Koninklijke Philips Electronics ... vs Smt. Kanta Arora And Ors.
2005 Latest Caselaw 846 Del

JUDGMENT

T.S. Thakur, J.

1. This suit for permanent injunction, passing off, damages, rendition of accounts and delivery up etc., was accompanied by an application for ad-interim injunction, in which the defendants expressed their willingness to give up the trade mark "PHILIPS", provided reasonable time was granted to them to change over to a new trade mark. On behalf of the plaintiff's that proposal was accepted and time till 31st March, 2002 given to the defendants to adopt a distinctively dis-similar trade mark, shortly after the order of this Court dated 4th April, 2002 in which that arrangement was recorded, defendant No. 1 appeared to repudiate the same. This changed stance on the part of the defendants was viewed by this Court as an attempt to over-reach the process of law with the result that a notice was issued to defendants No. 1 & 3 to show cause why appropriate action under the Contempts of Courts Act be not initiated against them. The Court also prima facie felt satisfied that a case for issue of an ad-interim injunction was made out by the plaintiffs, restraining the defendants from manufacturing, selling or offering for sale its product under the trade mark "PHILIPS" and from passing off the goods manufactured by it as that of the plaintiff's. The defendants have in IA No. 6363/2002, sought vacation of the said interim order.

2. The factual backdrop in which the controversy arises at may be summarised as under:

3. Plaintiff No. 1 company is incorporated under the Dutch laws. Plaintiff No. 2 is an Indian company incorporated under the Indians Companies Act in which 83% equity share is held by plaintiff No. 1. The parent company has permitted its subsidiary to sue the registered trade marks, which inter-alia consist of the word "PHILIPS" in respect of the goods manufactured or marketed by the said company. The user is, however, under strict supervision and control of plaintiff No. 1, owner of the trade mark.

4. The plaintiffs case as set out in the plaint is that plaintiff No. 1 company was established in the year 1891 under the name of "Philips & Co.". It has, over 107 years of its existence, grown to become one of the world's biggest electronic company, producing a variety of electrical and non-electrical goods including all kinds of lighting products, radio and television transmitting and receiving apparatus and equipments, electric clocks and clock radios, etc. The range of products manufactured by the plaintiff company includes electric household kitchen appliances such as mixers, grinders, toasters, grill baking ovens, hand mixers, coffee makers, electric kettles, juicers etc. The trade mark "PHILIPS" inside shield device was adopted by the first company in or about 1911. In the year 1938 it adopted the trade mark "PHILIPS SHIELD EMBLEM". Both these marks are the house marks of the parent company and represent the trading style of plaintiff No. 1 and have been used since their adoption and in connection with the manufacture and sale of practically all products manufactured by the said company. With its operations in more than 60 countries of the world and employees numbering more than 1,92,000 and with global sales turn over running into billion of US Dollars, plaintiff No. 1 company is one of the world's biggest electronic companies apart from being the largest company in Europe.

5. Plaintiff No. 2 was incorporated in India as "Philips Electrical Company (India) Ltd.", which was later changed to "Philips India Pvt. Ltd." in the year 1956. The present name of the said plaintiff was adopted in the year 1993. The company has been manufacturing electrical and electronic goods and has been using "PHILIPS" and "PHILIPS SHIELD EMBLEM" trade marks for its products. The plaintiff's claim that "PHILIPS" is recognised as one of the most trusted brands of India and ranks 25 of a total of 50 such brands and is also recognised by the magazine and newspaper as one of the world's most valuable brands.

6. The plaintiffs' case is that its trade mark "PHILIPS" and also trade mark consisting of a device of a shield with the word "PHILIPS" at the top and the circle device at the bottom, which device is bisected horizontally by three wavy lines with device of two stars on top left and device of two stars at the bottom right, are registered in various countries including India since 1943 in respect of goods falling under various classes. For the purposes of the present suit, the plaintiff has in particular referred to its trade mark registration No. 145532 in Class 21 with "PHILIPS SHIELD EMBLEM". In this Class apart from other items kitchen utensils and non-electric are also included. It also refers to registration No. 81810 PHILIPS (word) in Class 11 which too is held by the plaintiff companies for small domestic utensils and containers. All these registrations are current as is evident from the documents placed on record.

7. The plaintiffs' case now is that plaintiff No. 1, through plaintiff No. 2, has been selling goods under the mark "PHILIPS" for over 70 years in India. On account of excellent quality of the products known for their reliability and performance coupled with advertising and sales promotional efforts, the trade mark "PHILIPS" is distinctive and dominant part of the corporate name of the plaintiff company and is therefore, noticed by the public with each and every activity of the parent company. The plaint also refers to registrations, which the parent company holds in various Classes in various countries of the world. The world's sales figure running into millions of US Dollars have been disclosed in the plaint so also the promotional efforts made by the company for popularization of its products under its trade mark "PHILIPS" have been extensively referred to. This process of advertising the products under the trade mark "PHILIPS" is a continuous affair which has become exclusively associated in the minds of the general consumer public with the products manufactured by plaintiffs and have thus attained considerable goodwill and reputation.

8. The second plaintiff in the suit has been manufacturing and selling large variety of household (kitchen) appliances apart from electric and electronic goods like sandwich toasters, toasters, grill baking ovens, hand mixers, coffee makers, electric, etc. all of which are treated as kitchen appliances in the trade. The companies have also, during 1994-99, been selling electric rice cookers bearing the trade mark "PHILIPS" as one of the kitchen appliances. It has plans to sell rice cookers and pressure cookers under its trade mark "PHILIPS". The plaint also refers to the vigilance of the plaintiff in protecting their statutory and proprietary rights in the trade mark "PHILIPS" in respect of identical as well as allied and cognate goods. The plaintiff's have been taking actions against all those, who have attempted to copy and mis-use its trade mark "PHILIPS" or its logo. Details of the suits filed by the plaintiffs, against different parties who have infringed the trade mark or tried to pass off goods, have also been given in the plaint.

9. Plaintiffs' grievance in the above backdrop is that in the month of June 1992 it came to know that the trade mark "PHILIPS" had been advertised before acceptance in the Trade Mark Journal in the name of M/s. Kumar Enterprises. The said trade mark application was opposed, inter alia, on the ground that the user of the trade mark "PHILIPS" by the defendants was dishonest. The Assistant Registrar of Trade Marks, however, dismissed the objections raised by the plaintiff's and their predecessor companies against which order the plaintiff's preferred an appeal before this Court. Registrar of Trade Marks had despite the pendency of the said appeal granted the registration certificates in favor of defendant No. 1.

10. While the appeal preferred by the plaintiff's was pending they came to know that defendants No. 1 to 3 were advertising on cable television channels their products, i.e., pressure cookers for sale under the trade mark "PHILIPS". The adoption and use of an identical trade mark by the defendants in respect of the same/allied and cognate goods is according to the plaintiff's not only tantamount to infringement of the plaintiff's right but is bound to create confusion and deception in the minds of the consumer public. The unwary consumers are most likely to believe that the pressure cookers being sold by the defendants under the trade mark "PHILIPS" is a product manufactured by the plaintiffs. Any such sales would not only amount to commercial dishonesty but also injure fair name and reputation of the plaintiffs, who are known for high quality and reliability of their products. The use of "PHILIPS" as a trade mark by the defendants has in that view become an instrument of fraud in the hands of dealers appointed by the defendants, and shopkeepers, who are passing off their inferior goods as that of the plaintiffs. The plaint and the accompanying interim application in the light of these averments seek a prohibitory injunction against the defendants, restraining the defendants, their agents and partners, shopkeepers, dealers and distributors from manufacturing, selling, offering for sale, either directly or indirectly pressure cookers or the trade mark "PHILIPS" or any other trade mark, which may be identical or deceptively similar to the said trade mark.

11. The defendants have in the written statement filed by them set up delay in the filing of the suit as a defense. According to the defendants they have been continuously, openly and extensively using the trade mark "PHILIPS" since the year 1984. They in support place reliance upon the registration of the trade mark "PHILIPS" in their name. The defendants allege that so long as they have the statutory protection of registration Section 28 of the Trade and Merchandise Act, 1958 entitles them to use the trade mark. They also place reliance upon a copyright registration in support of their claim to use the trade mark "PHILIPS". It is submitted that since the plaintiffs are not manufacturing or selling rice cookers and pressure cookers they cannot prevent the defendants from manufacturing or selling the same under the trade mark "PHILIPS" as they have been doing for the past many years. The application for grant of ad-interim injunction has been similarly opposed by the defendants and a prayer for vacation of the interim order already granted made by them.

12. I have heard learned counsel for the parties at considerable length and perused the record.

13. Two questions primarily arise for consideration. The first is: whether the defendants hold a valid registration of the trade mark "PHILIPS" in their favor and can therefore oppose the prayer for injunction against them preventing its use qua their products. The second question is: whether the defendants can use the trade mark "PHILIPS" which is identical to the trade mark under which the plaintiffs have been marketing their wide range of their products including kitchen utensils. I shall deal with the questions ad seriatim.

It is true that the plaintiffs had secured a registration for the trade mark "PHILIPS" in respect of pressure cookers included in Class 21 of the Fourth Schedule to the rules framed under Trade and Merchandise Act, 1958, despite the opposition of the plaintiffs but it is equally true that the registration of the said trade mark could not affect the right of the plaintiffs' to bring an action for passing off against the defendants having regard to the provisions of Section 27(2) of the Act, aforementioned. Section 27(2) makes it abundantly clear that registration of a mark in the trade mark registry is irrelevant in an action for passing off and the mere presence of the mark in the register maintained by the trade mark registry does not prove its user by the person in whose name the same has been registered. The legal position in this connection is settled by two Division Bench decisions of this Court in Century Traders v. Roshan Lal Duggar & Co. and N.R. Dongre v. Whirlpool Corporation .

15. In N.R. Dongre's case (supra), one of the questions that fell for consideration was whether an action for passing off could be maintained against the registered proprietor of a trade mark. Reliance was, on behalf of the owner of the trade mark, placed upon the provisions of Section 28(1) of the Act to argue that the registration of the trade mark gave to the registered proprietor an absolute right to use the trade mark in relation to the goods in respect of which the trade mark was registered and to prevent infringement of the trade mark in the manner provided under the Act. The Court repelled that contention and held that the words "subject to the other provisions of the Act", appearing in Section 28(1), made it clear that the right conferred on a trader was not an indefeasible right as the same was expressly made "subject to the other provisions of the Act". The Court also relied upon Section 27(2) of the Act which provides that nothing in the Act shall be deemed to affect the right of action against any person for passing off the goods or the remedies thereof. The Court summed up the legal position thus:

"The rights of action under Section 27(2) are not affected by Section 28(3) and Section 30(1)(d). Therefore, registration of a trade mark under the Act would be irrelevant in an action for passing off. Registration of a trade mark in fact does not confer any new right on the proprietor thereof than what already existed at common law without registration of the mark. The right of goodwill and reputation in a trade mark was recognised at common law even before it was subject of statutory law. Prior to codification of trade mark law there was no provision in India for registration of a trade mark. The right in a trade mark was acquired only by use thereof. This right has not been affected by the Act and is preserved and recognised by Sections 27(2) and 33.

The law of 'passing off as it has developed, permits an action against a registered proprietor of a trade mark for its mendacious use of inducting and misleading the consumers into thinking that his goods are the goods of or are connected with the goods of a prior user of the trade mark. It seems to us that in so far as this Court is concerned, this position cannot be disputed in view of the judgment of the Division Bench in Century Trade v. Roshan Lal Duggar & Co., AIR 1978 Delhi 250."

16. It is, in the light of the above pronouncement, futile for the defendants to ague that the existence of a registration in their favor would entitle them to use the trade mark in the teeth of the rights, which the plaintiffs may have qua such trade marks on account of prior user. The plaintiff's right to seek an injunction against passing off as noticed above remains unaffected by any such registration.

17. There is another aspect that renders the contention urged on behalf of the defendants wholly specious. The order passed by the Assistant Registrar granting registration of the trade mark "PHILIPS" in favor of the defendants was, as seen earlier, challenged by the plaintiffs in appeal before this Court, which was eventually transferred to Intellectual Property Appellate Board for disposal. The said Board, relying upon the decisions of this Court in Daimler Benz Aktiegesellschaft and Anr. v. Hybo Hindustan and Honda Motors Co. Ltd. v. Charanjit Singh and Ors 2003 (26) PTC 1 (Delhi), has come to the conclusion that the trade mark of the plaintiffs' being a globally renowned and reputed mark, use of an identical mark by anybody else even in respect of goods which were not manufactured by the plaintiffs would create confusion in the minds of the purchasers. In Honda's case (supra), the owner of the trade mark had established itself in the field of automobiles and power equipment, while a similar mark was being used by the defendants for the pressure cookers manufactured by them. In the case of Daimler Benz (supra) the mark was being used by the defendants for sale of garments although the manufactures of Mercedes Benz were neither manufacturing or selling any garment, leave alone under-garments.

18. The very fact that the plaintiff was itself not engaged in the manufacture or sale of pressure cookers was therefore considered wholly irrelevant and the order passed by the Assistant Registrar of Trade Marks, granting registration of the same mark to the defendants for sale of pressure cookers reversed. The net result, therefore, is that the registration which the defendants had secured in their favor also stands withdrawn by the Appellate Authority. There is in that view nothing for the defendants to fall back upon in support of their claim to use the trade mark "PHILIPS".

An action for passing off was recognized at common law based on the prior user of a trade mark by the plaintiff to prevent its imitation or misuse by the defendants. The law thus recognised a trade mark as a valuable right even before the statues on the subject did so. The legal position in regard to the availability of the right by reason of prior user or the remedies open to the party, who has made such use has not undergone any material change enactment of specific provisions notwithstanding. These provisions no doubt provide for registration of trade marks and recognize the rights of the owner thereof to use the same but what is significant is that mere registration does not in itself prevent a prior user from restraining use of his trade mark by any other person including one who may have got the same registered in his name. Two crucial question therefore, arise in all cases of passing off. These are: (i) whether the trade mark in dispute has been in use by the plaintiff prior in point of time, and (ii) whether the trade mark being used by the defendants is identical or deceptively similar to the one used by the plaintiff so as to create any confusion in the mind of the consumer public.

20. The essence of the action in passing off lies in the need to maintain commercial honesty. No trader can use a trade mark to market its goods by creating a deception or confusion in the mind of a consumer with ordinary memory and power of recall. The Court may while examining the prayer for injunction also keep in mind whether the defendants had any particular reason for adopting a trade mark which is phonetically or otherwise identical or deceptively similar to that of the plaintiff. In the absence of any such reason, it may draw an inference that the use or the creation of a trade mark so similar as to create deception in the mind of the customer was actually intended to benefit from the goodwill and the reputation of the party who had used such mark prior in point of time.

21. Coming then to the facts of the present case it is evident that the plaintiff company is a globally reputed company. Its trade mark "PHILIPS" has been used for nearly 100 years for a variety of products. It has earned a goodwill and reputation worldwide for the reliability of its products which are now identified by its trade mark. Anyone looking at a product which carries the "PHILIPS" trade mark is lured to believe that it is a product manufactured by the plaintiff and can therefore, be trusted for its quality and reliability. The very fact that the plaintiff is not itself manufacturing pressure cookers is in my opinion wholly besides the point. The question is not whether the plaintiff also is manufacturing and marketing the very same product. The question is whether the product which the defendants are marketing can by reason of the deception of the trade mark under which it is sold, be taken by the consumer public as a product manufactured by the plaintiff. Just as Mercedes Benz could in Daimler Benz Aktiegesellschaft and Anr. v. Hybo Hindustan, (supra) prevent use of Benz as a trade mark for under-garments even when Mercedes Benz was not itself engaged in the business of manufacturing or selling under-garments and just as Honda could in Honda Motors Co. Ltd. v. Charanjit Singh and Ors., (supra) prevent sale of pressure cookers even when it was engaged in the business of manufacture and sale of automobile and power equipment only so also "PHILIPS" even when it is not manufacturing non-electric pressure cookers can prevent the defendants from using its trade mark for the sale of such pressure cookers. This is especially so when the plaintiff is engaged in the business of allied and cognate consumer products like kitchenware and electric pressure cookers. It is in that background not unreasonable to assume that a consumer with his ordinary knowledge, perceptions and memory is likely to believe that the plaintiff has extended its manufacturing activities to non-electric pressure cookers also for otherwise there is no reason why its world-known trade mark is being used on such products.

22. In the totality of these circumstances therefore, I have no difficulty in holding that the order of injunction already passed by this Court deserves to be made absolute. I order accordingly. IA No. 875/2002 under Order XXXIX Rules 1 & 2 CPC shall stand allowed while IA No. 6363/2062 under Order XXXIX Rule 4 CPC shall stand dismissed.