Delhi High Court
Western Digital Technologies Inc. vs Raaj Computer on 21 September, 2022
Author: Navin Chawla
Bench: Navin Chawla
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on: 24.08.2022
Date of decision: 21.09.2022
+ CS(COMM) 677/2019 & IAs 17475-76/2019
WESTERN DIGITAL TECHNOLOGIES INC. ..... Plaintiff
Through: Ms.Tanya Varma, Ms.Devyani
Nath, Advs.
versus
RAAJ COMPUTER ..... Defendant
Through: None.
CORAM:
HON'BLE MR. JUSTICE NAVIN CHAWLA
1. The present suit has been filed by the plaintiff seeking inter alia a
decree of permanent injunction restraining the defendant, its proprietor,
partners, representatives and/or others acting for and on its behalf from
selling, offering for sale, advertising or otherwise dealing in infringing
goods which bear the plaintiff‟s registered trade marks "WESTERN
DIGITAL", and/or "WD" (hereinafter referred to as "Western
Digital trade marks")
FACTUAL BACKGROUND
2. It is the case of the plaintiff that the plaintiff-company was
founded in April 1970 as „General Digital‟, and in July 1971, it adopted
its current name and trade mark "WESTERN DIGITAL" as part of its
corporate name. The plaintiff, a wholly-owned subsidiary of Western
Digital Corporation, is one of the largest computer hard-disk drive
manufacturers in the world.
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3. The plaintiff is a world-renowned manufacturer and marketer of
inter alia storage devices, media players, routers/switches/bridges,
comprising of Original Equipment Manufacturer (in short, „OEM‟)/
system manufacturer, desktop, and enterprise, solid state drives (in short
„SSDs‟), software and mobile applications which are marketed and sold
under the plaintiff‟s "Western Digital trade marks".
4. "WESTERN DIGITAL" is the most essential feature of the
plaintiff‟s corporate name, and is also used as a trade mark by the
plaintiff-company, either as a standalone or as a conjunctive
mark. The plaintiff‟s "WD" logo, is which is its corporate logo, is present
on all the labels and packaging of their goods.
5. The plaintiff has applied for and is the registered proprietor of the
"Western Digital trade marks" in India. The details of trade mark
registrations granted in favour of the plaintiff in Class 5 under the
provisions of the Trade Marks Act, 1999 (hereinafter referred to as "the
Act") are as follows:
Trade Mark Number Class Date Goods
WESTERN 1345682 9 March 18, COMPUTER
DIGITAL 2005 PRODUCTS,
NAMELY, DISK
DRIVES
WD 1349235 9 April 6, 2005 COMPUTER
PRODUCTS,
INCLUDING,
HARD DRIVES
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1325732 9 December COMPUTER
14, 2004 PRODUCTS,
NAMELY HARD
DRIVES
6. The plaintiff also owns and maintains several websites whose
domain names contain "WESTERN DIGITAL" or "WD" and are used
for marketing and selling goods bearing the "Western Digital trade
marks", the details whereof are given in paragraph 12 of the plaint.
7. The plaintiff submits that the Western Digital trade marks have
been registered in many countries such as Australia, China, Singapore,
Canada, the European Union, France, Hong Kong, New Zealand, Russia,
Singapore, Switzerland, and the United States of America and the United
Arab Emirates, to name a few. The plaintiff has provided details of the
revenue earned by the plaintiff-company, up until the filing of the present
suit, in paragraph 15 of the plaint.
8. The plaintiff further states that it has invested large sums of money
in advertising and promoting the goods bearing the "Western Digital
trade marks" world-wide as well as in India. Since the year 2005, the
plaintiff has spent more than Rs. 20 Crore to build the "WESTERN
DIGITAL" and "WD" brands in India.
9. The plaintiff further asserts that they have been extensively
advertised in all major international magazines including „Wired‟,
„Rolling Stone‟, „Fast Company‟, „PC Adviser‟, „PC Pro‟, „Computer
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Shopper‟, and „The Gadget Show Magazine‟, to name only a few. All
these magazines are widely circulated and read in India as well. The
"Western Digital trade marks" are also regularly advertised in Indian
publications as also on various television and satellite channels around
the world.
10. The plaintiff claims that the goods manufactured and sold by them
bearing the "Western Digital trade marks" have been the recipient of
numerous awards around the world from leading trade publications such
as „PC World‟ and „PC Magazine‟, the details whereof are given in
paragraph 18 of the plaint. The plaintiff has received awards in countries
such as the United Kingdom, Italy, Spain, and Russia.
11. Apart from its retail consumer business elaborated above, the
plaintiff also has a highly successful business of manufacturing and
selling hard-disk drives to system manufacturers such as Dell, HCL and
Wipro for integration into their systems/products/ ardware. For example,
a laptop manufacturer may buy the plaintiff‟s internal hard-disk drive and
integrate it into their laptop. These OEM products are not meant for retail
consumers for the following reasons:
a) They are not covered by the plaintiff‟s consumer warranty
since they are manufactured for the purposes of integration into
third party systems/ products/ hardware and the said third-party
warranty covers the systems/ products/ hardware as a whole. The
plaintiff‟s warranty policy, explaining this policy, is available
online for the purpose of consumer information and knowledge at
http://support.wdc.com/Warranty/warrantyPolicy.aspx?lang=en. It
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is submitted that this has been a consistent policy of the plaintiff
since inception of its business of selling hard-disk drives to system
manufacturers.
b) A number of these products are tailor-made for the systems
manufacturers based on their requirements, and hence, may have a
number of special hardware/ firmware changes which may not be
compatible with systems manufactured by other third-parties or for
the retail consumers.
c) The OEM products are therefore not put 'on the market' by
the plaintiff for retail consumers, which entitles the plaintiff to
oppose further dealing in the same in so far as they are retailed or
sold to end consumers.
CAUSE OF ACTION
12. It is the case of the plaintiff that in early-November 2019, it was
brought to the knowledge of the plaintiff that the sale of counterfeit and
refurbished hard-disk drives bearing the "Western Digital trade marks"
drives is taking place in Nehru Place market in New Delhi. The plaintiff,
thereafter, appointed an investigator, Mr. Pawan Kumar, to conduct a
survey at the Nehru Place market.
13. Upon a visit to the premises of the defendant, a retail shop located
in the Nehru Place Market, New Delhi, the investigator learnt that the
defendant has been selling the hard-disk drives bearing the plaintiff‟s
"Western Digital trade marks". The investigator, in an affidavit, stated
that on entering the premises of the defendant, he noticed several hard-
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disk drives bearing the plaintiff‟s "Western Digital trade marks" in
several generic Electrostatic Discharge (in short, „ESD‟) bags, which did
not bear the "Western Digital trade marks" of the plaintiff. Two hard
drives of 500GB, at Rs. 750/- each, were purchased by the investigator.
14. The plaintiff asserts that for the drive having Sl. number
WCAV9DX61577, the plaintiff ran a search of the same in their internal
database and discovered that serial numbers corresponded with hard-disk
drives that had been sold to OEM/System Manufacturers in the year 2013
and had been purchased for the purposes of integrating it into their
finished products. The same was thereafter analysed by Mr. Sandeep
Gandhi and the results from the testing and analysis are as follows:
Driv Serial Number Date of Shipped Hours Data
e No. Manufacturin Locatio in written on
g n „Powe the drive
r On‟
mode
1 WCAV9DX6157 4th October, OEM, 29,866 36.96 TB
7 2013 Hong hours (terabytes
Kong )
The technical report concluded that the drive with Sl. number
WCAV9DX61577 was an old and used hard-disk drive and had been
manufactured by the plaintiff for an OEM for integration into their
equipment.
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15. As far as the drive bearing Sl. number WCAV97740465 is
concerned, the date of manufacture on its label is stated to be 26.01.2017,
however, the warranty status page of the plaintiff‟s website
https://support.wdc.com shows that the warranty expired on 30.07.2013.
The drive is, therefore, tampered with.
COURT-PROCEEDINGS IN THE SUIT
16. Vide the order dated 10.12.2019, an ex-parte ad-interim injunction
in I.A. 17475 of 2019 [an application under Order XXXIX Rule 1 and 2
read with Section 151 of the Code of Civil Procedure Code, 1908
(hereinafter referred to as the "CPC")] was granted in favour of the
plaintiff and against the defendant- restraining the defendant, its
proprietor/ partners, representatives and/or others acting for and on their
behalf from selling, offering for sale, advertising, importing, or otherwise
dealing in infringing goods bearing the plaintiff‟s registered trademarks
"WESTERN DIGITAL", and/or "WD" under application nos. 1345682,
1349235 and 1325732 in Class 9. Vide the same order, this Court had
appointed a Local Commissioner to visit the premises of the defendant.
17. The Local Commissioner visited the premises of the defendant on
04.01.2020 and came across a number of infringing products bearing the
"Western Digital trade marks" as well as a number of loose stickers at
the premises of the defendant. The Local Commissioner thereafter seized
twenty-four cartons with products bearing the "Western Digital trade
marks" and were sealed and given on superdari to the defendant.
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18. Thereafter, this Court vide the order dated 08.04.2022, noted that
since there has been no appearance on behalf of the defendant and the
written statement to the plaint had also not been filed by the defendant,
the defendant is not interested in defending the suit, and accordingly be
proceeded ex-parte.
SUBMISSION OF PLAINTIFF
19. The learned counsel for the plaintiff submits that as the defendant
chose not to appear before this Court and has been proceeded ex-parte,
and further, no written statement has been filed by the defendant, it is a
fit case where a Summary Judgment in terms of Rule 27 of the Delhi
High Court Intellectual Property Rights Division Rules, 2022 read with
Order XIIIA of the CPC, as applicable to commercial disputes, be
passed.
ANALYSIS AND FINDING
20. I have considered the submission made by the learned counsel for
the plaintiff as also the reports of the investigator and the Local
Commissioner.
21. The plaintiff, along with the suit has filed Legal Proceedings
Certificates with respect to the registration obtained by it for the
"Western Digital trade marks" described hereinabove. The plaintiff is,
therefore, the rightful registered proprietor of the marks in question.
22. Along with the plaint, the plaintiff has also filed the technical
report pertaining to the hard-disk drives at Sl. numbers WCAV97740465
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and WCAV9DX61577, which were purchased by the investigator hired
by the plaintiff to visit the premises of the defendant. The report
concluded that the hard-disk drives under Sl. number WCAV97740465
had been tampered with, as firstly the Printed Circuit Board (in short,
„PCB‟) had been changed and the serial number detected by the system
of the plaintiff was different from the one on the label of the drive. As far
as the drive bearing Sl. number WCAV9DX61577, the investigator
concluded that the same had been tampered with as its PCB and label
were changed; it had been used for 29,866 hours and, therefore, was an
old and used hard-disk drive.
23. It has been submitted by the plaintiff that both the drives were not
in the original packaging of the plaintiff and were not sealed in the
original ESD bags of the plaintiff. It has been asserted that the packaging
is crucial to preserve and protect the sensitivity and performance of
electronic products such as hard-disk drives.
24. Pursuant to the order dated 10.12.2019 of this Court, the Local
Commissioner has also visited the premises of the defendant on
04.01.2020 and found various pieces of the infringing products as also
packaging stickers, which were sealed in twenty-four cartons and
thereafter released to the representative of the defendant on superdari.
Though a claim was made during the proceedings of the Local
Commissioner that these hard-disk drives had been purchased on the
basis of some invoices, as the defendant has chosen not to appear before
this Court, the co-relation of these invoices with the hard-disk drives
found during the execution of the local commission remains unproved.
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Even otherwise, the very fact that packaging stickers were found at the
premises of the defendant clearly shows that the defendant is
counterfeiting the hard-disk drives and passing them of as those of the
plaintiff‟s.
25. In addition, as the report of the investigator itself reveals, the
defendants are guilty of passing of old hard-disk drives and used hard-
disk drives of the plaintiff as new products of the defendant, by
tampering with the PCB and the labels of these hard-disk drives. This in
my view, is clearly an infringement of the trade mark of the plaintiff as
also passing off goods of the plaintiff as new and un-used, thereby
leading to deception, loss and injury to an unwary consumer as also
dilution of the trade marks of the plaintiff and unfair trade practices
adopted by the defendant. The defendant is also not entitled to seek
protection under Section 30(3) of the Act as it has tampered with the
goods of the plaintiff and its labelling.
26. In Kapil Wadhwa & Ors. v. Samsung Electronics Co. Ltd. &
Anr., 2012 SCC OnLine Del 5172, a Division Bench of this Court has
held as under:-
"50. Now, where the goods bearing a registered
trade mark are put in the market, whether it be the
domestic market or the international market, by
the registered proprietor of the trade mark, the
right to oppose further sale for the reason of the
goods being impaired or conditions changed
would be equally relevant and no distinction can
be made with reference to the right in relation to
the nature of the market. The reason is that if the
condition of the goods is changed or the goods are
impaired, they may diminish the value of the trade
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mark, causing injury to the registered proprietor
of the trade mark.
xxxxx
68. With reference to sub-section 4 of Section 30
of the Trade Marks Act 1999 it would be relevant
to note that further dealing in the goods placed in
the market under a trade mark can be opposed
where legitimate reasons exist to oppose further
dealing and in particular where the condition of
the goods has been changed or impaired. With
respect to physical condition being changed or
impaired, even in the absence of a statutory
provision, the registered proprietor of a trade
mark would have the right to oppose further
dealing in those goods inasmuch as they would be
the same goods improperly so called, or to put it
differently, if a physical condition of goods is
changed, it would no longer be the same goods.
But, sub-section 4 of Section 30 is not restricted to
only when the conditions of the goods has been
changed or impaired after they have been put on
the market. The section embraces all legitimate
reasons to oppose further dealings in the goods.
Thus, changing condition or impairment is only a
specie of the genus legitimate reasons, which
genus embraces other species as well. What are
these species? (i) Difference in services and
warranties as held in the decisions reported as
423 F.3d 1037 (2005) SKF USA v. International
Trade Commission; 35 USPQ2d 1053 (1995)
Fender Musical Instruments Corp. v. Unlimited
Music Center Inc.; 589 F. Supp. 1163 (1984)
Osawa & Co. v. B&H Photo. (ii) Difference in
advertising and promotional efforts as held in the
decisions reported as 70 F. Supp 2d 1057 Pepsi
Co. Inc. v. Reyes; 589 F. Supp. 1163 (1984)
Osawa & Co. v. B&H Photo. (iii) Differences in
packaging as held in the decision reported as 753
F. Supp. 1240 (1991) Ferrerro USA v. Ozak
Trading. (iv) Differences in quality control,
pricing and presentation as held in the decision
reported as 982 F.2d 633 (1992) Societe Des
Produits Nestle v. Casa Helvetia. (v) Differences
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in language of the literature provided with the
product as held in the decisions reported as 423
F.3d 1037 (2005) SKF USA v. International Trade
Commission; 70F. Supp 2d 1057 Pepsi Co. Inc. v.
Reyes; 816 F.2d 68, 76 (2 Cir. 1987) Original
Appalachian Artworks Inc. v. Granada
Electronics Inc."
27. In Amway India Enterprises Pvt. Ltd. v. 1MG Technologies Pvt.
Ltd. & Anr., 2019 SCC OnLine Del 9061, this Court has held that the
doctrine of exhaustion cannot give legitimacy to the tampering and
mutation of the products themselves.
28. Applying the above, the plaintiff has been able to prove
infringement of its trade marks by the defendant.
29. In view of the above, the injunctive reliefs prayed for by the
plaintiff in paragraph 38(A) to (C) of the plaint are granted.
30. On the of question/claim of damages, this Court in Philip Morris
Products S.A. & Anr v. Sameer & Ors., 2014 SCC OnLine Del 1077,
this Court observed that where the defendants choose not to appear and
show that the impugned products were lawfully acquired by them from
the market, it can be safely concluded that they were infringing the
plaintiff‟s rights in the suit trade marks and consequently, the plaintiff is
entitled to injunctive reliefs.
31. In Intel Corporation v. Dinakaran Nair & Ors., 2006 SCC
OnLine Del 459, this Court has held as under:-
"13. The only other question to be
examined is the claim of damages of Rs. 20
lakh made in para 48(iii) (repeated) of the
plaint. In this behalf, learned Counsel has
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relied upon the judgments of this Court
in Relaxo Rubber Limited v. Selection
Footwear, 1999 PTC (19) 578; Hindustan
Machines v. Royal Electrical Appliances,
1999 PTC (19) 685; and CS (OS)
2711/1999, L.T. Overseas Ltd. v. Guruji
Trading Co., 123 (2005) DLT 503 decided
on 7.9.2003. In all these cases, damages of
Rs. 3 lakh were awarded in favour of the
plaintiff. In Time Incorporated v. Lokesh
Srivastava, 2005 (30) PTC 3 (Del) apart
from compensatory damages even punitive
damages were awarded to discourage and
dishearten law breakers who indulge in
violation with impunity. In a recent
judgment in Hero Honda Motors
Ltd. v. Shree Assuramji Scooters, 125
(2005) DLT 504 this Court has taken the
view that damages in such a case should be
awarded against defendants who chose to
stay away from proceedings of the Court
and they should not be permitted to enjoy
the benefits of evasion of Court
proceedings. The rationale for the same is
that while defendants who appear in Court
may be burdened with damages while
defendants who chose to stay away from the
Court would escape such damages. The
actions of the defendants result in affecting
the reputation of the plaintiff and every
endeavour should be made for a larger
public purpose to discourage such parties
from indulging in acts of deception.
14. A further aspect which has been
emphasised in Time Incorporated
case (supra) is also material that the object
is also to relieve pressure on the overloaded
system of criminal justice by providing civil
alternative to criminal prosecution of minor
crimes. The result of the actions of
defendants is that plaintiffs, instead of
putting its energy for expansion of its
business and sale of products, has to use its
resources to be spread over a number of
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litigations to bring to book the offending
traders in the market. Both these aspects
have also been discussed in CS(OS) No.
1182/2005 titled Asian Paints (India)
Ltd. v. Balaji Paints and Chemicals decided
on 10.3.2006. In view of the aforesaid, I am
of the considered view that the plaintiff
would also be entitled to damages which
are quantified at Rs. 3 lakh."
(Emphasis supplied)
32. In Hindustan Lever Ltd. and Anr v. Satish Kumar, 2012 SCC
OnLine Del 1378, it has been held as under that:
"23. One of the reasons for granting relief of
punitive damages is that despite of service of
summons/notice, the defendant had chosen not to
appear before the court. It shows that the
defendant is aware of the illegal activities
otherwise, he ought to have attended the
proceedings and give justification for the said
illegal acts. Since, the defendant has maintained
silence, therefore, the guilt of the defendant
speaks for itself and the court, under these
circumstances, feels that in order to avoid future
infringement, relief of punitive damages is to be
granted in favour of the plaintiff."
33. Keeping in view the above precedents, the plaintiff is held entitled
to damages quantified at Rs. 3,00,000/- (Rupees Three Lakh only),
especially keeping in view the recovery made by the Local
Commissioner as also the potential loss and injury that the unwary
consumer shall suffer on purchasing such counterfeit product from the
defendants. The plaintiff shall also be entitled to costs of the suit.
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34. The suit is decreed in the above terms. Let a decree sheet be drawn
accordingly.
NAVIN CHAWLA, J.
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