Delhi High Court

Disney Enterprises,Inc & Anr vs Dhiraj & Anr on 25 February, 2014

$~ 14
*    IN THE HIGH COURT OF DELHI AT NEW DELHI
%                                     Date of Decision: February 25, 2014
+                        CS(OS) 1025/2012
      DISNEY ENTERPRISES,INC & ANR           ..... Plaintiff
                Through:   Mr.Aditya Kutty, Advocate

                         versus

      DHIRAJ & ANR                                ..... Defendant
                 Through

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

G.S.SISTANI, J. (Oral)

1. Plaintiffs have filed the present suit for permanent injunction,

restraining infringement of trademarks and copyrights, passing off,

dilution, damages, rendition of accounts of profits and delivery up.

2. Summons were issued in the suit and in the application filed by the

plaintiffs under Order 39 Rules 1 and 2 the following interim order

was passed on 18.4.2012:

"I have heard counsel for the plaintiffs and also perused the plaint, application and the documents filed along with the present plaint. I am satisfied that it is a fit case for grant of for ex parte ad interim injunction. Accordingly, till the next date of hearing, defendants, their principal officers, Directors, agents, franchisees, servants and licensees are restrained from marketing, offering for sale, selling, advertising, distributing - directly or indirectly - dealing in any products, including bags such as school bags, travel bags, bearing the word mark or character device or artistic works as identical or deceptively similar to the trade mark or copyrights of the plaintiffs including but not limited to Mickey Mouse, Minnie Mouse, Winnie The Pooh , „Pooh‟ and any other character/mark/ device/ artistic work of the plaintiffs. Plaintiffs shall comply with the provisions of Order XXXIX

Rule 3 CPC within two weeks from today."

3. The summons issued to the defendants remained unserved,

although the Local Commissioner, who was appointed in the matter

and had visited the premises of the defendants, submitted in his

report that the defendants were aware of the pendency of the

present suit. Since the defendants were keeping out of the way of

accepting service, the plaintiffs filed an application under Order 5

Rule 20 CPC for substituted service. The defendants were thereafter

served through publication in the newspaper „The Statesman‟ and

„Dainik Jagran‟.

4. Despite substituted service the defendants did not enter

appearance, consequently they were proceeded ex parte on

10.1.12013.

5. Plaintiffs have filed the affidavit by way of ex parte evidence of

Sh.Vishal Ahuja, the authorized signatory and lawful attorney of the

plaintiffs. The affidavit has been marked as Ex.PW-1/A. The

deponent has deposed on the lines of the plaint. It has been

deposed by him that he has the power of attorney which authorizes

him to file the suit. The power of attorney and other documents in

relation to authorization are collectively exhibited as Ex.PW-1/1.

6. PW-1 has deposed that the plaintiff No. 1, Disney Enterprises Inc., is

a corporation organized and existing under the laws of the State of

Delaware in the United States of America, having its principal place

of business at 500 South Buena Vista Street, Burbank, California

91521-0874, USA. It is also deposed that the plaintiff No.2, The Walt

Disney Company (India) Pvt. Ltd, is the master licensee in respect of

the Plaintiff No.1‟s copyrights and trademarks for promotion,

publishing and merchandising purposes in the territory of India

(hereinafter referred to as "DEI material"). Plaintiff No.2 is a

Company registered in India having its registered office located at

4th Floor, Peninsula Tower - I, Ganapatrao Kadam Marg, Lower Parel,

Mumbai - 400013 and its branch office located at C-301, Third Floor,

Ansal Plaza, HUDCO Place, Andrews Ganj, New Delhi - 110049. It is

also deposed that on account of being the master licensee of the

Plaintiff No.1, the Plaintiff No. 2 is responsible for granting licenses

for commercial exploitation of the Plaintiff No.1‟s copyrights and

trademarks in India. Thus, any infringement or piracy of the Plaintiff

No.1‟s rights in its copyrights and trademarks, would detrimentally

affect the Plaintiff No.2‟s business interest in India. Hence, the

Plaintiff No.2 is an affected and interested party whenever the

Plaintiff No.1‟s rights are infringed / violated in India.

7. PW-1 further deposed that the Plaintiffs are subsidiaries of The Walt

Disney Company which is a leading and diversified international

family entertainment and media enterprise. The Plaintiffs have

established themselves in various businesses, particularly as

creators and distributors of highly creative and entertaining

animated motion pictures and television programmes, whose unique

characters have achieved mythic proportions in popular culture. PW-

1 has deposed that globally prominent characters forming an

important part of the Plaintiffs‟ bundle of intellectual property assets

include, but are not limited to, Mickey Mouse, Minnie Mouse, Donald

Duck, Daisy Duck, Goofy, Pluto, Winnie the Pooh, Tigger, Hannah

Montana, etc. (hereinafter collectively referred to as "DISNEY

Characters"); and that these DISNEY Characters have appeared in

several motion pictures and television programmes for over eighty

years now and have a huge fan-following of their own, cutting across

all territorial, age and gender barriers.

8. PW-1 has next deposed that the Plaintiff No.1 has come to be

recognized for the distinctive flavor of its work and has proven itself

as a force to reckon with, not only in the entertainment industry but

in every business it has ventured into. In addition to providing

entertainment services, Plaintiff No.1 has enhanced the popularity

and relatability of its protected characters, trademarks, trade name

and service marks by building theme parks and spawning toys,

books, bags, apparel and merchandise industry which revolves

around these characters, trademarks, trade name and service

marks. The degree of association of the DEI Materials, particularly

Character Names, Character Devices or Characters with the Plaintiffs

is so intense that any reference to these would lead a substantial

part of the relevant public to recognize, acknowledge and associate

the same exclusively with the Plaintiffs and the Plaintiffs alone.

Moreover, irrespective of whether the goods and services are

provided by the Plaintiffs themselves, or through its licensees, use of

the DEI Materials in relation to any business, goods or services

signifies the highest standards of quality and integrity. It is also

deposed that the public has come to link such products which carry

the Plaintiff‟s Marks with attributes such as unassailable integrity,

highest levels of excellence, impeccable and unimpeachable quality

and value for money.

9. PW-1 has also deposed that the reputation and goodwill of the

Plaintiff‟s Characters and trademarks spill over into every business

that the Plaintiffs have ventured into, be it travel, real estate,

management and design services, print and publishing industry,

consumer goods and merchandising, internet and direct marketing,

interactive media like gaming and mobile applications or educational

services, apparel, beverages, clothing, giftware, novelty items,

sports equipments, bags etc.

10. The witness has further deposed that to protect the DEI Materials,

the Plaintiff has registered hundreds of Trademarks across many

countries including India. It is also deposed that the characters

"Mickey Mouse" and "Minnie Mouse" have been held to be

extremely popular and famous world over and hence were accorded

the status of „well known marks‟. It is deposed that being the

holder of the Trademarks over the DEI Materials, only the Plaintiff

has the right to authorize usage or issue licenses related to the

Trademarks. A list of all relevant registrations of the Plaintiff is

attached and exhibited as Ex.PW-1/2. Copies of Legal Proceeding

Certificates of the Trademark registrations are collectively exhibited

as ExPW-1/3. In addition, copies of the relevant extracts of the

trademark registrations of the Plaintiff‟s Characters, are also

collectively exhibited as ExPW-1/4.

11. PW-1 has further deposed that to protect the DEI Materials, the

Plaintiff also holds hundreds of Copyrights over the characters

across the world including India. The plaintiff being the exclusive

owner of Copyrights over them has the right to reproduce or

authorize/ license its reproduction in either two dimensional or three

directional forms. Copies of the Copyright Registration Certificates

of the Plaintiff‟s character guide have been collectively exhibited as

Ex.PW-1/5.

12. PW-1 has also deposed that every licensed product (including

packaging) of the plaintiffs bears a permanently affixed copyright

notice (generally ©Disney) and/or trademark notice as may be

communicated by the Plaintiffs‟ to the Licensee in writing. The

authorized/ genuine merchandise of the Plaintiffs‟ bears the name,

address and country of origin of the Licensee on permanently affixed

labels. Furthermore, authorized goods of the Plaintiff also contain

certain statutory declarations such as name and/or address of the

manufacturer/packer, retail sale price, quantity of goods, consumer

helpline number etc. The photographs of authorized goods bearing

such authentication features have been filed along with the suit

have been collectively exhibited as Ex.PW-1/6. Copy of a sample

agreement executed between the Plaintiff No. 2 and prospective

licensees have also been filed along with the suit and the same have

been exhibited as Ex.PW-1/7.

13. It is also deposed that given the Plaintiffs‟ enormous goodwill,

various entities have in the past often attempted to illegally encash

on the Plaintiffs‟ reputation by unauthorizedly using their protected

marks. It is also deposed that in the proceedings initiated by the

Plaintiffs to protect their statutory and common law rights in the said

marks, the courts have repeatedly safeguarded the Plaintiffs‟ rights

and passed orders in their favour, copies of such orders have been

filed and collectively exhibited as Ex.PW-1/8.

14. The witness has deposed that defendant No.1, Dhiraj is the

proprietor of Defendant No.2 and lives at 5752, Singhara Chowk,

Factory Road, Nabi Karim, New Delhi- 110055; and the defendant

No.2 Dhiraj Bag House, which is the front for illegal activities of

Defendant No. 1 is located at 5752 Singhara Chowk, Factory Road,

Nabi Karim, New Delhi-110055. It is deposed that defendant No. 1 is

in charge of defendant No.2 and is responsible for selling, wholesale

distribution, trading, stocking and dealing in interalia a variety of

bags, such as school bags, carry bags etc.

15. The witness has further deposed that in April 2012, the Plaintiffs

were informed by their market sources that the Defendants herein

are engaged in retailing, offering for sale, selling, trading, wholesale

distribution and other dealings in a variety of bags bearing the

Plaintiff‟s DEI Materials, without Plaintiff‟s permission. To verify the

information, one Mr. Neeraj Dhaiya was deputed by the plaintiff to

visit Defendant No.2 and verify the Defendant‟s involvement in such

blatant infringement. On 03.04.2012, Mr. Neeraj visited defendant

No.2 and reported that defendants were engaged in sale and

distribution of goods with the Plaintiffs‟ trademark and copyright

protected Characters affixed on them such as "Mickey mouse",

"Minnie Mouse", "Winnie the Pooh" etc. And upon receipt of the

investigation undertaken by Mr. Neeraj Dahiya, the present suit was

filed.

16. I have heard counsel for the plaintiff carefully. The affidavit by way

of evidence which has been filed and also the documents which

have been placed on record, are unrebutted. The relevant list of all

registrations of the plaintiffs have been marked and exhibited as

Ex.PW-1/2. Copy of the legal proceeding certificates of trade-mark

registrations have been collectively exhibited as Ex.PW-1/3, also the

copies of the relevant extracts of the trade mark registrations of the

plaintiffs‟ characters have been collectively exhibited as Ex.PW-1/4,

which would show that the plaintiffs are the registered proprietors of

the trade mark and the characters. The plaintiffs have also been

able to establish based on the copyright registration certificates,

collectively exhibited as Ex.PW-1/5, that they hold copyrights over

the characters, across the world, including India; and the plaintiffs

alone have the right to reproduce or authorize or licence its re-

production either in two or three dimensional forms. Plaintiffs have

also been able to establish before the Court that they enjoy

enormous goodwill and also that they have been vigilant in

protecting their rights. Copies of the orders passed in favour of the

plaintiffs have been filed and collectively exhibited as Ex.PW-1/8.

The local commissioner has also filed his report, wherein he states

that on inspection he found more than 40 school bags bearing the

plaintiff‟s trademark. The local commissioner has also filed

supporting photographs along with the report.

17. The plaintiff has also claimed damages for loss of reputation,

business and cost of proceedings. It is trite to say that the

defendant has deliberately stayed away from the present

proceedings with the result that an enquiry into the accounts of the

defendant for determination of damages cannot take place. In the

case of Time Incorporated v. Lokesh Srivastava and Anr.

Reported at 2005 (30) PTC 3 (Del) where apart from compensatory

damages of Rs.5 lakhs, punitive damages have also been awarded,

it would be useful to reproduce paras 7 and 8 of the said judgment,

which are as under :-

"7. Coming to the claim of Rs.5 lacs as punitive and exemplary damages for the flagrant infringement of the plaintiff's trade mark, this Court is of the considered view that a distinction has to be drawn between compensatory damages and punitive damages. The award of compensatory damages to a plaintiff is aimed at compensating him for the loss suffered by him whereas punitive damages are aimed at deterring a wrong doer and the like minded from indulging in such unlawful activities. Whenever an action has criminal propensity also the punitive damages are clearly called for so that the tendency to violate the laws and infringe the rights of others with a view to make money is curbed. The punitive damages are founded on the philosophy of corrective justice and as such, in appropriate cases these must be awarded to give a signal to the wrong doers that law does not take a breach merely as a matter between rival parties but feels concerned about those also who are not party to the lis but suffer on account of the breach. In the case in hand itself, it is not only the plaintiff, who has suffered on account of the infringement of its trade mark and Magazine design but a large number of readers of the defendants' Magazine 'TIME ASIA SANSKARAN' also have suffered by purchasing the defendants' Magazines under an impression that the same are from the reputed publishing

house of the plaintiff company.

8. This Court has no hesitation in saying that the time has come when the Courts dealing actions for infringement of trade marks, copy rights, patents, etc. should not only grant compensatory damages but award punitive damages also with a view to discourage and dishearten law breakers who indulge in violations with impunity out of lust for money so that they realize 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. In Mathias v. Accor Economi Lodging, Inc., 347 F.3d 672 (7th Cir. 2003) the factors underlying the grant of punitive damages were discussed and it was observed that one function of punitive damages is to relieve the pressure on an overloaded system of criminal justice by providing a civil alternative to criminal prosecution of minor crimes. It was further observed that the award of punitive damages serves the additional purpose of limiting the defendant's ability to profit from its fraud by escaping detection and prosecution. If a tortfeasor is caught only half the time he commits torts, then when he is caught he should be punished twice as heavily in order to make up for the reason that it is very difficult for a plaintiff to give proof of actual damages suffered by him as the defendants who indulge in such activities never maintain proper accounts of their transactions who they know that the same are objectionable and unlawful. In the present case, the claim of punitive damages is of Rs.5 lacs only which can be safely awarded. Had it been higher even this court would not have hesitated in awarding the same. The Court is of the view that the punitive damages should be really punitive and not flee bite and quantum thereof should depend upon the flagrancy of infringement."

18. I am in agreement with the aforesaid submission of learned counsel

for the plaintiffs 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