M/S Coral Seal & Ceramics vs Sunil Sagar
2013 Latest Caselaw 3234 Del

*      IN THE HIGH COURT OF DELHI AT NEW DELHI
#22
+                           CS(OS) 1662 of 2012

       M/S CORAL SEAL & CERAMICS                    ..... Plaintiff
                       Through: Mr. Sushant Singh with
                                Mr. P.C. Arya, Mr. Gowtham,
                                Mr. V.K. Shukla, Mr. Tejinder Singh
                                and Ms. Parveen Arya, Advocates.
                versus

       SUNIL SAGAR                                   ..... Defendant
                            Through: Mr. Manish Kaushik, Advocate.

       CORAM: JUSTICE S. MURALIDHAR

                                   ORDER

        %                          26.07.2013

1. The following issues are framed:

       (1)     Whether the Plaintiff is the owner and proprietor of the
               trademark CORAL MECHANICAL SEAL?                   OPP

       (2)     Whether the Defendant is passing off its goods as and those of
               the Plaintiff?                                           OPP

       (3)     Whether the Defendant's packaging is identical to the

               Plaintiff's packaging, thereby amounting to infringement of the
               Plaintiff's copyright?                                    OPP

       (4)     Whether there is concealment of material facts by the Plaintiff
               and to what effect?                                   OPD

       (5)     Whether the Defendant is the prior user of the impugned
               trademark CORAL MECHANICAL SEAL?                  OPD

       (6)     Whether the Plaintiff is entitled to damages as claimed by the
               Plaintiff?                                              OPP

       (7)     Relief.

               No other issue arises or is pressed.

2. The parties will now file their respective list of witnesses and affidavits

by way of examination-in-chief of those witnesses within eight weeks. To

be placed before the Joint Registrar on 13th November 2013.

I.A. No. 10717 of 2012 (u/O XXXIX R-1 & 2 CPC)

3. The background facts to the present suit has been set out in some detail in

the order passed by the Court on 1st June 2012 while granting an ex parte ad-

interim injunction in favour of the Plaintiff and against the Defendant. The

said order reads as under:

"Plaintiff has filed the present suit for injunction, infringement of copyright, passing off, damages and delivery up etc. against the defendant.

As per the plaint, plaintiff is engaged in the business of manufacturing and trading of automobile parts and mechanical seals under the trademark 'CORAL MECHANICAL SEAL' and has applied for registration of the said trademark with the Registrar of Trademark. A copy of the trademark application under no.2056103 dated 1.11.2010 has been filed along with the plaint. The plaintiff's products are known for their quality and high standard. The device, name, word, letter, design, layout and packaging of the said products of the plaintiff are covered by the provisions of Section 2(m) of the Trade Marks Act, pertaining to the definition of mark. The plaintiff is also the owner of the copyright in the packaging and design of the said products. The plaintiff has adopted the distinctive mark, shape, design, getup layout and arrangement of features in respect of the CORAL MECHANICAL SEAL and has been using the same continuously, regularly, extensively and uninterruptedly. The plaintiff has also spent large amount of money on sales promotion and advertisement through various modern media. The purchasers of CORAL MECHANICAL SEAL are generally the semi-literate persons or traders dealing with automobile parts and mechanical seals who recognize the plaintiff's goods with their distinctive mark, shape design, getup and layout of the product.

Learned counsel for the plaintiff submits that the plaintiff has learnt that defendant is engaged in the business of manufacturing and sale of automobile parts and mechanical seals. Counsel further submits that

defendant's mechanical seal are virtually a replica of the plaintiff's product CORAL MECHANICAL SEAL inasmuch as the device, mark, label, shape, design, arrangement of features, layout and get- up, colour combination, packaging and the overall trade dress are concerned and the said product of the defendant is readily available in Delhi and NCR. In support of his submission, counsel has drawn the attention of the Court to the scanned graphic design/scanned design of the plaintiff's CORAL MECHANICAL SEAL and the defendant's CORAL SEAL to show the similarity between the products of the plaintiff and the defendant. Counsel next submits that defendant is aware of the plaintiff's product, has been dealing with the plaintiff and purchasing the goods from the plaintiff, which is evident from the original bill, which has been filed at page 175 of the documents. Counsel also submits that defendant has filed an application dated 17.10.2011 before the Assistant Registrar, opposing the registration of the plaintiff's trademark CORAL MECHANICAL SEAL under class 7. Counsel submits that in case the defendant is permitted to continue with its illegal activities the plaintiff would suffer immense loss, goodwill, reputation and the name of the plaintiff will be diluted. Counsel, in these circumstances, prays for ex parte ad interim injunction.

Issue summons in the suit and notice in the application to defendants, returnable on 22.08.2012.

I have heard counsel for the plaintiff and perused the plaint, application and the documents. I am satisfied that prima facie plaintiff has been able to show that it has been using the trademark 'CORAL MECHANICAL SEAL' prior in time to the defendant, which is evident from a copy of the bill which has been placed on record to show that the defendant has been buying the product from the plaintiff. Had the defendant been in business prior to the plaintiff, defendant would not be purchasing the identical goods from the plaintiff. On comparison of the packaging material, I also find that the defendant has copied the trade-dress and the manner of writing is almost identical. The plaintiff has thus been able to establish a case for grant of ex parte ad-interim injunction.

Accordingly, till the next date of hearing defendant, its directors, partners, proprietors, servants, officers, agents and representatives are restrained from marketing, selling, offering for sale, advertising and directly or indirectly dealing using the similar mark, device, label, brand, name, shape, design and other arrangement of features and trade dress as that used by the plaintiff for its product

'CORAL MECHANICAL SEAL'.

Plaintiff will comply with the provisions of Order 39 Rule 3 CPC within five days. DASTI."

4. The graphic design/scanned design on the Plaintiff's coral mechanical seal

and the Defendant's coral seal are as under:

5. It is submitted by Mr. Sushant Singh, learned counsel for the Plaintiff that

there is a high degree of deceptive resemblance between the products and in

their mark, device, label, brand name, design, shape, scheme, layout, get-up

and arrangement of features and any purchaser of ordinary prudence and

imperfect recollection is bound to get confused as to the source of origin of

the goods and perceive the Defendant's product as having emanated from

the Plaintiff. He highlighted the following three features:

(i) The two products are identical in respect of their mark, device,

label, brand name, design, shape and arrangement of features.

(ii) The class of customers for the rival products, including traders

or persons dealing with automobile parts and mechanical seals

primarily, would overlap.

(iii) The trade channels through which the products are sold i.e.,

shops selling automobile parts, are also identical.

6. He submitted that permitting the Defendant to continue manufacturing

and marketing the aforementioned product bearing the aforementioned

identical mark, device, design, layout, shape as that of the Plaintiff's

CORAL MECHANICAL SEAL is likely to cause irreparable and

unquantifiable damage to the Plaintiff's business, and would tarnish the

reputation that the Plaintiff has built over many years, thereby resulting in

loss of its business and sales due to the confusion of the innocent purchaser.

There would be dilution of the goodwill of the mark in general. He points

out that while the Plaintiff's application for registration was under Class 7

issued on 19th November 2010, the Defendant applied for registration of the

identical mark clearly one year later, i.e., on 17th October 2011. According

to him, the Plaintiff had commenced its business in 2005 and its products

had, in a span of over and a half decade, become well-known for their

quality and high standards. Apart from answering the description of a mark

under Section 2(m) of the Trade Marks Act, 1999 (TM Act), it is submitted

that the Plaintiff is also the owner of the copyright in the packaging and

design of the said product within the meaning of 'artistic work' under

Section 2(c) of the Copyright Act, 1997 (Copyright Act). He relies on the

advertising given by the Plaintiff in various newspapers (Annexure C Colly)

the sale and advertisement figures (Annexure D), a list of several invoices

(Annexure E) which go to show that the Plaintiff has been in the trade of

manufacturing and selling the product under the said trademark prior to the

Defendant. He relied on an invoice dated 18th November 2005 evidencing

sale of the product by the Plaintiff since then. He submitted that even as

recently as 3rd December 2009 and 20th June 2011the Plaintiff has been

supplying the product to the Defendant (PW 1/9). He submits that thereafter

the Defendant has, in a dishonest manner, virtually copied the mark, design

and packaging of the Plaintiff's product.

7. Mr. Manish Kaushik, learned counsel for the Defendant, on the other

hand, submitted that Plaintiff was not itself engaged in the manufacture of

mechanical seals and was merely a dealer in the said product. According to

him, the carton of the Plaintiff is a cheap imitation of the carton of the

Defendant. While the carton of the Defendant has the manufacturing date,

quantity, MRP etc., describes the Defendant as manufacturer and contains a

logo CST meaning 'Coral from Sagar Trading Company', the word 'S' on

the Plaintiff's packaging has no connection at all with the Plaintiff. It is

submitted that around 2006 when the Plaintiff started dealing in mechanical

seals, the Defendant was already a well-known name. Referring to the

registration certificate dated 26th February 1987 under the Delhi Shops &

Establishments Act, 1954, it is submitted that the Defendant opened his shop

in Ajmeri Gate in 1985 and has been continuously in business since then. It

is claimed that he has been selling pumps spare parts and mechanical seals

since 1987. He obtained sales tax registration in 2005 and started

manufacturing mechanical seals under the brand name CORAL.

8. Counsel for the Defendant placed considerable reliance on an invoice

dated 30th September 2005 which shows the buyer as 'Machinery Zone -

Kashmeer' with parties TIN No. '01542020105'. Another invoice dated 26th

November 2005 issued by the Defendant does not indicate the name of the

purchaser and is purported to be "a cash sale". There is a third invoice of

28th November 2005 addressed to a party in Delhi. These invoices are relied

upon to show that the Defendant has been selling mechanical seal products

earlier than the Plaintiff.

9. Mr. Sushant Singh has drawn the attention of the Court to information

gathered by the Plaintiff about the identity of the purchaser 'Machinery Zone

- Kashmeer' whose TIN No. is shown in the invoice dated 30th September

2005 issued by the Defendant. The said firm in fact obtained the sales tax

registration only on 5th June 2009. Prima facie, it appears doubtful whether

in fact that entity could have purchased the product in question from the

Defendant in 2005. In any event, this would be a matter for evidence.

10. The other feature is that although the Defendant claims to have been in

business from 1987 onwards, there is not a single invoice of that date to

substantiate such a claim. The Defendant claims that like the Plaintiff it

being manufacturing the Coral Mechanical Seals only in 2005. Both the

Plaintiff and Defendant have produced invoices of 2005. While one of the

Defendant's invoices, as noted above, does appear prima facie to be

doubtful, the validity of the invoices can be tested at the trial. The Defendant

would have to explain the invoices produced by the Plaintiff which show

that the Defendant has been purchasing products from the Plaintiff even as

late as 2009 and 2011.

11. There are two factors that are striking. One is that there is very little to

distinguish one trade mark and packaging from the other. In the Plaintiff's

application for registration dated 19th November 2010 it has been stated that

it had been engaged in manufacture and marketing of mechanical seals in

2005 and exclusively, continuously and uninterruptedly. The date of use is in

December 2005. In the Defendant's Application made almost a year later on

17th October 2011 for a nearly identical trademark, the user date is shown as

four months prior to the Plaintiff, i.e., 12th August 2005. However, there is

no invoice of 12th August 2005 produced by the Defendant. The last invoice

is of 13th September 2005 which shows the aforementioned TIN no. which

appears to be of a firm which obtained its sales tax registration much later in

2009.

12. Counsel for the Defendant sought to place reliance on the decisions of

this Court in L.D. Malhotra Industries v. Ropi Industries (1976) ILR Delhi

278 and Novartis AG v. Crest Pharma Pvt. Ltd. 2009 (41) PTC 57 (Del).

The said decisions reiterate the settled position that the mere filing of an

application prior in time does not per se confer any right "if the other party

is in fact an actual prior user of the mark in question". In the present case, it

is not possible at this stage to conclude even prima facie that the Defendant

is the actual prior user of the mark. This could be decided only after

evidence is recorded. The Plaintiff having claimed user since December

2005 has in fact produced an invoice of 10th November 2005. What also

weighs in favour of the Plaintiff at this stage is the name of the firm of the

Plaintiff being 'Coral Seal & Ceramics'.

13. In the above circumstances, this Court is of the view that the Plaintiff has

a prima facie case in its favour for making absolute the interim injunction

granted by the Court on 1st June 2012. The balance of convenience is also in

favour of the Plaintiff.

14. For all of the aforementioned reasons, this Court makes the interim order

passed by it on 1st June 2012 absolute during the pendency of the suit. It is,

however, clarified that the above observations are prima facie and will not

influence the final decision in the suit.

15. The application is disposed of.

S. MURALIDHAR, J.

JULY 26, 2013 akg