Delhi High Court
Red Hat Inc vs Mr. Hemant Gupta And Ors on 9 July, 2012
Author: Manmohan Singh
Bench: Manmohan Singh
* HIGH COURT OF DELHI: NEW DELHI
% Order decided on: 09.07.2012
+ I.A. No.10679/2011 in CS (OS) No.1654/2011
RED HAT INC ..... Plaintiff
Through Mr. C.M. Lall, Advocate with Ms. Ekta
Sarin & Ms. Nancy Roy, Advs.
versus
MR. HEMANT GUPTA AND ORS ..... Defendants
Through Mr. Arun Dhiman, Adv.
CORAM:
HON'BLE MR. JUSTICE MANMOHAN SINGH
MANMOHAN SINGH, J.
1. By this order, I propose to decide the pending application filed by the plaintiff under Order XXXIX, Rules 1 & 2 read with Section 151 CPC, being I.A. No.10679/2011, restraining the defendants, their directors, principals, proprietors, partners, etc. from using the offending mark RED HAT along with a device which is deceptively similar to the plaintiff‟s SHADOWMAN device and/or the plaintiff‟s mark RED HAT, the SHADOWMAN device and the composite mark as a trade mark or part of a trade mark, a trade name or corporate name or as part of a trade or corporate name, domain name or as a part of a domain name, as a meta tag or otherwise on the internet or the worldwide web, or in any other manner whatsoever so as to infringe the registered trademarks of the plaintiff or passing off their services of business as and for the services or business of the plaintiff.
2. The fact of the matter is that the plaintiff company is into open source services which is primarily divided into three main heads, namely:-
I.A. No.10679/2011 in CS(OS) No.1654/2011 Page No.1 of 27 a. Red Hat Consulting - mainly dealing with technology assessment, implementations, quick starts, health checks, knowledge transfer workshops etc. b. Red Hat Training - dealing with Linux system administration, enterprise application development, LAMP development etc. c. Global Support Services (GSS) - dealing with software support, Technical Account Managers (TAMs) and Developer Support packages etc.
3. The plaintiff formed a Joint Venture in India with Clover Technologies. Plaintiff states that it has played key roles in developing E-Court project, HDFC Bank had used plaintiff‟s product, JBoss Enterprise Application Platform for implementing web based solution for improved productivity, efficiency. New India Assurance also had used plaintiff‟s products to build cost effective, scalable and secure infrastructure. Besides this plaintiff had executed MOUs with the various State Governments liked Tamil Nadu, Kerala for supporting the state‟s development.
4. As per the averments made in the plaint, the plaintiff adopted the trade mark RED HAT in the year 1994. The SHADOWMAN logo was adopted by the plaintiff in the year 1996. The plaintiff‟s first registration in India for RED HAT word per se and SHADOWMAN logo bearing No.874613 is obtained in class 9 as of 2nd September, 1999 in respect of various products, such as, computer software, namely, computer programmes for operating systems, system administration, computer communication administration, and instructional materials provided therewith as a unit. The plaintiff also obtained another registration of the trade mark RED HAT POWERED bearing No.1053335 in class 9 as of 19th October, 2001 in respect of products, i.e. computer workstations, namely, computer terminals, computer hardware and others. Various other registrations have also been I.A. No.10679/2011 in CS(OS) No.1654/2011 Page No.2 of 27 obtained. One of them is the device of logo SHADOWMAN in class 41 & 42 bearing No.1307397 as of 8th September, 2004 in relation to large number of goods, such as, educational services, namely, training others in the use, maintenance, updating, configuration, installation, support and programming of computer software and others in class 41 and computer software design for others, computer consultation, computer diagnostic services etc. in class 42. The plaintiff commences the use of trade mark RED HAT and SHADOWMAN logo in India in 2000. According to the plaintiff, it registered Indian subsidiary with the MCA, i.e. Red Hat India Private Limited on 5th July, 2000.
5. The plaintiff states that in July 2008, the plaintiff came across the domain name www.redhatinfotech.com. The plaintiff further states that defendant No.4‟s trademark bearing No.1859208 in Class 37 is claimed to be in use since 28th January, 2008. The plaintiff objected to the same and upon further investigation it was found out that even defendant No.1 had applied for registration of RED HAT INFOTECH (label) in Class 42 bearing No.1724581.
6. The plaintiff averred in the plaint that the defendants have unfairly/dishonestly used their trademark REDHAT words per se and also the device SHADOWMAN and the same is with an intention to deceit the consumers and the public at large. The reputation of the plaintiff is being affected due the action of the consumers.
7. Plaintiff states that it has obtained trademarks and registration for variety of services provided by them and the same is renewed from time to time. The plaintiff has registered trade mark in various countries including India. The plaintiff states that the goods and services are exclusively advertised and promoted on its exclusive website www.redhat.com.
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8. That after it came to the knowledge of the plaintiff that defendant No.1 is having the domain name as www.redhatinfotech.com and the same was registered under defendant No.1. The plaintiff issued a notice via email dated 18th July, 2008 stating the plaintiff was interested in an amicable settlement. Another email dated 31st July, 2008 stating that the active content was removed from the website and the matter was accordingly seemed resolved.
9. The plaintiff further states that they found defendants had expanded their arena of the Offending Marks to another website under domain name www.bulk.smshesms.com. The plaintiff further states that defendant No.4 had a trade mark application bearing No.1859208 in class 37 and defendants No.4 claimed to be using the same since 28th January, 2008. Upon further search, it was revealed that defendant No.1 had applied for registration of RED HAT INFOTECH (label) in Class 42 bearing No.1724581 and the mark is at the pre examination stage, yet to be advertised in the Trade Marks Journal. The plaintiff through its agent wrote to the defendants vide letter dated 23rd July, 2010 in this regard. It is also stated in the plaint that the defendants were using the registered trade mark RED HAT of the plaintiff as a part of another domain name www.redhatsalesteam.com. The defendants were again sent a „cease and desist‟ letter dated 11th September, 2010.
10. The plaintiff along with the suit filed an interim application which was listed before the Court for the first time on 11 th July, 2011. While issuing the summons in the main suit, an ex parte ad-interim order was issued against the defendants, their agents, employees, franchisees and representatives restraining them from using the trade mark RED HAT with a device which is deceptively similar to the plaintiff‟s SHADOWMAN device.
I.A. No.10679/2011 in CS(OS) No.1654/2011 Page No.4 of 27 Case of the Defendants
11. The defendants incorporated a company on 25th November, 2003 under the name of defendant No.5, i.e. Red Hat Infotechnologies Pvt. Ltd. under the Companies Registration Act. Earlier defendants No.1 to 3 were carrying on partnership business under the name and style of defendant No.4, namely, Red Hat Infocom. The defendants have filed large number of documents by way of invoices, sales tax, central sales tax certificates, statements of current account of the company, audit report, application for obtaining the PAN Card, from the year 2004 onward.
12. The contention of the learned counsel for the defendants is that while obtaining the registrations from the year 1999 onward, the plaintiff has not been claiming the actual user of the mark RED HAT, and the logo of SHADOWMAN, but in the user column in the application, it was mentioned as "proposed to be used", that means that the plaintiff was not using the mark in India at least prior to the year 2004. Therefore, in India the plaintiff is, apparently, the subsequent user of the mark RED HAT.
13. Second argument of the learned counsel for the defendants is that defendant No.5 is a company, namely, Red Hat Infocom Private Limited, which is registered under the Companies Act and it is the obligation of the defendants to execute its operation of the name of the company and the defendants are using the logo SHADOWMAN device totally in a different way which is not similar to the plaintiff‟s logo. The device of the cap is different. It is an honest user. Therefore, the defendants are entitled to use the same. As far as the name of the company is concerned, the Registrar of Companies has registered the said name in Corporation Certificate which clearly provides that a certificate of incorporation given by the Registrar in respect of any association shall be conclusive evidence that all the I.A. No.10679/2011 in CS(OS) No.1654/2011 Page No.5 of 27 requirement of this Act, have been complied with in respect of registration and matter precedent and incidental thereto, and that the association is a company authorized to be registered and duly registered under this Act.
14. The other argument of the learned counsel for the defendants is that the nature of the business of the defendants is different as that of the plaintiff. Therefore, the question of confusion and deception does not arise. Lastly, the plea of delay was also raised by the counsel for the defendants by alleging that there has been a considerable delay in bringing the action before Court, thus, the plaintiff is entitled for injunction. Apart of delay, the suit is also barred under the Limitation Act.
15. In reply to the submissions made by the defendants, the learned counsel for the plaintiff has referred para-10 of the plaint wherein the services offered by the plaintiff‟s trade mark are divided into three prime heads which read as under:-
a. Red Hat Consulting - Red Hat Consulting offers a broad portfolio of services spanning the entire Red Hat or JBoss deployment cycle. The plaintiff‟s product-related engagements range from technology assessments to implementations and migrations, quick-starts, health-checks, knowledge-transfer workshops, and more, all tailored to specific environments and goals.
b. Red Hat Training - Red Hat Training offers a rich array of hands-on training courses in hundreds of location across the world. Courses cover the full range of plaintiff‟s product range and beyond, ranging from Linux system administration to enterprise application development to security, LAMP development and more. The plaintiff‟s certifications include Red Hat Certified Technician (RHCT), the award winning Red Hat Certified Engineer (RHCE), advanced level Certificates of Expertise, and Red Hat Certified Architect (RHCA). c. Global Support Services (GSS) - The plaintiff‟s around- the-clock open source software support group provides highly-acclaimed production support as part of every Red Hat software subscription. GSS also provides additional premium I.A. No.10679/2011 in CS(OS) No.1654/2011 Page No.6 of 27 services such as Technical Account Managers (TAMs) and Developer Support packages.
16. The plaintiff has also given the statement of global revenue for the fiscal years 2002 to 2010 from the extensive sale of its high quality products and services provided under its world-renowned brand RED HAT. The same is reproduced here as below:
Fiscal Period Total Revenue in US$
(March - February) (In Excess of)
2010 $749 Million
2009 $653 Million
2008 $523 Million
2007 $400 Million
2006 $278 Million
2005 $196 Million
2004 $124 Million
2003 $90 Million
2002 $78 Million
17. As regards the plaintiff‟s operation in India, admittedly M/s Red Hat India (Pvt.) Ltd. formed as a joint venture between the plaintiff and Clover Technologies, India which was incorporated on 5th July, 2008 and now is a wholly owned subsidiary of Red Hat, Inc. The plaintiff opened its first office in the city of Pune in the year 2000. The plaintiff has a distribution network of over 50 channel partners spanning 20 cities across India. The key distributors of the plaintiff‟s software include GT Enterprises, Ingram Micro India and Integra Microsystems. The plaintiff‟s Red Hat Learning Services are also available with over 110 training partners at over 500 locations across India.
18. The scanned copy of the comparative representation of the plaintiff and the defendants‟ logo are reproduced here as below:
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19. The main contention of the learned counsel for the plaintiff is that the defendants‟ adoption and use of the offending marks constitutes trade mark infringement and passing off which are virtually identical to the plaintiff‟s well-known registered trade mark. The defendants‟ activities are in relation to the same services and their sole intention is to represent the plaintiff‟s trade mark in order to deceive and cause confusion to mislead the members of the trading and consuming public. Therefore, the injunction is sought by the plaintiff against the defendants.
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20. The defendants have not denied the fact that they have been using the trade mark RED HAT. They have also been using the mark RED HAT as part of the corporate name of defendant No.5 and the cap device. The main contention of the defendants in their written statement is that since the business activities of the defendants are different to that of the plaintiff, therefore, the plaintiff cannot be granted protection to the words RED HAT. Secondly, the cap device used by the defendants is dissimilar with the SHADOWMAN device used by the plaintiff, and they are carrying on business for the last number of years and particularly name of the company which was incorporated in the year 2004, therefore, the defendants are entitled to use the same.
21. Mr. Lall, learned counsel for the plaintiff has argued that the trade mark RED HAT is duly registered in favour of the plaintiff in respect of various classes of goods. The business of the defendants, i.e. hardware maintenance & service and software maintenance & service which are also provided by the plaintiff and at the time they are also carrying on their business of all kinds of hardware and software production support including of consulting, training and subscription & developing support packages which are same and allied and interrelated as that of the plaintiff‟s business and services. Secondly, the plaintiff has a residual reputation for the said trade mark along with the device of SHADOWMAN not only in India but in the overseas countries. He further submits that the defendants have not denied the fact that the plaintiff is using the trade mark as well as the device prior to the defendants. They have also admitted that both the trademark RED HAT and SHADOWMAN device are duly registered in many countries of the world including India, thus, the case of infringement of trademark and passing off is made out. He has further argued in view of using the mark RED HAT as dominant part of I.A. No.10679/2011 in CS(OS) No.1654/2011 Page No.9 of 27 corporate name, under the provisions of Section 29(5) of the Trade Marks Act, 1999, the action of the defendants is amounting to infringement of registered trade mark of the plaintiff.
22. As regards the business activities of both the parties, the learned counsel for the plaintiff has argued that those are almost the same. He has denied the contention of the defendants that the business activities of the defendants are different than the plaintiff. He argued that even otherwise, the trademark of the plaintiff is protected with regard to dissimilar goods of business under Section 29(4) of the Act in view of the reputed mark RED HAT of the plaintiff.
23. Mr. Lall has also argued that the overseas user of the plaintiff has also to be taken into consideration in this country in view of the settled law. He referred the decision of the case of N.R. Dongre and others vs. Whirlpool Corporation and others, reported in AIR 1995 Delhi 300 whereby the findings of the Division Bench were confirmed by the Apex Court. Thus, he submits that the defendants have miserably failed to assign any reason for using the trademark/trade name RED HAT along with the cap device which is similar to the device of SHADOWMAN of the plaintiff.
24. After having considered the submissions of the learned counsels for both the parties, I am of the view that the following points are to be considered while deciding the pending application of the plaintiff under Order XXXIX, Rules 1 & 2 CPC being I.A. No.10679/2011:-
(i) Whether by use of the mark RED HAT as a trade mark or part of corporate name amounts to infringement of the plaintiff‟s trade mark?
(ii) Whether the defendants are passing off their business/services as that of the plaintiff?
(iii) Whether the cap device used by the defendants is similar to the plaintiff‟s SHADOWMAN device?
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(iv) Whether the defendants are entitled for any benefit of user claimed in the written statement?
Infringement of Trademark
25. The law relating to infringement of a registered trademark has been envisaged u/S 29 of the Trade Marks Act, 1999 and exclusive rights granted by virtue of registration under Section 28 which reads as under:-
"29. Infringement of registered trademarks - "Infringement of registered trademarks.-
(1) A registered trade mark is infringed by a person who, not being a registered proprietor or a person using by way of permitted use, uses in the course of trade, a mark which is identical with, or deceptively similar to, the trade mark in relation to goods or services in respect of which the trade mark is registered and in such manner as to render the use of the mark likely to be taken as being used as a trade mark. (2) A registered trade mark is infringed by a person who, not being a registered proprietor or a person using by way of permitted use, uses in the course of trade, a mark which because of-
(a) its identity with the registered trade mark and the similarity of the goods or services covered by such registered trade mark; or
(b) its similarity to the registered trade mark and the identity or similarity of the goods or services covered by such registered trade mark; or
(c) its identity with the registered trade mark and the identity of the goods or services covered by such registered trade mark, is likely to cause confusion on the part of the public, or which is likely to have an association with the registered trade mark.
I.A. No.10679/2011 in CS(OS) No.1654/2011 Page No.11 of 27 (3) In any case falling under clause (c) of sub- section (2), the court shall presume that it is likely to cause confusion on the part of the public.
(4) A registered trade mark is infringed by a person who, not being a registered proprietor or a person using by way of permitted use, uses in the course of trade, a mark which-
(a) is identical with or similar to the registered trade mark; and
(b) is used in relation to goods or services which are not similar to those for which the trade mark is registered; and
(c) the registered trade mark has a reputation in India and the use of the mark without due cause takes unfair advantage of or is detrimental to, the distinctive character or repute of the registered trade mark. ......"
"28. Rights conferred by registration -
(1) Subject to the other provisions of this Act, the registration of a trade mark shall, if valid, give to the registered proprietor of the trade mark the exclusive right to the use of the trade mark in relation to the goods or services in respect of which the trade mark is registered and to obtain relief in respect of infringement of the trade mark in the manner provided by this Act........"
"31. Registration to be prima facie evidence of validity -
(1) In all legal proceedings relating to a trade mark registered under this Act (including applications under section 57), the original registration of the trade mark and of all subsequent assignments and transmissions of the trade mark shall be prima facie evidence of the validity thereof.
(2) In all legal proceedings as aforesaid a registered trade mark shall not be held to be invalid on the ground that it was not a registrable trade mark under section 9 except upon evidence of distinctiveness and that such evidence was not submitted to the Registrar before registration, if it is proved that the trade mark had been so used by the registered proprietor or his predecessor in title as to have become distinctive at the date of registration."
I.A. No.10679/2011 in CS(OS) No.1654/2011 Page No.12 of 27 By mere reading of these provisions, it is clear that a registered trademark is infringed by a person who not being a registered proprietor, uses in the course of trade a mark which is identical or deceptively similar in relation to the goods or services which are identical or similar to that in respect of which the trademark is registered without the permission of the trademark owner.
26. A reading of Section 29(4) of the Act would reveal that the said protection qua different goods is earmarked by the Legislature for the trademarks which are either highly reputed or well known or famous trademarks and enjoy either high level of distinctiveness or the marks which are inherently distinctive in nature or has become distinctive due to their repute; the use of which will cause detrimental to the distinctive character and repute of the trademark only when the ingredients of Section 29(4) are satisfied conjunctively which is sub sections (a), (b) and (c) the infringement qua Section 29(4) in relation to different goods is attracted.
27. It is settled law that in order to prove the case for infringement of trade mark, the plaintiff has to show that the essential features of the registered trade mark which has been adopted by the defendant has been taken out from the plaintiff‟s registration. Only the marks are to be compared by the Court and in case the registration is granted in favour of the plaintiff, he acquires valuable right by reason of the said registration. The following are the judgments which are relevant to be referred for the purpose of infringement of the trade mark:
i. Kaviraj Pandit Durga Dutt Sharma vs. Navaratna Pharmaceutical Laboratories, reported in AIR 1965 SC 980 - at 989-990 pages wherein it was held that:
"The action for infringement is a statutory remedy conferred on the registered proprietor of a registered I.A. No.10679/2011 in CS(OS) No.1654/2011 Page No.13 of 27 trade mark for the vindication of the exclusive right to the use of the trade mark in relation to those goods"
"if the essential features of the trade mark of the plaintiff have been adopted by the defendant, the fact that the get-up, packing and other writing or marks on the goods or on the packets in which he offers his goods for sale show marked differences, or indicate clearly a trade origin different from that of the registered proprietor of the make would be immaterial"
ii. In the case of American Home Products vs. Mac Laboratories, reported in AIR 1986 SC 137 in Para 36 it was held as under:
"When a person gets his trade mark registered, he acquires valuable rights by reason of such registration. Registration of his trade mark give him the exclusive right to the use of the trade mark in connection with the goods in respect of which it is registered and if there is any invasion of this right by any other person using a mark which is the same or deceptively similar to his trade mark, he can protect his trade mark by an action for infringement in which he can obtain injunction...."
iii. In the case of National Bell Co. vs. Metal Goods Mfg. Co., reported in AIR 1971 SC 898 at page 903 it was held as under:
"On registration of a trade mark the registered proprietor gets under Section 28 the exclusive right to the use of such trade marks in relation to the goods in respect of which the trade mark is registered and to obtain relief in respect of any infringement of such trade mark."
iv. M/s Avis International Ltd. vs. M/s Avi Footwear Industries and another, reported in AIR 1991 Delhi 22,the relevant paras of which read as under:
"14. At this stage of the case, we have no affidavit against another affidavit, and in view of the statutory provisions of Ss. 28 and 31 of the Trade and Merchandise Marks Act, it would be appropriate to rely upon contentions of the plaintiffs.
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17. In my view, the statutory monopoly which has been conferred upon the plaintiffs in connection with use of the mark AVIS for any other consideration in relation to grant or non-grant of an injunction, especially when the matter is at an interlocutory stage....."
v. In Sundar Parmanand vs. Caltex (India) Ltd., reported in AIR 1969 Bombay 24, a Division Bench of the Bombay high Court cited with approval the words of Lord Denning in 1962 RPC 265 that where a person selected a mark with intention to deceive and cause confusion, he must be given credit for success in his intention. The Court held that in such a case "we should not hesitate to hold that the use of that mark is likely to deceive and cause confusion." This Court further held that the fact that the applicant had given no explanation for adoption of CALTEX would be an additional factor to be taken into consideration and an inference could be drawn that he adopted CALTEX "to take advantage of the reputation of the mark of the opponents."
vi. In Bata India Limited vs. Pyare Lal & Co., reported in AIR 1985 Allahabad 242, A. Banerji, J., of the Allahabad High Court held that the question "why should the defendant-respondent use the name „Bata‟?" is a very material one. There is no plausible answer so far to this. The Court enjoined a defendant who had started using BATAFOAM in respect of its foam mattresses by holding that "the user of the name or mark BATA by the defendant is indicative of their (dishonest) intent."
28. Section 29(5) of the Trade Marks Act, 1999 reads as under:-
"29. Infringement of registered trademarks -
(5) A registered trade mark is infringed by a person if he uses such registered trade mark, as his trade name or part of his trade name, or name of his business concern or part of the name, of his business concern dealing in goods or services in respect of which the trade mark is registered."
29. Since the plaintiff is holding registration of the trade mark RED HAT as well as SHADOWMAN device under various classes, i.e. I.A. No.10679/2011 in CS(OS) No.1654/2011 Page No.15 of 27 classes - 9, 41 & 42 and the use of the trade mark RED HAT by the defendants as well as part of their corporate name, it is clear that prima-facie, the plaintiff has been able to make out a strong case for infringement of the trade mark, as the plaintiff has been able to satisfy the Court on producing of documents that the trade mark RED HAT is a well-known trademark and has acquired goodwill and reputation not only in India but also other parts of the world. Thus, it is also protected under Section 29(4) of the Act. As the defendants are using the trade mark RED HAT as part of their corporate name, they are also guilty of infringement under Section 29(5) of the Act.
30. The defendants‟ contention has no force that since the name was registered under the Companies Act and under various provisions the defendants are entitled to use the name of the company, therefore, this Court should not pass the injunction order in view of settled law laid down by various High Courts in India. Some of the judgments are referred as under:-
(a) In K.G. Khosla Compressors Ltd. vs. Khosla Extraktion Ltd., reported in AIR 1986 Delhi 181, D.P. Wadhwa, J., of this Court restrained the use of the KHOSLA as part of the corporate name of the defendant despite the fact that the fields of activity of both parties were entirely different (compressors v extraction business).
(b) In Montari Overseas Ltd. vs. Montari Industries Ltd., reported in 1996 PTC (16) 142, a Division Bench of this Court restrained the defendant from using Montari as part of its corporate name. The Court held that remedies under Section 22 of the Companies Act and common law of passing off operate in different fields. The Court relied upon the decision of K.G. Khosla Compressors Ltd. vs. Khosla Extraktion Ltd. (supra). The areas of operation of the two concerns were also different.
(c) In Kirloskar Diesel Recon P. Ltd. vs. Kirloskar Proprietary Ltd., reported in 1997 PTC (17) 469, S.M. Jhunjhunwala held that under the Trade & Merchandise Marks Act, 1958 the term „trade mark‟ in Section 105(c) would include the trade name also. The Court accordingly I.A. No.10679/2011 in CS(OS) No.1654/2011 Page No.16 of 27 restrained the defendant from using KIRLOSKAR as part of its corporate name in an action for passing off and infringement. This decision was cited with approval by the Supreme Court in Mahendra & Mahendra Paper Mills Ltd. vs. Mahindra & Mahindra Ltd.
31. The other contention of the defendants was that the defendants have commenced use of the mark RED HAT since the year 2003 and when the plaintiff applied for registration of the trade mark in 2000, it was mentioned as „proposed to be used‟, and the benefit of user outside India cannot be given to the plaintiff in view of denial of plaintiff‟s user in India. The arguments of the defendants in this regard are also without any cogent reasons and in view of material and documents available on record. As regards the user in overseas countries claimed by the plaintiff, the argument of the learned counsel for the defendants is without any substance in view of law laid down by the Supreme Court and this Court. Few decisions are referred to here as below:-
(a) In MilmentOftho Industries & Ors vs. Allergan, reported in 2004 (28) PTC 585 (SC), the Supreme Court has held that "mere fact that the respondents have not been using the mark in India would be irrelevant if they were first in the world market."
(b) In the case of Allergan Inc. vs. Sun Pharmaceutical Industries, reported in (2006) 2 Cal. 272, the Calcutta High Court restrained the defendant permanently despite the fact that the plaintiff was not in Indian market. The injunction was granted on the ground that the plaintiff was the prior adopter of the trade mark OCUFLOX worldwide.
(c) N.R. Dongre and others vs. Whirlpool Corporation and others, reported in AIR 1995 Delhi 300, the relevant paras thereof read as under:-
"16. Similarly the High Court of Australia in the The Seven Up Company vs. O.T. Limited, (1947) 75 CLR 203 held as follows:
I.A. No.10679/2011 in CS(OS) No.1654/2011 Page No.17 of 27 "........In my opinion the effect of these cases is that in the absence of fraud it is not unlawful for a trader to become the registered proprietor under the Trade Marks Act of a mark which has been used, however extensively, by another trader as a mark for similar goods in a foreign country, provided the foreign mark has not been used at all in Australia at the date of the application for registration. But the position is different if at that dale the mark has become identified with the goods of the foreign trader in Australia because those goods have been brought into Australia by the foreign trader' himself or by some importer or in some other manner. The court frowns upon any attempt by one trader to appropriate the mark of another trader although that trader is a foreign trader and the mark has only been used by him in a foreign country. It therefore .seizes upon a very small amount of use of the foreign mark in Australia to hold that it has become identified with and distinctive of the goods of the foreign trader in Australia. It is not then a mark which another leader is entitled to apply to register under the Trade Marks Act because it is not his properly hut the properly of the foreign trader. The registrar is entitled to refuse to register the mark for such goods. If it has been registered the court may rectify the register on the ground that the mark is wrongly entered on the register.
Further, if at the date of the application for registration, the mark of the foreign trader, although it has not been used in Australia, has nevertheless become associated in the minds of the Australian public with his goods because it has been advertised in publications which have circulated extensively in Australia or in some other manner, the registrar is entitled to refuse to register the mark for such goods because it is likely to deceive. If it has been registered the court may rectify the register on the ground that the mark is wrongly entered on the register."
17. Thus, advertisement of a trade mark of a foreign trader in respect of a product need not be associated with the actual use of the product in order to establish reputation.
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18. In Pioneer Hy-Bred Com Co. vs. Hy-line Chicks Pty. Ltd., 1979 RPC 410, the appellant, an Australian company had applied on August 1963 for registration of the mark "HY-LINE" in New Zealand in respect of live chicken and poultry. Similar trademark in respect of same items had been registered in the United States in the year 1941 in favour of the respondent, an American company. Till August 1963, no sales of poultry had been made either by the Australian company or by the American company in New Zealand because of import restrictions. The Assistant Commissioner of Trade Marks accepted the application of the Australian company for registration of the said trade mark. Thereupon the American company appealed to the Supreme Court of New Zealand, which reversed the decision of the Assistant Commissioner. Against the decision of the Supreme Court, the Australian company appealed to the High Court of New Zealand. The High Court while upholding the decision of the Supreme Court laid down the test to be applied while deciding whether use in New Zealand of the appellant's trade mark was likely to deceive or cause confusion when the use of the American trade mark in New Zealand was not established, but only the awareness through advertisement thereof in the concerned New Zealand market of that mark was proved. In this connection it was held as follows:-
"..........It is the awareness or cognizance of those who are potential buyers in, or otherwise associated with the relevant New Zealand market that is material. If there is a likelihood that they will be deceived or confused as to the origin of goods covered by the applicant's mark, it matters not how they gained the knowledge that gives rise to that deception or confusion."
".........But in my view it is-a fair inference from the evidence that many New Zealand poultry men with an interest in improving breeding stocks in New Zealand read overseas magazines to expand their knowledge and that New Zealand poultry men sufficiently interested to subscribe for overseas periodicals had an interest in reading about overseas developments in breeding stock. Not all readers would have read all advertisements in all issues. Having regard to the evidence that the poultry men specifically referred to associated the I.A. No.10679/2011 in CS(OS) No.1654/2011 Page No.19 of 27 trade mark HY-LINE with HY-LINE Poultry Farms from reading literature on poultry matters, I think it probable, as did Cooke, J., that many of the other New Zealand subscribers to the journals would have read many of the advertisements in those trade magazines."
23. Thus a product und its trade name transcends the physical boundaries of a geographical region and acquires a transborder or overseas or extraterritorial reputation not only though import of goods but also by its advertisement. The knowledge and the awareness of the goods of a foreign trade & its trade mark can be available at a place where goods are not being marketed and consequently not being used. The manner in which or the source from which the knowledge has been acquired is immaterial."
For the aforesaid reasons, and in view of settled law, prima- facie, case of infringement of trade mark is made out.
Passing Off
32. Now, coming to the third issue pertaining to the passing off, the following are the essential characteristics of an action of passing off:-
(A) In Erven Warnink B.V. v. J. Townend & Sons (Hull) Ltd., reported in 1980 RPC 31, Lord Diplock stated the essential characteristics of a passing off action as under:
"(1) misrepresentation, (2) made by a person in the course of trade, (3) to prospective customers of his or ultimate consumers of goods or services supplied by him (4) which is calculated to injure the business or goodwill of another trader (in the sense that this is a reasonably forseable consequence and (5) which causes actual damage to a business or goodwill of the trader by whom the action is brought or (in a quia timet action) will probably do so."
33. The essentials of passing off action in Halsbury's Laws of England Vol. 38 (3rd Edition) para 998 as given below are worth noting:
I.A. No.10679/2011 in CS(OS) No.1654/2011 Page No.20 of 27 "998. Essentials of the cause of action The plaintiff must prove that the disputed name, mark, sign or get up has become distinctive of his goods in the sense that by the use of his name or mark, etc in relation to goods they are regarded, by a substantial number of members of the public or in the trade, as coming from a particular source, known or unknown; it is not necessary that the name of the plaintiff's firm should be known.....The plaintiff must further prove that the defendant's use of name or mark was likely or calculated to deceive, and thus cause confusion and injury, actual or probable, to the goodwill and the plaintiff's business, as for example, by depriving him of the profit that he might have had by selling the goods which ex hypothesi, the purchaser intended to buy. Thus, the cause of action involves a combination of distinctiveness of the plaintiff's name or mark and an injurious use by the defendant of the name or mark or a similar name or mark, sign, picture or get-up does or does not amount to passing off is in substance a question of evidence; the question whether the matter complained of is likely to deceive is a question for the Court."
34. The judgment passed in the case of Laxmikant Patel vs. Chetanbhai Shah, reported in (2002) 3 SCC 65, the relevant para- 10 of which reads as under:-
"The law does not permit any one to carry on his business in such a way as would persuade the customers or clients in believing that his goods or services belonging to someone else are his or are associated therewith. It does not matter whether the latter person does so fraudulently or otherwise. The reasons are two. Firstly, honesty and fair play are, and ought to be, the basic policies in the world of business. Secondly, when a person adopts or intends to adopt a name in connection with his business or services which already belongs to someone else it results in confusion and has propensity of diverting the customers and clients of someone else to himself and thereby resulting in injury."
In this case, the Apex Court further observed that:
I.A. No.10679/2011 in CS(OS) No.1654/2011 Page No.21 of 27 "Where there is probability of confusion in business, an injunction will be granted even though the defendants adopted the name innocently."
35. The judgment passed in the case of B.K.Engineering Co. vs. Ubhi Enterprises and Anr., reported in 1985 PTC 1, Para-57, it was held as under:-
"Trading must not only be honest but must not even unintentionally be unfair."
36. In passing off action, it is held in various cases include in the case of Century Traders Vs. Roshan Lal Duggar, reported in AIR 1978 Delhi 250 (DB) referred by counsel for the defendants that actual deception is not necessary in order to establish the case of passing off.
37. Very recently, Hon‟ble Supreme Court has extensively discussed the law of passing off in the case of T.V. Venugopal vs. Ushodaya Enterprises Ltd. & Anr., reported in 2011 (45) PTC 433 (SC) and observed while dealing with the appellant‟s adoption of Eenadu in relation to incense sticks (agarbatti), a trade mark already well-known for a newspaper, held that permitted the appellant to use this mark would amount to encouraging the appellant to practice fraud on the consumer. The Court held that honesty and fair play ought to be the basis of the policies in the world of trade and business. The Court further held that in such situations it is the bounden duty and obligation of the Court not only to protect the goodwill and reputation of the respondent company but also to protect the interest of the consumers.
38. In Bata India Limited vs. Pyare Lal & Co. (supra), A. Banerji, J. of the Allahabad High Court was greatly influenced by the fact that BATA is a word known all over the country having been used since I.A. No.10679/2011 in CS(OS) No.1654/2011 Page No.22 of 27 prior to 1940. The Court held that the name BATA was associated with the name of Mr. Thomas Bata, a native of Czechoslovakia who started his business in India making shoes and rubber products. The Court enjoined the use of the word BATAFOAM on foam products and held:
".....I am of the opinion that the user of name „Bata‟ to any product may give rise in the minds of „unwary purchaser of average intelligence and imperfect recollection‟ that it is a product of the plaintiff. It is this impression which may ultimately cause damage to the reputation of the plaintiff. It amounts to an invasion of his right vis-à-vis the name „Bata‟." (Emphasis supplied)
39. Thus, prima-facie, the plaintiff has been able to establish its case of passing off.
Delay
40. Lastly, the learned counsel for the defendants has argued that there is a delay on the part of the plaintiff in bringing the action before this court. Let me mention here that no clear and cogent evidence, i.e. by way of advertisement in the newspaper has been produced by the defendants regarding user claimed which may indicate that the plaintiff was aware about user of the defendants as claimed. No separate sale and advertisement figures have been filed bearing the mark RED HAT so as advertisement material. Thereofre, in view of settled law, the benefit of user as claimed by the defendants cannot be granted even otherwise, in an action for infringement user, if any, which is deliberate the dishonest, is not fatal.
41. Few decisions on the aspect of delay are referred as under:
a) In the case of Midas Hygiene Industries Pvt. Ltd. vs. Sudhir Bhatia and others, reported in 2004 (Vol.28) I.A. No.10679/2011 in CS(OS) No.1654/2011 Page No.23 of 27 PTC 121, relevant para-5 of the said judgment is as under:
"5. The law on the subject is well settled. In cases of infringement either of Trade Mark or of Copyright normally an injunction must follow. Mere delay in bringing action is not sufficient to defeat grant of injunction in such cases. The grant of injunction also becomes necessary if it prima facie appears that the adoption of the Mark was itself dishonest."
b) In the case of Swarn Singh vs. Usha Industries (India) and Anr., reported in AIR 1986 Delhi 343 (DB) it was held as under:
"There is then the question of delay. Learned counsel for the respondents had urged that the delay is fatal to the grant of an injunction. We are not so satisfied. A delay in the matter of seeking an injunction may be aground for refusing an injunction in certain circumstances. In the present case, we are dealing with a statutory right based on the provisions of the trade and Merchandise Marks Act, 1958. An exclusive right is granted by the registration to the holder of a registered trade mark. We do not think statutory rights can be lost by delay. The effect of a registered mark is so clearly defined in the statute as to be not capable of being misunderstood. Even if there is some delay, the exclusive right cannot be lost. The registered mark cannot be reduced to a nullity....."
c) In the case of Hindustan Pencils Pvt. Ltd. Vs. M/s India Stationery Products Co., reported in AIR 1990 DELHI 19, it was held as under:
"................. It was observed by Romer, J. in the matter of an application brought by J.R. Parkingnon and Co. Ltd., (1946) 63 RPC 171 at page 181 that "in my judgment, the circumstances which attend the adoption of a trade mark in the first instance are of considerable importance when one comes to consider whether the use of that mark has or has not been a honest user. If the user in its inception was tainted it would be difficult in most cases to purify it subsequently". It was further noted by the I.A. No.10679/2011 in CS(OS) No.1654/2011 Page No.24 of 27 learned Judge in that case that he could not regard the discreditable origin of the user as cleansed by the subsequent history."
d) In the case of M/s. Bengal Waterproof Limited Vs. M/s. Bombay Waterproof Manufacturing Company and another, reported in AIR 1997 SC 1398, it was held as under:
"20.........It is now well 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 or infringement of such trade mark giving a recurring and fresh cause of action at each time of such infringement to the party aggrieved. It is difficult to agree how in such a case when in historical past earlier suit was disposed of as technically not maintainable in absence of proper relief, for all times to come in future defendant of such a suit should be armed with a license to go on committing fresh acts of infringement and passing off with impunity without being subjected to any legal action against such future acts."
42. The submission of the learned counsel for the defendants has no force that the suit should be dismissed as the same is barred by time. It is pertinent to mention that under Article 88 of the Limitation Act, 1963 the period of limitation provided for bringing the suit for copyright or any other exclusive privilege is three years from the date of infringement, and Section 22 of the Limitation Act, 1963 provides a fresh period of limitation begins to run at every moment of time during the breach or the tort, as the case may be, continue. Passing off law is one of the facets of tort. The said aspect has been dealt by the Supreme Court in the case of Bengal Waterproof Ltd. vs. I.A. No.10679/2011 in CS(OS) No.1654/2011 Page No.25 of 27 Bombay Waterproof Manufacturing Co. (supra), the relevant para thereof reads as under:-
"....It is now well-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 or infringement of such trade mark giving a recurring and fresh cause of action at each time of such infringement to the party aggrieved....."
43. It also appears from record that in the present case as and when the plaintiff came to know about the defendants‟ activities about the use of the mark RED HAT, the plaintiff has been issuing the legal notices requesting the defendants not to violate its rights. Copies of such notices issued by the plaintiff are placed on record for the period 2008, 2009 and 2010. On the other hand, it appears that despite of receiving the notices, the defendants expanded its business under the said name as per the case of the plaintiff. Therefore, this Court is of the view that any user made by the defendants knowingly of the trade mark of the plaintiff was not honest, as the same was within the knowledge of the defendants. The question of delay and acquiescence has no relevance after issuing of notice to the defendants by the plaintiff as thereafter the defendants were using the trade mark at their own cost and risk if it establishes that they were infringing the rights of the plaintiff.
44. The other aspect of the matter is that despite of interim order passed in the matter restraining thereby the defendants from using the trade mark RED HAT with a device which is similar to the plaintiff‟s SHADOWMAN device, there is a material on record to show, I.A. No.10679/2011 in CS(OS) No.1654/2011 Page No.26 of 27 though the plaintiff‟s two applications under Order XXXIX, Rule 2A CPC is pending. This Court is, therefore, not expressing any opinion in this regard at this stage as the said applications have to be decided as per their own merit.
45. In view of the over-all facts and circumstances of the case as well as the conduct of the defendants, it appears that the plaintiff has been able to make out a strong prima-facie case for the grant of an interim injunction. The plaintiff‟s application is, therefore, allowed with costs. Accordingly, till the final disposal of the suit, the defendants, their agents, employees, franchisees, representatives and all other persons acting on their behalf are restrained from using the trade mark RED HAT with the device of cap similar to the plaintiff‟s SHADOWMAN device as well as the mark RED HAT as their corporate name or any other trade mark and device which are either identical with or deceptively similar to the plaintiff‟s trade mark/trade name RED HAT and the plaintiff‟s SHADOWMAN device. As far as the mark RED HAT as part of corporate name of defendant No.5 is concerned, the defendants are granted time up to 31st December, 2012 to change or amend the name by deleting the mark RED HAT.
46. The findings given herein are tentative which shall not have bearing in any manner when the matter would be considered by the Court after the trial.
CS(OS) No.1654/2011List before the roster bench, on 23rd July, 2012 the date already fixed.
MANMOHAN SINGH, J.
JULY 09, 2012/ka I.A. No.10679/2011 in CS(OS) No.1654/2011 Page No.27 of 27