Delhi High Court
Sap Aktiengesellschaft & Anr vs Rohit Sharma & Anr on 12 September, 2014
Author: G.S.Sistani
Bench: G.S.Sistani
$~11
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of decision: 12th September, 2014
+ CS(OS) 3320/2011
SAP AKTIENGESELLSCHAFT & ANR .... Plaintiff
Through: Mr. Rahul Baruar, Advocate
versus
ROHIT SHARMA & ANR ..... Defendant
Through: None
CORAM:
HON'BLE MR. JUSTICE G.S.SISTANI
G.S.SISTANI, J. (Oral)
1. Present suit has been filed by the plaintiffs for permanent injunction restraining infringement of copyright, trademark, passing off, rendition of accounts of profit, damages and delivery up. Summons in the suit and notice in the application under Order XXXIX Rule 1 & 2, were issued on 23.12.2011 and 20.01.2012. On an application for appointment of local commissioner filed by the plaintiff, a local commissioner was appointed. Defendants entered appearance on 15.03.3012 and sought time to file the written statement and reply to the interim application. Defendants failed to file their written statement and reply to the interim application, therefore their right to file the same was closed vide order dated 29.05.2012 and on the same date, defendants were proceeded ex parte. Plaintiffs‟ evidence was concluded on 17.12.2012.
2. Further, plaintiffs filed an application under Order XXXIX Rule 2A and notice was issued in the said application to defendants through e-mail on 19.12.2012. None appeared for defendants, therefore, bailable warrants in the sum of Rs. 5000/- were issued against defendant no.1 vide order dated 15.07.2013. Bailable warrants could not be executed as defendant no.1 was not found at the addresses that was given. Vide order dated 10.10.2013 the bank account of defendant no.2 with Karnataka Bank was frozen.
3. Plaintiffs have filed affidavit by way of evidence of Mr.Somanath Ballari (PW1), constituted attorney of plaintiffs. Affidavit of PW1 has been exhibited as Ex. PW1/A. The copy of Power of Attorney dated 25.02.2011, 12.05.2011 and Letter of Authority dated 3.10.2011 have been exhibited as Ex.PW1/1, Ex.PW1/2 and Ex. PW1/3, respectively.
4. PW1 has deposed that plaintiff no.1 is recognized as a global market leader in providing collaborative, inter-enterprise business solutions for all types of industries and for every major market and further the plaintiffs‟ application and services enable more than 1,76,000 customers worldwide. It has also been deposed that plaintiffs are one of the largest independent software providers in the world. Printouts from the plaintiffs‟ website providing the aforesaid data have been exhibited as Ex. PW1/4 (colly).
5. PW1 has also deposed that the plaintiffs‟ business solutions are collectively called as SAP Business Suit and comprise of the following components being Customer Relationship Management (CRM), Enterprise Resource Planning (ERP), Product Lifecycle Management (PLM), Supply Chain Management (SCM) and Supplier Relationship Management (SRM). It has also been deposed that plaintiff no.1 developed an automatic accounting and transaction-processing program popularly called as RF-System in the year 1970. This software title was the first in the series of packaged ERP solutions. Plaintiff no.1 consistently kept developing on its platforms and introduced SAP R/2 in 1979. In 1992, plaintiff no.1 introduced SAP R/3 a new architectural paradigm by combining three-tier client-server architecture with the business concept of enhanced process integration. Plaintiff‟s no.1 SAP R/3 software met with overwhelming approval of the user industries and ushered in a new generation of enterprise software.
6. PW1 has further deposed being customizable solutions tailored to the specific needs of each customer, software products of the Plaintiffs are neither available off the shelf, or through e-stores or resellers nor are bundled with any computer hardware vendors as an OEM (Original Equipment Manufactured product or as a gift) in India.
7. PW1 has next deposed that due to the high levels of customization of plaintiff‟s no. 1 software products, the plaintiffs have purpose specific versions of its software license agreements namely End User License Agreements (EULA). The software of the plaintiffs are customized as per customers‟ specific use and requires specially trained software professionals to load, execute, access, employ, utilize and display end to end solutions derived from such software products. The said EULAs pertain to specific use of the plaintiffs‟ software programs and does not grant license for third party training. It has also been deposed that the plaintiffs have specific license agreements to govern comprehensive and continuing education/training programs essential to make effective and meaningful use of SAP software products. A copy of the Education/Training License Agreement ("SAP Academy Program") has been exhibited as Ex. PW-1/5. Also, the Plaintiffs observe these procedures in the strictest of fashion and consequently maintain detailed software license database, which contains all the relevant details of licensed users of plaintiffs‟ software and the particular nature of license.
8. Further, the software of the plaintiffs requires specially trained software professionals to load, execute, access, employ, utilize, store and display integrated end-to-end solutions derived from such software products and only a formal Training Agreement with the plaintiffs render a training license in respect of SAP software. It has also been deposed that the plaintiffs have entered into several specific arrangements with third party software specialists (known as „Partners‟) the world over, for the provision of professional training on working of the plaintiffs‟ software programs and unless specifically authorized through the said training agreements with the plaintiffs, no individual or entity would become eligible or authorised to act as Partner. In India, for the purpose of providing education training services upon the plaintiffs‟ software, the plaintiffs have entered into partnership with specific entities. A list of Partners authorized to render training in India has been exhibited as Ex. PW-1/6.
9. PW1, Mr. Somanath Ballari, has also deposed that plaintiff no. 1 is the sole owner of copyright in the software programs developed and marketed by it. It has also been deposed that the software programs are "computer programs" within the meaning of Section 2 (ffc) of the Copyright Act 1957 and included in the definition of a literary work as per Section 2 (o) of the said Act. Copy of the copyright registration certificates issued by the United States Copyright Office has been exhibited as Ex. PW-1/7 (Colly).
10. He has further deposed that plaintiff no. 1 adopted and is continuously and extensively using SAP as its trade name/ trade mark/ corporate name since 1972. Owing to its continuous long standing and extensive use, the trade mark/ trade name/ corporate name SAP has become integral part of the plaintiffs‟ trade and business. Plaintiff no. 1 is the registered proprietor of the trade mark/ trade name/ corporate name SAP in over 75 countries worldwide. In India, the trade mark/ trade name/ corporate name SAP and other SAP formative marks is registered in several classes including Class 41 of the international trade mark classification for training about the creation, design, development, use and application of computer programs and software and about electronic data processing. Copy of the Registration Certificates and legal proceeding certificates issued by the Trade Marks Registry has been exhibited as Ex. PW-1/8 (Colly).
11. PW1 has further deposed that owing to the outreach, utility and popularity of e-commerce, the plaintiffs promotes and provide details of its trade and business through its website www.sap.com, which is accessible throughout the world. Printout of the plaintiffs‟ website has been exhibited as Ex. PW-1/9 (Colly). It has also been deposed that owing to its worldwide presence, huge clientele and renowned business practice, the trade mark/ trade name/ corporate name SAP has gained immense goodwill and reputation worldwide.
12. PW1 has next deposed that the trade mark/ trade name/ corporate name SAP is one of the leading brands in the world. Inter Brand, a popular and independent brand agency ranks the brand SAP as Twenty Fourth (24) Best Global Brands for the year 2011. The Printout of the web-page of Inter Brand showing the rank and brand value of the trade mark/ trade name/ corporate name SAP has been exhibited as Ex. PW-1/10.
13. Further, in December, 2011 the plaintiffs learned about the defendants through the internet upon visiting the defendants‟ website www.sapguru.org . Plaintiffs learned from the said website that the defendants are offering training on SAP software under the infringing trade name / trademark SAPGURU. It has also been deposed that defendants offer to provide the training on Netweaver Enterprises portal and SAP CRM and that the Netweaver Enterprise course is of sixty (60) hours and the fee for the said course is INR Two Lakhs (INR 2,00,000).
14. PW1 has also deposed that SAP GURU is suggestive of „Master in SAP training‟. Defendant No.1 has adopted the identical/deceptively similar name SAP GURU, solely with the intent to cause confusion to the potential customers. Such adoption and use is illegal and violative of plaintiffs‟ exclusive rights in the trade mark „SAP‟. The unauthorized use by the Defendants of the mark „SAP‟ as part of its website, keywords, trading style and as a trademark amounts to infringement of plaintiffs registered trademark in India.
15. PW1 has further deposed that the defendants also have created and actively operate their domain name www.sapguru.org, through the internet. Internet serves as one of the most essential medium of trade and commerce, globally and potential customers, students and public at large, who search for the products, services or training of the plaintiffs, are deceived by the identical/deceptive name SAP GURU and are made to believe that defendants are affiliated/recognised/connected with the plaintiffs. It has also been deposed that the illegal and unauthorised use of plaintiffs‟ trade mark „SAP‟ in SAP GURU is nothing but a conscious and deliberate attempt to illegally encash upon the impeccable goodwill and reputation gained by the plaintiffs over the years and to cause confusion and deception within the trade circles and amongst the public at large. Defendants have deceived several potential customers, students and public at large and caused irreparable harm and injury to the plaintiffs in terms of profit, goodwill, reputation.
16. PW1, Mr. Somanath, has also deposed that the defendants are brazenly using the plaintiffs‟ registered trade mark SAP on its website. Moreover, defendants‟ trade name/trademark is virtually identical and/ or deceptively similar to the plaintiffs‟ registered trade mark/ trade name/ corporate name SAP and other SAP formative marks. It has also been deposed that the defendants are also using the plaintiffs‟ trademarks including SAP, ABAP and Netweaver as keywords and metatags for the website www.sapguru.org to divert the plaintiffs‟ potential customers and internet users to the said website. Printouts of the Defendants‟ websites have been exhibited as Ex. PW-1/11 (Colly).
17. PW1 has next deposed that the plaintiffs engaged an independent investigator to procure further information. The investigator confirmed that the Defendants provide training on SAP modules. Defendants informed the investigator that they provide SAP CRM training for INR Two Lakhs (2,00,000) and that the training is provided on plaintiffs‟ software mySAP CRM 7.0. Defendants further informed that the plaintiffs‟ software can be installed on additional payment of INR Three Thousand (INR 3,000). The Defendants also provided information brochure, pamphlets and visiting cards to the independent investigator and the same have been exhibited as Ex. PW-1/12 (colly).
18. Further, pursuant to the order dated 23.12.2011, the local commissioner visited the defendants‟ premises and on inspection found plaintiffs‟ SAP software on the computer installed at defendants‟ premises. The local commissioner also noted that at least Thirty Two (32) students were enrolled for the SAP training and the defendants charged the said students fees ranging from INR Twenty Five Thousand (INR 25,000) to INR Seventy Five Thousand (INR 75,000). Moreover, the Local Commissioner also noted that as per the printout on the notice board in the defendants‟ premises, the defendants were offering the unauthorised training on SAP CRM 7.0 for a fee of INR Two Lakh Twenty Four Thousand Seven Hundred and Twenty (INR 2,24,720).
19. PW1 has also deposed that although there are no known means to calculate the actual damages suffered by the plaintiffs, yet an appropriate figure can be determined on the basis of the following criterions:
(a) Local Commissioner found one server with the SAP software and four laptops with SAP logon pads at defendants‟ premises. The partnership fee for plaintiffs costs Rs.12,00,000/- (Rs. Twelve Lakhs Only). Further the plaintiff charges certification fee for CRM at Rs. 35000/- per student and assuming that minimum 130 students were trained and certified by the defendants, the plaintiffs would have lost about Rs.45,50,000/- (Forty Five Lakhs only) towards certification fee. Defendants claim to be in SAP line for five years and hence the defendants have caused a loss of at least Rs.57,00,000/- (Rs. Fifty Seven Lakhs Only) towards the partnership fee and certification fee in a year. Further as the defendants were into business for five years the plaintiffs assume the total loss to be Rs.2,85,00,000/- (Two Crores Eight Five Lakhs Only) from partnership fee and certification fee for five years.
Therefore, the plaintiffs have suffered a loss of around INR Rs.2,85,00,000/- (Two Crores Eight Five Lakhs Only) due to the use of infringing activities by the defendants for unauthorised training.
(b) Defendants enrolled at least Thirty Two (32) students for training on SAP software and as per the placement list available on its website www.sapguru.org, the defendants have placed about One Hundred and Thirty (130) students who undertook SAP CRM training from the defendants. The Plaintiffs charges Rs.3,30,000/ (Three lakhs thirty Thousand) as the course fee for CRM and hence the plaintiffs suffered the damages of about Rs.4,29,00,000/- (Four Crores and twenty Nine Lakhs) due to the unauthorised training provided by the defendants to the 130 students.
(c) The unauthorised and illegal use of the trade mark / trade name/ corporate name „SAP‟ by the Defendants have caused confusion to several consumers and internet users, causing immense loss of revenue and goodwill to the plaintiffs. Moreover, various students have lodged complaints on third party online forums for cheating and fraud against the defendants. Although the loss of revenue, goodwill and reputation thus caused is incalculable, the plaintiffs quantify the damages thus caused to the tune of atleast Rs.10,00,000/- (Rs. Ten Lakhs).
20. Plaintiffs have also filed affidavit by way of evidence of Mr.Nitin Mishra (PW2), who is working with the software audit team of the plaintiff company since the year 2008. PW2 has deposed in his affidavit that in pursuance to the direction given vide order dated 23.12.2011, being appointed as technical expert of plaintiff company, he accompanied the local commissioner to assist him.
21. PW2 has also deposed that on 29.12.2011, he visited the defendants‟ premises at the given address along with the local commissioner and the plaintiffs‟ counsel. On learning that the defendants have relocated to a new address, they visited the said new address on 30.12.2011 and found that the defendants were operating their training centre from the said address. They noticed a few printouts pasted on the notice board, which are mentioned as follows:
1) Infosat Corporation
2) Fee for SAP CRM 7.0 is INR 2,24,720/- (inc. taxes)
3) SAP GURU
22. PW2 has further deposed that they met Ms.Monika Rathore, PRO at SAP GURU and Mr.Debnath, student. The local commissioner enquired about Mr.Rohit Sharma (defendant), who was not available at the centre at that instance. The local commissioner informed Mr.Rohit Sharma(defendant) through telephone about the local commission and requested him to attend the proceedings. However, Mr. Rohit Sharma did not appear for over half an hour and in view of the same, the proceedings were initiated in his absence.
23. PW2 has next deposed that he inspected the computer machines being one CPU and four laptops for locating infringing software and study materials. The hard disc bearing name 5LJ1TMNQ, found in the said CPU, carried SAP CRM 7.0 software. Furthermore, three laptops were found with logon pads to access the software from the said CPU. In one laptop, which was located at the reception, only study material was found.
24. Further, after the completion of the proceedings Ms. Monika signed and stamped the Superdarinama. The local commissioner also noticed a file containing copies of fee receipts and on perusal found fee receipts issued to thirty two students, towards the payment for SAP CRM Course. PW2 also noted that the students have paid fee for the course in range of INR Twenty Five Thousand to INR Seventy Five Thousand.
25. I have heard counsel for the plaintiffs and carefully perused the documents which have been placed on record along with the affidavit by way of evidence which have been filed. Evidence of plaintiffs have gone unchallenged and un-rebutted. Copyright registration certificates issued in favor of plaintiff have been exhibited as Ex. PW1/7(colly). Copy of registration certificates, issued by trademark registry, in favor of plaintiffs have been exhibited as Ex.PW1/8(colly). A copy of Education/Training License Agreement and list of authorized partners of plaintiffs in India have been exhibited as Ex. PW1/5 and Ex.PW1/6, respectively. Printouts from defendants‟ websites and brochure, pamphlets and visiting card of defendants have been exhibited as Ex. PW1/11(colly) and Ex.PW1/12(colly), respectively.
26. On the basis of the documents place on record, plaintiffs have established that plaintiff no.1 is the sole owner of copyright in the computer programs within the meaning of section 2(ffc) of the Copyright Act, 1957 and is included in the definition of literary work as per Section 2(o) of the said Act. Section 17 of the Copyright Act, 1957 gives exclusive rights to the plaintiffs to exploit all rights emanating from the ownership of their copyright. These rights are set out in Section 14 of the said Act. Plaintiff no.1 is also the registered proprietor of the trademark/trade name/corporate name SAP and has the exclusive right to use the same. Plaintiffs have also established that the defendants by using the trademark/domain name SAPGURU, are infringing the copyright and trademark SAP of plaintiffs and also encashing the goodwill and reputation earned by the plaintiffs over a period of many years. Plaintiffs have also established that the defendants are also infringing the copyright of plaintiff in SAP computer programs by reproducing/installing and providing unauthorized training on software programs of plaintiff. Defendants have not been granted any license of any software to provide any training to third parties/students by the plaintiffs.
27. Further, defendants by using deceptively similar/ identical trademark SAP GURU are attempting to create an impression of connection or affiliation with the plaintiffs, in the minds of potential customers and public at large. Furthermore, internet serves as one of the most essential medium of trade and commerce and potential customers of plaintiff are deceived by the domain name "www.sapguru.org" of defendants and are made to believe that defendants are affiliated/recognized/connected with plaintiffs and the illegal and unauthorised use of plaintiffs‟ trade mark „SAP‟ in SAP GURU is nothing but a conscious and deliberate attempt to illegally encash upon the impeccable goodwill and reputation gained by the plaintiffs over the years and to cause confusion and deception within the trade circles and amongst the public at large.
28. In a very recent judgment delivered by another bench of this court, The Indian Hotels Company Ltd. Vs. Ashwajeet Garg and Ors. CS(OS) 394/2012, decided on 01.05.2014, following observations were made:
"23. ...........In Kaviraj Pandit Durga Dutt Sharma vs. Navaratna Pharmaceutical Laboratories 1965 SCR (1) 737, the Hon'ble Apex Court in the following paras held as under: "In an action for infringement, the Plaintiff must, no doubt, make out that the use of the Defendant's mark is likely to deceive, but where the similarity between the Plaintiffs and the Defendant's mark is so close either visually, phonetically or otherwise and the court reaches the conclusion that there is an imitation, no further evidence is required to establish that the Plaintiffs rights are violated. Expressed in another way, if the essential features of the trade mark of the Plaintiff have been adopted by the Defendant, the fact that the get-up, packing and other writing or marks on the goods or on the packets in which he offers his goods for sale show marked differences, or indicate clearly a trade origin different from that of the registered proprietor of the mark would be immaterial;...... When once the use by the Defendant of the mark which is claimed to infringe the Plaintiffs mark is shown to be "in the course of trade", the question whether there has been an infringement is to be decided by comparison of the two marks. Where the two marks are identical no further questions arise; for then the infringement is made out...."
29. In the case of Laxmikant V. Patel Vs. Chetanbhai Shah And Another, reported at (2002) 3 SCC 65, Apex court made following observation:
"..........The law does not permit any one to carry on his business in such a way as would persuade the customers or clients in believing that his goods or services belonging to someone else are his or are associated therewith. It does not matter whether the latter person does so fraudulently or otherwise. The reasons are two. Firstly, honesty and fair play are, and ought to be, the basic policies in the world of business. Secondly, when a person adopts or intends to adopt a name in connection with his business or services which already belongs to someone else it results in confusion and has propensity of diverting the customers and clients of someone else to himself and thereby resulting in injury."
30. In view of the aforesaid, the plaintiffs are entitled to a decree of permanent injunction in terms of prayer (a), (b) and (c) of paragraph 42 of the plaint.
31. The plaintiffs have also claimed damages on account of illegal activities of the defendants along with delivery up of all unlicensed/pirated plaintiffs‟ software lying in possession of the defendants. Plaintiffs have further claimed rendition of accounts of profits illegally earned by defendants, however, plaintiffs have restricted its prayer to punitive damages. I have no hesitation to state that the Defendants have deliberately stayed away from the present proceedings as a result of which an enquiry in the accounts of defendants for determination of charges could not take place.
32. In Microsoft Corporation v. Deepak Raval reported at MIPR 2007 (1) 72, this Court observed that in our country the Courts are becoming sensitive to the growing menace of piracy and have started granting punitive damages even in cases where due to absence of Defendant, the exact figures of sale made by them under the infringing copyright and/or trademark, exact damages are not available. The justification given by the Court for award of compulsory damages was to make up for the loss suffered by the plaintiff and deter a wrong doer and like-minded from indulging in such unlawful activities.
33. In Larsen and Toubro Limited v. Chagan Bhai Patel reported at MIPR 2009 (1) 194, this Court has observed that it would be encouraging the violators of intellectual property, if the Defendants notwithstanding having not contested the suit are not burdened with punitive damages.
34. In case of Time Incorporated v. Lokesh Srivastava and Anr., reported at 2005 (30) PTC 3 (Del), the court has recognized third type of damages as punitive damages apart from compensatory and nominal damages. The court has held that:
"The award of compensatory damages are aimed at deterring a wrong doer and the like minded from indulging in such unlawful activities."
"This Court has no hesitation in saying that the time has come when the Courts dealing actions infringement of trademark, 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 punitive damages also, which may spell financial disaster for them."
35. Based on the report of the Local Commissioner and the investigator, leaves no room for doubt that the computers were installed at the premises of the defendants with the SAP Software, various students were enrolled and fees were being charged from them. This is a fit case where the plaintiff is entitled to damages of Rs.5.00 lakhs.
36. For the reasons stated above, the plaintiffs have made out a case for grant of decree as prayed in the plaint. Accordingly, the order dated 23.12.2011 is confirmed and the suit is decreed in favour of the plaintiff and against the defendants. Plaintiff is also entitled to damages to the tune of Rs.5.00 lacs.
36. Decree sheet be drawn up accordingly.
I.A. No. 22919/1237. Present application is dismissed in view of the above.
(G.S.SISTANI) JUDGE SEPTEMBER 12, 2014 ssn