Delhi High Court
Ms Copenhagen Hospitality And Retails & ... vs Ms. A.R. Impex & Ors. on 22 February, 2022
Author: Sanjeev Narula
Bench: Sanjeev Narula
NEUTRAL CITATION NO: 2022/DHC/001023
$~15
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Decision: 22nd February, 2022
+ CS(COMM) 262/2021 & I.As. 9140/2021, 15360/2021, 2999/2022,
15361/2021.
M/S COPENHAGEN HOSPITALITY AND RETAILS & ORS.
..... Plaintiffs
Through: Mr. Chander M. Lall, Senior
Advocate, with Mrs. Bindra Rana,
Vikrant Rana, Ms. Priya Adlakha,
Tanvi Bhatnagar, Ms. Shilpi Ms.
Ananya Chugh, Advocates.
versus
M/S A.R. IMPEX & ORS. .... Defendants
Through: Mr. Jayant Mehta, Senior Advocate
with Mr. Naqeeb Nawab, Mr. Vig,
Mr. Himanshu Deora, Yashwardhan
Singh, Mr. P. D. Srikar and Mr.
Kirtan Patel, for Defendant No. 1.
CORAM:
HON'BLE MR. JUSTICE SANJEEV NARULA
JUDGMENT
[VIA VIDEO CONFERENCING] SANJEEV NARULA, J. (Oral):
I.A. No. 7085/2021 (u/Order XXXIX Rules 1 and 2 r/w Section 151 of the Code of Civil Procedure, 1908, for ad-interim injunction) I. The Dispute:
1. Plaintiffs jointly conduct business of operating a chain of pizzerias under the name and style of 'LA PINO'Z PIZZA' by granting franchises CS(COMM) 262/2021 Page 1 of 28 This is a digitally signed Judgement.
NEUTRAL CITATION NO: 2022/DHC/001023 under a master-franchise model, wherein they appoint a master-franchise in one state - which is given the right to appoint sub-franchise outlets in cities of that state - and assist it in establishing their business. Under this arrangement, Plaintiff No. 1 vide a 'Master Franchisee Agreement' dated 13th June, 2007, appointed Defendant No. 1 as the master-franchise in the state of Gujarat. It operated five self-owned LA PINO'Z PIZZA franchise outlets in Ahmedabad, and issued sub-franchises to other outlets in the state of Gujarat, for which certain tripartite agreements were executed. In the beginning of March, 2021, Plaintiff No. 1 started receiving complaints from its sub-franchise in Gujarat (other than Ahmedabad) about non-cooperation of their Master Franchisee Agreement. Disputes aggravated, leading the parties herein to execute a Termination Agreement dated 10th April 2021, inter-alia agreeing for settlement of outstanding payments/dues, as per books of accounts of both parties. Post termination, Defendant No. 1, set up its own LA MILANO pizzeria, in/around the same premises where it was earlier operating as a franchisee, which has given rise to the present dispute. The Plaintiffs received calls from the existing franchises informing that the hoarding/ display boards of defendant's outlets in the city were being replaced by LA MILANO PIZZERIA hoarding, with a look-alike logo of the Plaintiff. Defendant No. 2, who was a former employee of the Plaintiffs, was found at the site assisting them in transitioning from LA PINO'Z PIZZA to LA MILANO PIZZERIA and approaching other franchise owners of the Plaintiff in Ahmedabad.
II. The Suit:
2. Plaintiffs assert that Defendant No. 1 has entered the pizzeria business in complete violation of the terms of the Master Franchisee Agreement as well CS(COMM) 262/2021 Page 2 of 28 This is a digitally signed Judgement.
NEUTRAL CITATION NO: 2022/DHC/001023 as the Termination Agreement. They are aggrieved by the Defendant's adoption of the mark LA MILANO PIZZERIA and an accompanying logo which is stated to be a rip-off of the Plaintiffs' registered trademarks in its brand name and logo, as well as copyright in its original artistic work. The Plaintiffs are further aggrieved by Defendant's adoption of pizza names which are also stated to emulate the names, recipes and ingredients of the Plaintiffs' pizzas. Further, the Plaintiffs state that they have put in a lot of effort, labour, time and capital into developing their brand name and logo in LA PINO'Z PIZZA through advertisements in a wide variety of print and electronic media, and promotion on social medias, which has translated into enormous goodwill and reputation for the brand LA PINO'Z PIZZA. They claim that the brand is exclusively associated with the Plaintiffs, in the eyes of members of the public as well of the trade, and thus, they claim to be aggrieved by the Defendants adoption of the Plaintiffs social media pages, IVR telephone numbers, and occupation and dressing-up of the same premises that were once LA PINO'Z PIZZERIA in the same style as LA MILANO'S PIZZERIA.
III. Previous orders of this Court:
3. In the instant suit for infringement of trademark and copyright, as well as for passing off, a limited ad interim ex-parte injunction was granted in favour of the plaintiff in the instant application vide Order dated 22nd June, 2021, restraining the Defendants as follows:
"25. (...) Accordingly, the following interim relief is deemed fit to be granted till the next date of hearing:
(a) Defendant Nos. 1 and 2, their partners, associates, franchisee, sub-
franchisee, licensees, sub-licensees, agents, servants, affiliates or any one claiming under it, directly or indirectly, in any manner infringing the Plaintiffs registered trade mark, are restrained from selling the pizzas CS(COMM) 262/2021 Page 3 of 28 This is a digitally signed Judgement.
NEUTRAL CITATION NO: 2022/DHC/001023 under the impugned names SPRING BLING, LOVERS DELIGHT, BURN TO HECK, AMERICAN RETREAT, MILANO RETREAT and 7 CHEESY/CHEESE 7, which is infringing the Plaintiffs' registered trade marks SPRING FLING, LOVERS BITE, BURN TO HELL and ENGLISH RETREAT, and misuse Plaintiffs' product names/marks LAS VEGAS RETREAT CHICAGO RETREAT and CHEESY 7.
(b) Defendants are restrained from using Plaintiffs' propriety products at any of their outlets.
(c) Defendant are restrained from accessing and controlling LA PINO'Z PIZZA's official social media handles or any other websites. They are further directed to immediately, on the service of this order, hand-over the control of the official social media accounts to the Plaintiff.
(d) Defendants are restrained from using the Plaintiffs registered trademark LA PINO'Z PIZZA in any derogatory manner or in any public or private communication."
4. Thereafter, the Plaintiff filed an application alleging breach of said injunction, under u/Order XXXIX Rules 2A.1
5. The injunction order was assailed in appeal before the Division Bench of this Court,2 which was disposed of with the direction that in case Defendants would move an application seeking vacation of the same under Order XXXIX Rule 4 of CPC, the same was to be disposed of expeditiously.
6. In that light, initially, Defendants raised a preliminary objection regarding lack of territorial jurisdiction and sought return of the plaint.3 This objection was considered and rejected vide Order dated 29th July, 2021. Simultaneously, the Defendants also filed an application seeking vacation of 1 I.A. 9140/2021 under Order 39 Rule 2(A) read with Section 151 of the CPC, 1908, for breach of ex-parte ad-interim injunction order dated 02nd June 2021.
2Order dated 5th July 2021 in FAO(COMM)108/2021.
3In IA. 8371/2021 Under Order VII Rule 10 read with Section 151 of the Code of Civil Procedure, 1908.
CS(COMM) 262/2021 Page 4 of 28This is a digitally signed Judgement.
NEUTRAL CITATION NO: 2022/DHC/001023 the injunction.4
7. Thereafter, the matter was set down for hearing on the interim applications. Several hearings took place, during which, it transpired that the matter could possibly be settled amicably, and on certain aspects, there even appeared to be a meeting ground amongst the parties, but ultimately, nothing fructified. As a result, the matter now has to be taken to its logical conclusion.
IV. Scope of the present order:
8. In furtherance of settlement efforts, the Plaintiffs filed a brief note of submissions identifying 18 points of contention - which form their source of vexation. These points are extracted below:
"(i) Use of a brand name similar to that of the Plaintiff - "La Pino'z" versus "La Milano";
(ii) Use of a similar logo type with the same colour combination, text layout;
(iii) Use of similar website www.lapinozpizza.in vs. www.lamilanopizza.in;
(iv) Use of the same premises with the same exterior and interiors;
(v) Use of the same telephone numbers associated with the Plaintiffs' brand the True Caller logs still show the number against LA PINO'Z name and orders are booked by La Milano;
(vi) Use of same mobile nos. and name of La Pino'z for payment being made to LA MILANO through UPI;
(vii) Use of the same Instagram and Facebook pages - all followers / likes / date of pictures in relation to La Pino'z relate back to 2017 but are now used to benefit La Milano. Defendant No. 1 did not delete the Plaintiffs' promotional 4 I.A. 8372/2021 under Order XXXIX Rule 4 read with Section 151 of the Code of Civil Procedure, 1908 seeking vacation and/or Suspension of the Ex-parte ad-interim Injunction order Dated 02/06/2021 passed by this Court.CS(COMM) 262/2021 Page 5 of 28
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NEUTRAL CITATION NO: 2022/DHC/001023 post on Instagram account, therefore, the photos of LA PINO'Z PIZZA and LA MILANO PIZZERIA were appearing on the same page;
(viii) Use of the same email id for operating its impugned Facebook account;
(ix) Representation to the public that LA MILANO has taken over LA PINO'Z;
(x) Changing Google listings of Ahmedabad outlets;
(xi) Calling itself to be original and others to be copycat; a new market leader;
(xii) Use of the same pizza delivery bags bearing LA PINO'Z from the newly formed outlets of La Milano;
(xiii) Use of same sachets of chilli flakes and oregano seasonings;
(xiv) Use of the same pizza recipes and identical ingredients which were confidential in the hands of the franchisee, the Defendant No. 1;
(xv) Using same staff members, who were trained by the Plaintiff for LA PINO'Z PIZZA;
(xvi) Use of the same/similar pizza names many of which are registered by the Plaintiff and many are pending;
(xvii) Use of similar layout, colour combination and graphics on menu cards, serving same sizes of pizzas;
(xviii) Operators / Staff at LA MILANO accepting orders directed towards LA PINO'Z on the phone;"
9. The afore-noted 18 points substantially enhance and expand the scope of the instant application under Order XXXIX Rule 1 & 2 of the CPC, which prays for the following reliefs:
"a) grant an ad-interim injunction restraining the Defendant Nos. 1 and 2, their partners, associates. franchisee, sub franchisee, licensees, sub-licensees, agents, servants, affiliates, employees, representatives, and attorneys or any one claiming under it, directly or indirectly, in any manner operating restaurants under the impugned name LA MILANO PIZZERIA / so as to infringe the Plaintiffs registered trade marks LA CS(COMM) 262/2021 Page 6 of 28 This is a digitally signed Judgement.
NEUTRAL CITATION NO: 2022/DHC/001023 PINO'Z PIZZA and , and copyright in the artistic work of its logo, in any manner including but not limited to operating the impugned website www.lamilanopizza.in/ Mobile App, accounts on social media platforms i.e. Facebook, Instagram and/or any paid listings or third party listings, and/or any other name, trade mark, logo, website, which is visually, phonetically, conceptually, confusingly or deceptively similar with that of the Plaintiffs, as well as serving Plaintiffs proprietary products i.e. chili flakes and oregano seasonings etc. in their outlets;
b) grant an ad-interim injunction restraining the Defendant. Nos. 1 and 2, their partners, associates, franchisee, sub franchisee, licensees, sub-licensees, agents, servants, affiliates, employees, representatives, and attorneys or any one claiming under it, directly or indirectly, in any manner serving pizzas under the impugned names SPRING BLING, LOVERS DELIGHT, BURN TO HECK. AMERICAN RETREAT, MILANO RETREAT and 7 CHEESY/ CHEESE 7, which is infringing the Plaintiffs registered trade marks SPRING FLING, LOVERS BITE, BURN TO HELL and ENGLISH RETREAT, and misuse Plaintiffs' product names/marks LAS VEGAS RETREAT. CHEESY 7 and CHICAGO RETREAT or any other product name, which are visually, Phonetically, conceptually, confusingly or deceptively similar with that of the Plaintiffs, to pass off or enable others to pass off their business as that of the Plaintiffs;
c) grant an ad-interim injunction restraining the Defendants their partners, associates, franchisee, sub-franchisee, licensees, sub-licensees, agents, servants, affiliates, employees, representatives, and attorneys or any one claiming under it, directly or indirectly, in any manner approaching the Plaintiffs existing or upcoming Master franchisees and/or sub-franchisees persuading them to terminate their franchise agreements of LA PINO'Z PIZZA with the Plaintiffs and convert them to the impugned brand outlet LA MILANO PIZZERIA or any other brand;
d) grant an ad-interim injunction restraining the Defendants their partners, associates, franchisee, sub-franchisee, licensees, sub-licensees, agents, servants, affiliates, employees, representatives, and attorneys or any one claiming under it, directly or indirectly, in any manner approaching the Plaintiffs' officials to get unauthorized access on the confidential information and trade secrets of the Plaintiffs' business;
e) grant an ad-interim injunction restraining the Defendants their partners, associates, franchisee, sub-franchisee, licensees, sub-licensees, agents, servants, affiliates, employees, representatives, and attorneys or any one claiming under it, directly or indirectly, in any manner defaming the Plaintiffs officials and disparaging their brand LA PINO'Z PIZZA in any manner;"
CS(COMM) 262/2021 Page 7 of 28This is a digitally signed Judgement.
NEUTRAL CITATION NO: 2022/DHC/001023
10. In fact, Mr. Jayant Mehta, Senior Counsel for the Defendant, takes a strong objection to the manner in which the Plaintiffs are expanding the reliefs, which he argues are way beyond the main prayer in the suit. Mr. Mehta has vehemently stressed that the suit is not for tort or unfair competition, but for infringement and passing off, and therefore the Plaintiffs should not be permitted to seek reliefs which are beyond the scope of the suit. Nevertheless, even while strongly controverting the allegation in the suit, Mr. Mehta has very fairly, without prejudice to his rights and contentions, willingly agreed to abide by certain undertakings in order to resolve the controversy. In light of the reasonable stand taken by Mr. Mehta, the controversial points are considerably narrowed down, and there is no need to adjudicate each and every contention urged in the brief note as well as in the application. Hence, this order shall determine the interim arrangement that shall continue during the pendency of the suit and resolve any confusion or affiliation between the two brands that may be lingering. There is no dispute that after the cessation of the Master Franchisee Agreement, Defendant No. 1 has commenced the same business of pizzeria chains, and some of its outlets are operating from the same location which earlier functioned under the Plaintiffs' brand name. Therefore, it would best serve the interest of both the parties that they distance themselves from each other to have their own identities so as not to cause any confusion to the general public. To that extent, Mr. Mehta has explicitly stressed that Defendant No. 1 has neither claimed nor has any intention to claim or exhibit any association with the Plaintiffs. The Defendant has, without prejudice, undertaken to abide by the following actions:
CS(COMM) 262/2021 Page 8 of 28This is a digitally signed Judgement.
NEUTRAL CITATION NO: 2022/DHC/001023 A. To deactivate its Facebook5 and Instagram6 pages; B. To not use the sachets of chili flakes and oregano seasonings bearing the mark LA PINO'Z PIZZA;
C. To neither use nor shall use, the mark LA PINO'Z PIZZA on pizza delivery bags;
D. To neither use nor shall use, ([email protected]) or any other email ID containing the mark LA PINO'Z PIZZA; E. To neither use nor shall use, the mark LA PINO'Z PIZZA as Unified Payments Interface (UPI) IDs;
F. To not disparage the Plaintiffs and their brand, inter alia, in any public communications.
11. The above undertaking, given by Mr. Mehta is taken on record and the Defendants are held bound to the same. It is clarified that the Court has not rendered any observation on the afore-noted issues on merit. This undertaking shall not prejudice the Defendants and shall not be read as any concession or dilution of the stand taken by them in their written statement and shall also not be considered as admission of any allegations made in the suit. That said, the undertakings given by Mr. Mehta, in the opinion of the court, are necessary, considering the past relationship between the parties, whereunder Defendant No. 1 was the master-franchise of the Plaintiff No. 1.
12. The above undertaking given by Mr. Mehta takes care of points (iii),
(vi), (vii), (viii), (xi) (xii), and (xiii) enumerated in para 10 above.
5https://facebook.com/lamilanoindia/ 6 https://www.instagram.com/lamilanoindia/ CS(COMM) 262/2021 Page 9 of 28 This is a digitally signed Judgement.
NEUTRAL CITATION NO: 2022/DHC/001023
13. The remaining points are dealt with, in seriatim, as follows:
Point (i) - "LA Pino'z" versus "LA Milano" - Use of a brand name similar to that of the Plaintiff; & Point (ii) - Use of a similar logo type with the same colour combination, text layout.
14. This is prayer (a) - the main relief in the instant application. Plaintiffs' primary grievance is regarding the impugned name, (LA MILANO PIZZERIA) and logo, which, according to the Plaintiffs, infringes the Plaintiffs registered trademark LA PINO'Z PIZZA, and copyright in the artistic work of its logo.
15. The two logos, when placed side by side, appear as under:
16. According to Mr. Chander M. Lall, the Plaintiffs adopted the brand name LA PINO'Z PIZZA in July-August, 2013 and registered the trademark and the logo on 23rd August, 2013. The registrations are valid and subsisting. Plaintiff No. 2 licensed use of the said trade marks to Plaintiff No. 1, who has been using the word mark LA PINO'Z PIZZA and the logo since then in over 175 outlets all over the country. By virtue of such extensive use and publicity, he states that the trade mark LA PINO'Z PIZZA and logo have gained immense recognition, valuable goodwill and reputation amongst members of CS(COMM) 262/2021 Page 10 of 28 This is a digitally signed Judgement.
NEUTRAL CITATION NO: 2022/DHC/001023 public and trade, and the said trade marks have become distinctive and are exclusively identified by the general public and trade with Plaintiffs' goods and services. Mr. Lal avers that the Defendants seek to ride upon the goodwill and reputation of LA PINO'Z PIZZA and have attempted to mischievously copy all the Plaintiffs' marks in a complete dishonest adoption. He argues that the two-word marks, when compared, show a likelihood of confusion in the eyes of the general public, due to the following similarities:
(i) The Defendants have deliberately copied the prefix "LA" to its mark, with dishonest intention.
(ii) A rhyming or phonetic similarity between the two marks, due to use of the letters I, N and O appearing in both the marks, is also likely to cause confusion.
(iii) The act of Defendant No. 1 of adopting the impugned mark LA
MILANO PIZZERIA and domain name/website
<lamilanopizza.in>, for its business, which is phonetically and conceptually similar, having the same phonetic starting syllabi 'LA' and end syllabi '-NO' in LA PINO'Z and LA MILANO, and ending the mark with the generic word 'PIZZA', shows the dishonest intention of the Defendant No. 1.
(iv) The shape and colour combination of the logo as adopted by the Defendant No. 1 is identical to that of the Plaintiffs'. The Defendant No. 1 has made all attempts to copy the Plaintiffs' brand logo, while making little changes, so as to save its position in an infringement action.
17. Mr. Mehta, on the other hand contended that the Plaintiff does not hold CS(COMM) 262/2021 Page 11 of 28 This is a digitally signed Judgement.
NEUTRAL CITATION NO: 2022/DHC/001023 a valid trademark and cannot claim any infringement or passing off for the word or device mark LA PINO'Z PIZZA in any class. In this regard, he submits that:
(a) Plaintiffs' TM Application No. 2584778 for LA PINO'Z PIZZA in Class 30 has been refused by the Registrar of Trade Marks;
(b) Plaintiffs' TM Application No. 2584779 for LA PINO'Z PIZZA in Class 43 has been opposed by Lite Bite Foods Private Limited; and
(c) The device-mark LA PINO is prior registered in Class 30 in favour of a third-party.7 Thus, the Plaintiffs have made incorrect submissions qua subsistence of valid registration of its logo and word mark.
18. In the considered opinion of the Court, the two word-marks and device- marks are completely different and the Court does not find any deceptive similarity in the same. The law on deceptive similarity requires no introduction. 8 The Apex Court has laid down the test of 'point of view of a man of average intelligence and imperfect recollection', to whom, the overall structural and phonetic similarity of the two names is likely to deceive or 7 In the name of Mr. S. JASBIR SINGH trading as K.S. FOODS, bearing Registration. No. 2530426 dated 14/05/2013.
8In Cadila Health Care Ltd. v. Cadila Pharmaceuticals Ltd., (2001) 5 SCC 73, the Apex Court laid down the following factors for deciding the question of deceptive similarity:
(a) The nature of the marks, i.e., whether the marks are word marks or label marks or composite marks, i.e. both words and label works.
(b) The degree of resembleness between the marks, phonetically similar and hence similar in idea. (c) The nature of the goods in respect of which they are used as trade marks.
(d) The similarity in the nature, character and performance of the goods of the rival traders.
(e) The class of purchasers who are likely to buy the goods bearing the marks they require, on their education and intelligence and a degree of care they are likely to exercise in purchasing and/or using the goods.
(f) The mode of purchasing the goods or placing orders for the goods.
(g) Any other surrounding circumstances which may be relevant in the extent of dissimilarity between the competing marks.CS(COMM) 262/2021 Page 12 of 28
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NEUTRAL CITATION NO: 2022/DHC/001023 cause confusion.9 However, while considering the overall similarity of composite words, the two marks are to be considered as a whole, and due regard is to be placed on the circumstances.10 Hence, each case turns on its own facts. A critical comparison of the two names may disclose some points of difference. It is to be seen whether an imprudent purchaser (of average intelligence and imperfect recollection) would be deceived by the overall similarity of the two names, having regard to the nature of the product. 11 In fact, mere ocular comparison is not always the decisive test, and the Apex Court has also quoted the High Court of Bombay on the point of deceptive similarity, in the following words:12 It is settled law that a trade mark comprehends not merely the picture design or symbol but also its descriptive name. A copy of colourable imitation of the name, would constitute an infringement of the mark containing the name. Nobody can abstract the name or use a phonetical equivalent of it and escape the charge of piracy of the mark pleading that the visual aspect of his mark is different from the mark of the person opposing its registration. The words, Ambal and Andal, have such great phonetic similarity that they are undistinguishable having the same sound and pronounciation. In whatever way they are uttered or spoken, slowly or quickly perfectly or imperfectly, meticulously or carelessly and whoever utters them, a foreigner or a native of India, wherever they are uttered in the noisy market place or in a calm and secluded area, over the phone or in person, the danger of confusion between the two phonetically allied names is imminent and unavoidable.
19. The true test is to compare the impugned mark with the registered mark in totality and see whether it is likely to cause deception, confusion or mistake in the minds of persons accustomed to the registered trade mark. Applying the said test, no ocular or visual similarly that is likely to cause confusion is found. Hence in the opinion of the Court, no prima facie case made out in favour of the Plaintiff on this aspect.
9Amritdhara Pharmacy v. Satya Deo Gupta, AIR 1963 SC 449.
10Corn Products Refining Company v. Shangrila Food Products Ltd., AIR 1960 SC 142.
11Id.
12K.R. Chinna Krishna Chettiar v. Shri Ambal and Co., (1969) 2 SCC 131 CS(COMM) 262/2021 Page 13 of 28 This is a digitally signed Judgement.
NEUTRAL CITATION NO: 2022/DHC/001023
20. No doubt, both word-marks use the prefix "LA", of Spanish language origin, but that can be no ground to grant an injunction. LA is grammatically akin to the use of article "THE" in the English language, and merely serves to emphasise the next word: "MILANO" or "PINO'Z". LA is not an invented mark, rather, it is an expression routinely used in Spanish language. Therefore, the Plaintiff cannot claim any monopoly over the same. Besides, this grammatical commonality and adoption thereof cannot be a ground to allege deceptive similarity between the two marks.
21. Further, the logo / device marks, too, are fairly different. Although, both the logos are circular, Defendants' mark is indicative of a crust of a pizza with a concentric circle showing the flag of Italy. In comparison, Plaintiffs' double concentric circle pizza shape has a pizza slice as well, which could also be interpreted as a chef's hat. The fonts are different. The Plaintiffs' mark also has a slogan "Italian Taste Indian Palate". Indeed, colour scheme of both is borrowed from the tricolour of Italian flag, but the similarity ends there. In fact, as pointed out by Mr. Mehta, it is quite common for logos in the pizza category to have a pizza crust-like circle and the colours of the Italian flag - which are indicative of dish's origin. In these circumstances, the Court does not find any ground to pass a restraining order in terms of points (i) and (ii), and consequently, prayer (a) made in the application is rejected.
CS(COMM) 262/2021 Page 14 of 28This is a digitally signed Judgement.
NEUTRAL CITATION NO: 2022/DHC/001023 Point (iv) - Use of the same premises with the same exterior and interiors.
22. Mr. Lall contends that the hoarding/display boards of most of the LA PINO'Z PIZZA franchise outlets in the city, were removed and replaced with LA MILANO PIZZERIA, with a look-alike logo of the Plaintiffs. Customers having average intelligence and imperfect recollection would associate the Plaintiffs' pizzeria with its exterior and interior, specially considering the fact that the Defendants have established their pizzeria at the same premises where they were conducting their business as a franchisee.
23. The Plaintiffs have not made any specific prayer for such relief in the instant application. However, Mr. Lall has contended that on account of prior association of the parties, customers and traders alike are bound to be duped on account of similarity of exteriors and interiors of the premises. He submits that the aforesaid point is covered in prayer (b) the I.A. (i.e., passing off). Mr. Lall underscored that the instant case raises an important issue concerning franchise operations, because a franchisor, after years of labour and hard work, develops a franchise model and franchise operations, to extend its business outreach. For this purpose, it appoints relative novices as franchisees and shares all its know-how and expertise; establishes its relationship and strives to maintain a level of quality assurance to the consumer. It is for this reason that courts have come down heavily against franchisees who attempt to steal the business of its own former franchisor.
24. The Defendant No. 1 adopted logos, menu cards, dish names, and opened outlets in the same premises, using their old social media handles and phone numbers - with dishonest intention to create confusion and gather CS(COMM) 262/2021 Page 15 of 28 This is a digitally signed Judgement.
NEUTRAL CITATION NO: 2022/DHC/001023 Plaintiffs' existing customer base. Mr. Lall also relied upon the Spring Board Doctrine, that is to say that, upon the termination and in violation of the Master Franchisee Agreement, the Defendants cannot be permitted to use technical know-how, recipes, phone numbers, social media pages, etc. which it received under contract from the Plaintiff, as a springboard to promote and launch its own business.
25. Mr. Mehta denied all the contentions of Mr. Lall and stated that there is no basis to claim confusion. The premises of the Defendants bear their distinct logos, signages and brand name, which are all distinctive and there can be no basis to allege confusion. Pertinently, post-termination, by way of a separate agreement, the Plaintiff, in unequivocal terms, agreed for the Defendants to continue its business operations, and thus any injunction on this ground cannot be granted.
26. First, the court has perused Clause 9 of Termination Agreement, which reads as follow:
"Both the parties have agreed to terminate and rescind earlier agreements of Master Franchisee for the state of Gujarat and self owned Franchisee outlets of AR Impex for La Pinoz outlets in Ahmedabad with effect from April 15th midnight.
9. That all the earlier agreements are cancelled with immediate effect with consent of all the parties and none of the terms, conditions or obligations states therein operate or survive."
27. This indicates that the parties have jointly and consensually decided to part ways, which leaves the Defendant open to run its own business. Further, the Court notes that the Defendants, in their affidavits dated February of this year, have filed pictures to show that both the pizzerias are co-existing in the CS(COMM) 262/2021 Page 16 of 28 This is a digitally signed Judgement.
NEUTRAL CITATION NO: 2022/DHC/001023 same building/shopping complexes.13 The exteriors of two stores are also visibly different. In 4D Mall, a common signage distinctly lists, inter alia, both the pizzerias names and logos. In fact, at the outlet in Ghodasar, two more pizzerias exist adjacent to the instant ones, in the same complex. One of the visuals is extracted below:
28. On a perusal of the above, the likely confusion, as projected by Mr. Lall, is non-apparent. On the contrary, some of the outlets of the two pizzerias operating in the same location is clearly indicative that both have established their independent identity and distinct customer base. That apart, the Plaintiffs are not able to demonstrate any prima facie case to show that the interior and exterior of the premises itself, is a proprietary right of Plaintiffs, which the Defendants have copied illegally, to be entitled for to an order of restraint. Even otherwise, a prayer to this effect, not being found in the application, cannot be entertained. Accordingly, the submission made by Mr. Lall to this effect is rejected.
13At (a) Shivalik, Nava Wadaj; (b) 4D Mall Chandkheda, and (c) Raiya Circle Rajkot, and (d) Surdhara (Thaltej),and (d) Ghodasar outlets.
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29. As parties had expressly agreed that the Defendants could function independently, Spring Board Doctrine does not apply. Moreover, prima facie, the Termination Agreement rescinded the earlier agreements and the rights and obligations that were contained in the Master Franchisee Agreement do not survive. No case is found in favour of the Plaintiff in this regard. This prayer is thus disallowed.
Point (v) - Use of the same telephone numbers associated with the Plaintiffs' brand.
30. Mr. Mehta has explained that when Defendant No. 1 was associated with Plaintiff No. 1 as a master-franchise, La Pino'z was using an IVR system across India, and the IVR numbers were circulated to general public. When the customers used to call on the IVR numbers, the call would be transferred to any of the landing numbers, depending upon availability of free line, and these landing telephone numbers were for internal purpose only. Thus, at the time of parting of ways, the IVR ceased to be of use to the Defendants.
31. However, in the spirit of avoiding confusion, he submits, on instructions, that the Defendant is not using and/or will discontinue usage of any of IVR numbers of the Plaintiffs. However, Defendant does not wish to give up the use of remaining landing numbers, which are purchased/owned by them.
32. In light of the statement made by the Defendant that they are not using and will not use the IVR numbers of the Plaintiffs, no further direction is necessary. It must also be noted that there is no specific prayer made by the CS(COMM) 262/2021 Page 18 of 28 This is a digitally signed Judgement.
NEUTRAL CITATION NO: 2022/DHC/001023 Plaintiffs in the instant application to this effect. The Court is also mindful of the fact that since the date of termination of the Master Franchisee Agreement, Defendants have independently set up their business and have their own telephone numbers. There is no likelihood of any confusion that would result in diversion of customer traffic as has been projected by the Plaintiffs.
Point (ix) Representation to the public that LA MILANO has taken over LA PINO'Z.
33. Many allegations and counter-allegations have been made in this regard. The record reveals that when the relationship between the parties soured, both of them resorted to disparagement on social media.
34. Parties hotly contest the origin of such posts and statements, some of which have been shown to the court, which would require leading of evidence through trial. At this stage, it can be observed that Mr. Mehta has assured that no such statements will be made in future. This should equally apply to the Plaintiff. Accordingly, it is directed that neither party shall disparage each other or their respective brands, inter alia, in any public communications and/ or on any portal, including WhatsApp, social media, online food portals, or any other websites. Accordingly, prayer (e) in the application is allowed in the above terms.
Point (x) Changing Google listings of Ahmedabad outlets.
35. The Plaintiffs submitted that after filing the present suit, they learnt that their listings of LA PINO'Z PIZZA outlets in Bodakdev, Vastrapur and Naranpura (all self owned outlets of Defendant No. 1) have been renamed to CS(COMM) 262/2021 Page 19 of 28 This is a digitally signed Judgement.
NEUTRAL CITATION NO: 2022/DHC/001023 LA MILANO PIZZERIA on a restaurant search portal <www.restaurant- guru.in.>, containing photographs of Plaintiffs' LA PINO'Z PIZZA products, restaurant description as well as ratings on Google, Facebook and Zomato. They submitted that Restaurant Guru is a wiki + metasearch for restaurants, which provides users with information on restaurants, including visitors' reviews, menus, photos, ratings, including from Zomato, Google and Facebook, and attached three relevant links.14 In this context, it was prayed that the Defendants change the google listing of the restaurants.
36. When this issue was put to Mr. Mehta, he stated that Defendants do not have access to Google and Zomato listings of the Plaintiffs' outlets; the Defendants are not utilizing the Plaintiffs' listings for their benefit; and listing or delisting of the same are not within the Defendants' control. However, Mr. Mehta states that Defendants would take steps wherever possible and write to concerned agencies to attempt to get the same corrected on Google listings. In light of the aforesaid undertaking, and binding the Defendants to the same, no further action is necessary in this regard as well, specially given that no such prayer is made in the interim application as well.
Point (xiv) Use of the same pizza recipes and identical ingredients which were confidential in the hands of the franchisee, the Defendant No. 1.
37. This is a highly disputed fact - as to whether the recipes of the two pizzas in question are identical. In fact, the Defendants deny that the recipes 14
1. https://restaurant-guru.in/La-Pinoz-Pizza-Ahmedabad-2;
2. https://restaurant-guru.in/La-Pinoz-Pizza-Ahmedabad-6;
3. https://restaurant-guru.in/La-Pinoz-Ahmedabad.
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NEUTRAL CITATION NO: 2022/DHC/001023 of the Plaintiffs are proprietary in the first place or have been created by Mr. Sanam Kapoor, partner of the Plaintiff firms. They claim that the recipes are not an original creation. Further, the Defendants contend that the ingredients used by them are different from those use by the Plaintiff and its franchisees, and hence no case for injunction is made out. The claim of recipes is based on trade secrets and confidential information. Plaintiffs have not shown any proof to support their claims even by factual submissions. Plaint does not aver or identify as to what is the confidential information, for which they are seeking protection in the present proceedings. In absence of any prima facie material on record to prove that the recipes are original and unique creations, and that the same are being used in the same way by the Defendant as alleged, there is no basis to grant any injunction to the Plaintiff.
38. Accordingly, the Court does not find any prima facie case in favour of the Plaintiffs to restrain the Defendants from using the Plaintiffs' proprietary pizza recipes.
Point (xv) Using same staff members, who were trained by the Plaintiff for LA PINO'Z PIZZA.
39. As this point was neither pressed by Mr. Lall nor stated in the prayers to the application or the suit, no relief is deemed fit to be granted in this regard.
Point (xvi) - Use of the same/similar pizza names, many of which are registered by the Plaintiff, and many are pending.
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NEUTRAL CITATION NO: 2022/DHC/001023
40. There is already an ex parte injunction operating against the Defendants restraining them from using the Plaintiffs' registered trademarks and other pizza names, as noted in para 3. The said order restrains the Defendants from using the names SPRING BLING, LOVERS DELIGHT, BURN TO HECK, AMERICAN RETREAT, MILANO RETREAT and 7 CHEESY / CHEESE
7. The said injunction was granted in view of the Plaintiffs being the registered proprietor of trade marks SPRING FLING, LOVERS BITE, BURN TO HELL and ENGLISH RETREAT. The Court had also granted injunction qua other names, which are unregistered, considering Plaintiffs' claims of passing off in respect of marks LAS VEGAS RETREAT (opposed), CHEESY 7 (not applied) and CHICAGO RETREAT (objected).
41. The Defendants are now seeking vacation of the ex parte injunction in I.A. 8372/2021, contending that the Plaintiffs' marks are generic expressions and/or descriptive words commonly used by various businesses in the pizza industry and that Plaintiffs have wrongly obtained the ex-parte order against the Defendants' pizza names - 7 CHEESY/CHEESE 7, AMERICAN RETREAT, MILANO RETREAT, LOVERS DELIGHT, SPRING BLING and BURN TO HECK. They also argue that the use of the pizza names is protected under Sections 30(1)(a), 30(2)(a) and 35 of the Trade Marks Act, 1999.
42. Additionally, it is argued that the Plaintiffs' registration for pizza names (ENGLISH RETREAT, SPRING BLING, LOVERS BITE and BURN TO HECK) are invalid registrations granted in violation of Section 9 of the Trade Marks Act, 1999. The said registrations have been granted during the CS(COMM) 262/2021 Page 22 of 28 This is a digitally signed Judgement.
NEUTRAL CITATION NO: 2022/DHC/001023 pandemic, in violation of orders of the Supreme Court regarding limitation to file an opposition, which could not expire during the COVID-19 pandemic. The Defendants have placed on record extracts of pizza names used by third- party pizzerias and relied upon several case laws to support their contention.
43. The undisputed fact which emerges before the Court is that SPRING BLING, LOVERS BITE, BURN TO HECK and ENGLISH RETREAT are Plaintiffs' registered trademarks in Class 30 with different use dates. The marks adopted by the Defendants, on comparison appear to be deceptively similar, which are as follows:
Plaintiffs' registered marks Defendant's pizza names SPRING FLING SPRING BLING LOVERS BITE LOVERS DELIGHT BURN TO HELL BURN TO HECK ENGLISH RETREAT AMERICAN RETREAT
44. There is a prima facie presumption of statutory validity, stemming from trademarks registration in all legal proceedings under Section 31 of the Trademarks Act, 1999. Registration confers on the proprietor an exclusive right to use the trademark. Defendants have raised the defence of Plaintiffs' registrations being invalid and also that the trade marks in question, being used by third-parties, are common to trade. At this interim stage, the plea of rebuttable presumption raised by the Defendant, relying upon Section 28 of the Act, is not such that the court can ex-facie hold in favour of the Defendant. The arguments of the Defendant at the interlocutory stage do not cross the threshold that would be necessary to deny protection to Plaintiff on the basis CS(COMM) 262/2021 Page 23 of 28 This is a digitally signed Judgement.
NEUTRAL CITATION NO: 2022/DHC/001023 of its subsisting registration. Further, a brand-owner is not duty-bound to initiate or file an action against every infringer whatsoever, even if it does not impact its business. Therefore, even if a Plaintiff has not taken action against other third parties who may be using marks similar to its own, this non-action cannot be a good ground to refuse injunction. That said, the facts of the case demonstrate that the adoption of the marks by the Defendant was dishonest. Undisputedly, Defendant No. 1 was the franchisee of Plaintiff No. 1. Whilst in business, they were using the Plaintiffs' trademarks as a licensee. They used these-marks for monetization of their business and now cannot turn around and challenge the validity of such marks. Significantly, on termination of the agreement, they adopted marks for their pizza names which are visually and phonetically, ex facie, similar to the Plaintiffs' marks. This adoption is therefore mischievous, considering the past contractual relationship between the parties and the manner in which the Defendants have come to adopt the impugned marks. These facts establish a prima facie case. Balance of convenience also lies in favour of the Plaintiff to be entitled to an injunction restraining the Defendants from using any marks deceptively similar to Plaintiffs' registered marks noted in the table above.
45. The injunction order, to that extent, shall continue till such time the instant suit is adjudicated. Accordingly, with respect to registered trademarks, the injunction is allowed.
46. This brings us to the other marks which are not registered marks of the Plaintiffs viz.:
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NEUTRAL CITATION NO: 2022/DHC/001023 Plaintiffs' unregistered marks Defendant's pizza names 7 CHEESY CHEESY 7 LAS VEGAS TREAT MILANO RETREAT CHICAGO RETREAT SWEET HEAT SWEET HEAT HAWAIIAN VEG VEG HAWAIIAN
47. The Plaintiffs' action qua the above marks is based on passing off. In order to succeed in such an action, the Plaintiffs have to pass the Classical Trinity test.15 This requires the Plaintiffs to establish goodwill or reputation in the goods they supply to the general public under the mark. They have to show that the acts of the Defendant are actions in deceit, calculated to harm the Plaintiffs' business, divert customers and piggy-back on the Plaintiffs' reputation and goodwill. That means that the general public should recognize these marks as specifically occurring in the Plaintiffs' goods. The Plaintiffs have to prove that the above marks have acquired distinctiveness in the eyes of the general public so as to restrain third-parties from using the said marks. However, apart from showing that such marks have been used by the Plaintiff and registration has been applied for, no material has been placed on record to form a prima facie opinion with respect to the goodwill or public 15 As laid down in Perry v. Truefitt, (1842) 6 Beav 66, that was later upheld in the landmark case of Reckitt & Colman Products Ltd. v. Bordan Incorporation, [1990] 1 All ER 873. Further, please refer to my earlier decision in Krishna Kishore Singh v. Sarla A. Saraogi & Ors., 10th June, 2021, CS(COMM) 187/2021, where it is noted at Footnote No. 31, that:
"The Classical Trinity test postulates that in order to prove passing off, the plaintiff must prove: (1) goodwill or reputation attached to his goods or service; (2) existence of misrepresentation by defendant to the public which is likely to lead the public to believe that the goods and services offered by defendant are that of the plaintiff; and (3) existence of loss or the likelihood of damage to plaintiff's goodwill."CS(COMM) 262/2021 Page 25 of 28
This is a digitally signed Judgement.
NEUTRAL CITATION NO: 2022/DHC/001023 perception of such marks so that the Plaintiffs can, on the basis of a common law right of passing off, seek restrain against the Defendants. In absence of any basis to demonstrate such purported goodwill, at this stage, prima facie, the court cannot ascertain any damage to the Plaintiffs' marks, which is another pre-requisite to the claim of passing off.
48. That apart, Defendant has also shown that some of the above- mentioned names, which are claimed to be the Plaintiffs' exclusive intellectual property, are, in fact, adopted and used by third-parties way prior to their alleged adoption by the Plaintiffs. For instance, Mr. Mehta had argued that 'CHEESY-7' is not a unique name nor can the Plaintiffs claim any sole association of it for pizzas, as the same has been first coined by the renowned pizza brand 'Pizza Hut' as early as in 2001 as is evident from information freely available on the internet.
49. For the foregoing reasons, no injunction can be granted at this stage in respect of above-noted marks.
50. Thus, in the above terms, prayer (b) stands partially allowed. To clarify, the injunction will apply marks enumerated in para 43 and will not apply to marks enumerated in para 46 above.
Point (xvii) - Use of similar layout, colour combination and graphics on menu cards, serving same sizes of pizzas.
51. Upon a perusal of the menu cards of the two pizzerias, as annexed in the documents attached the suit, the Court is unconvinced of any deceptive CS(COMM) 262/2021 Page 26 of 28 This is a digitally signed Judgement.
NEUTRAL CITATION NO: 2022/DHC/001023 similarity or likelihood of confusion between the two in the eyes of the public. Hence, no relief in this regard is warranted.
Point (xviii) Operators/Staff at LA MILANO accepting orders directed towards LA PINO'Z on the phone.
52. There is no specific prayer made to this effect in the application or the suit. Moreover, in light of the discussion with respect to IVR numbers, there appears to be no realistic possibility of the apprehension expressed by the Plaintiff. Hence no relief is deemed fit to be granted in this regard.
Conclusion:
53. In summary, in IA I.A. No. 7085/2021, the following directions are passed with respect to the prayers sought therein:
(i) Prayer (a) is denied, as noted in para 21. (ii) Prayer (b) is partially allowed only to the limited extent of the
registered trade marks of the Plaintiff, as noted in para 50.
(iii) With respect to prayers (c) and (d), it is necessary to point out that in the 18 points of the brief note of submissions enumerated and dealt with above, prayer (c) and (d) of this application does not find any mention. In fact, no arguments in that regard were made. Nevertheless, the court does not find any prima facie case to find that the Defendants, or any one claiming under it be injuncted from approaching the Plaintiffs' existing or upcoming Master Franchises and/or sub-franchises to persuade them to terminate their franchise agreements of LA PINO'Z PIZZA with the Plaintiffs and/or convert them to LA MILANO PIZZERIA outlet or any other brand; or from approaching the CS(COMM) 262/2021 Page 27 of 28 This is a digitally signed Judgement.
NEUTRAL CITATION NO: 2022/DHC/001023 Plaintiffs' officials to get unauthorized access to confidential information or trade secrets of the Plaintiffs' business. Accordingly, prayer (c) and (d) are dismissed as not pressed.
(iv) Prayer (e) is allowed. The restrain will also apply on the Plaintiff, as noted in para 34.
54. The application is disposed of.
I.A. 8372/2021(by Defendants under Order XXXIX Rule 4 read with Section 151 of the Code of Civil Procedure, 1908 seeking vacation and/or suspension of the ex-parte ad-interim Injunction order dated 02/06/2021)
55. In light of the foregoing findings, nothing remains in this application. Accordingly, it is disposed of in the above terms.
56. It is noted that no arguments were addressed on the prayer against Plaintiffs pertaining to action under Section 340 of the Code of Criminal Procedure, 1973. This prayer is premised on the plea of fabricated documents
- which is a disputed question of facts would require trial. Hence, this prayer is rejected with liberty to the Applicant to approach this Court after conclusion of trial.
CS(COMM) 262/2021 & I.As. 9140/2021, 15360/2021, 2999/2022, 15361/2021.
57. List before the Joint Registrar for marking of exhibits and completion of pleadings on 18th April, 2022.
SANJEEV NARULA, J FEBRUARY 22, 2022/as/nk (Corrected and released on 23rd March, 2022) CS(COMM) 262/2021 Page 28 of 28 This is a digitally signed Judgement.