Delhi High Court
Societe Des Produits Nestle, S.A. ... vs Yadvendra Agrawal & Ors on 6 July, 2010
Author: S.Ravindra Bhat
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 06.07.2010
CS(OS) 2399/2009 & IA Nos. 16245/2009
SOCIETE DES PRODUITS NESTLE, S.A. & ANR ..... Plaintiffs
Through : Sh. Manish Mishra, Advocate
Versus
YADVENDRA AGRAWAL & ORS ..... Defendants
Through : Nemo
CORAM:
MR. JUSTICE S. RAVINDRA BHAT
1.
Whether the Reporters of local papers Yes.
may be allowed to see the judgment?
2. To be referred to Reporter or not? Yes.
3. Whether the judgment should be Yes.
reported in the Digest?
MR. JUSTICE S.RAVINDRA BHAT, J (Open Court)
%
1. The plaintiffs seek to restrain the defendants, their partners/proprietor, assigns,
distributors, licensees and dealers from manufacturing, selling, offering for sale, advertising,
directly or indirectly dealing in labels, paper cups, packagings, tea, coffee or other beverages
under the impugned trade mark comprising NESCAFÉ, NESKAFÉ, RED MUG logo or any
other trademarks, logo as may be deceptively similar with the trademarks NESCAFÉ, RED
MUG device and/or RED MUG logo or the slogan "JAGAO NESCAFÉ PILAO" as may
amount to infringement of trademark and copyright, passing off, unfair competition and
infringement of. A further order of delivery up of infringing materials and damages is also
sought.
2. The brief facts of the case are that the first plaintiff is a company incorporated under the
laws of Switzerland and has its registered office there. The second plaintiff is a company
incorporated under the Companies Act, 1956. The plaintiffs are hereafter jointly referred to as
"Nestlé group". The Nestlé group claims a gigantic geographical presence and goodwill in
international markets, owning 465 factories worldwide and employing nearly 2,20,000 people.
Further, its products are available in nearly all the countries in the world. Founded in 1867 by
Henri Nestlé as a small business in Switzerland to manufacture Kindermehl, the first ever milk
food manufactured for young children, the Nestlé group has since diversified into a range of
businesses including infant foods, dietetic products, milk and dairy products, cereals, snacks, ice
creams, chocolate, confectionery, bouillon‟s soups, seasonings, prepared dishes, canned food,
CS(OS) No.2399/2009 Page 1
pasta, sauces, yogurts, frozen foods, soluble coffee, roast & ground coffee, tea, chocolate-based
and malted drinks, fruit juices, cereal drinks, mineral water, pet foods, etc. The products are
known for high standards of quality and hygiene.
3. The Nestlé group manufactures and markets over 200 varieties of coffee world-wide. The
most popular coffee products of the plaintiffs are sold under the trade mark NESCAFÉ, and
dominate the instant coffee section. The said trade mark, i.e. NESCAFÉ was adopted in the year
1938, and in India in the year 1940.
4. The plaintiffs conceived the "RED MUG" device in the year 1978, which is claimed to
be extensively and continuously in use in over a 100 countries, including India (since 1983) as a
trademark, depicted by itself as well as upon a "bed of coffee beans against a halo" (hereinafter
referred to as "RED MUG" logo). Thus, on account of long and continuous use it is claimed to
have acquired goodwill and reputation amongst the members of trade and public at large.
5. The plaintiffs claim that the trademark, i.e. NESCAFÉ, as well as "RED MUG" logo
have been extensively advertised worldwide, including in India, through various media, viz. print
and electronic, as a result of which the trademarks NESCAFÉ, RED MUG device and/or RED
MUG logo have acquired a high level of distinctiveness indicating source of coffee originating
from the plaintiffs. The plaintiffs contend that coffee sold under the above mentioned trademark
and logo has acquired enviable goodwill and the reputation amongst the members of trade and
public at large as "well-known" brands. The outlay on advertising for the trademark RED MUG
logo and/or NESCAFÉ and the annual sales pertaining to NESCAFÉ Classic, as provided by the
plaintiffs are reproduced below :
Advertising expenses Sales
Year (In Rupees Crores) Year (In Rs. Crores)
1999 11 1999 207
2000 14 2000 253
2001 19 2001 317
2002 22 2002 258
2003 18 2003 277
2004 17 2004 229
2005 21 2005 252
2006 16 2006 247
2007 20 2007 320
2008 23
6. Apart from sales in retail outlets, coffees under the brand NESCAFÉ including
NESCAFÉ Sunrise Premium, NESCAFÉ Classic instant coffee are also dispensed through
vending machines, mobile vans, which distinguish coffee originating from the plaintiffs by
display of their trademarks. The plaintiffs claim that their products are consumed across a large
section of society, as the single serve sachets are sold at as low as ` 1/ sachet and coffee sold
CS(OS) No.2399/2009 Page 2
through vending machines are sold at ` 5 to ` 7 per cup. For selling coffee from the vending
machines and mobile vans, disposable paper cups bearing trademarks NESCAFÉ, RED MUG
device and or RED MUG logo either together or independently (manufactured by suppliers
authorized by the plaintiffs) are used. Further, all paper cups are manufactured under the strict
supervision of Plaintiff‟s „Quality Monitoring Team‟ and follow strict quality and hygiene
specifications such as:
(a) Paper used should be of food grade;
(b) Inks for the colours used should comply with food grade specifications;
(c) Weight of the cup;
(d) Thickness of the paper;
(e) Leak proof;
(f) Odour free;
(g) Volume fill, etc.
This team regularly audits the market and checks vending machines and mobile vans, including
the paper cups used.
7. The plaintiffs assert that the RED MUG device and/or logo are registered in many
countries worldwide including Albania, Austria, Balarus, Benelux, Bulgaria, China, Dominican
Republic, Egypt, Finland, Georgia, Hungary, Italy, New Zealand, Romania, San Marino,
Sarawak, Spain, Switzerland, United Kingdom, Vietnam etc. In India, the first plaintiff had
obtained registrations of the trademark NESCAFÉ in various classes, i.e. 32, 29, 30, 16, 9, 42,
24, 21, 41, 11 and for the RED MUG and/or RED MUG logo in class 30 and NESCAFÉ with RE
MUG logo in classes 30 and 32. It is claimed that these registrations are conclusively valid and
subsisting in favour of the first plaintiff. The second plaintiff is the licensee thereof in India,
authorized to manufacture and sell coffee preparations using the trademarks NESCAFÉ, RED
MUG device and/or RED MUG logo.
8. The plaintiffs contend that the instant coffee manufactured by the second plaintiff, in
India, under their distinctive trademarks NESCAFÉ, RED MUG device and/or RED MUG are
not only marketed in India but also exported to various countries all over the world. Further, they
have extensively advertised their trademarks, as well as logo through print and electronic media.
Thus, they contend that, on account of prior adoption and extensive use upon labels, hoardings,
coffee vending machines, café style outlets, restaurants, motels, disposable paper glasses, etc.,
the trademark NESCAFÉ has become „well-known‟ and the RED MUG device and/or RED
MUG logo have come to acquire „secondary significance‟ and become distinctive. The
trademarks RED MUG device and/or RED MUG logo have lost its primary meaning, if any, and
have acquired meaning and are associated with the plaintiffs and none else.
9. The plaintiffs allege that the defendants are engaged in the business of unauthorizedly
manufacturing, trading and selling of disposable paper cups bearing the trademarks NESCAFÉ,
NESKAFÉ, RED MUG device and/or RED MUG logo. The first defendant is proprietor of the
second defendant, alleged to be engaged in manufacturing and supplying the infringing paper
cups and the third and the fourth defendants are printers allegedly involved in printing and
supplying paper cups, bearing the impugned trademarks to them. This, it is alleged, is done with
CS(OS) No.2399/2009 Page 3
intent to pass them off as the plaintiffs products. The plaintiffs rely upon the investigation report
of a private investigator, dated 07.12.2009, according to which the defendants were engaged in
such infringement. The plaintiffs allege that the conduct of the defendants is mala fide,
dishonest, unethical, unlawful and solely motivated to encash upon the goodwill and the
reputation of plaintiffs‟ goodwill. Thus, the defendants are committing multiple offences, such as
infringement of trademark, passing off, unfair competition and infringement of copyright. The
plaintiffs claim that the defendants‟ actions have irreparably damaged their business and they
estimate the loss suffered at over Rs. 20,05,800/- and also stating that the loss to goodwill and
reputation cannot be assessed in monetary terms.
10. By order dated 27.04.2010 the defendants were proceeded ex-parte, as they did not enter
appearance ever in the suit. Further, the suit was amicably compromised between the third and
fourth defendants and the plaintiffs, and was disposed of in respect of these defendants on the
same day. An ex-parte ad interim injunction was passed against the defendants on 15.12.2009
and local commissioners were appointed to visit the premises of the defendant nos. 2, 3 and 4.
11. As the matter was compromised between the plaintiffs and the third and fourth
defendants, the report of the Local Commissioner, i.e. Syed Abdul Haseeb, who visited their
premises is being excluded from discussion in this judgment. Ms. Ritu Mishra, visited the
premises of the first and second defendants on 17.12.2009, she filed her report on 21.12.2009.
According to the Inventory (Annexure- B to her Report) (a) 165 brown cartons containing 5000
cups in each carton, i.e. 8,25,000 cups; (b) 7000 sheets on which 28 cups were printed on each
sheet; and (c) 8 trays containing 5000 cutting of cups in each tray, i.e. 40,000 cuttings of cups-
all bearing the impugned mark "NESCAFÉ/NESKAFÉ".
12. The Court has considered the plaint, supported by an affidavit, and report of the Local
Commissioner. Since the defendants have chosen not to file a written statement and were
proceeded ex-parte, only the facts urged by the plaintiffs and supported by documents and the
findings of the Local Commissioner as recorded in the report, shall be considered for
adjudication of the suit.
13. The plaintiffs have filed copies of trade mark registration certificates for NESCAFÉ,
RED MUG and RED MUG logo with and without NESCAFÉ on pages 25 to 98 of the
documents. The plaintiffs have also filed statement of annual sales and adverting expenditure by
the second plaintiff for the brand NESCAFÉ for the years 1999 to 2002 and 2002 to 2006, which
are certified by the Chartered Accountant. They have also filed sample photographs of
NESCAFÉ preparations packagings bearing the RED MUG and the RED MUG logo being used
in the domestic, as well as international market. The Investigation Report dated 07.12.2009 of
the private investigator is also filed at pages 409 to 412. The photographs of the defendants‟
paper cups bearing the trade mark NESCAFÉ, NESKAFÉ, RED MUG device and slogan
JAGAO NESCAFÉ PILAO. A consideration of the Local Commissioner‟s Report and its
Annexures, i.e. A (Samples of cups), A-1 (cutting of cups), A-2 (sheets containing cup cuttings)
the marks and logo (NESKAFÉ, NESCAFÉ and RED MUG) and E (photographs of the
defendants manufacturing unit and products) being used on paper cups reveals that the
defendants‟ products are identical and/or deceptively similar to those of the plaintiffs.
CS(OS) No.2399/2009 Page 4
14. With effect from 01.07.2002, after the amendment in Order VI, Rule 15 of the Code of
Civil Procedure, clause (4) was inserted to state as under:
"(4) The person verifying the pleading shall also furnish an affidavit in support of his
pleading"
Consequently, the affidavit required to be filed in support of the pleading has the effect of fixing
additional responsibility on the deponent as to the truth of facts stated in the pleadings. However,
such an affidavit is not evidence for the purpose of trial (Salem Advocate Bar Assocoiation v.
Union of India, AIR 2005 SC 3353). Further, the provision of Order VIII, Rule10 prescribes the
procedure when a party fails to present written statement called for by Court, as under:
"Where any party from whom a written statement is required under rule 1 or rule 9 fails
to present the same within the time permitted or fixed by the Court, as the case may be,
the Court shall pronounce judgment against him, or make such order in relation to the
suit as it thinks fit and on the pronouncement of such judgment a decree shall be drawn
up."
15. The averments in the plaint and the documents supplied by the plaintiffs and the Local
Commissioner‟s Reports remain unrebutted in the absence of the defendants or any contrary
pleadings by them. The plaintiffs have established that the defendants have infringed their
registered trademark in respect of the product in question; this activity does not have any
explanation except that the defendants‟ actions are deliberate and actuated with malafide, with
the intention of exploiting the plaintiffs‟ goodwill and reputation to cause confusion and
deception in the minds of the public at large. The plaintiffs have established that they are the
registered owners of the said trademarks and the logo in question.
16. Insofar as the relief of rendition of accounts and a consequential decree on the basis of
the aforesaid accounts is concerned, since the defendants were proceeded against ex-parte, there
is no material on the record by way of production of books of accounts, ledgers, etc., to establish
the volume of sales of the infringing product or the profits earned by it under the said
trademarks. Having said so, the Court considers this to be a fit case for awarding punitive
damages in view of the huge quantities of offending products and raw material bearing the marks
in question recovered at the defendants‟ premises by the Local Commisioner. If damages are not
awarded in favour of the plaintiffs, then the same would amount to a premium on the conduct of
the defendants. This Court held in The Heels v. V.K. Abrol and Anr., CS (OS) No. 1385/2005:
"12. No doubt it is not possible to give an exact figure of damages on the basis of actual
loss, but certain token amounts on the basis of the sales of the plaintiff can certainly be
made. The plaintiff is unnecessarily dragged into litigation and the defendants must bear
consequences thereof. In fact in such a case both compensatory and punitive damages
ought to be granted apart from the costs incurred by the plaintiff on such litigation."
17. Further, para 10 of the report and 13 of the On-the-Spot proceedings of the Local
Commissioner, Ms. Ritu Mishra reveals that she had to face untoward circumstances during the
execution of the Commission. The local lawyers sent by the first defendants hurled insults at her
and she was able to complete the proceedings with great difficulty. The Court, therefore, in light
of the grave inconvenience faced by the Local Commissioner deems it appropriate to make a
suitable order.
CS(OS) No.2399/2009 Page 5
18. In view of the above, the suit is entitled to succeed. The plaintiffs are also entitled to
damages to the extent of ` 2,00,000/-. Accordingly the suit is decreed in terms of para 37 (a), (b),
(c), (d), (e) and (f) of the plaint. The Counsel‟s fee and cost of proceedings is quantified at `
50,000/-. The amounts shall be paid by the defendants to the plaintiffs within 4 weeks from
today. Further, the defendants are directed to compensate the Local Commissioner of this Court,
Ms. Ritu Mishra, to the extent of ` 25,000/-. The keys to the defendants‟ precisely shall be
released to them, by the Court, if and when they approach with an application for this purpose.
The defendants are also directed to destroy the impugned paper cup and sheets, seized during the
inspection by the local commissioner. The suit is decreed in these terms.
JULY 06, 2010 (S.RAVINDRA BHAT)
JUDGE
CS(OS) No.2399/2009 Page 6
