Sandisk Corporation vs M/S Shivji Electronics & Ors.
2014 Latest Caselaw 6866 Del

*      IN THE HIGH COURT OF DELHI AT NEW DELHI

%                           Order delivered on: 16th December, 2014

+                        CS (OS) No. 2642/2012

       SANDISK CORPORATION                                   ..... Plaintiff
                       Through             Ms. Shwetasree Majumder
                                           and Mr. Prithvi Singh, Advs.

                         versus

       M/S SHIVJI ELECTRONICS & ORS.                       ....Defendants
                         Through None.

       CORAM:
       HON'BLE MR.JUSTICE MANMOHAN SINGH

MANMOHAN SINGH, J.

1. The plaintiff has filed a suit for permanent injunction restraining infringement of trademark "SanDisk", copyright, passing off, rendition of accounts of profits, damages and delivery up against the defendants.

2. The suit along with interim application was listed before Court on 31st August, 2012. After hearing, detailed ex-parte ad interim injunction order was passed restraining the defendants, their partners, servants, agents, representatives etc. from manufacturing, selling, offering for sale such products, that infringe the plaintiff's trademarks, 'SanDisk' and its 'SanDisk' logo and/or are identical or deceptively similar to the plaintiff's product packaged and sold under the trademark 'SanDisk', 'SanDisk' logo and 'Red Frame' logo.

3. Upon service of interim order, the defendants appeared. However, no written statement was filed and accordingly the right to file the written statement was closed vide order dated 18th April, 2013. The interim order dated 31st August, 2012 was made absolute vide order 18th April, 2013. Thereafter, the defendants stopped appearing and consequently, the defendants are proceeded ex parte vide order dated 22nd July, 2014.

4. Learned counsel for the plaintiff stated that their documents are mainly printout of electronic record and third party documents which shall be proved during the trial and there is no document to be put through admission/denial and hence, accordingly, admission/denial was concluded vide order dated 20th December, 2013.

5. Brief facts as stated in the plaint are that the plaintiff, a Fortune 500 and S & P 500 company, is the world's largest dedicated provider of flash memory storage solutions under the house mark 'SanDisk'. The plaintiff designs, develops and manufacturers data storage solutions in a range of form factors using the flash memory, controller and firmware technologies. It was founded in 1988 by Dr. Eli Harari and Sanjay Mehrotra, both non-volatile memory technology experts.

6. The plaintiff's brand 'SanDisk' is recognized around the world and the plaintiff's pioneering flash memory technology is integrated into products from top electronics companies and is marketed to both other equipment makers as well as direct to consumers.

7. The plaintiff creates transformational memory products at world-class manufacturing facilities that produce more than two million products each day. It serves three high growth mega markets- mobile, computing and consumer electronics - each of which increasingly requires flash memory to deliver compelling benefits to consumers and businesses.

8. The plaintiff became a publicly traded company on NASDAQ in November, 1995 and as of September, 2014, its market capitalization stood at USD 22 billion. Such is the demand for the plaintiff's products globally that as on date, approximately 3, 00,000 storefronts worldwide stock and sell the plaintiff's products, taking the plaintiff's annual revenues in the year 2013 to USD 6.17 billion. The plaintiff's advertising, research and development spend in 2013 stood at USD 761.6 million which manifests in the immense brand recall for the plaintiff's trademark 'SanDisk' in the minds of customers worldwide. Within a mere 26 years, the plaintiff has grown from a three person Silicon Valley startup to a global leader with more than 5,500 employees.

9. The plaintiff's trademark 'SanDisk' has been registered in favour of the plaintiff in more than 150 countries of the world, both as a word mark as well as a label. In addition to the worldwide trademark registrations, the plaintiff is also the registered proprietor of both variety of words marks and device marks in India as elaborated in Annexure A to the plaint. The plaintiff's house mark 'SanDisk' is registered under Trademark Application No. 1249761 in Class 9 since 14th November, 2003 and the 'SanDisk' logo is registered under

Trademark Application No. 1249762 in Class 9 since 14th November, 2003. The plaintiff also owns common law rights in the "Red Frame" logo which is currently pending before the Indian Trademark Registry which was applied for registration under No. 1805766 on 13th April, 2009.

10. Defendants are wholesalers of electronic equipment, including flash drives and memory cards. Defendant No.2 and 3 are partners who are running the business of defendant No.1.

11. It is the case against the defendants as alleged by the plaintiff that in the year 2012, the plaintiff came to know from market sources about the counterfeiting activities taking place in the Lajpat Rai Market Area which is one of the focal hubs of wholesale network for counterfeit products. The plaintiff observed a significant volume of trading in such counterfeit products operating out of the said area was being carried out with vendors from satellite towns around New Delhi, the National Capital Region and across North India. Thereafter, the plaintiff commissioned a full scale investigation into the operations and activities of counterfeit wholesalers in the Lajpat Rai Market area in New Delhi in the months of July-August, 2012 and came across defendant No.1 who was trading counterfeit SanDisk products.

12. It is alleged that the defendants were selling the SanDisk MicroSD cards at a price as low as Rs.10 for a single MicroSD card and Rs. 5 per card in case of bulk orders which is in contrast to the price of plaintiff's MicroSD cards which retail at a price of Rs.170 upwards.

13. It is further alleged that the defendant's cards were cheap counterfeits being mere plastic cut-outs in MicroSD card shape upon which bears similar markings as on the plaintiff's genuine products, including the plaintiff's trademark SanDisk. Defendants' cards did not have any electronic components, further even the packaging of the cards was of extremely low quality and the print on the packaging was deceptively similar to the plaintiff's original packaging bearing the plaintiff's trade dress, layout and trademark SanDisk.

14. In ex-parte evidence, the plaintiff filed affidavit dated 10th October, 2014 and 26th November, 2014 of Mr. Gurjot Singh, Constituted Attorney of the plaintiff as Ex. PW1 reiterating the contents of the plaint and also exhibited certain documents exhibited as Ex.PW1/1 to Ex. PW 1/20 in support of its case. The same are as follows :

 Copy of the Power of Attorney exhibited has been exhibited as Ex.PW 1/1 and Ex. PW1/2

 Extract of the Worldwide Business Authorisation Policy as certified by the Company Secretary of the plaintiff dated 17th August, 2012, has been exhibited as Ex. PW 1/3

 Extracts from the plaintiff's global and Indian websites has been exhibited as Ex.PW 1/4 (colly)

 Affidavit of PW-1 under Section 65 B of the Evidence Act has been exhibited as Ex. PW1/5

 Notarized copies of the Legal Proceedings Certificate has been exhibited as Ex. PW1/6

 Extracts from the website of the Trademark Registry demonstrating the status of the trademark applications of the plaintiff has been exhibited as Ex. PW 1/8 (colly)

 Copy of the application registered under No. 1805766 on 13th April, 2009 exhibited as Ex. PW1/9 (colly)

 Original photographs of various products of the plaintiffs bearing the trademark SanDisk with/without the SanDisk packaging exhibited as Ex.PW 1/10 (colly)

 Original photographs showing products of the plaintiff being sold at some of its authorized retailers in various cities and its branding efforts in India exhibited as Ex. PW1/11 (colly)

 Advertisements of the plaintiff's products exhibited as Ex.PW1/12 (colly)

 Third party write ups, industry awards and other media publications pertaining to the plaintiff's products under the SanDisk trademark exhibited as Ex. PW 1/13 (colly)

 Affidavit of Pawan Kumar, investigator exhibited as Ex.PW1/14

 Original photographs of the actual products bought by the plaintiff from the defendants, Ex.PW1/15 (colly)

 Visiting card of the defendants exhibited as Ex.PW 1/16

 Original photographs of the premises of the defendants exhibited as Ex.PW 1/17 (colly)

 A chart comparing the defendants' counterfeit products and the plaintiff's original SanDisk products exhibited as Ex. PW 1/18

 Comparison of the plaintiff's original packaging with that of the defendant's counterfeit product and the plaintiff's corresponding original product exhibited as Ex.PW1/19

 Report of the local commissioner exhibited as Ex.PW 1/20

15. The evidence filed by the plaintiff has gone unrebutted as no cross-examination of the plaintiff's witness was carried out, therefore, the statements made by the plaintiff are accepted as correct deposition.

16. In the affidavit filed on behalf of the plaintiff, the plaintiff has claimed punitive damages in addition to the damages of Rs. 20 lakhs prayed for in Para 16 (f) of the plaint. The prayer with regard to damages is liable to be rejected as the same has not been proved. However, the Court is empowered to grant punitive damages. Reliance in this regard can be had to the following:

(i) In Time Incorporated Vs. Lokesh Srivastava & Anr., 2005 (30) PTC 3 (Del.) while awarding punitive damages of Rs. 5 lakhs in addition to compensatory damages also of Rs. 5 lakhs, Justice R.C. Chopra observed that "time has come when the Courts dealing in actions for infringement of trademarks, copyrights, patents etc., should not only grant compensatory damages but also award punitive damages with a view to discourage and dishearten law breakers who indulge in violation with impunity out of lust for money, so that they realise that in case they are caught, they would be liable not only to reimburse the aggrieved party but

would be liable to pay punitive damages also, which may spell financial disaster for them."

(ii) In Microsoft Corporation Vs. Rajendra Pawar & Anr., 2008 (36) PTC 697 (Del.) decided on 27th July, 2007, this Court held that "Perhaps it has now become a trend of sorts, especially in matters pertaining to passing off, for the defending party to evade court proceedings in a systematic attempt to jettison the relief sought by the plaintiff. Such flagrancy of the Defendant's conduct is strictly deprecatory, and those who recklessly indulge in such shenanigans must do so at their peril, for it is now an inherited wisdom that evasion of court proceedings does not de facto tantamount to escape from liability. Judicial process has its own way of bringing to tasks such erring parties whilst at the same time ensuring that the aggrieved party who has knocked the doors of the court in anticipation of justice is afforded with adequate relief, both in law and in equity. It is here that the concept of awarding punitive damages comes into perspective."

17. In view of the above, plaintiff is entitled to Rs. 5 lacs as punitive damages. Also, in the light of the facts and circumstances of the present case, the plaintiff is entitled for a decree of permanent injunction in terms of prayer clause 16 (a) (b) (c) and (e) of the plaint. Other prayers are rejected. Decreed

18. Decree be drawn accordingly.

(MANMOHAN SINGH) JUDGE DECEMBER 16, 2014