M/S. Alberto-Culver Usa Inc. vs M/S. Nexus Health & Home Care (P) ...
2009 Latest Caselaw 3661 Del

*          HIGH COURT OF DELHI : NEW DELHI

+          I.A. Nos.2415 /2008, IA No.2423/2008 & IA No.12969/2007
           in C.S. [OS] No.2249 /2007

                                  Reserved on: 18th August, 2009

%                                 Decided on:    10th September, 2009

M/s. Alberto-Culver USA Inc.                        ...Plaintiff
                     Through : Mr. S.K. Bansal, Adv. with Mr. Shashi
                               P. Ojha, Adv.

                       Versus

M/s. Nexus Health & Home Care (P) Ltd.             ....Defendant
                    Through : Mr. S.S. Rana, Adv. with Mrs. Bindra
                              Rana and Ms. Meenu Sharma, Advs.

Coram:

HON'BLE MR. JUSTICE MANMOHAN SINGH

1. Whether the Reporters of local papers may
   be allowed to see the judgment?                                  No

2. To be referred to Reporter or not?                               Yes

3. Whether the judgment should be reported                          Yes
   in the Digest?

MANMOHAN SINGH, J.

1. By this order, I shall dispose of the plaintiff‟s application

being IA No.12969/2007 under Order XXXIX Rule 1 and 2 CPC and

defendant‟s application being IA No.2415/2008 under Order VII Rule

11 and Order XXV Rule 1 CPC respectively.

2. The plaintiff has filed the present suit for relief of permanent

injunction against the defendant and to restrain infringement, passing

off, damages and/or rendition of accounts etc.

3. The brief facts relevant for the purpose of deciding these

applications are that the plaintiff is a company organized and

incorporated under the laws of the USA. Mr. Gary P. Sschmidt, Senior

Vice President and Secretary of the plaintiff is duly authorized to

institute and file this suit, sign and verify its pleadings.

Case of the plaintiff:-

4. The plaintiff is engaged in the business of manufacture and

trade of a wide range of cosmetics, toilet preparations, personal care

products like hair care preparations, hair shampoos, hair conditioners,

hair sprays, hair dyes, vitamins and food supplements and other allied

and related products (hereinafter referred to as „the said goods and

business‟).

5. The plaintiff has claimed to be the proprietor of his trade

mark NEXXUS, NEXXUS formative marks and NEXXUS

artistic/design marks as also of the copyrights involved therein

(hereinafter referred to as "the said trade marks")

6. It is averred in the plaint that since December 1979, the

plaintiff through its predecessor, has honestly and bonafidely,

continuously, commercially, openly, exclusively and to the exclusion of

others, uninterruptedly and in the course of trade been using the said

trade marks as trade marks in relation to its said goods and business and

has built up a worldwide and globally valuable trade, goodwill and

reputation and acquired proprietary rights.

7. It is stated that the plaintiff‟s said goods and business under

the said trade marks are global in character. The plaintiff‟s goods under

the said trade marks are branded and sold in about 75 countries of the

world, and across all continents including North, South and Central

America, Europe, Africa, Asia, Middle and Far East, Australia and New

Zealand etc. The plaintiffs said goods are sold and traded through its

extensive marketing network including through retail, internet, e-

commerce and its affiliates/subsidiaries.

8. It is further stated that the plaintiff‟s said trade marks are

duly registered and pending registration in over 70 countries of the

world and across all continents in relation to its said goods and business.

The plaintiff has alleged to have built up a globally valuable trade under

its said trade marks and conducted a successful business thereunder

running into millions of dollars worldwide. As per the plaintiff, his

trade marks are well known trade marks within the meaning of Section 2

(I) (zg) of the Act. It is asserted that the net sales of the plaintiff for

the year ended September 30, 2002 were about $2.65 billion which was

an increase of about 11.4% over the prior year sales of $2.38 billion.

The net sales in the year 2000 were $ 2.14 billion.

9. It is averred that the plaintiff has regularly and continuously

been promoting his said distinctive trade marks, goods and business

through extensive advertisements, publicities, promotions and

marketing and the plaintiff has been spending enormous amounts of

moneys, efforts, skills and time on it. The plaintiff‟s advertisements and

marketing expenditure were $ 189,179,162 million in fiscal year 2000,

2001, 2002 respectively. The plaintiff‟s said trade marks have thus been

alleged to be distinctive and to have acquired secondary significance

with the plaintiff and plaintiff‟s said goods and business. It is averred

that the purchasing public, the trade and industry at large worldwide

and in India identify the plaintiff‟s said goods under the said trade

marks with the plaintiff and from the plaintiff‟s source and origin alone.

10. In India, the plaintiff‟s said trade marks were duly registered

in the name of its predecessors under trade mark registration

Nos.446836 in class 5, 446837 in class 3, 446838 in class 5 and 446839

in class 3 since the year 1985. However, it is submitted that

inadvertently, due to oversight, communication gap and lack of receipt

of Renewal O-3 notice from the Registrar of Trade Marks, the said

Trade Marks could not be renewed in the year 1999.

11. It is submitted that M/s Nexxus Products Company, 82,

Coromar Drive, Goleta, California 93117, U.S.A. are the predecessor-in-

title of the plaintiff. The plaintiff acquired the said trade marks from

them in India under a written Deed of Assignment dated 11.08.2005

along with the goodwill. The term plaintiff includes his aforesaid

predecessor-in-title as well. The plaintiff is a subsidiary/affiliate of M/s

Alberto-Culver Company.

12. It is alleged that in the first week of March, 2007 while

pursuing its various trade mark matters including applications in the

normal course in the Trade Mark Office, the plaintiff came across the

defendant and its impugned trade name from the Trade Mark Office

where the defendant‟s applications for registration were pending. The

defendant had moved an application under trade mark no. 1265315 in

class 3 in the Trademark Office and advertised in Trade Mark Journal

No. 1328 Suppl. (2) dated 14th February, 2005 (made available to the

public on or before 15th April, 2005) at page 252 the mark applied for by

the defendant which is deceptively similar to the said marks of the

plaintiff.

13. The plaintiff enquired in the market to ascertain the

defendant‟s impugned activities. The enquiries revealed that the

defendant had not commercially started the use of its impugned trade

name on its vendible articles but was soliciting trade and business in

relation to the plaintiff‟s goods and business in Delhi and neighbouring

areas besides other parts of the country.

14. It is submitted that the defendant is engaged in the business

of manufacture and trade of cosmetics, soaps, hair oil and other related

products (hereinafter referred to as „the impugned goods and business‟).

It is alleged that the defendant has adopted and is using or intends to so

use the word/mark NEXUS as an essential part of its trade name

(referred to as the „impugned trade name‟) in relation to its impugned

goods and business and that the same is identical and deceptively

similar to the plaintiff‟s said "NEXXUS" trade mark/label in each and

every respect including phonetically, visually, structurally, in its basic

idea and in its essential features. The impugned goods and business are

also alleged to be of the same/similar/allied/cognate nature as that of the

plaintiff.

15. The learned counsel for the plaintiff argued that the

defendant by its impugned adoption and user of the impugned trade

name is violating the plaintiff‟s aforesaid trademark/label and thereby

passing off and enabling others to pass off their goods and business as

that of the plaintiff as well as diluting the plaintiff‟s proprietary rights.

The defendant is further infringing the plaintiff‟s aforesaid registered

trade marks under nos. 446836 in class 5, 446837 in class 3, 446838 in

class 5 and 446839 in class 3.

16. It is stated that the defendant has adopted the impugned trade

name dishonestly, fraudulently and out of positive greed with a view to

take advantage and to trade upon the established goodwill, reputation

and proprietary rights of the plaintiff in its said trade mark/label. The

defendant‟s impugned adoption and use creates deception and confusion

in the market and the plaintiff is suffering huge losses both in business

and in reputation which are incapable of being assessed in monetary

terms. Hence, the present suit.

Case of the defendant

17. The learned counsel for the defendant vehemently argued

that the suit of the plaintiff for passing off is not maintainable as there

is not the remotest chance of any confusion and deception in the mind of

the public, because the mark „Nexus Health & Home Care‟ has never

been used as a trademark by the defendant in relation to any goods.

„Nexus Health & Home Care (P) Ltd.‟ is only the trading style of the

defendant and its goods are sold in West Bengal, Orissa, Assam and

Tripura only with the trademark SPA.

18. It is contended that the defendant has bona fidely and

honestly adopted the name „Nexus Health & Home Care (Pvt.) Ltd.‟ and

is a company duly incorporated under the Companies Act, 1956 under

No. U-51312 WB 2003 PTC0-97178 dated October 28, 2003 at Kolkata.

It is stated that the defendant has been carrying on its main business at

Kolkata in West Bengal, as well as in Orissa, Assam and Tripura and no

confusion or deception has arisen since 2003. The suit by the plaintiff

was filed in 2007, therefore, there is an inordinate delay and

acquiescence on the part of the plaintiff to file the present suit and the

suit is liable to be dismissed by this court as the delay defeats equity.

19. The alleged trade marks of the plaintiff admittedly got lapsed

in 1999 and were not renewed, thus the same are not valid and

subsisting in the name of the plaintiff. It is well settled law that a lapsed

mark cannot be assigned. The alleged unstamped assignment deed of

the plaintiff with its predecessor in title in the year 2005 is contended to

be just waste paper, because there were no valid and subsisting trade

marks of the plaintiff or its predecessor in 2005.

20. It is stated that the name of the defendant company was duly

approved by the Registrar of Companies and the same was incorporated

in 2003 in accordance with law. The said trade name is not used in

relation to any goods as a trade mark and there is no violation of the

plaintiff‟s rights. The defendant is the proprietor of the trading name

and style and has the statutory right to use the same.

21. It is submitted that the adoption of the name Nexus Health

and Home Care Pvt. Ltd was honest and bona fide, which is

combination of health and home. It is stated that NEXUS has become

public juris and there are more than 150 companies shown on the

internet having NEXUS as a prominent part of their name, and that the

same are registered/pending with the Registrar of Companies in India.

First, I shall deal with the two other applications filed by the defendant.

I.A. No. 2415/2008 (U/o 7 Rule 11 CPC)

22. The defendant filed an application being I.A. No. 2415/2008

under Order 7 Rule 11 CPC for rejection of plaint or for presenting the

same before a proper forum contending that the plaintiff has its office in

U.S.A and is not carrying on business or working for gain in Delhi. It is

contended that the plaintiff is also not actually and voluntarily residing

or carrying on business or personally working for gain in Delhi. The

plaintiff is also not presently the registered owner of the trade-mark

alleged in the plaint. It is urged that this court has no territorial

jurisdiction to entertain and try the present suit under Section 134 of the

Trade Marks Act.

23. Per contra, the plaintiff asserted that the question with regard

to jurisdiction is a triable issue which requires determination and

evidence. Only the allegations in the plaint have to be seen and

presumed to be correct at this stage of the proceedings. It is well settled

law that the approach of the court while dealing with an application

under Order 7 Rule 11 is that the court should be rather hesitant to

exercise its jurisdiction under Order 7 Rule 11, unless the circumstances

warrant such exercise and the matter in issue falls within the four

corners of the requirement of the provision. It is also well settled law

that the disputed question cannot be decided at the time of considering

the application under Order 7 Rule 11. The power to reject the plaint can

be exercised only if the court comes to the conclusion that even if all the

allegations are assumed to be proved, the plaintiff would not be entitled

to any relief whatsoever. A distinction must always be drawn in a case

where the plaint on the face of it discloses no cause of action and in a

case where after considering the entire material on record the court

comes to the conclusion that there is no cause of action. In the first case

the plaint can be rejected but in the later case the plaint cannot be

rejected.

24. The plaintiff relied upon para 30 of the plaint wherein it is

averred that the defendant is soliciting trade and business under its

impugned tradename in relation to its impugned goods and business in

Delhi and neighbouring areas besides other parts of the country. It is

further averred that the plaintiff‟s trade marks are registered with the

registrar of trademarks Delhi and the plaintiff is also carrying on the

business under its said trademark/label in Delhi.

25. It has been held by the court in a number of cases that at the

initial stage of the suit, only the allegations made in the plaint are to be

looked into while determining whether the Court has jurisdiction to try

the suit or not. In M/s. International Film Distributors v. Sh. Rishi

Raj, MIPR 2009 (2) 108, a Division Bench of this court held as under:

"24. In LG Corporation & Anr. Vs Intermarket Electroplasters(P) Ltd. and Anr.; 2006 (32) PTC 429, following observations were made in para 7 :-

"7. ......The question as to whether the Court has territorial jurisdiction to entertain a suit or not has to be arrived at on the basis of averments made in the plaint, that truth or otherwise thereof being immaterial as it cannot be gone into at this stage.....""

26. Looking at the averments made in the plaint by the plaintiff, I

am of the considered opinion that this court has jurisdiction to try the

suit. As a result, the defendant‟s application under Order VII Rule 11

CPC is hereby dismissed.

I.A. No. 2423/08 (U/o XXV Rule 1 CPC)

27. Another application has been filed by the defendant being

I.A. No. 2423/08 under Order XXV Rule 1 of CPC on the ground that

the plaintiff is not a resident of India and does not possess any

immovable property in its name in India. Therefore, it is asked that the

plaintiff be directed to give security for the costs which have been

incurred and which are likely to be incurred by the defendant in

defending the present suit.

28. From the provisions of Order XXV it appears that at any

stage of the suit, the court after assigning reason may direct any security

to be deposited for payment of costs, if incurred or likely to be incurred

by the defendant and pass such order if the plaintiff does not reside and

possess any immovable property within India other than the property in

the suit.

29. It is clear from the said provision that it is not a mandatory

provision that in every case of such a nature, the court must direct the

plaintiff to furnish security for costs. The mandate of this provision is

that if the court is satisfied that there is no resource to recover the cost

incurred and likely to be incurred by defendant in the facts and

circumstances of a particular case, it can pass the orders to the plaintiff

for furnishing security. The court has to exercise its discretion as per

the merit and circumstances of each case.

30. In the case reported in 1893 by Queen's Bench Division [In

the court of appeal] Neck v. Taylor page 560 the following principle

of law was laid down :

"The rule laid down by the cases seems to be as follows. Where the counter-claim is put forward in respect of a matter wholly distinct from the claim, and the person putting it forward is a foreigner resident out of the jurisdiction, the case may be treated as if that person were a plaintiff, and only a plaintiff, and an order for security for costs may be made accordingly, in the absence of anything to the contrary. Where, however, the counter-claim is not in respect of a wholly distinct matter, but arises in respect of the same matter or transaction upon which the claim is founded, the Court will not, merely because the party counter-claiming is resident out of the jurisdiction, order security for costs; it will in that case consider whether the counter-claim is not in substance put forward as a defence to the claim, whatever form in point of strict law and of pleading it may take, and, if so, what under all the circumstances will be just and fair as between the parties; and will act accordingly. Therefore, the Court in that case will have a discretion. It is clear to me in the present case that the counter-claim is not in respect of a matter wholly distinct from and independent of that upon which the claim is based; on the contrary, it arises out of the very same transaction in respect of which the action is brought. It is, in reality, the defendant‟s defence to the action, though, as a matter of pleading, it is, and necessarily is, put forward by way of counter-claim. Under these circumstances, I think that the Divisional Court had a discretion in the matter, and I see no reason for thinking that they exercised such discretion otherwise than rightly.

For these reasons, I think that the appeal should be dismissed."

31. In the present case, the suit has been filed by the plaintiff for

violation of statutory rights by the defendant and the plaintiff has also

sought the relief of recovery of Rs. 20,01,000/- as damages. It is a

matter of fact that the defendant has not filed any counter claim against

the plaintiff for recovery of amount. No doubt, the court has to exercise

its discretion if it feels that the claim of the plaintiff is false and

frivolous. In the present case, there is no material on record in this

regard. On a bare reading of the plaint, it does not appear that the suit of

the plaintiff is false and frivolous. Therefore, this court is not inclined

to pass any order under the provision of Order XXV Rule 1 CPC. The

prayer sought by the defendant in this application cannot be granted.

The application is misconceived and the same is hereby dismissed with

costs of Rs. 5,000/-.

Infringement of Trademark:-

32. The plaintiff has filed the suit for infringement of trademark

under Sections 134 and 135 of the Trademark Act. In the prayer, the

plaintiff is seeking relief based on the fact that the trademarks are duly

registered in the name of the plaintiff's predecessors under trademark

registration nos. 446836 in class 5, 446837 in class 3, 446838 in class 5

and 446839 in class 3. In the status report filed by the plaintiff on 5 th

May, 2008, it is stated that subsequent renewal in the year 1999 was not

filed by the predecessors due to non-receipt of the prescribed O-3

notice from the Registrar of Trade Marks and accordingly the said trade

marks were not renewed in the year 1999. However, the said

trademarks always remained on record and were never taken off from

the records on ground of non-payment of renewal fee. It is further

stated that the plaintiff company filed two renewal applications for each

of the marks on Form TM-12 dated 4th October, 2006 for regularizing

the renewal for the period 13.12.1999 to 13.12.2006 and from

13.12.2006 onwards which have no doubt been filed beyond the period

of extension of time under Section 25 of the Act. The said renewal

applications are pending in the Trade Mark office. It is alleged that the

plaintiff company filed a writ petition bearing W.P. (C) Nos. 448/2009,

446/009; 449/2009 and 447/2009 seeking directions to be given to the

Registrar of Trade Marks for regularization of the renewals. In the writ

petition order dated 23rd January, 2009 issued directions to the Registrar

of Trade Marks to consider the plaintiff's renewal applications, since it

is an undisputed fact that the renewal applications have been filed by the

plaintiff beyond the time prescribed and in the absence of renewal of the

said trademarks, which are the subject of the present case, under these

circumstances the suit for infringement of trademark is not

maintainable. The writ petition is yet to be disposed of, hence, there is

no force in the submission that the said trade marks of the plaintiff have

not been removed from the Registrar of Trade Marks, therefore relief

sought by the plaintiff for infringement of trade marks can be

considered.

Passing off:-

33. Learned counsel for the plaintiff has argued that the plaintiff

has also sought the relief of passing off, therefore, an injunction order

can be passed on account of that action. The contention of the

defendant is that it has not used 'Nexxus' trademark. The defendant is

merely using the tradename 'Nexus Health and Home Care Pvt. Ltd'. It

is further argued that the main business of the defendant is at West

Bengal, Orissa, Assam and Tripura. The said name of the company

'Nexus Health and Home Care Pvt. Ltd.' was incorporated in the year

2003. It is also argued that the defendant has no intention to use the

trade name by sending the merchandise goods within the territory of this

court as the defendant's business is only restricted to the areas

mentioned above.

34. In view of the above, learned counsel for the defendant

submits that there is not even a sliver of a chance of any confusion or

deception and the suit filed by the plaintiff for passing off therefore is

not maintainable. Learned Counsel for the parties have referred to a

number of decisions in support of their rival submissions. However, I do

not think it proper to refer and discuss each and every judgment while

deciding the interim application in the facts and circumstances of the

present case.

35. In the action of passing off, one has to see the evidence of

goodwill and reputation of the mark of the plaintiff. It appears from the

record that the defendant has never used the trademark 'Nexxus' nor

any evidence in this regard has been produced by the plaintiff although

the plaintiff has also sought the relief of injunction for using the said

trademark. In order to prove the case of passing off, the plaintiff has

filed invoices of sale of its products from the year 2002 onwards which

beling to the predecessor of the plaintiff. The said invoices are filed

upto the period 2005. There is no sufficient evidence placed on record

by the present plaintiff about the user of the mark in question after the

date of assignment, i.e. 11.08.2005, of the trademarks in question.

36. Per contra, the defendant company was incorporated in the

year 2003 which is four years prior to the filing of the suit and by this

there is continuous use of the name of the defendant company for the

last more than 6 years. I am of the considered opinion that id restraining

orders are passed against the name of the company at this stage, the

defendant will suffer irreparable loss and injury. Further, the trademarks

of the defendant are entirely different. Learned Counsel for the

defendant during the argument has submitted that the defendant has no

intention to use the mark Nexxus. Therefore, the plaintiff is also not

entitled to the relief of injunction on this pertaining to the restraint of

trading style.

37. In M/s. Gujarat Bottling Co. Ltd. and others Vs. Coca

Cola Company and others, AIR1995SC2372, it was observed as

under:-

"46....... The object of the interlocutory injunction is to protect the plaintiff against injury by violation of his right for which he could not be adequately compensated in damages recoverable in the action if the uncertainty were resolved in his favour at the trial. The need for such protection has, however, to be weighed against the corresponding need of the defendant to be protected against injury resulting from his having been prevented from exercising his own legal rights for which he could not be adequately compensated. The court must weigh one need against another and determine where the 'balance of convenience' lies. See : Wander Ltd. and Anr. v. Antox India P. Ltd. [1990] Supp. SCC 727 at pp. 731-

32. In order to protect the defendant while granting an interlocutory injunction in his favour the Court can require the plaintiff to furnish an under taking so that the defendant can be adequately compensated if the uncertainty were resolved in his favour at the trail."

38. The principle of law relating to temporary injunction during

pendency of a suit is well recognized in the decision of the Supreme

Court in Dalpat Kumar vs. Prahlad Singh AIR 1993 SC 276. The

relevant portion of the observations of the Supreme Court in the said

case is as under:-

".....It is settled law that the grant of injunction is a discretionary relief. The exercise thereof is subject to the Court satisfying that:

(1) there is a serious disputed question to be tried in the suit and that an act, on the facts before the court, there is probability of his being entitled to the relief asked for by the plaintiff/defendant. (2) The court‟s interference is necessary to protect the party from the species of injury. In other words, irreparable injury or damage would ensue before the legal right would be established at trial; and (3) That the comparative hardship or mischief or inconvenience which is likely to occur from withholding the injunction will be greater than that would be likely to arise from granting it.

The Supreme Court further held:

"......Prima facie case is not to be confused with prima facie title which has to be established, on evidence at the trial. Only prima facie case is a substantial question raised, bona fide, which needs investigation and a decision on merits. Satisfaction that there is a prima facie case by itself is not sufficient to grant injunction. The court further has to satisfy that non-interference by the court would result in „irreparable injury‟ to the party seeking relief and that there is no other remedy available to the party except one to grant injunction and he needs protection from the consequence of apprehended injury or dispossession of apprehended injury or dispossession. Irreparable injury, however, does not mean that there must be no physical possibility of repairing the injury, but means only that the injury must be a material one, namely on that cannot be adequately compensated by way of damages. The third condition also is that „the balance of

convenience‟ must be in favour of granting injunction. The court while granting or refusing to grant injunction should exercise sound judicial discretion to find the amount of substantial mischief or injury which is likely to be caused to the parties, if the injunction is refused and compare it with that it is likely to be caused to the other side if the injunction is granted. If on weighing competing possibility or probabilities of likelihood of injury and if the court considers that pending the suit, the subject matter should be maintained in status quo, an injunction would be issued. Thus the court has to exercise its sound judicial discretion in granting or refusing the relief of ad interim injunction pending the suit."

39. In view of the above said facts and circumstances, the

application of the plaintiff under Order XXXIX Rule 1 and 2 is disposed

of with the following directions in order to strike an equitable balance at

this stage:-

1. The defendant is restrained from using the trademark

'Nexxus' in relation to the goods in which the plaintiff is

dealing.

2. The defendant is allowed to carry on its business under

the trade name/trading style 'Nexus Health and Home

Care Pvt. Ltd.' in the States of West Bengal, Orissa,

Assam and Tripura till the disposal of the suit. However,

the defendant shall not use the corporate name in any

other manner which may be treated or may appear as a

trade mark.

3. The defendant shall maintain true accounts of the

business of the defendant under the name and style of

'Nexus Health and Home Care Pvt. Ltd.' and shall file

the accounts for its business every quarterly.

4. Liberty is also granted to the plaintiff to file fresh

application for injunction, if necessary, in case the

trademarks of the plaintiff get renewed in accordance

with law on account of change in circumstances.

The application under Order XXXIX Rule 1 and 2 is

disposed of with the above directions. List this matter before the court

on 30th October, 2009 for framing of issues.

MANMOHAN SINGH, J SEPTEMBER 10, 2009 SD