In a significant ruling shaping trademark jurisprudence, the Delhi High Court delved into the complex question of whether goodwill in a passing off action must be tied to the specific category of goods or can subsist in the mark itself. Arising from a protracted dispute over the use of the mark "CARLTON" in Class 18 between VIP Industries Ltd. and Carlton Shoes Ltd., the Court was called upon to determine the nature of goodwill, the threshold for trans-border reputation, and the implications of prior use in resolving competing claims. Read on to explore how the Court addressed these core issues at the intersection of intellectual property and commercial identity.
Brief facts:
The dispute involves the use of the trademark "CARLTON" in Class 18 (leather goods, bags, luggage, etc.) between VIP Industries Ltd. (VIP) and Carlton Shoes Ltd. (CSL). Both parties hold registrations for the "CARLTON" mark in Class 18. CSL claims use of the mark in the United Kingdom since 1992 by its founder Baljit Virk, and in India since 1993 through Carlton Overseas Pvt. Ltd., primarily for footwear and, to a limited extent, for handbags and purses. VIP claims rights to the mark through an Assignment Agreement with Carlton International PLC (CIPLC) and states that it has been using the mark in India for luggage since 2004. Due to the overlapping claims, both parties filed suits against each other for passing off and sought interim injunctions. The Single Judge of the Delhi High Court granted interim relief to CSL and restrained VIP from using the "CARLTON" mark for goods in Class 18. VIP appealed this decision before the Division Bench of the Delhi High Court.
Contentions of the Appellant:
The Appellant submitted that its use of the "CARLTON" mark for luggage since 2004 preceded CSL’s use, as CSL’s evidence of use only surfaced around 2011–2013 through an undated Flipkart listing. It was argued that goodwill in a passing off action must relate to specific goods here, luggage, and since CSL primarily used the mark for footwear and minimally for handbags, VIP claimed superior goodwill. The appellant further contended that CSL failed to establish a trans-border reputation in India prior to 2004, as its promotional materials lacked evidence of wide circulation. Alleging misrepresentation, it was submitted that CSL sought to exploit VIP’s established reputation in luggage after 15 years, which was evident from CSL’s own denials of selling luggage in consumer responses. It was also argued that the Single Judge’s decision unjustly favoured CSL, despite its lack of prior luggage use, while restraining VIP. Lastly, the appellant pointed to CSL’s delay in filing suit as a factor weakening its claim for injunction.
Contentions of the Respondent:
The Respondent submitted that it had prior use of the "CARLTON" mark in India since 1993, supported by invoices, VAT records, and sales data, establishing goodwill primarily for footwear and also for handbags under Class 18. CSL claimed a trans-border reputation, citing its global presence- 333 stores and operations across 30 online platforms, supported by media coverage, including The Hindu (2004). It was argued that VIP’s use of the identical mark caused brand dilution, evidenced by consumer confusion. CSL contended that VIP’s adoption of the mark despite knowledge of CSL’s prior use amounted to misrepresentation. Relying on Heinz Italia v. Dabur India Ltd., CSL argued that delay did not bar relief where goodwill was well established.
Observation of the Court:
The Division Bench of Justice C. Hari Shankar and Justice Ajay Digpaul observed, "The goodwill that is required to be established in order to sustain a claim of passing off is goodwill in the mark, and not goodwill in the mark as used for any particular goods or services."
The Court stressed that goodwill attaches to the mark itself, not necessarily the specific goods it is used for, as "even if the goodwill ultimately attaches to the goods or services in respect of which the mark is used, that goodwill is attributable, not to the goods or services, but to the mark or name under which the goods or services are provided." The Court rejected VIP’s contention that goodwill must be product-specific, noting that marks like "Mercedes-Benz" or "Mont Blanc" enjoy protection due to their inherent goodwill, regardless of the goods.
On trans-border reputation, the Court relied on Toyota Jidosha Kabushiki Kaisha v Prius Auto Industries Ltd and Starbucks (HK) Ltd. v. British Sky Broadcasting Group, holding that "the existence of goodwill and reputation has to be shown to exist in India and worldwide or global goodwill and reputation, sans any evidence of territorial goodwill and reputation, will be insufficient to succeed in a claim of passing off." The Court stated that VIP failed to demonstrate sufficient trans-border reputation prior to 2004, as its evidence, including promotional materials and invoices, did not show significant circulation or sales in India before CSL’s established use since 1993.
While dismissing VIP’s argument that handbags and purses were not cognate to luggage, the Court stated that "the submission appears to be highly debatable," and affirmed that CSL’s goodwill in footwear sufficed to enjoin VIP’s use for luggage. The Court also upheld the Single Judge’s finding of misrepresentation by VIP, noting that "it would be hard to believe that VIP was unaware of the prior existence of the CARLTON mark, in India, as used by CSL since 1993." On balance of convenience, the Court agreed that it favored CSL, as "CARLTON is the house mark of CSL, and is the only mark used by it," unlike VIP, which used multiple marks.
The decision of the Court:
Under the light of the foregoing discussion, the Court dismissed VIP’s appeals, upholding the Single Judge’s order. The Court affirmed the interlocutory injunction restraining VIP from using the "CARLTON" mark for Class 18 goods, while allowing CSL to continue its use, based on CSL’s prior goodwill and reputation in India since 1993.
Case Title: VIP Industries Ltd Vs. Carlton Shoes Ltd & Anr.
Case No.: CM APPL. 37334/2023
Coram: Justice C. Hari Shankar and Justice Ajay Digpaul
Advocate for Appellant: Sr. Adv. Akhil Sibal, Advs. Nishad Nadkarni, Ankur Sangal, Ankit Arvind, Aasif Navodia, Khushboo Jhunjhunwala, Shaurya Pandey, Rakshita Singh, and Ridhie Baja
Advocate for Respondent: Sr. Adv. Sandeep Sethi, Advs. Peeyoosh Kalra, C.A. Brijesh, Ishith Arora, Sumer Dev Seth, and Simranjot Kaur
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