Smithkline & French Laboratories ... vs Mohd. Mateen And Anr.
2014 Latest Caselaw 3504 Del

*       IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                      Date of decision : 4th August, 2014

+                          CS(OS) 797/2006

        SMITHKLINE & FRENCH LABORATORIES
        LTD. AND ANR.                          ..... Plaintiff
                      Through : Mr.Maanav Kumar, Advocate.

                           versus

        MOHD. MATEEN AND ANR.                                  ..... Defendant
                    Through :

        CORAM:
           HON'BLE MR. JUSTICE G.S.SISTANI

G.S.SISTANI, J. (Oral)

1. Present suit has been filed by the plaintiffs for permanent injunction restraining infringement of trademark, copyright, passing off, damages and delivery up. It is the case of the plaintiffs that the defendants are selling counterfeit product of plaintiff i.e. IODEX.

2. Summons were issued in the suit on 10.05.2006. While issuing summons in the suit an ex parte ad interim injunction was granted in favour of the plaintiffs and against the defendants. Defendant no. 1 entered appearance on 08.09.2006, while fresh summons were issued to defendant no. 2 on the same date. Defendant no. 2 entered appearance on 17.10.2006. Defendant no. 1 filed his written statement on 17.10.2006 and defendant no. 2 filed his written statement on 26.02.2007 alongwith an application under Order VIII Rule 1 for extension of time to file written statement. Written statement of defendant no. 2 was taken on record on 26.04.2007.

Plaintiff filed replication to the written statement of defendant no. 1 on 13.07.2007.

3. On the pleadings of the parties, issues were framed on 30.10.2007. Vide order dated 23.05.2014, right of defendants to cross-examine the witness of the plaintiff was closed as nobody was appearing for the defendants for last two dates and further plaintiffs evidence was concluded.

4. It may be noticed that the plaintiffs have examined one witness. None is present for defendants today and none was present on 03.05.2013, 12.12.2013, 23.05.2014 and 09.07.2014, consequently defendants are proceeded ex parte.

5. Plaintiffs have filed affidavit by way of evidence of the constituted attorney of the plaintiff no.1, Mr. Rahul Sethi (PW1). Copy of the power of attorney in his favour has been exhibited as Ex. PW1/1. Evidence of PW-1 has been exhibited as Ex.PW-1/A. He has deposed that the suit was initially filed by Smithkline & French Laboratories Limited as plaintiff No.1. Thereafter, during the pendency of the suit, the trademark IODEX was assigned by Smithkline & French Laboratories Limited in favour of Glaxo Group Limited. Further, the said mark IODEX registered under Registration no.38 in class 5 has been assigned to Glaxo Group Limited vide assignment deed dated 17th October 2007. Copy of the said deed of assignment has been exhibited as Ex. PW1/2. Subsequent to the assignment Smithkline & French Laboatories Limited and Glaxo Group Limited applied before the Trade Mark Registry for formal devolution of title with respect to the aforesaid mark in the name of Glaxo Group Limited. Copy of the TM-23 filed before the Trade Mark Registry has been exhibited as Ex. PW1/3. It has also been deposed that subsequent to the said assignment, Glaxo Group Limited entered into a registered user agreement with plaintiff no.2 dated 21st April 2009 and the same has been

exhibited as Ex. PW1/4. Further, plaintiff herein had filed amendment application to amend the plaint to bring on record Glaxo Group Limited as Plaintiff no.1.

6. PW1 has also deposed that the plaint as well as the amended plaint has been signed by Ms. Sree K. Patel on behalf of Plaintiff No. 1 and he recognizes her signatures as he has seen her signing the papers from time to time. Copy of the power of attorney in favour of Ms. Sree K. Patel has been exhibited as Ex. PW1/5.

7. PW-1 has further deposed that the plaintiffs' products encompass a wide and diverse range and are known for their efficacy, reliability and excellence of quality. The plaintiffs and their subsidiaries and affiliates maintain state-of-the-art research and development facilities for developing new products and upgrading their present range of products. All such products are subject to stringent quality testing to ensure safety and efficacy of these goods. Glaxo Smithkline is one of the world leaders in Research & Development, with a combined expenditure of 3.1 billion, in 2005.

8. He has also deposed that the mark IODEX is registered in the name of Smithkline &French Laboratories Limited under registration no. 38 in class 05 since 1st June 1942 in respect of "Pharmaceutical preparations; veterinary preparations and sanitary chemical substances; antiseptics; medicinal or surgical plaster; medicinal and surgical bandages." The said trade mark has been duly renewed from time to time and thus is valid and subsisting on the register. Copy of legal proceeding certificate for the mark IODEX under Registration No.38 in class 5 as of 1st June 1942 has been exhibited as Ex. PW1/6. On 17th October, 2007, the trademark IODEX was assigned to the plaintiff No.1 herein; Glaxo Group Limited.

9. PW1 has further deposed that IODEX is one of the oldest brands of the plaintiffs and its history dates back to 1921 when its manufacture was commenced by Smithkline & French Laboratories Limited predecessor- in-title, namely Menley & James of UK. Although IODEX was originally promoted through doctors as a prescription product, by the year 1963 it became a product that could be sold over the counter (OTC). The said product has been found highly effective to generations of people as a cure for sprains and pulled muscles. According to an All India Survey made around the mid-1990s, IODEX was stocked in one out of every three homes in India. The popularity of the brand IODEX has also carried over into the sports arena, having contributed to the rapid healing of common sports-related injuries and even healing damaged tissue. Presently, the plaintiffs IODEX preparations are popularly consumed and extensively available in pharmacies, drug stores as well as grocery stores and supermarkets.

10. PW1, Mr. Rahul Sethi, has also deposed that over the years, the Smithkline & French Laboratories Limited had entered into Registered User Agreements which inter alia permitted the use of the mark IODEX by plaintiff No.2 in India. Pursuant to the assignment of the IODEX trademark by Smithkline & French Laboratories Limited in favour of Glaxo Group Limited, the plaintiff no.1 herein has licensed the use of the mark IODEX in favour of plaintiff No.2. Furthermore, the mark IODEX is being used by plaintiff No.2 in India under a Technical collaboration Agreement with Smithkline Beecham Plc. which was entered into on 1st June 1995. Also, with a view to expand the market potential of IODEX, plaintiff No.2 transferred the marketing and distribution of IODEX range of products to its associate viz. M/s. Glaxo Smithkline Consumer Healthcare Limited, India's number one nutritional healthcare company

renowned for its science-based healthcare products that carry a stamp of unmatched quality. Glaxo Smithkline consumer Healthcare Ltd is a subsidiary of Smithkline Beecham plc. that markets IODEX in India with the express authorization of the plaintiff by virtue of Distribution Agreement dated January 16, 2003.

11. He has further deposed that the trade mark IODEX has been advertised continuously and extensively printed in audio and media since the very beginning and in the audio-visual media since the 1980s. The advertising of the said product has targeted all age groups - from the elderly and working people to children and housewives.

12. Further, due to the maintenance of exacting and constant high standards of quality and effectiveness in relieving pain as well as the unflagging advertising and publicity campaign, IODEX has the distinction of being the best known product in the pain-balm segment. Needless to say therefore, that the mark IODEX is an asset of great commercial significance to the plaintiff; which enjoys immense reputation and goodwill amongst the purchasing public and members of trade.

13. PW1 has also deposed that by virtue of prior registration, long-standing use, vast publicity and promotion, the plaintiffs' mark IODEX has earned substantial goodwill and reputation. As a result, members of trade and the public have come to associate the mark IODEX exclusively with the plaintiffs and no one else. The plaintiffs have ceaselessly guarded their statutory and proprietary rights in the said marks and asserted their right in the same at all times.

14. He has further deposed that the plaintiffs have been ever vigilant in seeking judicial recognition and protection of their statutory and proprietary rights against infringers of their registered trademarks and of

their distinctive packaging. The witness has given a list of legal actions taken by the plaintiffs before this Court.

15. He has also deposed that apart from the steady brand image maintained by the plaintiffs for IODEX, the said product has also been consistently presented in a unique and distinctive new packaging which is exclusively associated with the said product of the plaintiffs and no one else. The visual features of the product packaging of the new improved IODEX have been detailed as:

"a) A circular jar made of dark brown glass embossed on the base with the word "IODEX";

b) A green colored label on the bottle which is divided vertically into three portions;

c) The central portion of the three divisions bearing the mark IODEX in conjunction with the word RUB in bold black letters and the yellow twisted arrow containing the words New Improved (in combination of red and black colour) appearing at the left upper end against the backdrop of a haloed four pointed star like device in cream colour which is flanked on 2 sides by a brief description of ingredients and the directions for use on one side and the names of the manufacturer and the marketers appearing on the other side and finally the logo of the Plaintiffs i.e., GSK appearing in the left hand corner within a heart-shaped device;

d) The two divisions of the label on either sides of the central panel (as described above) are devoted to the descriptive matter and indications respectively, while the batch number and the manufacturing date appear in the extreme left hand on a multi- colored extension of the main label; and

e) The bottle bears a 2 colored cap i.e. green and yellow colored cap with the words "New Improved Green IODEX RUB" appearing thereon. The words 'Quick Pain Relief' appear just below the words IODEX RUB in red. The photographs of the plaintiffs'

product bearing the mark IODEX have been exhibited as Ex. PW1/7."

16. He has further deposed that the distinctive green IODEX label has been continuously used by the plaintiffs since the year 2003. Prior to this modification in the label, the IODEX label was in all dark green color with the said words appearing in black. In 1994, a multi-colored extension was added to the label and in January 1997 the haloed four pointed yellow star device was added to the label.

17. PW1 has also deposed that the above-described packaging has acquired a trade mark signification apart from the word IODEX and is independently entitled to protection. The labels are original artistic works within the meaning of Section 2 (C) of the copyright Act 1957, of which Smithkline & French Laboratories Limited is the owner and thus entitled to reproduce the same in any material form to the exclusion of all others.

18. PW1 has relied upon the statement of sale and advertisement figures mentioned in para 16 of the amended plaint.

19. He has further deposed that in course of their international business operations, the plaintiffs along with their affiliate and subsidiary companies under the GlaxoSmithkline group of companies use the GSK logo (a heart-shaped device with the alphabets GSK written in small letters within the device) to indicate the source and origin of their goods. A pictorial representation of the logo is as under:-

20. Further, the plaintiffs adopted the side logo in the year 2001 subsequent to the merger between Glaxo welcome Plc. and Smithkline Beecham Plc. to form GlaxoSmithKline plc. Evidently, the mark GSK is an acronym for the plaintiffs' parent company (GlaxoSmithKline PIc.).

21. PW1 has also deposed that the plaintiffs use the GSK logo universally on all their products. By virtue of continuous and extensive use all over the world, the trade and public have come to associate the logo with the plaintiffs exclusively. Widespread sales coupled with the proven efficacy of the plaintiffs products, have helped the GSK logo in becoming symbolic of quality of their products. The plaintiffs have also applied for registration of the mark GSK (word) under application Nos.930871 and 792990 and GSK logo under No.944362 in class 05; which are still pending before the trade marks Registry. The plaintiffs are also the registered proprietors of the GSK logo in classes 29 and 30 under Registration No.1000741 and 1000740.

22. PW1, Mr. Rahul Sethi, has further deposed that the plaintiffs have been receiving complaints about availability of counterfeit IODEX preparations in the pharmaceutical market since the year 2005. Taking serious note of such counterfeiting activities, the plaintiffs lodged a complaint against unknown persons in M/s Smithkline & French Laboratories Ltd. V. Unknown persons and obtained:-

"a) an order to investigate the matter under S. 156 (3) of the code of criminal procedure, 1973 (here in after referred to as Cr.P.C.);

b) along with a search warrant from the Learned Additional Chief Metropolitan Magistrate, Ms. Madhu Jain under S.93 of Cr..P.C.; which was duly extended by a subsequent order from the Learned Additional Chief Metropolitan Magistrate Ms. Kanwaljeet Arora."

23. Further, it transpired from the preliminary investigations conducted by the plaintiffs that Defendant No. 1 was manufacturing, stocking and distributing fake medicinal preparations under the mark IODEX. Taking immediate action, the plaintiffs lodged a first Information Report ( No. 108 of 2006) with the Ashok Vihar Police Station on 13th February 2006 against defendant No. 1 for offences under:-

I. Ss. 103 and 104 of the Trade marks Act, 1999 for falsifying trade marks and for selling goods to which false trade marks have been applied; and

II. S. 63 of the Copyright Act, 1957 for infringement of copyright.

The corresponding General diary Reference Entry No. is DD No.12A dated 13th February 2006.

24. He has also deposed that acting upon the First Information Report, the Sub-Inspector Mr. Suraj Prasad accompanied the plaintiffs representative to the premises of Defendant No. 1 at A-391, Weavers Colony, Ashok Vihar (phase-iv), New Delhi. On searching the said premises, it was found to be stocked with:-

a. fake medicinal preparations under the mark IODEX; b. along with raw materials ( like wax, oils colors etc.) for manufacturing counterfeit IODEX preparations; c. identical labels and packaging for selling medicines under the mark IODEX.

25. He has further deposed that at the time of the raids around 5 workers along with Defendant No. 1 were found inside the premises; who were engaged in manufacturing spurious IODEX. Caught red-handed, Defendant No.1 was arrested immediately by the raiding team of Delhi Police led by Sub-Inspector Mr. Suraj Prasad.

26. PW1 has also deposed that on searching the Defendants premises, a huge cache of fake medicinal preparations under the mark IODEX was recovered. The details of counterfeit goods and materials seized at the time of the raids are as follows:-

                  Description of Goods/Materials      Quantity Sized
                  IODEX labels                        73,329
                  IODEX holograms                     45,360
                  IODEX plastic shrink caps           4 large rolls
                  IODEX caps seals                    1 large bag
                  IODEX caps                          12,051
                  IODEX empty bottles (re-used)       7880
                  Wax                                 17 Kilograms
                  Finished IODEX bottles (20grams)    4,576
                  Finished IODEX bottles (10grams)    3,136

Copy of the FIR against the defendants along with seizure memo and the photographs taken during the raids, which clearly establish the level of counterfeiting in large quantities involved have been collectively exhibited as Ex. PW1/9. Plaintiff had conducted an analysis of the defendant's counterfeit product bearing the mark IODEX and the same was confirmed to be counterfeit. Copy of the Analysis report of the defendants sample has been exhibited as Ex. PW1/10. The photographs of the defendants' product have been exhibited as Ex. PW1/11.

27. He has further deposed that it is sufficiently clear from the above that the Defendants work in close association with each other towards

manufacturing and marketing of fake medicinal preparations under the mark IODEX. While Defendant No. 1 provides fake IODEX labels, Defendant No.2 handles distribution of counterfeit IODEX products throughout the country.

28. The witness has also deposed that the plaintiffs had earlier filed an action (being CS(OS) No.1415 of 2004) against Defendant No.2 (Mr. Surinder Jain) before this court for marketing counterfeit medicinal preparations under the mark IODEX on a wholesale basis. Vide its order dated 13th December 2004 this court granted ex-parte injunction and restrained Defendant No. 2 herein from manufacturing, selling or otherwise dealing in any manner what so ever in counterfeit IODEX preparations. The said interim order was subsequently confirmed by order dated 1st September 2005. The above proceedings are still pending.

29. PW1, Mr. Rahul Sethi, has also deposed that the Defendants, working hand-in-glove have been defrauding the general public by selling counterfeit IODEX medicines as original. The Defendants activities have caused immense loss of reputation and revenue to plaintiffs, loss of revenue to the government and deceived that innocent public who buy their products perceiving them to be genuine.

30. He has further deposed that the Defendant No. 1 Mr. Mohammad Mateen is a businessman/trader. Defendant no. 2 Mr. Surinder Jain is the proprietor of M/s. Raj Shingar House and is a wholesaler of pharmaceutical products based in Delhi.

31. He has also deposed that given the Defendants' brazen and unabashed attempts to counterfeit plaintiffs' preparations under the mark IODEX, they cannot possibly deny their knowledge of the plaintiffs' goods under the mark IODEX. As the Defendants have attempted to commercially gain by seriously undermining public health at the expense of the

plaintiffs' reputation, it is imperative to ensure that the Defendants do not profit from their own illegal activities by ordering the Defendants to pay punitive damages.

32. PW1 has further deposed that it is settled proposition of law that quantum of damages should depend upon the flagrancy of infringement. Given the defendants' attempt to manufacturing and marketing fake medicinal preparations under the mark IODEX at a massive scale, the defendants must be directed to pay damages to the tune of Rs. 20 Lacs to ensure that they do not profit from their unlawful excursion; which is also commensurate with their large scale counterfeiting activities.

33. I have heard counsel for the plaintiffs and carefully perused the documents which have been placed on record along with the affidavit by way of evidence which have been filed. The evidence of plaintiffs has gone unchallenged and un-rebutted. Copy of legal proceeding certificate for the mark IODEX under Registration No.38 in class 5 as of 1st June 1942 has been exhibited as Ex. PW1/6. The photographs of the plaintiffs' product bearing the mark IODEX have been exhibited as Ex. PW1/7. Annual reports of plaintiffs have been exhibited as Ex. PW 1/8. Copy of the FIR against the defendants along with seizure memo and the photographs taken during the raids have been collectively exhibited as Ex. PW1/9. Copy of the Analysis report of the defendants sample has been as Ex. PW1/10. The photographs of the defendants' product have been as Ex. PW1/11.

34. On the basis of the documents placed on record, the plaintiffs have established that the mark IODEX is registered in the name of SmithKline & French Laboratories Limited and the same has been assigned to Plaintiff no. 1, Glaxo Group Limited. Plaintiffs have also established that by virtue of prior registration, long-standing use, vast publicity and

promotion, the plaintiffs' mark IODEX has earned substantial goodwill and reputation. As a result, members of trade and the public have come to associate the mark IODEX exclusively with the plaintiffs and no one else. Plaintiffs have also established that apart from the steady brand image maintained by the plaintiffs for IODEX, the said product has also been consistently presented in a unique and distinctive new packaging which is exclusively associated with the said product of the plaintiffs and no one else. Further, the labels are original artistic works within the meaning of Section 2 (C) of the copyright Act 1957, of which Smithkline & French Laboratories Limited is the owner and thus entitled to reproduce the same in any material form to the exclusion of all others. Plaintiffs have also established that by virtue of continuous and extensive use all over the world, the trade and public have come to associate the GSK logo with the plaintiffs exclusively and it has become symbolic of quality of their products.

35. Plaintiffs have also established that the defendants are engaged in manufacturing, stocking and distribution of spurious medicinal preparation under the mark IODEX. Defendants prepare a mixture of wax, oils and colors which is then sold under the mark IODEX, they use labels (including caps, seals and holograms) to pack such preparations and also employ re-used IODEX bottles.

36. The facts of this case reveal that the conduct of the defendants is mala fide, dishonest, unethical and unlawful and solely motivated to encash upon the goodwill and reputation of the plaintiffs' trademark IODEX and to earn easy and illegal profits by passing off its medicinal preparations as those of the plaintiff. The act of the defendant is also likely to tarnish the plaintiff's goodwill and reputation and constitutes act of passing off and unfair completion.

37. In a very recent judgment delivered by another bench of this court, Mind Gym Ltd.v. Mindgym Kids Library Pvt. Ltd CS (OS) 1029/2013, decided on 21.03.2014, plaintiffs who were carrying on business under the trade mark 'MIND GYM' sought permanent injunction against the defendants restraining them from infringing and/or passing off the plaintiff's rights by using the trademark 'MINDGYM' as part of latter's corporate name/trademark. Following observations were made by the court:-

"9........

(ii) In the case of Evergreen Sweet House Vs. Ever Green and Ors., 2008 (38) PTC 325 (Del), it was observed as under:

15. A mark, is said to be deceptively similar to another (Section 2(1) (h), Trademarks Act, 1999) if it so nearly resembles that other mark as to be likely to deceive or cause confusion. Section 29(1) deals with a situation where the defendant uses a mark, which is identical or deceptively similar to that of the plaintiff, in respect of the same goods or services, and in such manner that it is likely that such use is taken as being an use as a trademark. This amounts to infringement. To fall within Section 29(1), the defendant's use of the mark must be so that it is likely that the public assumes that the said mark is used as a trademark. Section 29(2) deals with three situations; one where the defendants mark is identical to that of the plaintiff and in respect of similar goods. Two, where the marks are similar and in respect of goods which are identical or similar. Three, the marks as well as the goods are identical. Infringement does not take place if only one of the three ingredients are satisfied; the plaintiff has to prove that use by the defendant is likely to cause confusion on the part of the public or is likely to have an association with the registered mark."

[Emphasis Supplied]

38. I am of the view that the impugned trademark of the defendants is identical to the plaintiff's trademark. The use of the word "IODEX" by the

defendants is likely to dilute the distinctive character of the plaintiff's trademark "IODEX" and the same is likely to erode the goodwill and reputation of the plaintiffs among its existing as well as potential customers in the market. The adoption and use of the identical trademark by the defendants in relation to identical products amounts to an infringement of the plaintiffs' statutory rights in the registered trademark "IODEX".

39. In view of the above, the plaintiffs are entitled to a decree of permanent Injunction against the defendants from dealing with the counterfeit pharmaceutical preparations having infringing mark, logo, label and packaging and also from using recycled bottles of the plaintiffs' bearing the mark IODEX in terms of prayers (i), (ii) and (iii) in paragraph 34 of the plaint.

40. The plaintiff has also claimed damages on account of illegal activities of the defendants along with delivery up of the goods, dyes, blocks, bottles, cartons, labels and any other printed matter bearing the impugned trade mark, or get up, layout, arrangement, color scheme etc.

41. In the case of Time Incorporated v. Lokesh Srivastava and Anr reported at 2005 (30) PTC 3 (Del), apart from compensatory damages of Rs.5 lakhs, punitive damages were also been awarded.

42. I am in agreement with the aforesaid submission of learned counsel for the plaintiff that damages in such cases must be awarded and a defendant, who chooses to stay away from the proceedings of the Court, should not be permitted to enjoy the benefits of evasion of court proceedings. Any view to the contrary would result in a situation where a defendant who appears in Court and submits its account books would be liable for damages, while another defendant who, chooses to stay away from court proceedings would escape the liability on account of failure of the

availability of account books. A party who chooses not to participate in court proceedings and stays away must, thus, suffer the consequences of damages as stated and set out by the plaintiffs. There is a larger public purpose involved to discourage such parties from indulging in such acts of deception and, thus, even if the same has a punitive element, it must be granted. R.C. Chopra, J. has very succinctly set out in Time Incorporated's case (supra) that punitive damages are founded on the philosophy of corrective justice. In this case, based on the complaint registered at the instance of the plaintiff, a raid was conducted and goods were seized which also establishes the case of the plaintiff. The counterfeit goods sold by the defendant is not only likely to deceive the public and cause risk to the health of unvary customers, but is also causing financial loss to the plaintiff.

43. For the reasons stated above, the plaintiffs have made out a case for grant of decree as prayed in the plaint. Accordingly, the order dated 10.03.2006 is confirmed and the suit is decreed in favour of the plaintiffs and against defendants. Plaintiffs are also entitled to damages to the tune of Rs.10.00 lacs.

(G.S.SISTANI) JUDGE August 4, 2014 ssn