Delhi High Court
Yash Arora vs Tushar Enterprises And Ors. on 30 November, 2007
Equivalent citations: 2008(36)PTC523(DEL)
Author: T.S. Thakur
Bench: T.S. Thakur, Veena Birbal
JUDGMENT T.S. Thakur, J.
1. This appeal arises out of an order dated 16th July, 2007 passed by learned single Judge of this Court whereby an application under Order 39 Rules 1 and 2 of CPC filed by the plaintiff-appellant has been dismissed with costs of Rs. 25,000/-. The facts in the backdrop may be summarized as under:
2. A partnership firm in the name and style of M/s. Keyman Locking Devices was, according to the plaintiff, floated in April, 1985 in terms of a partnership deed dated 1st June, 1985 in which the plaintiff was one of the two partners. Shri Ashwani Berry, the other partner is said to have retired from partnership on 4th September, 1986 leaving the goodwill, assets and liabilities of the concern to the plaintiff. The plaintiff was then joined by his brother Shri Narinder Arora as a partner in the concern that applied for the registration of trade mark "KEYMAN" in class 12 for use in automobiles, which registration was granted in favor of the partnership firm under No. 4459278.
3. In due course the partnership expanded the range of its products and started manufacturing and trading in the entire range of locks, like furniture locks, door locks, metal locks, automobile locks and other hardware items under the Trade Mark "KEYMAN" adopted by the firm w.e.f. 21st November, 1985. The partnership between the plaintiff and Shri Narinder Arora is said to have been dissolved in the year 1999 in terms of a dissolution deed dated 31st March, 1999. The concern was from that date taken over by the plaintiff as its sole proprietor with all its assets including the trademark "KEYMAN" adopted by the plaintiff in respect of the entire range of locks and hardware items manufactured and sold in the name and style of "M/s. Keyman Locking Devices".
4. The plaintiff-appellant's case is that in March, 2007, it came to know that the defendant Nos. 1 and 2, respondents herein, had also started marketing metal locks and hardware items in an exactly and deceptively similar trade mark called "KEY MANN". Alleging that the use and adoption of the trade mark "KEY MANN" by Defendant Nos. 1 and 2 amounts to an infringement of the plaintiff's well-known and reputed trade mark "KEYMAN", the plaintiff filed CS(OS) No. 578/2007 on the original side of this Court in which the plaintiff inter alia alleged that the word "KEYMAN" had been invented and coined by plaintiff and the same had been adopted as a trademark for the goods manufactured by the plaintiff, namely, locks and hardware items and that it formed part of the corporate name of the plaintiff's proprietary concern, M/s. Keyman Locking Devices. The plaintiff's further case was that ever since the adoption of the trade mark along with above locking devices, the plaintiff has been extensively and continuously using the same in respect of the entire range of locks including metal locks, auto locks, door locks, furniture locks and other hardware and allied items. It was also alleged that the plaintiff had applied for the registration of trade mark "KEYMAN" with its logo under No. 1387908 in Class-6 with the Registrar of Trademarks on 27.09.05 in respect of the said goods and that the mark was protected under the Trademarks Act, 1999. The plaintiff's further case was that he has given wide publicity to his trademark "KEYMAN" in the print media in the form of advertisements in newspapers, trade magazines, books, stickers, calendars, price list, etc. He claimed to have spent huge amounts on the publicity of trademark "KEYMAN" which according to the plaintiff, enjoyed solid and enduring reputation amongst retailers, wholesalers and distributors of metal locks, and hardware items and also amongst the public at large. The plaintiff in that factual background prayed for a decree for perpetual injunction restraining the defendants, their servants, agents, representatives, dealers and all other persons on their behalf from manufacturing or selling or otherwise dealing with in locks and hardware items under the offending trademark "KEY MANN" or in any other trademark identical, phonetically and/or deceptively similar to the trademark "KEYMAN" of the plaintiff. An injunction restraining the defendants from infringing the trademark "KEYMAN" and passing off their products locks and other hardware items under the trade mark "KEYMAN" was also prayed for apart from a decree for rendition of accounts. The suit was accompanied by an application under Order 39 Rules 1 and 2 for an ad interim ex parte injunction on the above line.
5. A single Bench of this Court hearing the suit on the original side by order dated 30th March, 2007 issued an ex parte injunction restraining the defendants from using the trademark "KEY MANN" or dealing with any trademark identical phonetically and/or deceptively similar to the trademark "KEYMAN" and appointed a Local Commissioner to visit the business premises mentioned in the application and to seize the offending material from the same. Aggrieved by the said order, the defendant moved an application under Order 39 Rule 4 of the CPC for vacation of the same and alleging concealment of material facts by the plaintiff. The defendants further alleged that the plaintiff had secured the interim order in question by playing fraud upon the Court. According to the defendants, they were the registered owners of the trademark "KEY MANN" which was registered in their favor on 1st January, 2004 under the Registration No. 1258852. It was also alleged that while Defendant No. 1 had applied for registration of the mark in January, 2004, the plaintiff had done so in September, 2004. It was also pointed out that the defendants had filed objection against the registration of the trade mark "KEYMAN" in favor of the plaintiff and that the plaintiffs had made a false and misleading statement to the effect that Defendant Nos. 1 and 2 had recently started marketing metal locks and hardware items under a deceptively similar trademark "KEY MANN". By the order impugned in this appeal, the learned single Judge vacated the ex parte ad interim injunction quoting the following three precise reasons:
i) Every businessman who adopts a trademark normally conducts a search to know if there is any other user of the same trademark. The plaintiff also must have conducted a search before applying for the registration of the trademark and would have come to know of the existence of the earlier registered trademark of the defendant. The plaintiff's application for injunction did not, however, disclose the fact that the trademark "KEY MANN" stood already registered or that the trademark of the plaintiff was lying under objections because of the opposition of the defendant.
ii) Even if the plaintiff had no knowledge about the earlier registration of the trademark, the suit had been filed in a negligent manner without first conducting a search about the other similar trademarks.
iii) Plaintiff's story about use of trademark since 1985 was not supported by any documentary evidence. He has not given the sequence of events leading to the acquisition of the mark by the plaintiff from the earlier partnership.
iv) The defendants are the owner of the registered trademark "KEY MANN" in the light of the registration granted in their favor since January, 2004 which registration entitles the defendants to exclude others from the use of the trademarks in the light of the provisions of Section 28 of the Trade and Merchandise Marks Act and in the light of the decisions of this Court in Tata Oil Mills Co. Ltd. v. Wipro Limited and Anr. AIR 1986 Delhi 345 and Jindal Industries Ltd. v. Nirmal Steel Tubes Pvt. Ltd. AIR 1994 Delhi 42. The interim order already issued by the Court was, on the above findings, vacated with costs as already indicated earlier. The present appeal assails the correctness of the said findings.
6. Appearing for the appellant, Mr. Valmiki Mehta argued that each one of the findings which the learned single Judge had recorded while vacating the order and dismissing the application for ad interim injunction under Order 39 was unsustainable. The charge made against the plaintiff-appellant that a search must be presumed to have been made before applying for registration of trademark and such a search must be presumed to have led to the disclosure of the mark having already been registered in favor of defendants was, according to Mr. Mehta, without any juristic basis. The statute did not make it necessary for a party applying for registration of the trademark to conduct a search before the application was filed. That was true especially in cases where the party had been using a particular trademark for a number of years past as in the instant case. The finding of the learned single Judge that the plaintiff appellant had not come with clean hands was, therefore, based on an assumption that was not legally sustainable. It was also contended by Mr. Mehta that the finding of the learned single Judge that the plaintiff was negligent in filing the suit and dishonest in suppressing the alleged knowledge about the opposition to the application for registration filed by him was also unsustainable. He submitted that there was nothing on record to suggest that the plaintiff had at any stage information about the opposition of defendants to the prayer for registration of plaintiff's trademark. He drew our attention to the application made by the plaintiff under the RTI and the response to the same received from the trademark Registry which according to Mr. Mehta conclusively established that no notice regarding opposition of defendants was ever issued to the plaintiff. The allegation that the plaintiff had no knowledge of the opposition and yet withheld or misrepresented facts was, therefore, unfair and untenable.
7. It was lastly contended by Mr. Mehta that the learned single Judge had proceeded on the assumption that the registration of trademark was conclusive of the matter. That was not, however, the correct position in law, according to the learned counsel. Relying upon the decisions of the two Division Benches of this Court in Rob Mathys India Pvt. Ltd. v. Synthes Ag Chur [DB] 1997 PTC 669 and N.R. Dongre v. Whirlpool Corporation , Mr. Mehta argued that the registration of trade mark was irrelevant in passing off action. It was also contended that the learned single Judge was wrong in holding that there was no material on record to suggest that the plaintiff-appellant had been using the trademark since the year 1985. Reference was in that regard made to the list of documents filed by the plaintiff comprising 114 odd documents including purchase orders, invoices, advertisements, articles, deeds of partnership, etc. which showed that the claim made by the plaintiff for prior use of the trademark was not without documentary support as held by the learned single Judge.
8. On behalf of the respondents, it was per contra argued that while there was no manner of doubt that prior user of a trademark was an important area that required to be examined which if found correct may prove sufficient to entitle the user to an injunction notwithstanding the subsequent registration of a mark in favor of another party, the Court was justified in holding that plaintiff had not fully disclosed the facts and had thereby disentitled itself to the grant of a relief which was otherwise discretionary with the Court.
9. We have given our anxious consideration to the submissions made at the bar and perused the record. The plaintiff has, in the plaint to which we have referred in some detail, specifically alleged that he had been using the trademark "KEYMAN" ever since 1985 first in partnership with his brother Shri Narinder Arora and later as a sole proprietor of the concern M/s. Keyman Locking Devices. Prior use of a trademark is in law sufficient to entitle such user to relief in a passing off action against the registered user of such mark. The legal position in that regard stands settled by a Division Bench of this Court in N.R. Dongre's case (supra) relied upon by the appellant, which decision has been upheld even by the Apex Court. That was a case where the plaintiff Whirlpool Corporation was engaged in the manufacture, sale, distribution and servicing of washing machines under the trademark "WHIRLPOOL". It had apart from registrations in other countries, a registration in India in respect of different machines in classes 7, 9 and 11. These registrations had lapsed after the year 1977 despite which the products in India continued to be sold under the trade mark "WHIRLPOOL". The plaintiff in that background and because of long user claimed the ownership of "WHIRLPOOL" as a trademark of global repute. In the suit filed by it for injunction, it sought to restrain the defendant "Chinar Trust" who was the registered owner of the trade mark "WHIRLPOOL" from manufacturing selling and advertising its machines using the word "WHIRLPOOL" or any other trademark, deceptively or closely similar. Question No. 2 framed by the Court for consideration was whether an injunction could be issued against the owner of a registered trademark at the instance of a party who was the prior user of such a mark. The Question was framed in the following words :
1)Whether the respondents, who are not the registered proprietors of trademark "WHIRLPOOL" in respect of washing machines, can maintain an action for passing off against the appellants in respect of the use of the same which has been registered in their favor in respect of the same goods?
10. Answering the question in the affirmative, the court observed :
According to Section 28(1) of the Act, registration of a trade mark gives to the registered proprietor thereof exclusive right to use the same in relation to the goods in respect of which it has been registered. But from the opening words of Section 28(1) namely, "subject to other provisions", it is clear that the right conferred on a trader is not an indefeasible right as the same is expressly made subject to other provisions of the Act. This is further made clear by Section 27(2) of the Act, which provies that "nothing in this Act shall be deemed to affect the right of action against any person for passing off the goods as goods of another person or the remedies in respect thereof." Thus it is manifest that Section 28 of the Act and all other provisions come within the overriding sway of Section 27(2) of the Act. Similarly Section 33 of the Act also saves vested rights of a prior user. It lays down that nothing in the Act shall entitle a registered proprietor of a trade mark to interfere with the use of the trade mark by a prior user of the same. Thus the right created by Section 28(1) of the Act in favor of a registered proprietor of a trade mark is not an absolute right and is subservient to other provisions of the Act namely Sections 27(2), 33 etc. Neither Section 28 nor any other provision of the Act bars an action for passing off by an anterior user of a trade mark against a registered user of the same. In other words registration of a trade mark does not provide a defense to the proceedings for passing off as under Section 27(2) of the Act a prior user of a trade mark can maintain an action for passing off against any subsequent user of an identical trade mark including a registered user thereof.
XX XX XX A reading of Section 28(3) WITH Section 30(1)(d) shows that the proprietor of a registered trade mark cannot file an infringement action against a proprietor of an identical or a similar trade mark. While Sections 28(3) and 30(1)(d) on the one hand deal with the rights of registered proprietors of identical trade marks and bar action of infringement against each other. Section 27(2) On The Other Hand Deals with the Passing Off Action. The rights of action under Section 27(2) are not affected by Section 28(3) and Section 30(1)(d). Therefore, registration of a trade mark under the Act would be irrelevant in an action for passing off. Registration of a trade mark in fact does not confer any new right on the proprietor thereof than what already existed at common law without registration of the mark.
11. Three other decisions to which a reference was made by Mr. Mehta, namely, Rob Mathys India Pvt. Ltd. v. Synthes Ag Chur [DB] 1997 PTC 669, Madan Lal Jain v. Babu Di Fancy Hatti 1997 (67) DLT 557 and Bimal Govindji Shah Trading As Acme Industries v. Panna Lal Chandu Lal 1997 (67) DLT 65 also reiterate the same legal position. In the light of the above, the learned single Judge had to examine the claim of the prior user made by plaintiff in the plaint and determine whether the plaintiff had established the same even on a prima facie basis. The Single Judge has however brushed aside that claim by making a sweeping statement that the claim was unsupported by any documentary evidence. That observation does not take note of or make any comment regarding a very large number of documents upon which the plaintiff has placed reliance before us and which we believe were available before the learned single Judge. If prior user, as alleged by the plaintiff was established, the subsequent registration of trade mark in favor of the defendants would have paled into insignificance in a passing off action. Suffice it to say that the treatment given by the learned single Judge to the question of prior user does not appear to be satisfactory. It is true that this Court could in the present appeal examine the documents being relied upon by the plaintiff to find out whether the plaintiff-appellant had made out a prima facie case for the grant of injunction based on the plea of prior user of the trade mark yet it is not necessary for this Court to embark upon such exercise. It would, in our view, be more appropriate if the matter is remitted back to the learned single Judge to examine this aspect while making a fresh order. An appellate Court, in our view, ought to have the advantage of having the views of the single Judge on the material issues including in the instant case whether the plaintiff had made out a case for injunction on the basis of prior user.
12. The other two issues which the learned single Judge has referred to in the impugned order would, in our view, recede into the background and may not, by themselves, be sufficient to support the order under appeal. We say so because in the absence of any statutory provision making a search essential, the practice of making a search or the breach thereof would be insufficient to support a finding that the party concerned has not come to the court with clean hands. The learned single Judge has also found that the plaintiff had not referred to the opposition of the defendants to the plaintiff's application for registration. That observation assumes that the opposition had been notified to the plaintiff. The material placed on record, however, does not support any such assumption. In the circumstances, the question mark put by the learned single Judge on the bona fides of the plaintiff may remain a grey area for future debate but may not be sufficient on the available material to support the vacation of the interim order.
13. In the result, this appeal succeeds and is hereby allowed. The impugned order passed by the learned single Judge is set aside and the matter remitted back to the learned single for passing a fresh order in the matter in accordance with law keeping in view the observations made herein above. No costs.