Delhi District Court
Through Its Authorised Representative vs Mr. Anwar Ali on 30 May, 2020
-1-
IN THE COURT OF SH. GURDEEP SINGH
DISTRICT JUDGE (COMMERCIAL COURT)-02
WEST DISTRICT, TIS HAZARI COURTS, DELHI.
In the matter of :-
CNR No.: DLWT01-004465-2018
CS (Comm.) No.: 84/2020
adidas AG
(a company registered in Germany)
having its office at
Adi-Dasseler Strasse 1
Herzogenaurach- 91074
Germany
And also at
adidas India Marketing Private Limited
Plot No. 93, Institutional Area
Sector -32, Gurgaon - 122003
Through its Authorised Representative
Mr. Narendra Singh
...Plaintiff
VERSUS
1. Mr. Anwar Ali
Building No. G-24, Gulshan Park
Near Sonia Hospital, Nangloi
Delhi - 110 041
...Defendant
Date of Institution : 18.05.2018
Date of transfer to this court : 04.02.2020
Date of reserving order : 22.05.2020
Date of pronounced of order : 30.05.2020
CS (Comm.) No. : 84/2020 Page 1 of 25
-2-
JUDGMENT
1. Vide this judgment I shall decide present suit for mandatory and permanent injunction, infringement of trademarks and copyright, passing off and rendition of accounts. Initially the suit was filed against defendant Ashok Kumar (John Doe) and subsequently name of the defendant Anwar Ali was impleaded vide order dated 04.09.2018 and Ashok Kumar (John Doe) was deleted.
2. The relevant facts are that it is averred that the Plaintiff Company is registered under the laws of Germany having its office at Adi-Dasseler Strasse, 1, Herzogenaurach - 91074, Germany and is engaged in manufacturing, sale and distribution of sportswear, t-shirt, t-shirts, lowers, jackets, apparels, caps, other apparels and accessories across the world. That the Plaintiff Company has authorised Mr. Narendra Singh to institute, sign, verify and pursue the present suit. The plaintiff company is owner of the trademarks "adidas", "three bars", "3-Strips", "Trefoil" and said trademarks and its logos are registered under the provisions of the Trademarks Act, 1999 in India. The products of the Plaintiff Company are available in more than 160 countries worldwide including India.
3. Further it is averred that the Plaintiff Company started its business in India in 1989, and carries out its business in India CS (Comm.) No. : 84/2020 Page 2 of 25 -3- primarily through its wholly owned subsidiary company "adidas India Marketing Private Limited", having its office at Gurgaon and also through other subsidiaries. That the "adidas" brand and its trademarks are already well known in India as a result of its international business association and sponsorship of top athletics events such as the Olympic Games and FIFA World Cup and of numerous other well known athletes team. That the Plaintiff Company carries out its business in India through its franchise and company owned showrooms and advertises in India and other parts of the world through print, television and other media for promotion of its brand and products and incurs huge expenses on account of advertisement. The trademarks of plaintiff are well known trademarks and enjoy huge reputation and goodwill in India.
4. Further the plaintiff company has a huge turnover against sale of its products worldwide including in India and net global sales for the year 2010 was 11,990 million in Euro which increased to 21218 million for the year 2017 and gross profit for the year 2010 was 5730 million in Euro which increased to 10703 million in Euro for theyear 2017.
5. The trademarks and logos of the Plaintiff Company are registered in India under various classes of the Trademarks Rules, 2002, which are being renewed from time to time by the CS (Comm.) No. : 84/2020 Page 3 of 25 -4- trademark Registry and subsisting in favour of the Plaintiff Company till date. That the Legal Proceedings in respect of the above-mentioned trademarks are in favour of the Plaintiff. The plaintiff has thus the exclusive right to use the said trademarks and logos with respect to its products and no one is entitled to use the trademark "adidas", "three bars", "3-Strips", "Trefoil" and its logos and or any mark identical and / or confusingly or deceptively similar to the trademarks and logos of the plaintiff company, without a license or assignment by the plaintiff company.
6. That the logos and mark adidas", "three bars", "3-Strips", and "Trefoil" have their own figurative distinctiveness on account of their unique design effect, sign, graphics, style as a whole and are artistic works under the definition of Copyright Act owing to its unique design effect and style and has the copyright over the trademarks and logos since it's the original and pristine creation of the Plaintiff Company.
7. That the Plaintiff Company spends huge amount of money in advertising and promotion of its products under the trademarks adidas", "three bars", "3-Strips", "Trefoil" and its logos in India and said marks enjoy a huge goodwill and reputation in business community and public in general in India and across the world. That on account of its good quality and standards of CS (Comm.) No. : 84/2020 Page 4 of 25 -5- manufacturing and untiring efforts in advertising and marketing, goods of the Plaintiff have acquired an enviable reputation and goodwill in India.
8. It is further averred that in the month of April, 2018, it came to the knowledge of the plaintiff company that the defendant from its premises is manufacturing, stocking, distributing and selling infringing shoes and other accessories bearing trademarks identical and/ or confusingly or deceptively similar to the trademarks "adidas", "three bars", "3-Strips", "Trefoil" and its logos and is causing confusion and deception amongst the purchasing public and trade. The infringing goods manufactured, distributed and sold by the defendant are readily available in the markets of Delhi especially in the market of Nangloi, Pitampura, Rohini through its manufacturing unit situated in Gulshan Park. Further the plaintiff company has been able to buy/ procure sample of infringing shoes bearing mark "adidas", "three bars", "3-Strips", "Trefoil" and its logos. The defendant does not issue any invoice/bill for the purchase and work in a very clandestine manner. On a close scrutiny of defendant's shoes, it has been observed that the fabric of the defendant's shoes is that of average quality having average quality of stitching and infringing product is not so well finished as compared to the high end finished products of the CS (Comm.) No. : 84/2020 Page 5 of 25 -6- plaintiff. Further the labels on the defendant's shoes has poor stitching and shoes manufactured, distributed and sold by the defendant do not carry care label, security label.
9. That by the use of trademarks and logos which are identical and /or confusingly or deceptively similar to the registered trademarks of the Plaintiff in relation to similar goods, defendant is reaping unfair advantage without any due cause and such an act is highly detrimental to the distinctive character and repute of the trademarks of the Plaintiff Company and it constitutes infringement within meaning of the Trade Marks Act, 1999.
10. The infringing shoes and accessories being sold by Defendant bearing falsified trademarks "adidas", "three bars", "3-Strips", "Trefoil" and logos of the Plaintiff are not the genuine product and are of inferior quality and the Defendant by falsifying "adidas", "three bars", "3-Strips", "Trefoil" and logos of the Plaintiff is deceiving the purchasing public and also causing huge monetary loss to the Plaintiff and also diluting the goodwill and reputation of the Plaintiff's trademarks.
11. That overall impact of action of Defendants and in fact the totality of the circumstances show that Defendant have acted with the sole intention of dishonestly riding on the goodwill of CS (Comm.) No. : 84/2020 Page 6 of 25 -7- Plaintiff and to cause deception and confusion in the minds of the purchasing public, otherwise there was no reason for Defendants to adopt same/ similar trademark and logos as that of the Plaintiff.
12. It is further averred that the cause of action first arose in the month of April, 2018 in favour of plaintiff company and against the defendant when it learnt that such infringing goods are being freely manufactured in Gulshan Park and freely sold in markets of Nangloi, Pitampura and Rohini and other markkets of Delhi and thereafter the cause of action is still accruing on a continuous basis as the defendant is manufacturing, stocking, distributing and selling the infringing goods and is passing of goodwill and reputation of the plaintiff company. Further it is averred that this Court has jurisdiction as defendant has its place of business/office within the territorial jurisdiction of this Court.
13. It is prayed that mandatory injunction and permanent injunction be granted in favour of plaintiff restraining the defendant, its associates and agents, officers, employees, distributors, representatives and assigns from using the trademarks and copyright "adidas", "three bars", "3-Strips", "Trefoil" and its logos and other registered trademarks of plaintiff company on goods including shoes and other accessories in any form and manner and / or trademark identical and/or confusingly and CS (Comm.) No. : 84/2020 Page 7 of 25 -8- deceptively similar to the mark "adidas", "three bars", "3- Strips", "Trefoil" and its logos and other registered trademarks and copyright of the Plaintiff Company; grant order for delivery up of all the impugned finished and unfinished materials bearing the impugned and violative trade mark/ label for the purpose of destruction and erasure; and grant decree of rendition of accounts and loss of business on account of sale of infringing goods by the defendant and decree of punitive damages.
14. Vide order dated 28.05.2018, an application under Order 26 Rule 9 CPC for appointment of Local Commissioner was allowed to conduct raid on the premises of the defendant and further summon of the suit and notice of the application under Order 39 Rule 1 & 2 CPC read with S. 135 of Trademarks Act were also directed to be issued. Thereafter in pursuant to the said order, Local Commissioner executed the commission proceeding, seized the infringed goods and filed report. After that vide order dated 04.09.2018, an application under Order 6 Rule 17 CPC for amendment of the plaint and an application under Order 1 Rule 10 CPC for impleading Mr. Anwar Ali as defendant and deletion of Mr. Ashok Kumar were allowed. Accordingly suit was amended and Mr. Anwar Ali was impleaded as defendant and Mr. Ashok Kumar was deleted and CS (Comm.) No. : 84/2020 Page 8 of 25 -9- fresh summons of the suit and notice of the application was directed to be issued to the defendant. However, the defendant could not be served through ordinary mode and therefore ultimately he was served by way of publication in newspaper 'Statesman' for 07.05.2019 but none has appeared on 07.05.2019. However, the court chose not to proceed ex parte but provided opportunity to defendant to file WS and on 23.07.2019, the opportunity to file WS was closed when none appeared on behalf of defendant.
15. Plaintiff led evidence by way of affidavit of Sh. Narender Singh as PW-1. He deposed on the line of plaint, relied upon documents and proved Certificate of Incorporation dated 31.03.2015 as Ex.PW-1/1 and power of attorney dated 06.1.2016 as Ex.PW-1/2, copies of trademarks certificate/ legal proceedings of the trademarks of various dates as Ex.PW-1/3, Ex.PW-1/4, Ex.PW-1/5, Ex.PW-1/6, Ex.PW-1/7, Ex.PW-1/8, Ex.PW-1/9, Ex.PW-1/10, Ex.PW-1/11, Ex.PW-1/12, Ex.PW-1/13, Ex.PW-1/14, Ex.PW-1/15, Ex.PW-1/16, Ex.PW-1/17, Ex.PW-1/18, Ex.PW-1/19, Ex.PW-1/20, Ex.PW-1/21, Ex.PW-1/22, Ex.PW-1/23, Ex.PW-1/24, Ex.PW-1/25 respectively, renewal certificates of trademarks Ex.PW-1/26, Ex.PW-1/27, Ex.PW-1/28, affidavit of investigator as Ex.PW-1/29, photographs of infringed goods as Ex.PW-1/30, CS (Comm.) No. : 84/2020 Page 9 of 25 -10- photographs of original products of the plaintiff company as Ex.PW-1/31 and Technical Expert Certificate.
16. It is worth noting that on 17.03.2020 case was listed for further final arguments, however, on account of non-availability of counsel for plaintiff after lunch, the case was adjourned for 09.04.2020 and thereafter in pursuant to direction of Hon'ble High Court of Delhi and Ld. District & Sessions Judge, West District, THC on account of outbreak of covid-19, the case was adjourned en bloc for 04.06.2020. Now in pursuant to direction of Hon'ble High Court of Delhi and Ld. District & Sessions Judge, West District, THC, the matter is preponed on 19.05.2020 and posted for ex parte final arguments by way of video conferencing through 'Cisco Webex Meeting App' only with direction that parties may file written submission on the email id i.e. [email protected] and both parties shall exchange written submission with each other on their respective e-mail id/ Whatsapp number. Accordingly, the Counsel for plaintiff was informed by way of SMS on her mobile number available on record.
17. I have heard counsel for plaintiff. I have gone through the same.
Permanent and Mandatory Injunction
18. PW-1 has deposed on the line of plaint and stated that the CS (Comm.) No. : 84/2020 Page 10 of 25 -11- trademarks "adidas", "three bars", "3-Strips", "Trefoil" and its logos are registered in India under various classes of the Trademarks Rule 2002, which are valid and subsisting in favour of the plaintiff company till date. Details of same are mentioned in para 8 of the amended plaint. Further the trademarks "adidas", "three bars", "3-Strips", "Trefoil" and its logos have their own figurative, distinctiveness on account of their unique design effect, sign, graphics, style as a whole and are artistic work under the definition of Copyright Act and the logos are original and pristine creation of plaintiff company. Further plaintiff spends huge amount of money in advertising and promotion of its product and said marks enjoy a huge goodwill and reputation in business community and public in general in India and across the world. Further the plaintiff company has global sales turnover which runs in million USD and details of same are mentioned in para 6 of the plaint. Further as per report of Local Commissioner, 4046 infringed articles contained trademarks of plaintiff company, out of which 3600 were semi finished articles i.e. were in the process of manufacturing, and 446 articles were finished products, were recovered from the premises of the defendant which were seized and returned to defendant on superdari. Further the infringed goods are that of average quality, poor stitching and does not carry care label, CS (Comm.) No. : 84/2020 Page 11 of 25 -12- security label. The examination on the basis of labels attached on the products and quality of material finish and proportion of trademarks are given in para 17 of the amended plaint. The use of trademarks and logos in similar goods as adopted by the defendant which are identical and/ or confusingly or deceptively similar to the registered trademarks of the plaintiff "adidas", "three bars", "3-Strips", "Trefoil" and its logo, amounts to not only fraud upon the plaintiff company but also upon the unwary general public. Due to which the plaintiff company suffers huge monetary loss and his goodwill and reputation is also at stake.
19. The evidence of PW-1 which is duly supported by documents has gone unrebutted. Therefore in the totality of the facts and circumstances of the fact, I am of the opinion that plaintiff has succeeded in proving that defendant was manufacturing, stocking, distributing and selling goods having plaintiff trademarks and its logos and therefore trademarks and copyright of plaintiff company is required to be protected. Accordingly, mandatory injunction and permanent injunction is granted in favour of plaintiff and defendant, its associates and agents, officers, employees, distributors, representatives and assigns are restrained from using the trademarks and copyright "adidas", "three bars", "3-Strips", "Trefoil" and its logo and other registered trademarks of plaintiff company on goods including CS (Comm.) No. : 84/2020 Page 12 of 25 -13- shoes and other accessories in any form and manner and / or trademark identical and/or confusingly and deceptively similar to the mark "adidas", "three bars", "3-Strips", "Trefoil" and its logos and other registered trademarks and copyright of the Plaintiff Company.
Delivery up
20. As already discussed 3600 were semi finished articles and 446 finished articles were seized by the Local Commissioner and returned to defendant on superdari. Therefore defendant is directed to delivery up all above seized semi finished and finished articles besides all other the impugned finished and unfinished materials bearing the impugned and violative trade mark/ label of plaintiff company.
Rendition of Accounts
21. It is submitted by Ld. Counsel for the plaintiff that since defendant did not participate in the proceedings, therefore his account could not be sought and rendition of accounts is not possible in such circumstances. Although in evidence, plaintiff had sought rendition of accounts by calculating amount on the basis of seizure of infringing material from defendant amounting to Rs.94,25,000.00. However, plaintiff could not give break up. As conceded by Ld. Counsel for plaintiff relief of CS (Comm.) No. : 84/2020 Page 13 of 25 -14- rendition of account cannot be granted.
Punitive Damages
22. Ld. Counsel for plaintiff submitted that plaintiff company is entitled to punitive damages amounting to Rs.10 lacs and relied upon judgments of our own Hon'ble High Court in case titled as Super Cassettes Industries v. M/s Rachana Television Pvt. Ltd., CS (OS) 1742/2009 decided on 13.05.2013 and Time incorporated v. Lokesh Srivastava & Anr., 116 (2005) DLT
599.
23. However, both cited judgments for plaintiff have been overruled by Division Bench of our own Hon'ble High Court in case titled as Hindustan Unilever Limited v. Reckitt Benckiser India Limited ILR (2014) II Delhi 1288, paras to quote :-
65. As far as punitive damages are concerned, the learned Single Judge relied in Lokesh Srivastava and certain other rulings. Here, since the Court is dealing with a final decree - and a contested one at that (unlike in the case of trademark and intellectual property cases, where the courts, especially a large number of Single Judge decisions proceeded to grant such, punitive damages in the absence of any award of general or quantified damages for infringement or passing off), it would be necessary to examine and re-state the governing principles.CS (Comm.) No. : 84/2020 Page 14 of 25 -15-
66. Rookes v. Barnard, [1964] 1 All ER 367, is the seminal authority of the House of Lords, on the issue of when punitive or exemplary (or sometimes alluded to as "aggravated") damages can be granted. The House defined three categories of case in which such damages might be awarded. These are:
a. Oppressive, arbitrary or unconstitutional action any the servants of the government;
b. Wrongful conduct by the defendant which has been calculated by him for himself which may well exceed the compensation payable to the claimant; and c. Any case where exemplary damages are authorised by the statute.
The later decision in Cassell & Co. Ltd. v. Broome, 1972 AC 1027, upheld the categories for which exemplary damages could be awarded, but made important clarificatory observations. Those relevant for the present purpose are reproduced below:
"A judge should first rule whether evidence exists which entitles a jury to find facts bringing a case within the relevant categories, and, if it does not, the question of exemplary damages should be withdrawn from the jury's consideration. Even if it is not withdrawn from the jury, the judge's task is not complete. He should remind the jury: (i) that the burden of proof rests on the plaintiff to establish the facts necessary to bring the case within the categories, (ii) That the mere fact that the case falls within the categories does not of itself entitle the jury to award damages purely exemplary in character. They can and should award nothing unless (iii) they are satisfied that the punitive or exemplary element is not sufficiently met within the figure which they have CS (Comm.) No. : 84/2020 Page 15 of 25 -16- arrived at for the plaintiff's solatium in the sense I have explained and (iv) that, in assessing the total sum which the defendant should pay, the total figure awarded should be in substitution for and not in addition to the smaller figure which would have been treated as adequate solatium, that is to say, should be a round sum larger than the latter and satisfying the jury's idea of what the defendant ought to pay. (v) I would also deprecate, as did Lord Atkin in Ley v. Hamilton, 153 L.T. 384the use of the word "fine" in connection with the punitive or exemplary element in damages, where it is appropriate. Damages remain a civil, not a criminal, remedy, even where an exemplary award is appropriate, and juries should not be encouraged to lose sight of the fact that in making such an award they are putting money into a plaintiff's pocket, and not contributing to the rates, or to the revenues of central government."
(emphasis supplied).
The House of Lords, in its discussion, remarked crucially that there is a considerable subjective element in the award of damages in cases involving defamation and similar actions. Courts, it remarked, used terminology to reflect overlapping, and sometimes undesirable ideas underlining the considerations weighing grant of damages:
"In my view it is desirable to drop the use of the phrase "vindictive" damages altogether, despite its use by the county court judge in Williams v. Settle [1960] 1 W.L.R. 1072, Even when a purely punitive element is involved, vindictiveness is not a good motive for awarding punishment. In awarding "aggravated" damages the natural indignation of CS (Comm.) No. : 84/2020 Page 16 of 25 -17- the court at the injury inflicted on the plaintiff is a perfectly legitimate motive in making a generous rather than a more moderate award to provide an adequate solatium. But that is because the injury to the plaintiff is actually greater and, as the result of the conduct exciting the indignation, demands a more generous solatium.
Likewise the use of "retributory" is objectionable because it is ambiguous. It can be used to cover both aggravated damages to compensate the plaintiff and punitive or exemplary damages purely to punish the defendant or hold him up as an example.
As between "punitive" or "exemplary," one should, I would suppose, choose one to the exclusion of the other, since it is never wise to use two quite interchangeable terms to denote the same thing. Speaking for myself, I prefer "exemplary," not because "punitive" is necessarily inaccurate, but "exemplary" better expresses the policy of the law as expressed in the cases. It is intended to teach the defendant and others that "tort does not pay" by demonstrating what consequences the law inflicts rather than simply to make the defendant suffer an extra penalty for what he has done, although that does, of course, precisely describe its effect. The expression "at large" should be used in general to cover all cases where awards of damages may include elements for loss of reputation, injured feelings, bad or good conduct by either party, or punishment, and where in consequence no precise limit can be set in extent. It would be convenient if, as the appellants, counsel CS (Comm.) No. : 84/2020 Page 17 of 25 -18- did at the hearing, it could be extended to include damages for pain and suffering or loss of amenity.
Lord Devlin uses the term in this sense in Rookes v. Barnard [1964] A.C. 1129, 1221, when he defines the phrase as meaning all cases where "the award is not limited to the pecuniary loss that can be specifically proved." But I suspect that he was there guilty of a neologism. If I am wrong, it is a convenient use and should be repeated.
Finally, it is worth pointing out, though I doubt if a change of terminology is desirable or necessary, that there is danger in hypostatising "compensatory," "punitive," "exemplary" or "aggravated" damages at all. The epithets are all elements or considerations which may, but with the exception of the first need not, be taken into account in assessing a single sum. They are not separate heads to be added mathematically to one another."
67. In India, the Supreme Court has affirmed the principles in Rookes (supra) and Cassel (supra).
Interestingly, however, the application in those cases has been in the context of abuse of authority leading to infringement of Constitutional rights or by public authorities (ref. Ghaziabad Development Authority v. Balbir Singh, (2004) 5 SCC 6; Lucknow Development Authority v. M. K. Gupta, 1994 SCC (1) 243. As yet, however, the Supreme Court has not indicated the standards which are to be applied while awarding punitive or exemplary damages in libel, tortuous claims with economic overtones such as slander of goods, or in respect of intellectual property matters. The peculiarities of such cases would be the courts, need to evolve proper CS (Comm.) No. : 84/2020 Page 18 of 25 -19- standards to ensure proportionality in the award of such exemplary or punitive damages. The caution in Casesel that damages remain a civil, not a criminal, remedy, even where an exemplary award is appropriate, and juries should not be encouraged to lose sight of the fact that in making such an award they are putting money into a plaintiff's pocket...." can never be lost sight of. Furthermore - and perhaps most crucially - the punitive element of the damages should follow the damages assessed otherwise (or general) damages; exemplary damages can be awarded only if the Court is "satisfied that the punitive or exemplary element is not sufficiently met within the figure which they have arrived at for the plaintiff's solatium". In other words, punitive damages should invariably follow the award of general damages (by that the Court meant that it could be an element in the determination of damages, or a separate head altogether, but never completely without determination of general damages).
68. This court is of the opinion that the impugned judgment fell into error in relying on the decision in Times Incorporated v. Lokesh Srivastava, 116 (2005) DLT 569. A Single Judge articulated, in his ex parte judgment in a trademark infringement action, as follows:
"This Court has no hesitation in saying that the time has come when the Courts dealing actions for infringement of trade-marks, copy rights, patents etc. should not only grant compensatory damages but award punitive damages also with a view to discourage and dishearten law breakers who indulge in violations with impunity out of lust for money so that they realize that in case they are caught, they would be liable not only to reimburse the aggrieved party but would be liable to pay CS (Comm.) No. : 84/2020 Page 19 of 25 -20- punitive damages also, which may spell financial disaster for them. In Mathias v. Accor Economy Lodeine. Inc. reported in, 347 F.3d 672(7th Cir. 2003) the factors underlying the grant of punitive damages were discussed and it was observed that one function of punitive damages is to relieve the pressure on an overloaded system of criminal justice by providing a civil alternative to criminal prosecution of minor crimes. It was further observed that the award of punitive damages serves the additional purpose of limiting the defendant's ability to profit from its fraud by escaping detection and prosecution. If a to tortfeasor is caught only half the time he commits torts, then when he is caught he should be punished twice as heavily in order to make up for the times he gets away. This Court feels that this approach is necessitated further for the reason that it is very difficult for a plaintiff to give proof of actual damages suffered by him as the defendants who indulge in such activities never maintain proper accounts of their transaction since they know that the same are objectionable and unlawful. In the present case, the claim of punitive damages is of Rs. 5 lacs only which can be safely awarded. Had it been higher even, the court would not have hesitated in awarding the same. This Court is of the view that the punitive damages should be really punitive and not flee bite and quantum thereof should depend upon the flagrancy of infringement."
With due respect, this Court is unable to subscribe to that reasoning, which flies on the face of the circumstances spelt out in Rookes and later affirmed in Cassel. Both those judgments have received approval by the Supreme CS (Comm.) No. : 84/2020 Page 20 of 25 -21- Court and are the law of the land. The reasoning of the House of Lords in those decisions is categorical about the circumstances under which punitive damages can be awarded. An added difficulty in holding that every violation of statute can result in punitive damages and proceeding to apply it in cases involving economic or commercial causes, such as intellectual property and not in other such matters, would be that even though statutes might provide penalties, prison sentences and fines (like under the Trademarks Act, the Copyrights Act, Designs Act, etc.) and such provisions invariably cap the amount of fine, sentence or statutory compensation, civil courts can nevertheless proceed unhindered, on the assumption that such causes involve criminal propensity, and award "punitive" damages despite the plaintiffs inability to prove any general damage. Further, the reasoning that "one function of punitive damages is to relieve the pressure on an overloaded system of criminal justice by providing a civil alternative to criminal prosecution of minor crimes" is plainly wrong, because where the law provides that a crime is committed, it indicates the punishment. No statute authorizes the punishment of anyone for a libel - or infringement of trademark with a huge monetary fine-which goes not to the public exchequer, but to private coffers. Moreover, penalties and offences wherever prescribed require the prosecution to prove them without reasonable doubt. Therefore, to say that civil alternative to an overloaded criminal justice system is in public interest would be in fact to sanction violation of the law. This can also lead to undesirable results such as casual and unprincipled and eventually disproportionate awards. Consequently, this court declares that the reasoning and formulation of law enabling courts to determine punitive damages, based on the ruling in Lokesh Srivastava and Microsoft CS (Comm.) No. : 84/2020 Page 21 of 25 -22- Corporation v. Yogesh Papat, 2005 (30) PTC 245 (Del) is without authority. Those decisions are accordingly overruled. To award punitive damages, the courts should follow the categorization indicated in Rookes (supra) and further grant such damages only after being satisfied that the damages awarded for the wrongdoing is inadequate in the circumstances, having regard to the three categories in Rookes and also following the five principles in Cassel. The danger of not following this step by step reasoning would be ad hoc judge centric award of damages, without discussion of the extent of harm or injury suffered by the plaintiff, on a mere whim that the defendant's action is so wrong that it has a "criminal" propensity or the case merely falls in one of the three categories mentioned in Rookes (to quote Cassel again - such event "does not of itself entitle the jury to award damages purely exemplary in character").
24. Further on similar facts, in case titled as Super Cassettes Industries Pvt. Ltd. v. HRTN Cable Network, 2017 SCC Online Delhi 10943 where defendants were ex parte and did not participate in the proceeding, counsel for the plaintiff sought punitive damages, which was declined in view of the judgment of Hindustan Unilever Limited (supra) of Hon'ble Division Bench. However as per law laid down by Hon'ble Division Bench in case of Hindustan Unilever Limited (supra), it is needed to be seen whether case of plaintiff falls for exemplary damages. The Local Commissioner while executing the commission seized the large quantity of infringed goods from the premises of the defendant in his presence and also handed CS (Comm.) No. : 84/2020 Page 22 of 25 -23- over the same to the defendant on supardari.
It is established that defendants were manufacturing, stocking and selling/ passing off the infringed goods bearing the trademark "adidas", "three bars", "3-Strips", "Trefoil" and logos as that of the plaintiff product thereby causing wrongful loss to plaintiff company and have earned illegal profits. Further, if the infringed goods would have gone to the hands of the consumer/ general public, the reputation/ goodwill of the plaintiff company would have brought down in the eyes of consumer/ general public as infringed goods were of average quality and not up to the quality which is claimed by the plaintiff company.
The Hon'ble Division Bench in case
of Hindustan Unilever Limited (supra) declined
punitive damages however granted exemplary damages as the contesting defendant persisted with the disparaging advertisement of plaintiff's product and kept on contesting the issue. On the other hand, in the case in hand, the defendant did not show up and participate in the proceedings in order to deprive plaintiff to benefit of rendition of account and therefore in the totality of the facts and circumstance, I am of the opinion that plaintiff company is entitled to exemplary damages amount to Rs.5 lacs.
CS (Comm.) No. : 84/2020 Page 23 of 25 -24-Relief
25. As discussed above, suit is decreed in favour of plaintiff and against the defendant qua mandatory and permanent injunction thereby restraining defendant, its associates and agents, officers, employees, distributors, representatives and assigns from using the trademarks and copyright "adidas", "three bars", "3-Strips", "Trefoil" and its logo and other registered trademarks of plaintiff company on goods including shoes and other accessories in any form and manner and / or trademark identical and/or confusingly and deceptively similar to the mark "adidas", "three bars", "3-Strips", "Trefoil" and its logos and other registered trademarks and copyright of the Plaintiff Company. Further suit is also decreed in favour of plaintiff and against the defendant qua delivery up of all seized semi finished and finished articles besides all other the impugned finished and unfinished materials bearing the impugned and violative trade mark/ label of plaintiff company and superdarinama is cancelled. Further suit is also decreed in favour of plaintiff and against the defendant qua damages amounting to Rs.5 lacs.
26. Accordingly the suit is decreed in favour of the plaintiff and against the defendant with cost of suit.
27. Decree sheet be prepared accordingly after payment of deficit court fee on regular functioning of court after lockdown is over.
CS (Comm.) No. : 84/2020 Page 24 of 25 -25-28. File be consigned to the record room.
Digitally signedAnnounced in open court GURDEEP by GURDEEP SINGH today i.e. 30-05-2020 SINGH Date: 2020.05.30 12:23:10 +0530 (GURDEEP SINGH) DISTRICT JUDGE (COMMERCIAL COURT)-02 WEST DISTRICT/THC/ 30-05-2020 CS (Comm.) No. : 84/2020 Page 25 of 25