitrator to decide and therefore, the contention of the learned counsel for the respondent that the Arbitration proceedings and the Application under Section 9 of the Act are not maintainable are not correct. The relevant paragraph, in the said decision, reads thus:- "42. .... The Court enumerated three facets which relate to the jurisdiction of the Arbitral Tribunal. In sub-para (ii) of the said paragraph it has been stated that one facet of arbitrability is whether the disputes are enumerated or described in the arbitration agreement as matters to be decided by arbitration or whether the disputes fall under the 'excepted matters' excluded from the purview of the arbitration agreement. On a careful reading of the said judgment we find that the learned Judges have referred to paragraph 19 of SBP & Co. (supra) and thereafter referred to Section 8 of the Act and opined what the judicial authority should decide...." 6.3. This decision (Arasmeta Catpvie's case) is very clear on the proposition that it is for the Arbitrator to decide, whether a claim falls under excepted matter or not under the Arbitration Agreement. 7. The next contention of the learned counsel for the Applicant is that the permission granted to use the trademark 'Ratna Cafe' has been cancelled and after cancellation, the respondent has is not entitled to use the same. In support of this contention, the learned counsel relied upon the decision reported in (2004) 12 SCC 628 (Baker Hughes Ltd., and another v. Hiroo Khushlani and another), wherein in paragraph 5 it is stated as follows:- "5. In support of this contention, the learned counsel relied upon the decision reported in (2004) 12 SCC 628 (Baker Hughes Ltd., and another v. Hiroo Khushlani and another), wherein in paragraph 5 it is stated as follows:- "5. ....The application, which had been made by the 1st Respondent to the Government of India, itself shows that the Appellants had a very huge turnover, that they are regularly supplying equipment to parties in India. As per this letter they had reputation in India. At the interim stage this admission of the 11th Respondent had to be taken note of. The 2nd Respondent-company could thus use the name "baker" only if there was permission, or an Agreement, by which the Appellants permitted them to use the name 'Baker'. In the absence of any such Agreement or permission the 2nd Respondent would be guilty of passing off its goods as those of the Appellants and an injunction would have to follow on basis of well settled principles governing grant of injunction........" 7.1. This contention of the Applicant's counsel is quite right. In the communication, dated 29.03.2015, the respondent has conceded that the use of trademark Ratna Cafe was only a permitted user and the relevant lines reads as under:- "You have permitted the use of Chennai Ratna Cafe voluntarily and there was no infringement of trade mark or passing off. However all your actions calling upon me to desist the continuity of the business cannot be solved without an arbitration, dispute before an arbitrator in this regard." 7.2. Once there is an admission that the use of the trademark is by permissive user, then the question is whether it has been cancelled/revoked or not. By the correspondence, dated 13.04.2015, the Applicant has insisted that the name Ratna Cafe cannot be used by the respondent. This implies revocation of permission. Therefore, the respondent cannot be permitted to say that he has got the right to use the trademark 'Ratna Cafe'. 8. The next contention of the learned counsel for the Applicant is that the respondent, having acknowledged and admitted the rights of the Applicant over the trademark, is estopped from disputing the same and cannot be heard to say that, he would continue to use the same. In support of the said contention, the learned counsel relied upon the decision reported in 2012 (55) FTC 417 (Del) (Eaton Corporation & Anr. In support of the said contention, the learned counsel relied upon the decision reported in 2012 (55) FTC 417 (Del) (Eaton Corporation & Anr. v. BCH Electric Limited) where-under it has been held as follows:- "66. .....Similarly, in the License And Technical Service Agreement as per 7.7 of the Agreement, it was agreed that the licensee shall not apply or obtain registration of any trademarks and shall not challenge the validity or contest the right of the proprietor and in the user agreement between 1979-1986 in Clause 7 the defendant recognized the right the trademarks of the owner and the defendant shall not acquire and shall not claim any title to the said trademarks by virtue of the licence granted to the defendant and user shall at all times have the benefit of the trademark owner." 8.1. No doubt, in this case, initially the respondent made an endorsement that the respondent had no idea of using the trademark 'Ratna Cafe', but later this endorsement was withdrawn explaining the circumstances under which it was made and thereafter the matter was argued on merits. Therefore, the issue regarding the respondent admitting that he will not apply and claim the use of the trademark does not arise for consideration. 8.2. As already discussed, the Applicant has revoked the permission granted to the respondent and therefore, the respondent would be guilty of passing off its goods as those of the Applicant and therefore, it is a fit case for grant of injunction. 9. The contention of the learned counsel for the respondent is that, without a valid renewal of the registration of the trademark, the Applicant cannot maintain an action for infringement of trademark. 9.1. Contending that the registration of trademark is not mandatory to maintain the action against the respondent and also emphasizing that long prior use of the mark and its trans-border reputation is sufficient, the learned counsel for the Applicant relied upon the decision reported in (1996) 5 SCC 714 (N.R. Dongre and Others v. Whirlpool Corporation and another)-- "18. .... The mark/name 'WHIRLPOOL' is associated for long, much prior to the defendants' application in 1986 with the Whirlpool Corporation - plaintiff No. 1. .... The mark/name 'WHIRLPOOL' is associated for long, much prior to the defendants' application in 1986 with the Whirlpool Corporation - plaintiff No. 1. In view of the prior user of the mark by plaintiff No. 1 and its trans-border reputation extending to India, the trade mark 'WHIRLPOOL' gives an indication of the origin of the goods as emanating from or relating to the Whirlpool Corporation-plaintiff No. 1. The High Court has recorded its satisfaction that use of the 'WHIRLPOOL' mark by the defendants indicates prima facie an intention to pass-off defendants' washing machines as those of plaintiffs' or atleast the likelihood of the buyers being confused or misled into that belief.........On the other hand, refusal of the interlocutory injunction would cause irreparable injury to the plaintiffs' reputation and goodwill since the trade mark/name 'WHIRLPOOL' is associated for long because of prior user and even otherwise with the plaintiff No. 1-Whirlpool Corporation. These factors which have been relied on for grant of the interlocutory injunction by the trial court indicate that the exercise of discretion was in accordance with the settled principles of law relating to the grant of interlocutory injunctions in a passing-off action. The affirmance of the trial court's order by the Division Bench on an appeal reinforces the trial court's view." 9.2. The long prior use by the Applicant and his predecessor in title cannot be disputed, as the date of registration of the trademark is 14.12.2004. Therefore, the Application for registration should have been filed prior to that. 10. It is the contention of the learned counsel for the respondent that the assignment of trademark was neither in separate writing nor finds place in the partnership deed, and therefore, the Applicant cannot maintain any action against the respondent. 10.1. This contention is not correct, because admittedly, after the respondent entering into partnership with the Applicant, has got the consent of the Applicant in using the trademark 'Ratna Cafe' and therefore, it does not finds place in the partnership deed. When the use of the trademark is admitted by the respondent himself, the contention that, there is no assignment of trademark in writing cannot be accepted. 10.2. When the use of the trademark is admitted by the respondent himself, the contention that, there is no assignment of trademark in writing cannot be accepted. 10.2. The next contention of the learned counsel for the respondent is that there is no registered trade mark as on today, by name, 'Ratna Cafe' and the trademark already registered in the year 2004 got expired in 2012 and the right has been abandoned and hence, the common law right of passing off cannot be sustained. 10.2.1. No doubt, the Applicant has not renewed the registration of the trademark. Therefore, the petitioner cannot maintain the action for infringement of the Trademark, as rightly contended by the learned counsel for the respondent. 10.2.2. But, the right of passing off is available under the common law for two categories of people: (i) those who have not registered their trademark and (ii) for those who have failed to renew their trademark. The failure to renew the trademark can take away the rights and protection available to a registered trademark holder, but it cannot take away the right and protection available under the common law in respect of unregistered trademark holder. 10.3. It is the claim of the learned counsel for the respondent that the effect of failure to renew the trademark registration after 2012, within the stipulated time, enables the respondent or any other third party to apply for the name 'Ratna Cafe', as trademark, under Section 18 of the Trademark Act and the same cannot be restrained. It is pointed out that the respondent has also applied for the registration of the trademark 'Ratna Cafe' under Section 18 of the Act. 10.3.1. The right of the respondent to apply for registration cannot be disputed. But the merits of the claim would be decided by the concerned authorities, subject to objection being made by anybody. 10.4. Yet another contention of the learned counsel for the respondent is that the grant of trademark, even in the year 2004, was only in the name of the four individuals and not in the name of the Applicant; the protection for trademark would be available only to the holder of a registered trademark and the registration is not in the name of the Applicant, but in the name of four other members. 10.4.1. 10.4.1. No doubt, in the year 2004, the registration has been granted in the name of four other members. It is the case of the Applicant that he continues to use the trademark as the member of the family. If really, the petitioner has no rights based upon the mark registered in the name of erstwhile members of the family, the respondent would not have agreed to take permission from the petitioner to use the trademark. Hence, this contention is not valid. 10.5. The next contention of the learned counsel for the respondent is that the registration does not pertain to restaurant, but it pertains to food products, milk products, etc., hence, the petitioner has no locus standi to maintain the Application. 10.5.1. The products for which registration of trademark was taken, are no different from the products which are sought to be sold in the restaurant run by the Applicant and the respondents. The respondent having enjoyed the benefit of the trademark is estopped from contending that the user of the trademark had been for a different purpose/different establishment. 11. It is vehemently contended that even though the passing off right can be claimed by the petitioner under Section 27(2) of the Trademark Act, that right is not unrestricted and it cannot be claimed, as a matter of right, as the trademark is not enjoyed continuously without interruption. 11.1. On a question of law, the further contention of the respondent is that, the petitioner cannot be permitted to exercise dual rights, at the same time, i.e., he cannot exercise statutory right as well as common law right at the same time; the Applicant, having exhausted and abandoned the statutory right, cannot claim the common law remedy of passing off. 11.2. In order to answer the question of law, with reference to Section 27 of The Trademarks Act, 1999, it is worthwhile to extract Section 27, which reads as follows:- "27. EFFECT OF REGISTRATION- (1) No person shall be entitled to institute any proceeding to prevent, or to recover damages for, the infringement of an unregistered trade mark. (2) Nothing in this Act shall be deemed to affect rights of action against any person for passing of goods or services as the goods of another person or as services provided by another person, or the remedies in respect thereof." 11.3. (2) Nothing in this Act shall be deemed to affect rights of action against any person for passing of goods or services as the goods of another person or as services provided by another person, or the remedies in respect thereof." 11.3. In order to appreciate the contentions raised by the learned counsel for the respondent, it is also necessary to find out the distinction/similarity between the action for infringement and the action for passing off. 11.4. The similarity and the dissimilarity between the two actions have been explained in the decision reported in Saville Perfumery Ltd. V. June Perfect Ltd. (1941) 58 RPC 147 at p, 161 : (1941) 58 RPC 147 at p. 161, however, are closely similar in many respects. The relevant observation reads thus:- "The statute law to infringement of trade marks is based on the same fundamental idea as the law relating to passing off. But it differs from that law in two particulars, namely : (1) it is concerned only with one method of passing off, namely, the use of a trade mark, and (2) the statutory protection is absolute in the sense that once a mark is shown to offend, the user of it cannot escape by showing that by something outside the actual mark itself he has distinguished his goods from those of the registered proprietor. Accordingly, in considering the question of infringement the Courts have held, and it is now expressly provided by the Trade Marks Act, 1938. Section 4, that infringement takes place not merely by exact imitation but by the use of a mark so nearly resembling the registered mark as to be likely to deceive." 11.5. In an action for infringement where the defendant's trade mark is identical with the plaintiffs mark, the Court will not inquire whether the infringement is such as is likely to deceive or cause confusion. But where the alleged infringement consists of using not the exact mark on the Register, but something similar to it, the test of infringement is the same, as in an action for passing off. In other words, the test as to likelihood of confusion or deception arising from similarity of marks is the same both in infringement and passing off actions." 11.6. In other words, the test as to likelihood of confusion or deception arising from similarity of marks is the same both in infringement and passing off actions." 11.6. In the decision reported in (1934) 51 R.P.C. 110 @ 116 (Irving's Yeast-Vite Ltd. v. Horsenail), Lord Tomlin, answers the contention of the learned counsel for the respondent, which reads thus:- "The distinction between the cases in which the remedy for infringement of trade mark and the remedy for passing off are respectively appropriate has often been stated and is not in doubt. The first remedy is available where there is violation of the specific property right conferred by the trademark law. The second is available apart altogether from trademark right where there is conduct on the part of the defendant which has led or is calculated to lead to deception. "Both remedies available.- 12. The right to an action for passing-off is available in addition to and apart altogether from the right to an action for infringement which is based on the trademark where there is conduct on the defendant's part which has resulted in or is likely to result in deception. Where the mark has been used by the plaintiff the two actions are generally combined with a view that if the plaintiff fails in one he may still succeed in the other. Therefore, even though the petitioner is not entitled to the remedy of infringement of trademark, he is entitled to the alternative remedy of passing off. 13. The non-renewal of the trademark cannot be construed to be the abandonment of the right or extinction of right. May be, the non-renewal would have resulted in deprivation of the right to ask for infringement of trademark, but that cannot deprive the applicant from invoking the common law remedy of passing off. Had the right been abandoned by the petitioner the respondent would not have had an opportunity to use the same mark with the permission of the petitioner. While taking all these defences with regard to relinquishment or abandonment of right, the respondent intermittently forgets the fact that he himself was enjoying the use of trademark 'Ratna Cafe', along with the petitioner, after obtaining permission of the petitioner, only because the petitioner was having an existing right. But, for that there would not have been any dispute regarding the use of the trademark 'Ratna Cafe'. But, for that there would not have been any dispute regarding the use of the trademark 'Ratna Cafe'. In the result, Application No. 3173 of 2015, seeking for an appoint an Advocate Commissioner to seize and take into custody all boards, letter heads, etc., bearing the trademark 'Ratna Cafe' is dismissed, as the relief pertaining to infringement of trademark is declined. 14.1. O.A. No. 481 of 2015, seeking an order of interim injunction restraining the respondent, from using the trademark 'Ratna Cafe' is declined. However, the lesser relief of injunction restraining the respondent from passing off the goods of the Applicant as that of the respondent by the use of the mark 'Ratna Cafe' is granted.