Exphar Sa And Ors. vs Bharat Shah And Anr.
2003 Latest Caselaw 138 Del

JUDGMENT

Devinder Gupta, ACJ.

1. Both appeals arise out of an order passed on 28.9.1999 by learned Single Judge disposing of IA Nos. 9365/98 and 10313/98. FAO (OS) No. 306/99 is plaintiffs appeal against a part of the order on the ground that when plaintiff No. 1 was held to be the proprietor of trade mark MALOXINE, temporary injunction, as prayed for in the application, ought to have been granted and ought not have been declined on the ground of delay in bringing the action. FAO (OS) No. 331/99 is defendants' appeal against that part of the impugned order by which learned Single Judge restrained it from using the colour combination holding that prima facie plaintiff No. 1 had got right herein under Section 17(b) of the Copyright Act, 1957 and as regards the finding of learned Single Judge that prima facie plaintiff is the proprietors of trade mark MALOXINE and owner of copyright in the carton.

2. Facts in brief are that the plaintiff on 26.10.1998 filed a suit claiming decree for permanent prohibitory injunction restraining the defendants from passing off and infringing its copyright. Along with the suit, an application (IA 9365/98) was also filed seeking temporary injunction against the defendant from using the trademark MALOXINE and also the carton bearing the word "MALOXINE" in the colour combination, in a manner amounting to passing off and infringing plaintiffs' copyright in MALOXINE carton. In brief, it was urged that plaintiff No. 1 adopted trademark MALOXINE in July, 1991 and in October, 1991 plaintiff No. 1 entered into a sub-contract with defendant No. 2 of manufacturing arrangement for manufacture of MALOXINE pharmaceutical preparations. MALOXINE tablets manufactured by defendant No. 2 were thereafter exported to plaintiff No. 1 through an offshore of Eupharma in U.K. by the name of Britlodge Ltd. It was further alleged that on 23.11.1991 plaintiff No. 1 terminated the sub-contract due to deterioration in quality standards and specifications. Despite this, defendant No. 2 continued exporting MALOXINE preparations to its agent Moore Associates in Nigeria. Plaintiff No. 1 alleged that this fact was discovered only in April, 1996 when the office of the National Agency of Flood and Drug Administration Control, Nigeria informed plaintiff No. 1 that it was processing the product license application of another entity for the manufacture and marketing of a pharmaceutical preparation under the trademark MALOXINE. M/s St. Michael Pharmaceutical Ltd., the agent of plaintiff No. 1 in Nigeria investigated the matter and found that the application for the pharmaceutical preparation license was of M/s. Moore Associates Ltd. As such plaintiff No. 1 filed suit before the Federal High Court of Nigeria against M/s. Moore Associates Ltd. At that point of time, plaintiff No. 1 discovered that defendant No. 2 continues to export MALOXINE tablets to M/s. Moore Associates Ltd. despite termination of sub-contract manufacturing arrangement.

3. It is further alleged that after termination of the arrangement in November, 1991 plaintiff No. 1 entered into another sub contract with plaintiffs No. 2 and 3. In November, 1992 defendants No. 2 had issued to plaintiff No. 1 a cease and desist letter calling upon plaintiff No. 1 to cease and desist from manufacturing pharmaceutical preparation under the trademark MALOXINE. There was an exchange of correspondence and plaintiff No. 3 had categorically denied right of defendant No. 2 while reiterating the proprietary rights of plaintiff No. 1 in respect of brand name MALOXINE. Nothing was heard thereafter from defendant No. 2 and on 19.5,1998 defendant No. 2 issued a fresh cease and desist notice to plaintiff No. 2, which was forwarded to plaintiff No. 1 and instructions were thereafter issued to its attorney to send reply. On 4.6.1998, attorney of plaintiff No. 1 replied to the notice of defendant No. 2 dated 19.5.1998, inter alia, calling upon defendant No. 2 to concede the right of plaintiff No.1 in trademark MALOXINE and also its copyright in MALOXINE carton. No response was received from defendant No. 2, therefore, suit was filed in this Court.

4. On the miscellaneous application filed by the plaintiffs Along with the suit, learned Single Judge on 8.10.1998 passed an ex parte ad-interim order of injunction restraining the defendants from violating the trademark and copyright of the plaintiffs. The defendants filed application (IA 10313/98) seeking vacation of the ex parte order of injunction. By the impugned order learned Single Judge restrained the defendants from using a colour combination, which was deceptively similar to the plaintiffs MALOXINE carton but permitted the defendants to use trademark MALOXINE provided defendant No. 2 boldly mentions its name and address on all its packaging and promotional material.

5. As both parties felt aggrieved, these appeals were filed. Parties filed their written submissions also. On behalf of the 'plaintiff/appellant it was submitted that trademark registrations are held by appellant No. 1 and none by the defendants therefore, the priority of its use, conduct of parties and projection of the mark to the public collectively show that trademark MALOXINE belongs to plaintiff No. 1 and not to the defendants. Plaintiff No. 1 is the prior adopter and the date of adoption is July, 1991 whereas even as per the defendants own showing the date of adoption by them is November, 1991, though in reply and pleadings the defendants have claimed adoption since 22.3.1991. Plaintiff No. 1 invented and created the trademark MALOXINE. Defendant No. 2 affixed the trademark MALOXINE at the instance of plaintiff No. 1. Name of plaintiff No. 1 appeared on the product and packaging materials in conjunction with the mark MALOXINE. Plaintiff No. 1 exercised control over the nature and quality of the products manufactured by defendant No. 1. Customers perceive plaintiff No. 1 to be the entity, which stands behind the goods. Purchase orders were placed on the plaintiff No. 1 and it was plaintiff No. 1 who received complaints from the customers. Plaintiff No. 1 paid for advertising and promotional expenses and had spent over 3 million Nigerian dollars on advertising and promoting the mark MALOXINE. In view of the finding of learned Single Judge that the plaintiff was the owner of the trademark, delay ought not to have come in the way of grant of injunction since adoption of the mark by the defendants/respondents was dishonest and mala fide.

6. The case of the defendants as urged before us is that defendant No. 2 is a manufacturer of drugs in India. The Drugs and Cosmetics Act contemplates a manufacturing license and the name of a proprietary drug before it can be manufactured. The drug in question has market especially in Africa and is combination of active ingredients Sulphadoxine 500 mg and Pyrimethaminc 25 mg. Defendant No. 2 named the drug MALOXINE being a combination of aliment Malaria and active ingredient Sulphadoxine and got the license in March, 1991. Plaintiff No. 1 is only a trader based in Belgium and it imports and sells drugs. Defendant No. 2 was selling other drugs through its agent to the plaintiff. The plaintiff contacted agent of defendant No. 2 in October, 1991 for the drug of defendant No. 2 MALOXINE. Defendant No. 2 thereafter manufactured and exported the drug MALOXINE to the plaintiff, who expropriated the trademark MALOXINE and copied the art work of the carton, which defendant No. 2 had got made in India through an artist and started getting the same manufactured and selling the same through the competitors of the defendant, namely, Gracure Pharmaceuticals Ltd. and Shree Chem Laboratories. Therefore, defendant No. 2 served a notice to cease and desist in 1993. It was urged that the suit filed in 1998 by the plaintiff is on the basis of fabricated letter dated 23.11.1991, alleged to have been sent by the plaintiff, which is nothing but admissions in its own favor by which the plaintiff had asked defendant No. 2 to manufacture MALOXINE. Defendant No. 2 denied having received the said letter. It was contended that there was no prima facie case what to say a strong prima facie case in favor of the plaintiffs since there was no prior user, goods were not traded in India, therefore, there was no question of passing off.

7. On behalf of defendants it was further submitted that even the case set up in the plaint by the plaintiffs does not establish proprietorship in the trademark MALOXINE or the ownership of copyright in carton. One of the objections raised by the defendants was about the courts in India, especially this Court having territorial jurisdiction to entertain and try the suit. During the course of arguments on behalf of the defendants, it was vehemently urged that learned Single Judge was not justified in holding that this Court had territorial jurisdiction. On the face of it, the suit was not maintainable in this Court and the plaint ought to have been returned for presentation to the proper Court.

8. In order to decide this controversy as regards territorial jurisdiction, it will be necessary to take notice of the manner in which the plaintiffs alleged that this Court had territorial jurisdiction to entertain and try this suit. Paragraph 19 of the plaint alleged the manner in which cause of action had accrued to the plaintiff to file the suit in this court stating :-

"The cause of action for the present suit first arose in the month of November, 1993 when the defendant's attorneys addressed a cease and desist letter to the plaintiff No. 3. The cause of action once again arose in April, 1996 when the plaintiff No. 1 discovered that the defendant No. 2 was manufacturing MALOXINE for and on behalf of Moore Associates, Nigeria. The cause of action once again arose when the defendant No. 2 issued a fresh cease and desist letter in May, 1998 to the plaintiff No. 2. The cause of action is a continuous and recurring one and continues to subsist till such time the defendants are restrained by an order of injunction passed by this Hon'ble Court."

9. In paragraph 20 of the plaint, the plaintiff alleged about this Court having jurisdiction to entertain and try the suit by virtue of provisions of Section 62(2) of the Copyright Act, 1957 stating :-

"This Hon'ble Court has jurisdiction to entertain and try the present suit by virtue of the provisions of Section 62(2) of the Copyright Act, 1957 which is attracted as :-

i.      The copyright of the plaintiffs in MALOXINE carton is being infringed by the defendants ; and  
 

ii.      The plaintiffs carry on business in Delhi and one of them even has a
registered office in New Delhi.   
 

 Moreover this Hon'ble Court has jurisdiction to entertain and try the present suit as the defendant carries on business for the profit and gain in New Delhi within the jurisdiction of this Hon'ble Court."  
 

10. As noticed above, the plaintiffs have claimed in the suit a decree for permanent prohibitory injunction restraining the defendants from passing off or attempt-

ing to pass off a preparation for the treatment of malaria holding the trademark MALOXINE or any deceptive variant thereof and also restraining the infringement of copyright of plaintiff No. 1 in the artistic work comprised in the MALOXINE carton. 
 

11. Defendant No. 2 in its written statement while denying that the plaintiffs are the proprietor of the trademark MALOXINE or are owners of the copyright in the artistic works on the cartons used for packaging and that defendant No. 2 is proprietor and owner respectively of trademark MALOXINE and the copyright, raised a preliminary objection that this Court does not have jurisdiction to entertain and try the suit, since no violation of any of the alleged rights of the plaintiff either under the Trade and Merchandise Marks Act, Common Law or under Copyright Act has taken place within the jurisdiction of this Court. It was also pleaded that defendant No. 2 does not carry on business within the jurisdiction of this Court. Defendant No. 2 is situated at Mumbai. Goods are not sold within the territorial jurisdiction of this Court. Subject goods are not at all sold by any of the parties in India. The same are being traded in countries outside India. The defendant further urged that invocation of jurisdiction by the plaintiffs and relying on provisions of Section 62(2) of the Copyright Act, 1957 is misconceived. Plaintiff No. 1, in the plaint, had claimed itself to be the owner of the copyright and had claimed infringement of the same in the carton, which is a foreign company, not carrying on business within the territorial jurisdiction of this Court. Plaintiff No. 2, who is stated to be carrying on business within the territorial jurisdiction of this Court is not the owner of copyright in the artistic work on the carton since no right has been claimed in the plaint. There is also no agreement of assignee within the meaning of Section 19 of the Copyright Act, 1957 between plaintiff No, 1 and plaintiff No. 2. Nor there is any agreement of license between plaintiff No. 1 and plaintiff No. 2 within the meaning of the provisions of Section 30 and 30A of the Copyright Act, 1957, therefore plaintiff No. 2 not being entitled to copyright in any manner cannot claim infringement thereof nor can on that basis plaintiffs invoke court's jurisdiction under Section 62(2) of the Copyright Act, 1957. Not even a single paragraph in the plaint urged violation of common law rights of the plaintiffs in the trademark MALOXINE or violation of goodwill or reputation within territorial limits of India. Goods are not sold within territorial jurisdiction of this Court. Plaintiff No. 1 is a foreign company based in Belgium and is not carrying on business in this country.

12. To this objection of the defendants, it was urged on behalf of the plaintiff that defendant No. 2 does extensive business for profit and gain within the territorial jurisdiction of this Court and the present case involves infringement of copyright and that plaintiff No. 2 is residing at New Delhi and carrying on business for

profit and gain. Jurisdiction vests by virtue of Section 62(2) of the Copyright Act, 1957.

13. Learned Single Judge on the question of territorial jurisdiction of this Court, without going into the case set up by either of the parties observed :-

"However, prima facie there appears no doubt about territorial jurisdiction and more so in view of Souza Cruz v. N.K. Jain, 1995 PTR 97 : PTC (Suppl)(2) 892(Del)"

14. There is no other discussion in any other part of the impugned order about Court's jurisdiction.

15. Admittedly, the goods are being traded outside India and are not being traded in India and as such there is no question of infringement of trademark within the territorial limits of any Court in India what to say of Delhi. Emphasis was laid only on Section 62 of the Copyright Act, 1957 which reads :-"62.    Jurisdiction of Court over matters arising under this Chapter  
  

(1)      Every suit or other civil proceedings arising under this chapter in  respect  of the  infringement  of copyright  in  any work  or  the infringement of any other right conferred by this Act shall be instituted in the District Court having jurisdiction. 
 

(2)      For the purpose of Sub-section (1), a 'District Court having jurisdiction' shall, notwithstanding anything contained in the Code of Civil Procedure, 1908, or any other law for the time being in force, include a District Court within the local limits of whose jurisdiction, at the time of the institution of the suit or other proceeding, the person instituting the suit or other proceeding of, where there are more than one such persons, any of them actually and voluntarily resides or carries on business or personally works for gain."  
 

16. On a bare reading of Sub-section (2) of Section 62 of the Copyright Act, a suit in r.espect of infringement of copyright may be instituted in a Court within the local limits of whose jurisdiction, the person instituting the suit or other proceedings, actually and voluntarily resides or carries on business or personally works for gain. 
 

17. There is no copyright claim made either by plaintiff No. 2 or by plaintiff No. 3. Copyright is claimed only by plaintiff No. 1. Admittedly, plaintiff No. 1 neither resides nor carries on business or works for gain within any part of the territorial limits of any court in India. It is a foreign company based at Belguim. Sub-section (1) of Section 62 makes it clear that it overrides the provisions of the Code of Civil Procedure relating to jurisdiction of the Courts to the limited extent that the suit has to be instituted only in a District Court having jurisdiction, which for the purpose of Subsection (1) has been defined in Sub-section (2) to be a Court within the local limits of whose jurisdiction, at the time of institution of the suit or other proceedings, the person instituting the suit or other proceedings actually and voluntarily resides or carries on business or personally works for gain. Learned single Judge in the impugned order held that the work of art in the design of the carton was drawn in India by an artist through the defendant, for valuable consideration. At this stage, it may also be observed that the suit, which the plaintiffs had filed in Nigerian Court, in which ex-pane order of injunction had also been granted but later on injunction was vacated, was regarding passing off.

18. On the bare reading of the entire plaint it was not a case in which the plaint ought to have been entertained in this Court since this Court has no territorial jurisdiction, which fact was one of the basic requirement which ought to have been duly considered in accordance with law at the stage of grant of injunction. In case the court lacks territorial jurisdiction, the proper course would be to return the plaint and not to make any adjudication, even of a prima facie nature, whether there existed prima facie case or it would be appropriate to grant injunction. In case the Court has no territorial jurisdiction, the other questions need not be gone into by us.

19. Accordingly, while allowing the appeal of defendants/respondents [FAO (OS) No. 331/99] the impugned order in its entirely passed by the learned Single Judge including its observations that the Court has territorial jurisdiction to try the suit is set aside and as a result thereof the entire order would stand set aside holding that since the Court has no territorial jurisdiction, the application under Order 39 Rules 1 and 2 CPC filed by the plaintiffs is not maintainable. The plaint is ordered to be returned to the plaintiff for presentation before appropriate Court. Resultantly, the appeal [FAO (OS) 306/99] is dismissed as rendered infructuous.