Delhi High Court
Aviat Chemicals Pvt. Ltd. And Anr. vs Magna Laboratories (Gujarat) Pvt. Ltd. ... on 10 August, 2001
ORDER V.S. AGGARWAL, J.
1. M/s Aviat Chemicals Pvt. Ltd., and NBZ Pharma ltd. are the plaintiffs. They preferred civil suit seeking permanent injunction restraining infringement of registered trade mark, passing off and rendition of accounts against the defendant, namely, Magna Laboratories (Gujarat) Pvt. Ltd.
2. The facts alleged are that first plaintiff is stated to be carrying on business as manufacturer and seller of pharmaceutical and medicinal preparations. Plaintiff no.2 is also carrying on the same business. Defendant no.1 is carrying on the business of manufacture, selling or marketing pharmaceutical and medicinal preparations. Plaintiff no.1 is the registered proprietor of trade mark MVI in respect of medicinal and pharmaceutical preparations and they have been using the same since 1958. On 22nd September, 1958 US Vitamin Corporation (Ar lington Funk Laboratories), USA filed an application for registration of trade mark MVI under no. 186931 in class 5 and obtained registration of the trade mark. The registration of the said trade mark has been assigned from time to time. The first plaintiff is the registered proprietor of the trade mark. The first plaintiff applied for registration of another trade mark consisting of MVI under no. 502261 with respect to pharmaceutical preparations falling in class 5 of the 4th Schedule of Trade and Merchandise Marks Rules, 1959.
3. By a license user agreement dated 6th March, 1999, the first plaintiff has granted in favor of plaintiff no.2, a non-exclusive license and right to use the trade mark MVI. The plaintiffs had spent huge amounts on publicity and advertisement to promote the sale of medicinal preparations and the same has been accepted by the medical profession.
4. By a license/registered user agreement of 28th May, 1996 the first plaintiff had granted n favor of defendants a non-exclusive license and right to use the trade mark MVI. The defendants were manufacturing and selling medicinal preparations under the trade mark MVI as licensee of the first plaintiff. The defendants agreed to pay royalty as per terms contained in the said agreement. Defendants failed to pay the license fees and committed several breaches. Keeping in the view defaults, plaintiff no.1 terminated the license agreement vide letter dated 22nd June, 1999. Defendants were required to dis-continue each and every use of the trade mark MVI. It is the grievance of the plaintiffs that in April 2001 they came across medicinal preparations bearing trade mark MVI despite the termination of the license/registered user agreement of 28th May, 1996. Thus, defendants are claimed to be surreptitiously continue to manufacture and sell preparations under the trade mark MVI. Consequently plaintiffs pray that defendants should be restrained from using on any medicinal or pharmaceutical preparations the impugned trade mark MVI in the pharmaceutical preparations etc.
5. During the pendency of the suit, an ad interim injunction to the same effect was claimed.
6. Defendant no.1 had submitted an application under Order 39 Rule 4 Code of Civil Procedure for vacation of the ad interim injunction that was granted to the plaintiff vide order of this court dated 3rd May, 2001. It is claimed that defendant no.1 had accumulation of stocks of the said pharmaceutical drugs. The shelf life of these medicines is eighteen months and expiry date of the batch is September 2001. If they are not sold they would be rendered useless.
7. Furthermore, it is claimed that plaintiffs have suppressed material facts. While they pray for vacation of ex parte ad interim injunction, plaintiffs were stated to be not registered proprietors of the mark MVI. The trade mark registrations certificate placed on record by the plaintiff in support of the assignment of the mark in their favor seems to be a certificate based on a fraudulent and fabricated document. Defendant no.1 applied to Trade Mark Registry, Bombay. The certificate issued by Trade Mark Registry does not contain the so called assignment which appears is the copy of the certificate placed on record by the plaintiffs. Thus, it is claimed that there is no assignment in favor of plaintiff no.1 and plaintiff is it the proprietor of trade mark MVI. Same is also assailed on the ground that there is no specific pleading in the plaint in relation to so called assignment dated 18th February, 1997.
8. It has further been alleged that mark MVI is a generic and descriptive mark. It is not distinctive of any particular product. The said mark MVI is used by a number of other manufacturers including Tablets (India) Ltd., Systochem Laboratories Ltd., Zee Drugs and Civil Drug Laboratories. There are various other products using similar names and consequently plaintiff has no cause of action. Not only that defendant no.1 further asserted that it has been using the mark MVI since the year 1987. It had an arrangement with Indian subsidiary (M/s US Vitamin (India) Ltd. now known as USV Ltd.). Even the license agreement of 28th May, 1996 was entered into under the instructions of USV Ltd. only as a means to pay the royalty. Thus, document of 28th May, 1996 is stated to be void inasmuch as plaintiff had represented to defendant no.1 that it is the proprietor and beneficiary owner of mark MVI. Plea has been raised that defendant no.1 is prior user of MVI and is protected under Section 33 of the Trade and Merchandise Marks Act, 1958.
9. The written statement and the reply as yet had not been filed but keeping in view that it was alleged that shelf life of the pharmaceutical drugs might expire, both the parties addressed arguments on the application if ad interim injunction has to be confirmed or not because it was stated at the BAR that application under Order 39 Rule 4 may be taken as the reply to the application seeking temporary injunction.
10. On behalf of the defendant it had been urged vehemently that the application/suit are highly belated and therefore in any event the plaintiff should not be granted any ad interim injunction. On the contrary, the plaintiff's learned counsel urged that it was only recently that the plaintiff came to know about the infringement and in any event this was not a case where there was any delay. In the alternative he urged further that this cannot be a case for defeating a just claim merely on the ground of delay.
11. It is well known that before any ad interim injunction is to be granted the concerned applicant must show that there is no inordinate delay in coming to the court. Whether there is a delay or not has to be seen on facts of each case. But principle of law that delay would defeat equity is not subject-matter of controversy. A successful motion for interlocutory injunction some times puts an end to the litigation. A person seeking infringement of trade mark should make it a rule to take action with utmost speed so that the other person doe snot manufacture goods or continue to do so.
12. Learned counsel for the plaintiff had drawn the attention of the court towards the decision of this court in the case of Hindustan Pencils Pvt. Ltd. vs. M/s. India Stationery Products Co. & Anr. . In the cited case trade mark Natraj with the device of Natraj was with respect to pencils, refills for propelling pens and pencils. it had been alleged by the plaintiff therein that in 1985 they came to know that defendants had surreptitiously got registered a copyright with the office of the Registrar of Copyrights. The conduct of the defendants was stated to be fraudulent. Application was filed with the Registrar of Copyright for rectification and cancellation of defendants registration. One of the question that came up for consideration was as to if on the ground of delay or latches the right of the plaintiff would be defeated or not. This court held that if there is an inordinate delay such a right may be defeated but the duty of the court is to protect the interest of unwary customers and that if there is no inordinate delay such a right should not be defeated. These findings were recorded by this court in paragraph 28 which reads:-
it is the duty of the Courts of protect the interest of such unwary customers. It is for the Court to see that an unscrupulous infringer does not cheat the general public by selling spurious goods by using trade marks which do not belong to him and which are associated with goods of repute. it is no doubt true that giving protection to the consumer would necessarily amount to giving relief to the plaintiff, even though plaintiff may have slept over his right for a number of years. But when it becomes known that stolen property and infringement amounts to stealing another persons' intellectual property, is being sold in the market to unwary customers, it would be in the public interest that protection is granted to the members of the public. It is not unknown, and indeed it is unfortunate though common, that spurious medicines, life saving drugs and other articles of general public use are illegally made or manufactured and sold in the market. The manufacturer of the genuine products may not be adversely affected by such sales and may not choose to approach the Court for a number of years but, as far as the general public is concerned, the sale of spurious goods results in the public spending good money for bad things. It is the general public which is being cheated.
13. This court again in paragraph 38, further held that if the court comes to the conclusion that prejudice is likely to be caused to the general public who may be misled, injunction must be issued. The relevant findings in this regard are:
There is no force in the aforesaid contention of the learned counsel for the defendants. As has already been noted, acquiescence means something more than mere silence on the part of the plaintiffs. Acquiescence means encouragement on the part of the plaintiff to the defendant. There should be a mistaken belief by the defendant that there is no objection to the plaintiff using its mark. In the present case the plaintiffs have taken action by applying to the Registrar of Copyright for cancellation of the registration which had been granted to the defendant. In the application for cancellation it has been specifically stated by the plaintiffs that the use of the infringing label has adversely affected the business of the plaintiffs. It is true that no specific notice was sent to the defendant asking the defendant not to use the mark and it is further correct that no suit for injunction was immediately filed. Such non-action may disentitle the plaintiff for the award of damages of rendition of accounts, but such inaction doe snot show any consent or acquiesence on the part of the plaintiff to the defendant's using the said mark. No overt act has been done by the plaintiffs which could, in any manner, amount to encouraging the defendant to continue to use the infringing mark.
14. Thereafter the findings recorded were that such non-action may disentitle the plaintiff for the award of damages or rendition of accounts, but such inaction does not show any consent or acquiescence on the part of the plaintiff. In other words, the conclusions were that if there is inordinate delay it could be a ground to refuse ad interim injunction but totality of the facts has to be seen as the whether a non-customer would be misled or not.
15. Attention of the court was further drawn towards the decision of the Supreme Court in the case of Power Control Appliance & Ors. vs. Sumeet Machines Pvt. Ltd. 53 (1994) DLT 723 (SC). The facts of the case are not very relevant but with respect to the delay and acquiescence, the Supreme Court in paragraph 29 of the cited decision held:
Acquiescence is sitting by, when another is invading the rights and spending money on it. It is a course of conduct inconsistent with the claim for exclusive rights in a trade mark, trade name etc. It implies positive acts; not merely silence or inaction such as is involved in laches. In Harcourt vs. While (28 Beav 303) Sr. John Romilly said: "It is important to distinguish mere negligence and acquiescence." Therefore, acquiescence is one facet of delay. If the plaintiff stood by knowingly and let the defendants build up an important trade until it had become necessary to crush it, then the plaintiffs would be stopped by their acquiescence". If the acquiescence in the infringement amounts to consent, it will be a complete defense as was laid down in Mouson & Co. v. Boehm (1884) 26 Ch D 406. The acquiescence must be such as to lead to the inference of a license sufficient to create a new right in the defendant a was laid down in Rodgers v. Nowill (1847) 2 De GM & G 614: 22 LJ KCH 404.
16. It was further held that delay simpliciter may not be a defense to a suit for infringement of trade mark but where a trader allows a rival trader to expend money over a considerable period in building up of the business, he will not be allowed to stop his rivals business. Finally the Supreme Court concluded that in relation to trade mark, there can only be one mark, one source and one proprietor. It cannot have two origins. The joint ownership would not be permissible.
17. Once again it is apparent form the findings that have been arrived at that the Supreme Court even did not ignore the delay altogether. This remained an important factor to be taken note of.
18. At this stage, one can take note of the subsequent decisions of this court in the case of Gopal Engg & Chemicals Works vs. M/s POMX Laboratory AIR 1992 Delhi 302. The decision rendered in the case of Hindustan Pencils Pvt. Ltd. (supra) was taken note of and this court thereupon had concluded:
It was argued that since delay unaccompanied by anything else, is not any more taken as a bar to a suit for permanent injunction, it should also not cause the Court to refuse interlocutory injunction and that there is no justification. On that point, to make distinction, which the Courts have generally sought to make, between the grant of interim injunction and permanent injunction. I am afraid, I cannot agree, for there are reasons more than one to make the distinction and one of them is that since preliminary injunction is sought upon the theory that there is an urgent need for speedy action to protect the plaintiff's right, by sleeping on them it demonstrates the lack of need for speedy relief.
19. Similarly, in the case of Peshawar Soap & Chemicals Ltd. vs. Godrej Soap Ltd. 2001 PTC Page 1 and the decision rendered by the Madras High Court in the case of Jolen Inc. Vs. Shoban Lal Jain & Ors. 2001 PTC 216, it was held that where the plaintiff allows the defendant to carry on business under the trade name Jolen he would be prima facie guilty of acquiescence and will not be entitled to ad interim injunction because the balance of convenience would not be in his favor.
20. Having referred to some of the precedents in this regard, the conclusion is obvious that delay is an important factor in coming to a conclusion as to whether ad interim injunction should be granted or not. It will not be the sole factor. But it could lilt the balance. If there is an inordinate delay and the respondent/defendant had in meantime invested huge amounts, the court in peculiar facts may refuse injunction but at the same time in a peculiar facts if there is no inordinate delay and people at large may be misled by the infringement the injunction may be granted. These are facts which go to the peculiar circumstances of the case.
21. In the present case in hand, the plaintiffs plead that they came to the court with due diligence because they came to know about the defendants preparations only in April 2001 and thereupon had filed the present petition. But this is not the end of the matter. It transpire in the pleadings of the plaintiff themselves that it was in January 1999 that the plaintiff terminated the license/registered user with the defendants and defendants were called upon to desist form manufacturing and selling the medicinal preparations under the alleged trade mark MVI. However, the subsequent correspondence between the parties further indicate that as per the defendants there was some meeting and the notice was withdrawn but the plaintiff had been demanding royalties. The defendants, on the contrary, have contended that they have continued to manufacture the said drugs subsequently after january 199 also. it is their case as pointed out that they have a stock of more than Rs. 25 lakhs which cannot be disposed of as a result of the ad interim ex parte injunction that had been granted. Prima facie on basis of the facets it is patent that the defendants were manufacturing, selling the preparations under the trade mark MVI earlier to what is alleged by the plaintiff. It is different to conceive that the plaintiff only came to know this fact in April 2001. In other words, there was has been a delay of more than 2-1/2 years which would in the peculiar facts prima facie would be inordinate.
22. Concerned with the same situation it had been contended that the shelf life of the articles was only one year and the same would have expired and question of permitting the defendants to dispose of the same would not arise. The defendants had produced certain articles to contend that the shelf life is expiring only in September 2001. So far as the shelf life is concerned, indeed it varies with the each drug. They bear their label i.e. the date of manufacture and date of expiry of potency. Once it has been so indicated it cannot for the purposes of the present purposes be taken that the shelf life of the product purposes be taken that the shelf life of the product had expired. From the aforesaid therefore it can clearly be inferred that the plaintiff delayed action for a long time while defendant no.1 continued to manufacture the articles under the the same MVI and once the same has accumulated the delay would act against the plaintiff.
23. Keeping in view of the aforesaid at this stage when the shelf life of the products of the defendants is about to expire and there is delay on the part of the plaintiffs, the ad interim injunction to that extent requires vacation. The defendant would be permitted to sell the stock of articles which has accumulated subject other condition that they shall maintain proper accounts and make it available whenever required. No opinion is expressed further in this regard.
24. As yet the written statement has not been filed and certain facts pertaining to the registration as well as the agreement have been alleged but hot so specifically. Thus rest of the mater pertaining to the ad interim injunction can be considered after the written statement is filed along with a reply to the application under Order 39 Rules 1 and 2. it be filed within three weeks. Rejoinder, if any, be filed within next two weeks.
25. List it on 9th October, 2001.