Pernod Ricard S.A.France & ... vs Rhizome Distilleries Pvt. Ltd. & ...
2008 Latest Caselaw 1959 Del

                                          REPORTED
*      IN THE HIGH COURT OF DELHI AT NEW DELHI

+      I.A. No.13426/2008 in CS(OS) 2314/2008

                            DATE OF DECISION: November 06, 2008

       PERNOD RICARD S.A FRANCE, & ANR                   ..... Plaintiffs
                       Through: Mr. Hemant Singh, Ms. Mamta R. Jha
                               and Mr. Manish K. Mishra, Advocates
                versus

       RHIZOME DISTILLERIES PVT. LTD. & ORS           ..... Defendants
                     Through: Mr. M.S. Ganesh, Sr. Advocate with
                              Mr. K. Seshachary and Mr. Manish
                              Gandhi, Advocates

       CORAM:
       HON'BLE MS. JUSTICE REVA KHETRAPAL

1.     Whether reporters of local papers may be allowed
       to see the judgment?
2.     To be referred to the Reporter or not?

3.     Whether judgment should be reported in Digest?

:      REVA KHETRAPAL, J.

1. The present action has been filed by the plaintiffs for permanent

injunction against the defendants restraining infringement of its registered

trademark, copyright, passing off, rendition of accounts of profit/damages,

delivery up, dilution, unfair competition, etc. against the defendants.

FACTS

2. The material facts are not in dispute. The plaintiffs are a part of the

'Groupe Pernod Ricard', a group of companies held by Pernord Ricard S.A., the

plaintiff No.1 herein. The plaintiffs No.2 and 3 are the ultimate subsidiaries of

the plaintiff No.1. The 'Groupe Pernod Ricard' features as one of the two

leading players of the world in the spirits and wine market having presence in

many countries of the world. Its products are sold under various

internationally renowned and acclaimed brands such as ROYAL SALUTE,

CHIVAS REGAL, 100 PIPERS, BALLANTINES, BEEFEATER, CLAN

CAMPBELL, SOMETHING SPECIAL, THE GLENLIVET, MALIBU,

KALHUA, WILD TURKEY, JAMESON, PERNOD, RICARD, JACOB'S

CREEK, MARTELL, BLENDERS PRIDE, PASSPORT, HAVANA CLUB,

etc. Apart from the aforesaid famous international brands, the plaintiff No.1

through its subsidiaries, the plaintiffs No.2 and 3 owns locally acclaimed

brands such as IMPERIAL BLUE and ROYAL STAG, which are subject

matter of the present proceedings.

3. The plaintiffs claim to have adopted and used the trademark

IMPERIAL BLUE for the sale of their whisky in India continuously and

uninterruptedly since the year 1997. The turnover of the said product for the

year 2007 was over Rs.317 crores, while the promotional expenses are claimed

to be over Rs.13 crores per annum. Sales invoices from the year 1997 onwards

have been placed on record by the plaintiffs (262 in number). In order to

obtain statutory protection for its trademark IMPERIAL BLUE, the plaintiff

No.1 applied for and obtained registration for the said trademark in several

countries, including India. The plaintiff No.3, the wholly owned subsidiary of

the plaintiff No.1, also adopted the mark IMPERIAL RED for another

variety of grain spirit blended with imported malt and obtained registration of

the said trademark in Class 32 on 17th August, 2005. The aforementioned

trademark registrations are valid, subsisting and in full legal force. Hence, the

plaintiffs claim that the use of the trademark IMPERIAL, in conjunction with

any other mark signifying colour, indicates that the goods originated from the

plaintiffs, and accordingly the use of the trademark IMPERIAL may lead to

confusion or deception in the minds of consumers about a nexus or trade

connection between such business and the business of the plaintiffs, leading to

the passing off such unauthorised products for those originating from the

plaintiffs.

4. Yet another whisky manufactured and marketed by the plaintiff No.3 is

under the trademark ROYAL STAG, which is another popular whisky in the

lower price segment. The plaintiff No.3 is a licensed user thereof in India

since the year 1995. The plaintiff No.2 is the proprietor of the trademark

ROYAL STAG, which is a coined mark having no significance or meaning in

common parlance. The plaintiff No.2 applied for and obtained registration of

the trademark ROYAL STAG internationally as well as in India under

various classes and registrations numbers as set out in paragraph 14 of the

plaint. The aforesaid registrations are valid and subsisting till date. ROYAL

STAG has an annual turnover of over Rs.644 crores, while promotional

expenses are claimed to be in the sum of Rs.38 crores. Sales invoices to show

the use of the mark since the year 1995 have been placed on record.

5. According to the plaintiffs, the ROYAL STAG whisky has been

marketed by the plaintiffs No.2 and 3 for the past over a decade under a

distinctive label and trade dress. The aforesaid label and trade dress constitute

an original artistic work within the meaning of Section 2(c) of the Copyright

Act, 1957. The plaintiff No.2 is the owner of the copyright in the said artistic

work under the provisions of Section 17 of the Copyright Act, 1957, thereby

having exclusive right to use and reproduce the same. On account of extensive

trade usage since 1995, the plaintiffs' trademark comprising ROYAL STAG

label and the trade dress have become distinctive of the whisky marketed by

and originating from the plaintiffs in the minds of the consumers at large. The

trade dress and the overall get up of the plaintiffs' ROYAL STAG whisky

bottle and the accompanying label constitute trademark within the meaning of

Section 2(1)(m) read with Section 2(1)(zb) of the Trade Marks Act, 1999.

6. The plaintiffs' grievance is that though the plaintiffs are the prior users

and proprietors of the trademark IMPERIAL BLUE and the said trademark

has become distinctive of the plaintiffs' liquor business, which enjoys

formidable goodwill and reputation in the market, the defendants have

infringed the plaintiffs' trademark IMPERIAL BLUE by adopting the

trademark IMPERIAL GOLD and that too by using the trade dress, get up,

colour combination and label of ROYAL STAG, thus committing acts of

infringement of trademark and passing off. The defendants are thereby trading

upon the goodwill and reputation built up by the plaintiffs in the aforesaid two

products.

7. It is claimed that a glance at the defendants' IMPERIAL GOLD label

and trade dress, and at the plaintiffs' IMPERIAL BLUE label and the overall

trade dress of the plaintiffs' ROYAL STAG whisky, clearly establish the

overall deceptive similarity between the two products, which is delineated in

paragraph 24 of the plaint as follows:

"(i) The defendants have adopted the trade mark IMPERIAL GOLD for their whisky which is an imitation of and is structurally as well as phonetically deceptively similar to the plaintiffs' reputed trade mark IMPERIAL BLUE and registered trade mark IMPERIAL RED;

(ii) The defendants have further deliberately imitated the overall trade dress of the plaintiffs' ROYAL STAG whisky bottle, such as the shape and design of the botle, the colour combination and overall get up of ROYAL STAG label. The plaintiffs are not claiming proprietory right in any individual features which form

part of the trade dress but together, they constitute distinctive trade dress. The defendants have also not copied any individual feature, but copied all the features that collectively distinguish plaintiffs' trade dress;

(iii) The defendants' bottle has a label affixed upon the front and rear panels having same colour combination of cream, burgundy and golden as that of ROYAL STAG label;

(iv) The front panel depicts two thick ribbon devices having burgundy colour background and golden border upon which the trade mark IMPERIAL GOLD is represented in cream colour in bold capital letters in the same manner as that on ROYAL STAG label;

(v) The rear panel label also has same size, cream background with ribbon devices as that appear on plaintiffs' bottle;

(vi) The defendants are in fact using plaintiffs' ROYAL STAG used and discarded bottles after purchasing them from kabariwalas which is a stamp of seal on the fraudulent intention and conduct of the defendants."

8. The adoption and use of the trademark IMPERIAL GOLD by the

defendants alongwith the adoption and use of the trade dress pertaining to the

plaintiffs' ROYAL STAG product by the defendants, according to the

plaintiffs, is thus evidently dishonest, malafide and fraudulent in nature and

with a view to practice confusion and deception on consumers at large. The

defendants are conspiring, selling and abetting sale of sub-standard whisky

under the trademark, label and trade dress which are deceptively to those of the

plaintiffs, and which have no connection or nexus whatsoever with the goods

or business of the plaintiffs. The sole motive of the defendants is to mislead

the consumers and to trade upon the goodwill and reputation that vest in the

trademark IMPERIAL BLUE (word) and the "ROYAL STAG" label of the

plaintiffs.

9. The plaintiffs claim to have come across the trademark registration

applications filed by the defendant No.1 for registration of trademarks

RHIZOME'S IMPERIAL WHITE (No.1374617), RHIZOME'S IMPERIAL

RED (No.1374616) and RHIZOME'S IMPERIAL GREEN (No.1374618), all

advertised together in the Trade Marks Journal No.1372 (Regular) dated 16th

July, 2007 towards the end of October, 2007. All the three applications were

opposed by the plaintiff No.1 vide Opposition Nos.719925 (RHIZOME'S

IMPERIAL RED), 719924 (RHIZOME'S IMPERIAL GREN) and 719923

(RHIZOME'S IMPERIAL WHITE), all dated 15th February, 2008. Before

filing the notice of opposition, the plaintiffs, through their marketing network

and sales representatives, made all efforts to find out from the liquor market in

India whether any alcoholic beverages under the aforesaid trade names were

available for sale, but no such goods were reported to be found. Accordingly,

the plaintiffs decided to await adjudication of the opposition proceedings,

which are still pending before the Registrar.

10. On 16th February, 2008, however, the plaintiffs came across yet another

application for registration of the trademark Rhizome's IMPERIAL GOLD

whisky label vide trademark application No.1454195, advertised in the Trade

Mark Journal 1386 Suppl. (1) dated 16.02.2008. The plaintiff No.1filed notice

of opposition to the said application before the Registrar of Trademarks on

16.06.2008. Once again, the plaintiffs made attempts to verify whether any

whisky under the impugned Rhizome's IMPERIAL GOLD label is being sold

in any market in India, but it was only in the second week of September, 2008

that the plaintiffs came across the infringing bottle of the defendant No.1

bearing the impugned Rhizome's IMPERIAL GOLD, a sample whereof was

obtained from the Hyderabad and Delhi markets. The plaintiffs were shocked

to learn that the defendants had not only copied the overall colour combination

and get up of the ROYAL STAG label and the trade dress thereof, but had

even used the ROYAL STAG bottles of the plaintiffs for sale of Rhizome's

IMPERIAL GOLD whisky. The plaintiffs filed their opposition, to which the

defendant No.1 filed its counter-statement before the Registrar. The

opposition proceedings are stated to be pending before the Registrar and are

yet to be adjudicated upon. The plaintiff No.1 also claims to have filed

rectification petition before the Intellectual Property Appellate Board (IPAB),

Chennai seeking cancellation of the trademark registration No.1161682 of the

defendant No.1. The said proceedings are also pending adjudication.

11. The present suit has been instituted on 3rd November, 2008 during the

pendency of the aforesaid proceedings. A caveat having been filed by the

defendants, and the defendants having appeared as caveators on the very first

day of hearing, that is, 5th November, 2008 and filed Affidavit in opposition to

the grant of injunction order in favour of the plaintiffs, Mr. Hemant Singh, the

learned counsel for the plaintiffs and Mr. M.S. Ganesh, the learned senior

counsel for the defendants have been heard at length on the aspect of grant of

injunction.

Contentions of the plaintiffs

12. The learned counsel for the plaintiffs submits that there is ample

evidence on record to show that the plaintiffs are the prior users and

proprietors of the trademark IMPERIAL BLUE since the year 1997, as

evidenced from the sheaf of invoices (262 in number) placed on record with

the plaintiffs' documents. The defendants on the strength of registration of the

trademark Rhizome's IMPERIAL GOLD and their claim of having obtained

copyright registrations (of which no copies have been filed) cannot be allowed

to trade upon the enviable goodwill and reputation built up by the plaintiffs for

their products IMPERIAL BLUE and ROYAL STAG. None of the

registrations, assuming they exist, whether trademark or copyright, provide any

defence to the action for passing off, which entitles the plaintiffs to an order of

interim injunction. The learned counsel also submits that though the suit is for

infringement of trademark as well as for passing off, for the purposes of the

interlocutory application, the plaintiffs are pressing for injunction on account

of passing off alone, and the relief of injunction may be granted in favour of

the plaintiffs and against the defendants on account of passing off. Thus

viewed, the registration obtained by the defendants, whether considered valid

or invalid in the cancellation proceedings, has no relevance to the cause of

action of passing off, as held by the Division Bench of this Court in the case of

N.R. Dongre and Ors. vs. Whirlpool Corporation and Ors., AIR 1995 Delhi

300.

13. According to the learned counsel for the plaintiffs, the test of overall

similarity as delineated by a three Judge Bench of the Supreme Court in the

case of Parle Products (P) Ltd. vs. J.P. & Co., Mysore, AIR 1972 SC 1359 is

the relevant deciding factor. Reference is made in this regard to paragraphs 8

and 9 of the judgment, which read as follows:-

"8. According to Kerly's Law of Trade Marks and Trade Names (9th Edition Paragraph 838):

"Two marks, when placed side by side, may exhibit many and various differences, yet the main idea left on the mind by both may be the same. A person acquainted with one mark, and not having the two side by side for comparison, might well be deceived, if the goods were allowed to be impressed with the second mark, into a belief that he was dealing with goods which bore the same mark as that with which he was acquainted. Thus, for example, a mark may represent a game of football; another mark may

show players in a different dress, and in very different positions, and yet the idea conveyed by each might be simply a game of football. It would be too much to expect that persons dealing with trade marked goods, and relying, as they frequently do, upon marks, should be able to remember the exact details of the marks upon the goods with which they are in the habit of dealing. Marks are remembered rather by general impressions or by some significant detail than by any photographic recollection of the whole. Moreover, variations in detail might well be supposed by customers to have been made by the owners of the trade mark they are already acquainted with for reasons of their own.

9. It is therefore clear that in order to come to the conclusion whether one mark is deceptively similar to another, the broad and essential features of the two are to be considered. They should not be placed side by side to find out if there are any differences in the design and if so, whether they are of such character as to prevent one design from being mistaken for the other. It would be enough if the impugned mark bears such an overall similarity to the registered mark as would be likely to mislead a person usually dealing with one to accept the other if offered to him."

14. It is further contended that as far as "deceptive similarity" is concerned,

it should be borne in mind that the similarity may be visual or phonetic or both,

and the consumers to be considered are the ones having average intelligence

and an imperfect recollection. Reliance is placed, in this context, upon the test

of imperfect recollection as adumbrated by the Supreme Court in Amritdhara

Pharmacy vs. Satya Deo Gupta, AIR 1963 SC 449 and in particular on

paragraphs 7 to 9 of the said judgment, which read as follows:-

"7. It will be noticed that the words used in the sections and relevant for our purpose are "likely to deceive or cause confusion". The Act does not lay down any criteria for determining what is likely to deceive or cause confusion. Therefore, every case must depend on its own particular facts, and the value of authorities lies not so much in the actual decision as in the tests applied for determining what is likely to deceive or cause confusion. On an application to register, the Registrar or an opponent may object that the trade mark is not registrable by reason of clause (a) of Section 8, or sub-section (1) of Section 10, as in this case. In such a case the onus is on the applicant to satisfy the Registrar that the trade mark applied for is not likely to deceive or cause confusion. In cases in which the tribunal considers that there is doubt as to whether deception is likely, the application should be refused. A trade mark is likely to deceive or cause confusion by its resemblance to another already on the Register if it is likely to do so in the course of its legitimate use in a market where the two marks are assumed to be in use by traders in that market. In considering the matter, all the circumstances of the case must be considered. As was observed by Parker, J., in Re Pianotist Co.'s Application, (1906) 23 RPC 774, which was also a case of the comparison of two words-

"You must take the two words. You must judge them, both by their look and by their sound. You consider the goods to which they are to be applied. You must consider the nature and kind of customer who would be likely to buy those goods. In fact you must consider all the surrounding circumstances; and you must further consider what is likely to happen if each of those trade marks is used in a normal way as a trade mark for the goods of the respective owners of the marks." (p. 777) For deceptive resemblance two important questions are: (1) who are the persons whom the resemblance must be likely to deceive or confuse, and (2) what rules of comparison are to be adopted in judging whether such resemblance exists.

As to confusion, it is perhaps an appropriate description of the state of mind of a customer who, on seeing a mark

thinks that it differs from the mark on goods which he has previously bought, but is doubtful whether that impression is not due to imperfect recollection. (See Kerly on Trade Marks, 8th Edition, p. 400.)

8. Let us apply these tests to the facts of the case under our consideration. It is not disputed before us that the two names 'Amritdhara' and 'Lakshmandhara' are in use in respect of the same description of goods, namely a medicinal preparation for the alleviation of various ailments. Such medicinal preparation will be purchased mostly by people who instead of going to a doctor wish to purchase a medicine for the quick alleviation of their suffering, both villagers and townsfolk, literate as well as illiterate. As we said in Corn Products Refining Co. v. Shangrila Food Products Ltd., (1960) 1 SCR 968 : (AIR 1960 SC 142) the question has to be approached from the point of view of a man of average intelligence and imperfect recollection. To such a man the overall structural and phonetic similarity of the two names 'Amritdhara' and 'Lakshmandhara' is, in our opinion, likely to deceive or cause confusion...................................." "9. We agree that the use of the word 'dhara' which literally means 'current or stream' is not by itself decisive of the matter. What we have to consider here is the overall similarity of the composite words, having regard to the circumstance that the goods bearing the two names are medicinal preparations of the same description. We are aware that the admission of a mark is not to be refused, because unusually stupid people, "fools or idiots", may be deceived. A critical comparison of the two names may disclose some points of difference, but an unwary 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 medicine he is looking for with a somewhat vague recollection that he had purchased a similar medicine on a previous occasion with a similar name. The trade mark is the whole thing - the whole word has to be considered. In the case of the application to register "Erectiks" (opposed by the proprietors of the trade mark 'Erector') Farwell, J., said in

William Bailey (Birmingham) Ltd.'s Application, (1935) 52 R.P.C. 136:

"I do not think it is right to take a part of the word and compare it with a part of the other word; one word must be considered as a whole and compared with the other word as a whole.............. I think it is a dangerous method to adopt to divide the word up and seek to distinguish a portion of it from a portion of the other word."

15. Applying the test of deceptive similarity as laid down by the Supreme

Court, the learned counsel for the plaintiffs contends that a clear case of

passing off is made out and the defendants ought to be injuncted forthwith not

only to protect the business interest, goodwill and reputation of the plaintiffs,

but also so as to protect the members of the public from the acts of deception

of the defendants. He further submits that the grant of injunction is necessary

if it prima facie appears to the Court that the passing off action is maintainable,

but injunction is imperative if it prima facie appears that the adoption of the

mark was itself dishonest. [Midas Hygiene Industries (P) Ltd. and Anr. vs.

Sudhir Bhatia and Ors. (2004) 3 SCC 90].

16. Reliance is also placed by learned counsel for the plaintiffs on a

judgment of the House of Lords in Office Cleaning Services, Ld. vs.

Westminster Window and General Cleaners, Ld., 63 RPC 39 and, in

particular, on the following observations made therein:-

"Confusion innocently caused will yet be restrained. But if the intention to deceive is found, it will be readily inferred that deception will result. Who knows better than the trader

the mysteries of his trade?....................................."

17. Learned counsel also seeks rely upon the following observations made

by the Supreme Court in the case of Laxmikant V. Patel vs. Chetanbhat Shah

and Anr., AIR 2002 SC 275:-

"Once a case of passing off is made out the practice is generally to grant a prompt ex parte injunction followed by appointment of local commissioner, if necessary."

Contentions of the defendants

18. To counter the submissions made by the learned counsel for the

plaintiffs, Mr. M.S. Ganesh, the learned senior counsel for the defendants

submits that whereas in the instant case, both the parties have registered

trademarks and the plaintiffs have filed a rectification application before the

IPAB followed by a composite suit for infringement as well as passing off, the

plaintiffs cannot be permitted to bifurcate their suit for the purpose of ad

interim relief to claim ad interim injunction only with reference to the relief of

passing off. Such an approach, the learned senior counsel contends, amounts

to:-

(a) abuse of the process of the Court, viz., seeking leverage from

the present suit for the purpose of their pending rectification

application before the Board;

(b) forum shopping, viz., first moving the rectification application

before the IPAB and then seeking to trammel its consideration by

moving this Court for alleged infringement by the defendants'

registered trademark and seeking an injunction in common law

jurisdiction;

(c) multiplicity of proceedings for substantially the same relief,

viz., for invalidating and neutralizing the defendants' registered

trademark at an interlocutory stage of the rectification

proceedings before the IPAB and the infringement suit before

this Court; and

(d) putting the cart before the horse, viz., seeking restraints on the

use of the defendants' registered trademarks even before its

alleged invalidity has been adjudicated by the IPAB.

19. In the above context, Mr. Ganesh urges that the IPAB being a statutory

quasi judicial tribunal, subject to the superintendence of the High Court under

Article 227 of the Constitution of India, the present suit can be considered to

be filed only for the purpose of seeking leverage in the pending rectification

application before the Board, more so, as it was open to the plaintiffs to have

invoked the jurisdiction of the Board itself.

20. Without prejudice to the aforesaid submission, learned senior counsel

submits that in any case, the plaintiffs are not entitled to the grant of an ad

interim injunction as they are guilty of suppression of material facts in the

plaint, inasmuch as there is not even a whisper in the plaint as to when the

plaintiffs became aware of the marketing activities of the defendants' product

in Andhra Pradesh. The defendants' application for a registered trademark was

advertised in the Trade Marks Journal in 2002 and, after obtaining registration,

the defendants commenced marketing of their product in Andhra Pradesh in

2006. The present suit has been filed in November, 2008.

21. The plaintiffs, the learned senior counsel for the defendants urges, are

also guilty of delay and laches, having raised no opposition to the defendants'

trademark registration from 2002 to 2005, and again to its marketing activities

from April 2006 (when the defendants started marketing their products) to

October-November, 2008, that is, for a period of over two and a half years,

during which period the plaintiffs neither appealed to the IPAB against the

defendants registration nor moved any competent Court for the alleged

infringement or passing off. By sleeping over their rights, the plaintiffs thus

acquiesced in the defendants trademark registration and its continuous user,

thereby allowing the defendants to built up their business and market for the

sale of their product.

22. In the context of delay and laches and non-disclosure of material facts,

the learned senior counsel for the defendants heavily relies upon a recent

judgment of this Court in BDA PRIVATE LTD. vs. PAUL P. JOHN & ANR.

reported in 152 (2008) DLT 405. In the said case, while rejecting the plea of

passing off the defendants' product, that is, whisky under the trademark

"Original Choice", alleged to be deceptively similar to the plaintiff's

registered mark "Officer's Choice", the learned Single Judge, after reviewing

the case law on the subject, held that delay and acquiescence were major

considerations in any action for passing off and it was, therefore, incumbent

upon the plaintiff in the said case to have disclosed as to when it became aware

of the defendants' use of the trademark "Original Choice". Had it disclosed

that it was aware of the defendants' trademark for such a long time, then

perhaps, it would have dented its case for seeking an interim injunction on the

ground of passing off, for, the delay in approaching the Court would have

come in the way of the plaintiff for the purpose of an interim injunction.

23. Next, the learned senior counsel for the defendants contends that in any

event, the words IMPERIAL and ROYAL are publici juris and are words

and connotations which can be used by anyone, and are admittedly used as

registered trademarks for various products, including whisky. The plaintiffs

cannot, therefore, claim exclusive appropriation thereof. Referring to a

Division Bench judgment of this Court in Astrazeneca UK Limited & Anr. vs.

Orchid Chemicals & Pharmaceuticals Ltd. reported in 141 (2007) DLT 565,

the learned senior counsel contends that in the said case, the learned Single

Judge and subsequently on appeal, the Division Bench had refused to grant ad

interim injunction to the plaintiff, who claimed infringement of his registered

trademark 'Meronem', alleging it to be deceptively similar to the trademark

'Meromer' of the defendant, on the premise that 'Mero' was a generic

term/publici juris and the plaintiffs/appellants could not claim exclusive right

to use 'Mero' as constituent of their trademark. In doing so, the learned

Division Bench relied upon an earlier judgment by another Division Bench of

this Court in SBL Limited vs. Himalaya Drug Company reported in 67(1997)

DLT 803, wherein it was held as under:-

"25.(3) Nobody can claim exclusive right to use any word, abbreviation, or acronym which has become publici juris. In the trade of drugs it is common practice to name a drug by the name of the organ or ailment which it treats or the main ingredient of the drug. Such an organ ailment or ingredient being publici juris or generic cannot be owned by anyone for use as trade mark."

24. The learned senior counsel for the defendants vehemently urges that in

any case, the presence of the defendants' name on their product, viz.,

RHIZOME'S is an indication that there is no passing off, even assuming the

trademark IMPERIAL GOLD is similar to the trademark of the plaintiffs'

IMPERIAL BLUE and the trade dress of the plaintiffs' whisky ROYAL

STAG and that of the defendants' whisky RHIZOME'S IMPERIAL GOLD is

identical. Reference in this context is made by senior counsel to a decision of

the Supreme Court rendered in the case of S.M. DYECHEM LTD. VS.

CADBURY (INDIA) LTD. (2000) 5 SCC 573. In the said case, the appellant

Company (plaintiff in the Suit) had been using the trademark "PIKNIK" for

various products, including confectionery chocolates. The respondent-

defendant was found using the mark "Cadbury's PICNIC" for chocolates.

Declining the prayer for temporary injunction, the Supreme Court held that the

occurrence of the name Cadbury on the defendant's wrapper was a factor to be

considered while deciding the question of passing off, and that the presence of

the defendant's name on his goods was an indication that there was no passing

off, even if the trade dress was the same.

25. Countering the contention of the counsel for the plaintiffs that the test to

be applied in a passing off action is that of the imperfect recollection of a man

of average intelligence, the learned senior counsel submits that the crucial test

to be applied is not that of the impact of the product on an ignorant customer,

but the impact of the product on a customer whose views can properly be

regarded by the Court. In this context, the following observations made by the

Supreme Court in S.M. DYECHEM LTD. (supra) are relied upon:-

"54. As to scope of a buyer being deceived, in a passing- off action, the following principles have to be borne in mind. Lord Romer, L.J. has said in Rayton & Co. v. Snelling, Lampart & Co. that it is a misconception to refer to the

confusion that can be created upon an ignorant customer. The kind of customer that the courts ought to think of in these cases is the customer who knows the distinguishing characteristics of the plaintiff's goods, those characteristics which distinguish his goods from other goods in the market so far as relates to general characteristics. If he does not know that, he is not a customer whose views can properly be regarded by the Court. (See the cases quoted in N.S. Thread & Co. v. Chadwick & Bros. which was a passing-off action.) In Schweppes case Lord Halsbury said, if a person is so careless that he does not look and does not treat the label fairly but takes the bottle without sufficient consideration and without reading what is written very plainly indeed up the face of the label, you cannot say he is deceived."

26. Lastly, the learned senior counsel for the defendants contends that under

sub-section (5) of Section 124, no ad interim injunction can be granted to the

plaintiffs by this Court in view of the fact that the present suit is liable to be

stayed under the sub-section (1) of the said section and the parties must be left

to abide by the adjudication of the IPAB in the rectification proceedings.

REJOINDER ARGUMENTS

27. In rejoinder, Mr. Hemant Singh, the learned counsel for the plaintiffs

submits that the plea of publici juris raised by the defendants must fail at the

threshold itself firstly, in view of the fact that no evidence of the mark

IMPERIAL being used by others in the market has been produced or placed

on record by the defendants and secondly, in view of the fact that mere cited

registrations are no evidence to uphold any plea of "common usage" as held by

the Supreme Court in the case of Corn Products Refining Co. vs.

Shangrila Food Products Ltd., AIR 1960 SC 142 wherein it was observed as

follows:-

"It is possible that the marks may have been registered but not used. It is not permissible to draw any inference as to their user from the presence of the marks on the register".

28. As regards the pleas of concealment of material facts and delay and

laches raised by the defendants, learned counsel submits that the said pleas are

also baseless, as there is no evidence produced by the defendants to show that

the plaintiffs knew about the sale of IMPERIAL GOLD whisky of the

defendants prior to the second week of September, 2008. More importantly,

there is no evidence produced by the defendants to show prima facie the extent

of the defendants' sale of their aforesaid products prior thereto. Not a single

invoice is forthcoming on the record to substantiate the statement of the

defendants that they had commenced use of the mark IMPERIAL GOLD in

"about April, 2006". The defendants no doubt had been filing trademark

applications for the marks IMPERIAL RED, IMPERIAL WHITE and

IMPERIAL GREEN before the Registrar of Trade Marks falsely claiming

their use since 2002 and 2006, but in fact no such sale had been made. Hence

the defendants themselves are guilty of making false statements and

misrepresentations before the Registrar of Trademarks as well as before this

Court.

29. Even otherwise, the learned counsel submits that delay cannot be a

ground for refusing the interim injunction prayed for by the plaintiffs once the

defendants are found guilty of acts of passing off. This is by now a well settled

principle of law recognised by this Court and by the Supreme Court.

Reference in this regard is made by him to the judgment of this Court in M/s.

Hindustan Pencils Pvt. Ltd. vs. M/s. India Stationery Products Co. and Anr.,

AIR 1990 DELHI 19. Paragraph 39 of the said judgment in particular is relied

upon, which reads as follows:-

"39. It had been submitted that there was an inordinate delay on the part of the plaintiffs in filing the present suit. I have already held that inordinate delay would not defeat an action for the grant of a temporary injunction especially where the use by the defendant of the mark was fraudulent. An any case, in my opinion, the delay in the present case cannot be regarded as inordinate. Assuming for the sake of argument that, as contended by the defendants, the plaintiffs came to know about the user by the defendants of the infringing mark in March, 1982, it is not as if the plaintiffs slept over their rights for a number of years. It is to be seen that the plaintiffs' principal place of business is in Bombay while the defendant is a small businessman carrying on its business in Sadar Bazar, Delhi. The plaintiffs, in 1985, did filed in application for cancellation of the registration of copyright of the defendant. This amounted to first step being taken by it. The plaintiffs waited and within 3 years thereafter filed the present suit. The defendant must have known that it was adopting a mark which belongs to some one else. Any infringer who uses or adopts some one else's mark must be aware of the consequences which may follow. The

defendants ran the risk in using a mark which belonged to some one else. It continued its business uninterruptedly for a number of years before any action was taken by the plaintiffs against it. Any growth after notice is at the risk and peril of the defendant. The defendant certainly had notice of application of the plaintiff having been filed against it in the year 1985 for cancellation of registration of the copyright. The defendant should have been warned, at that stage, that the plaintiff is not likely to accept the user of its mark by the defendant. If the defendant continued to do business by using the impugned mark, it did so at its own peril. The continued user cannot be set up as a defence under these circumstances."

30. Reference is next made by the learned counsel for the plaintiffs to the

decision rendered by this Court in Automatic Electric Limited vs. R.K.

Dhawan & Anr. reported in 1999 PTC (19) 81. In the said case, an

advertisement of the defendants featured in the same trade magazine in which

the advertisement of the plaintiff was also published, and on the basis thereof,

the defendants submitted that it was inconceivable that the plaintiff was not

aware of the defendants' use of the trademark "DIMMER DOT", and that the

plaintiff stand that they did not have knowledge about the infringement of its

trademark "DIMMERSTAT" till much later was false. Rejecting the said plea,

a learned Single Judge of this Court (Hon'ble Dr. Justice M.K. Sharma, as His

Lordship then was) held:-

"The plaintiff is a Bombay based company. Merely because in a particular magazine advertisement of the defendants was published on the cover page, cannot by itself be a case of deduction that the plaintiff was aware of the

advertisement of the defendant's trademark in the said magazine. However, even if such a presumption could be made, the same cannot deprive the registered owner of a trade mark from getting his rights established in a Court of Law, particularly, when the same cannot amount to a case of inordinate delay."

31. Relying upon the aforesaid observations, Mr. Hemant Singh, the learned

counsel for the plaintiffs contends that the present is an appropriate case for the

grant of an ad interim injunction in favour of the plaintiffs. It is also Mr.

Singh's contention that interim injunction can be granted, even if

rectification/cancellation proceedings are pending as is evident from a bare

reading of the provisions of Section 124(5) of the Trade Marks Act, 1999.

FINDINGS:

32. Keeping in view the aforesaid contentions raised at the Bar and the

precedents laid down by the various Benches of this Court and by the Hon'ble

Supreme Court, I am of the considered view that the instant case is a clear cut

case of passing off. I say so on the basis of the fact that it is undisputed that

the plaintiffs adopted the trademark IMPERIAL BLUE in the year 1997 and

since then the said trademark has become distinctive of the plaintiffs' product,

resulting in a huge turnover in the sum of Rs.317 crores for the year 2007.

Likewise, on account of extensive trade usage since the year 1995, the

plaintiffs' trademark comprising ROYAL STAG label and trade dress have

become distinctive of the whisky emanating from the plaintiffs. The

defendants have slavishly copied the former as well as the latter. The former

by adopting the trademark IMPERIAL GOLD for their whisky, knowing

fully well that the plaintiffs have registered trademarks for IMPERIAL BLUE

and IMPERIAL RED. The defendants did not stop there. But went on to

imitate the latter, i.e., the overall trade dress of the plaintiffs' ROYAL STAG,

such as the shape and design of the bottle, the colour combination and the

overall get up of the ROYAL STAG label, including its special features, such

as two thick ribbon devices on the front panel having the same colour

combination of burgundy and golden, with the rear panel also having the same

size and the same cream background with ribbon devices as appear on the

plaintiffs' bottle. Not only this, the defendants appear to have either used the

discarded bottles of the plaintiffs' ROYAL STAG whisky with 'SEAGRAM'

embossed at the bottom of the bottle or have got manufactured the same. Such

fraudulent and dishonest adoption, in my view, of not one but two of the

products of the plaintiffs, which have been in the market since the years 1995

and 1997 respectively and have a huge turnover (Rs.317 crores and Rs.644

crores respectively), cannot be shrugged off as coincidental.

33. Then again, even according to the defendants themselves, their product

has emerged in the market in April, 2006. Assuming the same to be correct

(though there is not a single invoice to substantiate the same), the defendants

have launched their product in the market more than a decade after the launch

of the plaintiffs' product in the market. In such circumstances and keeping in

view the fact that the defendants are manufacturing, distributing, marketing

and selling the same product as the plaintiffs, in the same area as the

plaintiffs and targetting the same section of consumers as the plaintiffs, the

inescapable conclusion is that the defendants want to ride piggy back on the

goodwill and reputation painstakingly built up by the plaintiffs over the course

of a decade.

34. Coming to the aspect of delay and laches. The defendants claim that

their product emerged in the market in April, 2006. The plaintiffs dispute this

and state that the market research from their end showed that the defendants'

product was not available even in the year 2007. And it was only in

September, 2008 that they first came across a bottle of the IMPERIAL GOLD

whisky of the defendants in the market. Assuming for a moment the version of

the defendants to be correct, there is not an iota of evidence on record to

prima facie show the launch of the defendants' product in the year 2006, except

the bald statement made by the defendants which appears to be with a view to

contest the claim of the plaintiffs on the ground of delay and laches. In such

circumstances, to hold that the plaintiffs are not entitled to interim injunction

on the ground of delay and laches and/or on account of suppression of material

facts would be wholly untenable. More so, as the Hon'ble Supreme Court in

Midas Hygiene Industries (supra) categorically held:-

"5. The law on the subject is well settled. In cases of infringement either of trade mark or of copyright, normally an injunction must follow. Mere delay in bringing action is not sufficient to defeat grant of injunction in such cases. The grant of injunction also becomes necessary if it prima facie appears that the adoption of the mark was itself dishonest."

35. Equally untenable is the contention of the defendants that the word

"IMPERIAL" is a generic term and hence publici juris. The word

"IMPERIAL" may be generic if used by a member of the royal family, but

certainly it will be arbitrary when applied to a whisky and that too, a whisky

other than Scotch, and furthermore a whisky in the lower price segment.

36. The prefix RHIZOME is also neither here nor there, as, to my mind,

even a seasoned consumer is liable to be misled by the IMPERIAL GOLD

label and the overall trade dress of the bottle of the defendants including its

shape into believing that the plaintiffs group, which is engaged in the sale of

IMPERIAL BLUE whisky for more than a decade, has now launched

IMPERIAL GOLD with a trade dress similar to the plaintiffs ROYAL

STAG whisky. Confused by the trade name IMPERIAL GOLD as well as by

the trade dress and shape of the bottle, it would be too much to expect the

consumer, assuming him to be well versed with the liquor and wine market, to

search for the word RHIZOME, inconspicuously printed on the label, more so,

when examining the bottle upside down the word "SEAGRAM" also appears

at the bottom of the bottle.

37. Thus viewed, the relative strength of the case of the plaintiffs appears to

be robust in proportion to the relative strength of the defendants' case. The

dishonest intention of the defendants calculated to encash upon the goodwill of

the plaintiffs cannot be ignored and weighs heavily in favour of the plaintiffs.

The following observations of the Supreme Court in Heinz Italia and Anr. vs.

Dabur India Ltd. (2007) 6 SCC 1 have a direct bearing on the matter and are

accordingly reproduced hereunder:-

"15. We have also considered the arguments with regard to the prior user of the trademark "Glucon-D" and the specific packaging. It is the admitted case that the term "Glucose-D" has been used by the respondent from the year 1989 and that the packaging which is the subject-matter of dispute in the present suit has been in use from the year 2000. In Century Traders it has been held that in an action for passing off, the plaintiff has to establish prior user to secure an injunction and that the registration of the mark or similar mark in point of time, is irrelevant. This Court in Cadila Health Care case also laid down the tests in the case of passing off and observed as under: (SCC p.80, para10) "In other words in the case of unregistered trade marks, a passing-off action is maintainable. The passing-off action depends upon the principle that nobody has a right to represent his goods as the goods of somebody. In other words a man is not to sell his goods or services under the pretence that they are those of another person. As per Lord Diplock in

Erven Warnink BV v. J. Townend & Sons the modern tort of passing off has five elements i.e. (1) a misrepresentation, (2) made by a trader in the course of trade, (3) to prospective customers of his or ultimate consumers of goods or services supplied by him, (4) which is calculated to injure the business or goodwill of another trade (in the sense that this is a reasonably foreseeable consequence), and (5) which causes actual damage to a business or goodwill of the trader by whom the action is brought or (in a quia timet action) will probably do so."

16. Likewise, it has been repeatedly held that before the use of a particular mark can be appropriated it is for the plaintiff to prove that the product that he is representing had earned a reputation in the market and that this reputation had been sought to be violated by the opposite party. In Corn Products case it was observed that the principle of similarity could not to be very rigidly applied and that if it could be prima facie shown that there was a dishonest intention on the part of the defendant in passing off goods, an injunction should ordinarily follow and the mere delay in bringing the matter to court was not a ground to defeat the case of the plaintiff. It bears reiteration that the word "Glucon-D" and its packaging had been used by Glaxo since 1940 whereas the word "Glucose- D" had been used for the first time in the year 1989.

17. In Cadila Health Care case, it has also been held that in the case of a passing-off action the similarities rather than the dissimilarities have to be taken note of by the court and the principle of phonetic "similarity" cannot be ignored and the test is as to whether a particular mark has obtained acceptability in the market so as to confuse a buyer as to the nature of product he was purchasing. We observe that the both Glucon-D and Glucose-D are items containing glucose and to us it appears that there is remarkable phonetic similarity in these two words."

37. The argument of the defendants' senior counsel that no ad interim

injunction can be granted to the plaintiffs under sub-section (5) of Section 124

in view of the fact that the suit is liable to be stayed under sub-section (1)

thereof is also wholly misconceived and is being noted for the purpose of being

rejected as it is well established that Section 124(5) empowers this Court to

grant interim injunction in appropriate cases even if rectification/cancellation

proceedings are pending [see Jagan Nath Prem Nath vs. Bhartiya Dhoop

Karyalaya, Khari Baoli, Delhi AIR 1975 DELHI 149, Surjeet Book Depot vs.

Surjeet Book Depot (P) Ltd. and Anr. 1982 PTC 297 and Ahmed Oomerbhoy

& Anr. vs. Gautam Tank & Ors. 2008 (36) PTC 193 (Del.)].

38. On the aspect of the relative strength of the case of each party, before

American Cyanamid Co. vs. Ethicon Ltd. (1975) 1 All ER 504, it was

customary for the Courts to go into the prima facie case in a trademark case for

grant or refusal of temporary injunction. But in American Cyanamid, it was

observed that it was sufficient if a "triable issue" was presented by the plaintiff

and the merits need not be gone into. The said judgment was referred to by the

Supreme Court in Wander Ltd. vs. Antox India (P) Ltd. 1990 Supp SCC 727

and again in Power Control Appliances vs. Sumeet Machines (P) Ltd. (1994)

2 SCC 448. But in Gujarat Bottling Co. Ltd. vs. Coca Cola Co. (1995) 5 SCC

545, the Supreme Court again adverted to the prima facie case principle while

granting temporary injunction. However, all the aforesaid rulings were again

reviewed in Colgate Palmolive (India) Ltd. vs. Hindustan Lever Ltd. (1999) 7

SCC 1. In the said case, the Supreme Court reconsidered the principles laid

down in the American Cyanamid case and in the process referred to the

judgment in Series 5 Software Ltd. vs. Clarke (1996) 1 All ER 853 (Ch D), in

which Laddie, J. explained that in the American Cyanamid case, Lord Diplock

did not lay down that the relative strength of the case of each party need not be

gone into. The Supreme Court in the Palmolive case (supra) affirmed the view

of Laddie, J. as correct, holding that American Cyanamid cannot be

understood as having laid down anything inconsistent with the "old practice".

Therefore, in trademark matters, it is now necessary to go into the question of

"comparable strength" of the cases of either party, apart from balance of

convenience. Thus viewed, the strength of the plaintiffs' case, on facts, in my

view, is such that ad interim injunction must be granted in favour of the

plaintiffs.

39. To conclude, even proceeding on the assumption that the purchasers of

the defendants' product are discerning persons with proper knowledge of the

liquor market and the brands available on the counter, I have no hesitation in

holding that the plaintiffs have made out a prima facie case for the grant of an

injunction order in their favour and against the defendants. Keeping in view

the comparable strength of their case, grave and irreparable loss is likely to

ensue to the plaintiffs in case interim protection is not granted in their favour

and against the defendants. The injunction, in my view, is also imperative

keeping in view the dishonest adoption of the mark and trade dress of the

plaintiffs' product by the defendants and the larger interest of the consumers of

the product. It is not inconceivable that sub-standard whisky may prove to be

even more injurious than a sub-standard medicinal or pharmaceutical product,

and may lead to lethal consequences, even wholesale disastrous ones. The

balance of convenience also clearly tilts in favour of the plaintiffs and against

the defendants. Both in justice and equity, the plaintiffs must be held entitled

to the injunction prayed for by them.

40. Accordingly, the plaintiffs' prayer in this application is allowed. The

defendants, their partners/proprietor, assigns in business, distributors, dealers

and agents are restrained from manufacturing, selling, offering for sale,

advertising, directly or indirectly dealing in whisky or any other alcoholic

beverages under the impugned trademark IMPERIAL GOLD or the

impugned label/trade dress pertaining thereto or any other

trademark/label/trade dress as may be deceptively similar to the trademarks

IMPERIAL BLUE, IMPERIAL RED or ROYAL STAG label of the

plaintiffs which may lead to confusion and deception amounting to acts of

passing off.

39. I.A. No.13426/2008 stands disposed of accordingly.

CS(OS) 2314/2008

List before the Joint Registrar on 9th January, 2009 for completion of

pleadings in the suit and for admission/denial of documents and before the

Court on 20th March, 2009 for framing of issues.

REVA KHETRAPAL, J.

NOVEMBER 06, 2008 km