Delhi High Court
Choice Hotels International Inc vs M Sanjay Kumar And Anr on 9 February, 2015
Author: Manmohan Singh
.* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment pronounced on: 9th February, 2015
+ I.A. No.2402/2010 in CS(OS) 332/2010
CHOICE HOTELS INTERNATIONAL INC ..... Plaintiff
Through Ms.Abhilasha Nautiyal, Adv. with
Mr.Raunaq Kamath, Adv.
versus
M SANJAY KUMAR AND ANR ..... Defendants
Through Mr.S.Santanam Swaminadhan, Adv.
with Ms.Insha Mir & Ms.Shagufa
Salim, Advs.
CORAM:
HON'BLE MR.JUSTICE MANMOHAN SINGH
MANMOHAN SINGH, J.
1. The plaintiff has filed the present suit for permanent injunction
restraining infringement of trademark, passing off, dilution of
trademarks, damages, delivery up etc. against the defendants.
2. By this order, I propose to decide the pending application under
Order 39 Rule 1 and 2 CPC being I.A. No. 2402/2010 filed by the
plaintiff.
3. The plaintiff's case as per the plaint is as under:
(i) The plaintiff is a hospitality holding corporation originally set up
in 1939 as a non-profit association under the name Quality
Courts United, and became Choice Hotels International, Inc. on
25th July 1990. The plaintiff's business consists of franchising,
promoting and licensing high quality hotel services in various
countries of the world.
(ii) It is claimed that the plaintiff is one of the world's largest and
most successful lodging franchisors with more than 5,800
hotels, providing exceptional services and amenities to
travellers in over 40 countries across the world. The plaintiff
established a joint venture Company, Quality Inns India Private
Limited as a master franchisee in India in 1987 and became
Choice Hospitality (India) Private Ltd.
(iii) In India, the plaintiff is holding several trademark registrations
for its various brands such as Comfort Inn, Comfort Suites,
Clarion, Quality, Sleep Inn, MainStay Suites, Econo Lodge and
Rodeway Inn.
The trademarks relevant for the purpose of this suit are
COMFORT, COMFORT INN and variants thereof, and the
details of the relevant registrations are as follows:
Trademark Registration Date Class
No.
COMFORT & Design 502842B 23/12/1988 16
COMFORT INN 454036 13/5/1996 16
CS COMFORT 1238091 18/9/2003 42
SUITES & Design
COMFORT & Design 1238101 18/9/2003 42
COMFORT Wave & 1361095 1/6/2005 42
Design
COMFORT INN with 1361094 1/6/2005 42
Device
COMFORT INN & 1462362 15/6/2005 42
SUITES with Device
COMFORT INN & 1462363 15/6/2005 42
SUITES
(iv) The plaintiff's website www.choicehotelsindia.com which has
been functional since the year 2000 is an invaluable vehicle of
the plaintiff's online business and a powerful marketing tool
which is effectively used to advertise and promote its brands
particularly, COMFORT, CLARION, QUALITY and SLEEP INN.
The plaintiff's website is a powerful medium of communication
that has spread the awareness and reputation of its brands.
(v) The plaintiff enjoys extensive goodwill and reputation in India in
relation to its business of franchising hotels, temporary
accommodation and lodging services and its success in this
field is self evident from the widespread geographical presence
of its services in India. It is submitted that in particular the
plaintiff has a substantial reputation in the trademark
COMFORT INN used by itself and with suffixes as:
Comfort Inn Sunset - Ahmedabad
Comfort Inn Vijay Residency - Bangalore
Comfort Inn Hawa Mahal - Jaipur
Comfort Inn Heritage - Mumbai
Comfort Inn Marina Towers - Chennai
Comfort Inn President - Ahmedabad
Comfort Inn City Park - Hyderabad
Comfort Inn Lucknow - Lucknow
Comfort Inn The President - Delhi
Comfort Inn Saurabh - Haldwani
Comfort Inn GSK - Amritsar
Besides, the said trademark/service mark of the plaintiff
appears prominently in websites, travel brochures, letter heads,
catalogues and other print media elevating the COMFORT INN
trademark to a famous and well known trademark.
(vi) The plaintiff's COMFORT brand for hotels, which was adopted
and first used in 1981, is one of the most popular of its brands.
COMFORT INN is currently the fifth largest lodging chain in the
United States. Hotels under COMFORT formative trademarks
are operating through plaintiff No.2 in India since at least 1991.
There are over 2500 properties under the well known
COMFORT brand (Comfort Inn, Comfort Suites, Comfort Hotel,
Comfort Inn & Suites, Comfort Resort, Comfort Hotel & Suites)
worldwide, and include over 1600 COMFORT INN hotels
worldwide of which 11 are located in India.
(vii) The plaintiff's chain of hotels, including the mark COMFORT
INN is advertised widely in magazines and newspapers having
circulation in India. Apart from websites, readers and potential
customers, inter alia in India, can thus find information on the
plaintiff's hotels from magazines such as OAG Travel Planner
(Europe and Pacific Asia editions), Caterer and Hotel Weekly,
TTG Japan, Asia Travel Trade, Business Traveller, The
International Directory, The News Releases of World Travel
Market and such other easily available publications. Besides,
magazines such as Hotels and Restaurants International which
keep the hotel industry up to date with all the developments in
the major chains of hotels worldwide feature articles on the
plaintiff regularly.
The plaintiff has advertised its products and services
through national media and satellite television channels and the
consolidated advertisement expenses of the plaintiff since the
year 2004 are as follows:
YEAR AMOUNT (Rs. in crores)
2006 3,050,586,107.25
2007 3,752,364,131.93
2008 4,091,318,143.84
(viii) The plaintiff's global gross sales revenue under the
trademark/trade name/trading style COMFORT INN since 2004
demonstrating the extent of goodwill and reputation accruing to
its business are as follows:
YEAR AMOUNT (Rs. in crores)
2007 59,779,870,072.99
2008 62,110,221,193.49
In addition to all the above, the plaintiff has been doing
extensive business on the Internet under the domain name
www.choicehotels.com and www.comfortinn.com and has
offered internet reservation services since as far back as 1995.
The said websites are used for aggressive engagements in
business on the internet for providing exhaustive information on
the plaintiff's group of hotels. Online reservations are also
facilitated by this website hence it is a fully interactive website
for the purpose of e-commerce. The website contains several
other features such as a site map, a search engine, details of
the plaintiff company, reward programs and offers & programs
etc.
(ix) The trademark COMFORT INN has acquired a high degree of
distinctiveness due to long, continuous and extensive use so
much as that COMFORT, COMFORT INN and COMFORT
formative are among the most widely protected of the plaintiff's
brands registered in over 143 countries across five continents.
The plaintiff owns trademark registrations for its trademark
COMFORT INN in over 40 countries. These registrations
evidence the recognition of distinctiveness of the said
trademark and the exclusive proprietorship of the plaintiff in
these countries. Thus the common law proprietary rights and
statutory rights of the plaintiff combine to make the said
trademark strong and well known. The trademarks COMFORT/
COMFORT INN enjoys a unique place in the hospitality
industry worldwide and conveys an implicit assurance to
consumers and the trade of a single source of origin and a
certain degree of expectation of quality and consistency of the
services under this mark.
4. The plaintiff submits that on account of its priority in adoption,
use and registration, and its exclusive rights as the proprietor of the
trademark COMFORT INN in the hospitality sector the adoption or
use of the mark COMFORT INN or any deceptively similar mark in
relation to identical or cognate services will not only cause confusion
and deception but will also be contrary to the protection required to
be afforded to a well-known mark, and dilute its indication of a single
source.
Plaintiff's case against the defendants
5. Defendant No.1 is the Managing Director and key person of
operations of defendant No.2, HOTEL RAJ COMFORT INN, located
at Paradise Circle, Secunderabad (AP). Defendants are using the
trade name / trademark COMFORT INN for a hotel in Secunderabad,
Andhra Pradesh.
6. The plaintiff served a cease and desist notice dated 2nd April
2009 cautioning defendants of the plaintiff's legal rights and calling
upon them to refrain from using plaintiff's trademark/ service mark
COMFORT INN and/or COMFORT or other deceptively similar
marks, to discontinue use of their website
www.hotelrajcomfortinn.com to remove any reference to the plaintiff's
trademark and to carry out appropriate changes in its trade name so
as to render it dissimilar and distinguishable from the plaintiff's mark.
7. On 18th April 2009 the defendants sent a reply through their
counsel acknowledging receipt of the plaintiff's cease & desist notice
and attempted to justify their adoption and use of the mark
COMFORT INN as being bonafide and not amounting to
infringement. The defendants further denied having any knowledge of
the plaintiff's well known status in the hospitality business or of their
reputation. It is stated by the plaintiff that the defendants neither
carried out a trademark search for the marks COMFORT
INN/COMFORT before naming their hotel as RAJ COMFORT INN
nor exercised due diligence especially when the existence of the
plaintiff's hotel 'Comfort Inn City Park' located at Chirag Ali Lane,
Abids, Hyderabad, could not have escaped their attention. The
defendants admitted to being relatively recent users of the impugned
mark and subsequent to the plaintiff's HOTEL COMFORT INN CITY
PARK in Hyderabad which opened in the year 2006.
8. It is averred by the plaintiff that the defendants are deemed to
have adopted the impugned mark not with bonafide intention but in
order to encash the reputation of the plaintiff's business and pass off
their hotel as that of the plaintiff. Further, the plaintiff's said
trademark being a registered and well-known one in India in the hotel
industry as it is stated that such use is unauthorized use by the
defendants without any cause in order to take unfair advantage and
to tarnish the distinctive character of the plaintiff's registered
trademarks. The use of the impugned mark comprising of the word
COMFORT is per se an infringement of the plaintiff's statutory rights
in the trademarks COMFORT & Design under No. 502842B (class
16), COMFORT INN under No.454036 (class 16), CS COMFORT
SUITES & Design under No. 1238101 (class 42) and COMFORT
Wave & Design under No. 1361095 (class 42), COMFORT INN with
Device under No. 1361094 (class 42), COMFORT INN & SUITES
with Device under No. 1462362 (class 42) and COMFORT INN &
SUITES under No. 1462363 (class 42).
Further it is averred that the operation of the website
www.hotelrajcomfortinn.com which wholly incorporates the plaintiff's
trademarks COMFORT / COMFORT INN is also an infringement of
the plaintiff's rights and calculated to pass off the defendants'
business and services as and for those of the plaintiff. This is
substantiated by the fact that the defendants on their own admission
have a prior existing hotel named hotel RAJ CLASSIC INN since
1995. However, they have opened another hotel under an infringing
mark/name comprising COMFORT INN which is used in essential
manner in order to confuse the tourists. The defendants are thus
aware about the goodwill and reputation of the plaintiff and intend to
cause deception and/or confusion in the mind of consumers.
9. The website of the defendants at www.hotelrajcomfortinn.com
has served to further expand the scope of infringement of the
plaintiff's rights by its wide reach and the fact that this gives
information about its services, list of facilities, etc. with an online
information form and email address to invite bookings from
anywhere. With the undeniable reach of businesses due to internet
access and dissemination of information all over the world, the
defendants' use of the name hotel RAJ COMFORT INN would be
mistaken for or believed to be associated with the plaintiff's business
under the trademark COMFORT INN and misrepresent the
defendant's hotel to be from the same origin as the plaintiffs' hotels.
10. It is alleged by the plaintiff that the use of the trademark
COMFORT INN by the defendants as a part of their trading style and
trade name is highly misleading to travel agents and customers. The
continued use of the impugned mark will dilute the strength of the
plaintiff's trademark in the hospitality industry and thus diminish its
value which has been created over long years of sustained effort and
commitment to brand values. The defendants are conducting their
business in the same place as one of the chain of hotels of the
plaintiffs, which fact is also likely to lead the general public to
associate the defendant's hotel RAJ COMFORT INN with the
plaintiffs' COMFORT brand hotels.
Defendants' case in the written statement
11. In the written statement filed by the defendants, the defendants
have contended that the suit is not maintainable. As per the
defendants, the question of infringement does not arise as the
plaintiff is claiming infringement and other reliefs against the
defendants on the basis of its alleged registered trademark "Comfort
Inn" in Class 16, which class pertains to paper and paper products.
However, defendants are not involved in any activity relating to class
16, therefore, there is no question of any infringement under the said
class.
Further it is averred that though the plaintiff is also claiming
violation of its right on the word "Comfort" by virtue of registration in
class 42, plaintiff does not have any registration for the word
"Comfort Inn" in class 42, therefore, plaintiff cannot allege violation of
its right therein. It is averred by the defendants that the defendants
are using the word "Comfort Inn" in relation to the services in class 42
in respect of which the plaintiff has no registered trademark,
therefore, suit for infringement is not maintainable and liable to be
dismissed.
12. It is contended that the plaintiff has relied upon registration
certificates under Form 2 which cannot be used in legal proceedings.
Plaintiff has not filed copy of the entry in register as required under
Section 137 of the Trademarks Act, 1999 (hereinafter referred to as
"the Act") to prove its registration.
13. Further, the defendants are carrying on their business at
Hyderabad, Andhra Pradesh. They neither actually nor voluntarily
reside and/or carry on business nor personally work for gain within
the territorial jurisdiction of this Court. Therefore this Court has no
jurisdiction to entertain and decide the present suit. Also, the website
of the defendants is not interactive. Though the plaintiff has referred
to the website of the defendants, plaintiff has not pleaded or
produced any evidence to prima facie show that some commercial
transaction was entered into by the defendants with a user of
defendants' website resulting in any injury or harm. There is no cause
of action for the suit to be maintainable in Delhi.
14. It is averred that the defendants are using the trade name
"Hotel Raj Comfort Inn" since the year 2005 in a bonafide manner.
The word "Raj" is defendants' family name, while "Comfort" and "Inn"
are descriptive words that describe a comfortable hotel. Both the
latter words are common dictionary words and widely used in the
hotel and hospitality industry, which are inherently incapable of
distinctiveness. The plaintiff cannot claim exclusivity or proprietary
rights over these words. It is further averred that the plaintiff has not
pleaded that the said words have acquired a secondary meaning in
connection with their services.
15. It is also averred that there is inordinate delay in filing the suit
as the plaintiff was aware of the defendants and also in Para 15 of
the plaint the plaintiff stated that it owns "Hotel Raj Comfort Inn City
Park" at Hyderabad, which opened in the year 2006. It is averred that
the suit is hit by principle of latches and is liable to be dismissed. All
the other averments made by the plaintiff in the plaint are denied and
disputed by the defendants in their written statement.
16. The plaintiff in the replication filed to the written statement has
stated that the trademark of the plaintiff COMFORT INN is a
registered trademark under Class 16 which relates to paper and
paper products. Plaintiff has travel brochures, letter heads,
catalogues and other print media which promotes the trademark
COMFORT INN. Also, COMFORT INN as a trademark had been
applied for registration to the Trade Marks Registry by the plaintiff
and the objection period of 4 months thereunder had expired in June,
2010. Therefore, the contention of the defendants that the suit for
infringement is not maintainable is baseless. All the other averments
made by the defendants in the written statement are denied and
disputed by the plaintiff.
17. The learned counsel for the defendants during the course of
hearing has not denied the fact that the plaintiff is the prior adopter
and user of the mark COMFORT INN. It is also denied that the
plaintiff was earlier having COMFORT INN in Hyderabad and the
defendants have started using the said name being aware about the
COMFORT INN of the plaintiff. Admittedly the plaintiff is having the
registered trademark COMFORT in class 42 in respect of hotel and
motel services and the trademark COMFORT INN has been
protected by this Court from time to time by passing the interim
orders and final decrees.
18. In case the entire arguments and pleading of the defendants
are examined in a meaning manner, it is evident that the defendants'
have taken the following defences :
(i) No infringement as plaintiff is not holding registered
trademark Comfort Inn in Class 42.
(ii) Comfort Inn is not distinctive mark, hence no passing off.
(iii) Honest adoption of the mark Comfort Inn by the defendants.
(iv) No similarity between Comfort Inn and Raj Comfort Inn,
hence no confusion.
(v) Delay and latches for bringing action.
(vi) No territorial jurisdiction of this Court.
19. First, I shall take the issue of infringement of trademark. The
defendant has not denied that the plaintiff is holding the registered
trademark Comfort Inn in Class 16. The plaintiff is also registered
proprietor of the trademark Comfort in Class 42. The said trademark
is registered prior to the adoption and user of the defendants'
trademark. On the date of user, it is evident that the defendants were
aware about the name of the plaintiff being in the same trade.
INFRINGEMENT
20. Before I proceed to decide this issue, it is imperative to discuss
Section 29 of the Act that envisages the law relating to infringement
of a registered trademark and Section 28 of the Act that provides for
exclusive rights granted by virtue of registration. The said provisions
read as under:-
"29. Infringement of Registered Trademark
(1) A registered trade mark is infringed by a person
who, not being a registered proprietor or a person
using by way of permitted use, uses in the course
of trade, a mark which is identical with, or
deceptively similar to, the trade mark in relation to
goods or services respect of which the trade mark
is registered and in such manner as to render the
use of the mark likely to be taken as being used
as a trade mark.
(2) A registered trade mark is infringed by a person
who, not being a registered proprietor or a person
using by way of permitted use, uses in the course
of trade, a mark which because of-
(a) its identity with the registered trade mark
and the similarity of the goods or services
covered by such registered trade mark; or
(b) its similarity to the registered trade mark
and the identity or similarity of the goods or
services covered by such registered trade
mark; or
(c) its identity with the registered trade mark
and the identity of the goods or services
covered by such registered trade mark, is
likely to cause confusion on the part of the
public, or which is likely to have an
association with the registered trade mark.
(3) In any case falling under clause (c) of sub-section
(2), the court shall presume that it is likely to
cause confusion on the part of the public.
(4) A registered trade mark is infringed by a person
who, not being a registered proprietor or a person
using by way of permitted use, uses in the course
of trade, a mark which-
(a) is identical with or similar to the
registered trade mark; and
(b) is used in relation to goods or services
which are not similar to those for which
the trade mark is registered; and
(c) the registered trade mark has a
reputation in India and the use of the
mark without due cause takes unfair
advantage of or is detrimental to, the
distinctive character or repute of the
registered trade mark.
(5) A registered trade mark is infringed by a person if
he uses such registered trade mark, as his trade
name or part of his trade name, or name of his
business concern or part of the name, of his
business concern dealing in goods or services in
respect of which the trade mark is registered.
(6) For the purposes of this section, a person uses a
registered mark, if, in particular, he-
(a) affixes it to goods or the packaging thereof;
(b) offers or exposes goods for sale, puts them
on the market, or stocks them for those
purposes under the registered trade mark,
or offers or supplies services under the
registered trade mark;
(c) imports or exports goods under the mark;
or
(d) uses the registered trademark on business
papers or in advertising.
(7) A registered trade mark is infringed by a person
who applies such registered trade mark to a
material intended to be used for labelling or
packaging goods, as a business paper, or for
advertising goods or services, provided such
person, when he applied the mark, knew or had
reason to believe that the application of the mark
was not duly authorised by the proprietor or a
licensee.
(8) A registered trade mark is infringed by any
advertising of that trade mark if such advertising-
(a) takes unfair advantage of and is contrary to
honest practices in industrial or commercial
matters; or
(b) is detrimental to its distinctive character; or
(c) is against the reputation of the trade mark.
(9) Where the distinctive elements of a registered
trade mark consist of or include words, the trade
mark may be infringed by the spoken use of those
words as well as by their visual representation
and reference in this section to the use of a mark
shall be construed accordingly."
"28. Rights conferred by registration -
(1) Subject to the other provisions of this Act, the
registration of a trade mark shall, if valid, give to
the registered proprietor of the trade mark the
exclusive right to the use of the trade mark in
relation to the goods or services in respect of
which the trade mark is registered and to obtain
relief in respect of infringement of the trade mark
in the manner provided by this Act.
(2) The exclusive right to the use of a trade mark
given under sub-section (1) shall be subject to
any conditions and limitations to which the
registration is subject.
(3) Where two or more persons are registered
proprietors of trade marks, which are identical
with or nearly resemble each other, the exclusive
right to the use of any of those trade marks shall
not (except so far as their respective rights are
subject to any conditions or limitations entered on
the register) be deemed to have been acquired by
any one of those person as against any other of
those persons merely by registration of the trade
marks but each of those persons has otherwise
the same rights as against other persons (not
being registered users using by way of permitted
use) as he would have if he were the sole
registered proprietor."
21. Section 29(2) of the Act is introduced in the Act whereby the
scope of infringement was enlarged as the words used in
Section 29(2)(b) of the Act are "similarity" of trademarks as opposed
to use of the word "deceptively similarity" used in Section 29(1) of the
Act. It is sufficient that the similarity of the marks is such as is likely
to cause confusion not deception or to cause any association with the
registered trade mark.
22. This Court in the recent case has discussed the aspect of
determination of the well-known trade mark in the case of
Bloomberg Finance LP vs. Prafull Saklecha & Ors., 2013 (56)
PTC 243 (Del) wherein was observed in Para 32-44, and 51 that :
"32. Section 29 of the TM Act contemplates the
owner/proprietor of the registered trade mark alleging
infringement of the said mark by another person who is
neither a registered proprietor in relation to the goods and
services for which the mark is registered, nor has
permission to use such mark in the course of his trade.
Under Section 29(1) infringement results if the mark is
"identical with or deceptively similar to" the registered trade
mark and is in relation to the goods and services for which
the trademark has been registered. The use of infringing or
impugned mark must render it "likely to be taken as being
used as a trade mark".
33. Under Section 29(2)(a) infringement occurs where
the impugned mark is identical with the registered
trademark and the goods or service for which the
impugned mark is being used is similar to the goods and
services covered by the registered mark. Under
Section 29(2)(b) infringement occurs where the impugned
mark is similar to the registered mark and the goods and
the services for which is used is identical with or similar to
the goods and services for which the registered mark is
used. Under Section 29(2)(c) infringement occurs where
the impugned trade mark is identical to the registered trade
mark and the goods or services for which the impugned
mark is used is also identical to the goods/services covered
by the registered trade mark.
34. An additional requirement in the above three
situations for infringement to result is that the use of the
impugned trademark "is likely to cause confusion on the
part of the public" or "is likely to have an association with
the registered trade mark". Under Section 29(3) when the
impugned trademark is identical to the registered
trademark and the goods/services for which it is used are
also identical to the goods or services for which the
registration has been granted then "the Court shall
presume that it is likely to cause confusion on the part of
the public".
35. Therefore, under Section 29(1), (2) and (3) for
infringement to result (i) the impugned mark has to be
either similar to or identical with the registered mark and (ii)
the goods or services for which the impugned mark is sued
has to also either be identical with or similar to the goods or
services for which registration has been granted. The
scenario is different as regards Section 29(4) of the TM Act
1999. For infringement to result under Section 29(4), the
following conditions are required to be fulfilled :
(i) the person using the impugned mark is neither a
registered proprietor in relation to the goods and
services for which the mark is registered nor is using
it by way of permitted use
(ii) the impugned mark must be used in the course
of trade
(iii) the impugned mark has to be either similar to or
identical with the registered mark
(iv) the impugned mark is used for goods or services
different from those for which registration has been
granted;
(v) the registered trade mark has a reputation in
India;
(vi) the use of the impugned mark is without due
cause, and takes unfair advantage of or is
detrimental to,
(a) the distinctive character of the registered trade
mark; or
(b) the reputation of the registered trade mark.
36. The expression 'mark' has been defined in
Section 2(m) of the TM Act to include "a device brand,
heading, label, ticket, name, signature, word, letter,
numeral, shape of goods, packaging or combination of
colours or any combination thereof." (emphasis supplied)
Therefore, for the purpose of Section 29(4), the use of a
mark as part of a corporate name would also attract
infringement. In other words, if the registered mark is used
by a person, who is not the registered proprietor of such
mark or a permitted user, as part of the corporate name
under which he trades then also infringement would also
result. What is however important is that the registered
trade mark must be shown to have a reputation in India
and should be shown to have been used by the infringer
'without due cause". Further, it should be shown that such
adoption or use has resulted in the infringer taking unfair
advantage of the registered mark or is detrimental to the
distinctive character or repute of the registered trade mark.
37. Section 29(4) is also distinct from Section 29(1) to
(3) of the TM Act in another important aspect. The element
of having to demonstrate the likelihood of confusion is
absent. Perhaps to balance out this element, the legislature
has mandated the necessity of showing that (a) the mark
has a reputation in India (b) that the mark has a distinctive
character (c) the use by the infringer is without due cause.
In other words, the legislative intent is to afford a stronger
protection to a mark that has a reputation without the
registered proprietor of such mark having to demonstrate
the likelihood of confusion arising from the use of an
identical or similar mark in relation to dissimilar goods and
services. The words 'detriment' in the context of the
'distinctive character' of the mark brings in the concept of
'dilution' and 'blurring'. In the context of 'repute' they are
also relatable to the concept of 'tarnishment' and
'degradation'. The words "takes 'unfair advantage" refers to
'free-riding' on the goodwill attached to mark which enjoys
a reputation. The disjunctive 'or' between the words
'distinctive character' and 'repute' is designedly inserted to
cater to a situation where a mark may not have a distinctive
character and yet may have a reputation.
38. Section 2(zg) of the TM Act defines a 'well known
trade mark' in relation to any goods or services to mean 'a
mark which has become so to the substantial segment of
the public which uses such goods or receives such
services that the use of such mark in relation to other
goods or service would be likely to be taken as indicating a
connection in the course of trade or rendering of services
between those goods or services and a person using the
mark in relation to the first-mentioned goods or services.'
Under Section 11(9)(i) and (v), for the purposes of
registration of a well-known mark it is not necessary for
such mark to have been used in India or be well-known to
the public at large in India. It must be well known to a
substantial segment of the relevant public.
39. It may not be necessary for the proprietor of a
registered mark to show that it is a 'well-known trademark'
as defined in Section 2(zg) although if in fact it is, it makes
it easier to satisfy the 'reputation' requirement of Section
29(4) of the TM Act. The presumption of distinctiveness
attached to a registered mark is a rebuttable one. At the
interim stage, either of these elements should be shown
prima facie to exist. Whether in fact these elements are
satisfied would depend on the evidence led by the parties
at trial.
40. It may be noticed at this stage that even prior to the
TM Act 1999 the Supreme Court in N.R. Dongre v.
Whirlpool Corporation 1996 PTC (16) recognised the
concept of cross-border reputation when it upheld the
decision of the Division Bench of this Court which granted
a temporary injunction in favour of a Plaintiff based abroad.
The Division Bench of this Court followed the decision in
Apple Computer Inc. vs. Apple Leasing & Industries 1992
(1) ALR 93, and held that it was not necessary to insist that
a particular plaintiff must carry on business in a jurisdiction
before improper use of its name or mark can be restrained
by the court. The main consideration was "the likelihood of
confusion and consequential injury to the plaintiff and the
need to protect the public from deception. Where such
confusion is prima facie shown to exist, protection should
be given by courts to the name or mark".
41. Turning to Section 29(5) of the TM Act 1999, it is
seen that it relates to a situation where (i) the infringer uses
the registered trademark "as his trade name or part of his
trade name, or name of his business concern or part of the
name, of his business concern" and (ii) the business
concern or trade is in the same goods or services in
respect of which the trade mark is registered. If the
owner/proprietor of the registered trade mark is able to
show that both the above elements exist then an injunction
restraining order the infringer should straightway follow.
This is in the nature of a per se or a 'no-fault' provision
which offers a higher degree of protection where both the
above elements are shown to exist. For the purpose of
Section 29(5) of the TM Act 1999, there is no requirement
to show that the mark has a distinctive character or that
any confusion is likely to result from the use by the infringer
of the registered mark as part of its trade name or name of
the business concern.
42. However, in a situation where the first element is
present and not the second then obviously the requirement
of Section 29(5) is not fulfilled. The question is whether in
such a situation the owner or proprietor of the registered
trade mark is precluded from seeking a remedy under
Section 29(4) of TM Act, 1999 if the conditions attached to
Section 29(4) are fulfilled.
43. In the considered view of this Court, given the object
and purpose of Section 29(1) to (4), Section 29(5) cannot
be intended to be exhaustive of all situations of uses of the
registered mark as part of the corporate name.
Section 29(5) cannot be said to render Section 29(4) of the
TM Act, 1999 otiose. In other words, the legislature may
not be said to have intended not to provide a remedy
where the registered trade mark is used as part of the
corporate name but the business of the infringer is in goods
or services other than those for which the mark is
registered.
44. The Statement of Objects and Reasons of the TM
Act 1999 explain that sub-section (5) of Section 29 "seeks
to prevent a person from adopting someone else's trade
mark as part of that person's trade name or business name
by explicitly providing that such action shall also constitute
an infringement under this Act. This provision will bring this
clause in harmony with the proposed amendments to
Sections 20 and 22 of the Companies Act, 1956." Sections
20 and 22 of the CA have been amended to provide that
where the name of a company resembles a registered
trade mark, then the registration of the company in that
name can be refused. The ROC is expected to gather
information from the TM Registry. Under Section 22(5) of
the CA, the owner of the registered trade mark can apply to
have the name of a company that is purportedly infringing
the mark cancelled. All of this only strengthens the
conclusion that where Section 29(5) offers a high degree of
protection where both the elements envisaged in that
provision exist, it is not meant to preclude the owner of a
registered mark remediless when only the first and not the
second element exists.
xxxxx
51. The legal position emerging as a result of the above
discussion may be summarised as under :
(a) Section 29(5) of the TM Act 1999 relates to a
situation where (i) the infringer uses the registered
trademark "as his trade name or part of his trade name, or
name of his business concern or part of the name, of his
business concern" and (ii) the business concern or trade is
in the same goods or services in respect of which the trade
mark is registered.
(b) This is in the nature of a per se or a 'no-fault'
provision which offers a higher degree of protection where
both the above elements are shown to exist. If the
owner/proprietor of the registered trade mark is able to
show that both the above elements exist then an injunction
order restraining order the infringer should straightway
follow. For the purpose of Section 29(5) of the TM Act 1999
there is no requirement to show that the mark has a
distinctive character or that any confusion is likely to result
from the use by the infringer of the registered mark as part
of its trade name or name of the business concern.
(c) However, in a situation where the first element is
present and not the second then obviously the requirement
of Section 29(5) is not fulfilled. Where the registered trade
mark is used as part of the corporate name but the
business of the infringer is in goods or services other than
those for which the mark is registered, the owner or
proprietor of the registered trade mark is not precluded
from seeking a remedy under Section 29(4) of TM Act 1999
if the conditions attached to Section 29(4) are fulfilled.
(d) Given the object and purpose of Section 29(1) to
(4), Section 29(5) cannot be intended to be exhaustive of
all situations of uses of the registered mark as part of the
corporate name. Section 29(5) cannot be said to render
Section 29(4) otiose. The purpose of Section 29(5) was to
offer a better protection and not to shut the door of
Section 29(4) to a registered proprietor who is able to show
that the registered mark enjoying a reputation in India has
been used by the infringer as part of his corporate name
but his business is in goods and services other than that for
which the mark has been registered.
(e) A passing off action is maintainable in the case of a
well known mark even if the goods and services being
dealt with by the parties are not similar."
23. In order to establish infringement, the main ingredients of
Section 29 of the Act are that the plaintiff's mark must be registered
under the Act; the defendant's mark is identical with or deceptively
similar to the registered trademark; and the defendant's use of the
mark is in the course of trade in respect of the goods covered by the
registered trademark. The rival marks are to be compared as a
whole. Where two rival marks are identical, it is not necessary for the
plaintiff to prove further that the use of defendant's trademark is likely
to deceive and cause confusion as the registration shows the title of
the registered proprietor and the things speak for themselves. In an
infringement action, once a mark is used as indicating commercial
origin by the defendant, no amount of added matter intended to show
the true origin of the goods can effect the question. If Court finds that
the defendant's mark is closely, visually and phonetically similar,
even then no further proof is necessary.
24. In the case of Kaviraj Pandit Durga Dutt Sharma v.
Navaratna Pharmaceutical Laboratories AIR 1965 SC 980-at 989-
990 page it was held that:
"The action for infringement is a statutory remedy conferred
on the registered proprietor of a registered trade mark for
the vindication of the exclusive right to the use of the trade
mark in relation to those goods"
"if the essential features of the trade mark of the plaintiff
have been adopted by the defendant, the fact that the get-
up, packing and other writing or marks on the goods or on
the packets in which he offers his goods for sale show
marked differences, or indicate clearly a trade origin
different from that of the registered proprietor of the make
would be immaterial"
25. Besides infringement of trademark and passing off in the
present matter, there is also another fact of the matter as to whether
the trademark COMFORT and/or COMFORT INN of the plaintiff is
well-known trademark as alleged in the plaint.
26. From the material placed on record, it is apparent that the
trademark Comfort Inn has been registered in many countries in the
world. It has a unique goodwill and reputation. It has been protected
by the Courts from time to time in respect of goods and services in
relation to classes in which the same is registered. It cannot be used
as a whole mark in relation to any goods/services.
27. It appears from the abovementioned decision rendered by this
Court read with Section 29(4) of the Act that a registered trademark is
infringed by a person who, not being a registered proprietor or a
person using the identical with or similar trademark in relation to
goods or services which are not similar to those for which the
trademark is registered and if the same has a reputation in India and
is of distinctive character or repute of the said registered trademark.
In other words, if the registered trademark is a well-known trademark
which covers the definition of Section 2(1)(zg) of the Act of "well-
known trademark", the same can be protected even in relation to
dissimilar goods used by the defendant. Although, in the present
case, the plaintiff is also providing hospitality services, it is averred by
the defendants that COMFORT INN is registered under class 16 and
also holding few registrations under class 42 even may not be for
hotel services, while the defendants are using the same for hotel
services, in view of the Bloomberg Finance LP (supra) judgment,
COMFORT INN, being a well known trademark can be protected
even in relation to dissimilar goods/services used by the defendants.
Thus, the case of infringement of trademark is made out by the
plaintiff against the defendants.
28. In order to establish the use of the trade mark Comfort Inn in
India the plaintiff has filed large number of documents which are
available on record. The brochure from 2002 refers to its operations
in India. Plaintiff's Annual Report of 2004 shows use of the Comfort
Trademarks by the Plaintiff, including Comfort Inn. Google search
report for "Comfort Inn" in India for the period 1st January, 1986 to 1st
January, 2005 shows presence of the plaintiff's Comfort Inn hotels in
India from 2001. Printout of the plaintiff's website
www.choicehotelsindia.com from 8th May, 2001 retrieved through
internet archives showing use of the Comfort Inn trademark by the
plaintiff in India. Printout of the plaintiff's website
www.choicehotelsindia.com from 11th October, 2002 and 11th
February, 2003 retrieved through internet archives showing use of
the Comfort trademark by the plaintiff in India. Printout of the
plaintiff's website www.choicehotelsindia.com from 11th October,
2002 and 11th February, 2003 retrieved through internet archives
showing the plaintiff's Comfort Inn Hotels in Hyderabad as on 17th
December, 2001 and 16th June, 2008. Articles filed show plaintiff's
extensive use of the Comfort trademarks in India. An article in Hindu
Business Line dated 26th September, 2004 - shows the plaintiff's
presence and use of its Comfort Inn trademarks in South India.
defendants' use of the impugned mark 'Raj Comfort Inn' on its
letterhead. Printout of the defendants' website showing its impugned
use of the plaintiff's Comfort trademarks.
PASSING OFF
29. One of the essential ingredients is goodwill. The classic case of
passing off as it existed since its genesis always insist the existence
of goodwill of a merchant in order to give him a locally enforceable
right to sue for passing off. This has been explained by Kerly's in his
book called Law of Trade Marks and Trade Names (Fourteenth
Edition) (South Asian Edition 2007), wherein the concept of goodwill
has always been categorized as local in character and the learned
author observed thus:-
"Since an essential ingredient of passing off is damage (or
prospective damage) to goodwill, he (the Plaintiff) must show
that he had, at the date when the Defendants started up, in
this country not merely a reputation but a goodwill capable of
being damaged. Goodwill, however, is local; it is situated
where the business is. Thus a foreign claimant may have a
reputation in this country-from travellers or periodicals of
international circulation or, increasingly, from exposure on the
Internet-yet still fail in an action for passing off because he
has here no business and so no goodwill. Such cases have
been not uncommon in recent years, and have caused
considerable difficulty. Where there is a substantial reputation
here, our courts will often accept minimal evidence that a
business exists here, but there has to be some".
30. This concept of goodwill and the insistence of localized
business has been traditional concept of passing off which
sometimes is called as classic case of passing off. However, this
concept of passing off has undergone changes due to advent of
technology and modernization. For the said reason the tendency to
insist localized goodwill has been transformed into proving reputation
of a global character. All this would mean that courts entertaining the
case of passing off can discount the localized existence of goodwill
and the business in the territory specific if the substantial nature of
reputation has been proved which has some kind of nexus in the
territory where the protection is sought and the said concept in the
modern language is called trans-border reputation whereas the
goodwill is always local in character, the concept of reputation is
dynamic and is all encompassing.
31. The reputation of a person can transcend boundaries by virtue
of its advertisement in the newspapers, media circulation, expatriate
reputation due to cultural akinness and all other relevant factors
which connect one country's business with that of another. This has
been aptly explained by the Division Bench of this Court in the case
of N.R.Dongre v. Whirlpool Corporation, AIR 1995 Delhi 300
wherein the concept of trans-border reputation was approved in the
following words:-
"(25) Thus a product and its trade name transcend the
physical boundaries of a geographical region and acquire a
trans border or overseas or extraterritorial reputation not only
though import of goods but also by its advertisement. The
knowledge and the awareness of the goods of a foreign trade
and its trade mark can be available at a place where goods
are not being marketed and consequently not being used.
The manner in which or the source from which the knowledge
has been acquired is immaterial".
32. The said judgment of Whirlpool [supra] has been approved by
the Supreme Court in the case of N.R. Dongre and Ors. vs
Whirlpool Corpn. and Anr., 1996 (2) ARB.LR 488 (SC) wherein the
exposition of law laid down by the Division Bench of this Court was
again reiterated. This exposition of 1996 in the case of Whirlpool
[supra] has been further revisited by the courts in India more
importantly in the case of Allergan Inc. v. Milment Oftho
Industries, 1999 PTC (19) (DB) 160 wherein Ruma Pal, J. has
carefully analyzed the interplay between the goodwill and reputation
in a case of passing off action and has laid down that the Courts in
India have followed the third approach which is a middle path wherein
strict insistence of localized business is not necessary. However,
reputation which is sought to be protected has to be substantial one
having global character. The observation made by Hon'ble Judge is
as under:-
"13. Reputation is the connection that the public makes
between a particular product or service and a particular
source which may or may not be known. Some Courts have
held that reputation which is built up on the basis of trade
within the country is entitled to protection from passing off.
Others Court have made some concession to the
communication explosion and held that if the plaintiff has a
reputation in another country, his right to the mark will be
protected if it is coupled with some actual or proposed
business activity within the country (See Alain Beniardin et
Cie v. Pavilion Properties, (1967) RFC 581; Amway
Corporation. v. Eurway Int. Ltd. (1974) RFC 82."Still other
Courts have held that with the increase in international
commerce, mass media communications and the frequency
of the foreign travel, political and geographic boundaries do
not stem the exchange of ideas and instant information. Local
business is not an essential ingredient of a passing off action.
However, the reputation must be well established or a known
one See : Panhard et Levassor v. Panhard Motor Co. Ltd.,
(1901) 18 RPC 405; Sheraton Corpn. v. Sheraton Motels,
(1964) RPC 202; Orkin Exterminating Co. Tnd. v. Pest Co. of
Canada (1985) 5 Canadian Patent Reporter 433; Vitamins L.
D.'s Application for Trademark, 1956 (1) RPC 1. The
decisions which reflect the first and second view have so held
for reasons which are partly historic, partly geographic and
partly because reputation was equated with goodwill.
Goodwill has been defined as the benefit derived from
reputation. It is not the reputation required to found a passing
off action. The law of passing off is not trammelled by
definitions of goodwill developed in the field of revenue law
[per Hockhart J., Conagra Inc. v. McCain Foods (Aust) P.
Ltd., 1993 (23) IPR 193 231]. It is an asset of a business
assessable in terms of money and transferable (See IRC v.
Muller, (1901) AC 217, Trego v. Hunt (1896) AC 7; ITC v.
B.C. Srinivas Shetty. In my opinion reputation framing the
basis of a passing off action need not be so localised.
Whatever the compulsion for the Courts taking the first or
second view in other countries, as far as this country is
concerned, Courts in India prescribe to the third view and
have held that a plaintiff with a reputation which is
established internationally can sue to protect it in this country
even if it does not have any business activity here. In other
words reputation of a product may precede its introduction
and may exist without trade in such product in the
country. See N.R. Dongre v. Whirlpool Corporation, (DB); J.
N. Nichols (Vimto) Ltd. v. Rose & Thistle, 1994 PTC 83
(DB); Calvin Klein Inc. v. International Apparels, (1995) FSR
515 : 1995 IPLR 83; Conagra Inc. v. McCain Foods (Supra)
at p. 133."
33. The said judgment passed in the case of Milment (supra)
passed by Division Bench of Kolkata High Court has been further
approved by Supreme Court of India in the case of Milment Oftho
Industries v. Allergan Inc., (2004) 12 SCC 624 presided by S.N.
Variava, J. wherein the Supreme court has laid down that :
"It must also be remembered that nowadays goods are widely
advertised in newspapers, periodicals, magazines and other
media which is available in the country. This results in a
product acquiring a worldwide reputation. Thus, if a mark in
respect of a drug is associated with the Respondents
worldwide it would lead to an anomalous situation if an
identical mark in respect of a similar drug is allowed to be
sold in India. However one note of caution must be
expressed. Multinational corporations, who have no intention
of coming to India or introducing their product in India should
not be allowed to throttle an Indian Company by not
permitting it to sell a product in India, if the Indian Company
has genuinely adopted the mark and developed the product
and is first in the market. Thus the ultimate test should be
who is first in the market".
It was further observed on the facts of the case as under:
"(9) In the present case, the marks are the same. They are in
respect of pharmaceutical products. The mere fact that the
Respondents have not been using the mark in India would be
irrelevant if they were first in the world market. The Division
bench had relied upon material which prima facie shows that
the Respondents product was advertised before the
Appellants entered the field. On the basis of that material the
Division Bench has concluded that the Respondents were
first to adopt the mark. If that be so then no fault can be found
with the conclusion drawn by the Division Bench."
34. The Courts in India have started recognizing the global
character of the brand names and have started giving them
protection merely on the basis of global nature of reputation without
insisting any localized business which was significant departure from
the classic trinity laid down by Lord Diplock in the case of Erven
Warnink (Supra). The position of law uptill Milment has been
followed that the Courts in India by placing reliance on the said
decision have proceeded to grant interim orders to the multi-nationals
having their brands which are of global character and prevented the
misuse of the said brands by protecting trans-border reputation
subject to fulfilling of essential characteristics necessary to prove
trans-border reputation. The decision in the case of Milment was
also rendered in the year 2004 when the impact of internet, e-
commerce, social media was yet to be seen and realized.
35. Recently, this Court has rendered a decision in the case of
Cadbury U.K. Limited & Anr vs. Lotte India Corporation Ltd.,
reported in 2014 (57) PTC 422 (Delhi) wherein the decision of law
relating to trans-border reputation has been further strengthened and
has been taken to another level wherein the court has not merely
relied upon the decision of Milment (supra) and Whirlpool (supra)
but has also extended the principle of trans-border reputation by
observing that the existence of a merchant on web pages which are
of foreign origin and social media are sufficient to show the trans-
border nature of reputation without having any activity in India at the
relevant time. Though it is very broad extension of the concept of
trans-border reputation, but it is a question of fact in each case as to
how the internet documents are sufficient to show the global
character of the trademark and the reputation attached to the same.
The impact of the said decision which has been given very recently is
yet to be seen and analyzed by the other Courts in India in the
upcoming times.
36. Effectively, the concept of trans-border reputation and goodwill
is interesting in academic sense. However, due to advent of internet
media, international travel, the insistence on the localized business
as well as trans-border reputation is nowadays more or less dealt
with in a kind of presumptive approach rather than by actual
establishment of the same. As the international businesses grow and
proximity between the markets would increase, over the time this
concept will become weaker and on one good day world will be
treated as one market.
37. In the present case, it cannot be denied by the defendants that
the plaintiff earlier had a hotel in Hyderabad. The defendants have
adopted and used the mark Raj Comfort Inn after the use of the said
name by the plaintiff. They were aware about the goodwill and
reputation of the plaintiff at the time of adoption. It is totally immaterial
if now the plaintiff has no hotel in Hyderabad as the
travellers/consumes may still think that the defendants may have
some association with the plaintiff or they are using the similar name
with the consent/licenses of the plaintiff which is actually untrue.
Thus, the plaintiff has made out a classic case of passing off. Even
on the transborder reputation and local business/hotel in other parts
of India.
38. It is pertinent to mention here that similar issue of the plea
raised by the defendants was discussed by this Court in the case of
Madhubhan Holiday Inn Vs. Holiday Inn Inc., 100 (2002) DLT 306
where the plaintiff/ respondent company Holiday Inn Inc, a registered
company of United States of America had filed a case against the
defendants/appellants for adoption of the words "Holiday Inn" by the
appellants who had before "Holiday Inn", used prefix "Madhuban"
and "Kapoor" in their mark. It was held in appeal that adoption of the
words "Holiday Inn" by the appellants is ex facie fraudulent and
malafide from the very inception. The words "Holiday Inn" have been
adopted by the appellant to ride on the global reputation of the
respondent. The appellant was actuated by bad faith and dishonest
motive. In the facts and circumstances, the learned Single Judge was
fully justified in granting the injunction and decreeing the suits in
order to protect the commercial goodwill and to ensure that the global
business reputation of the respondent is not exploited by the
appellants in a clandestine manner. In this case of Madhubhan
Holiday Inn (supra), the Court referred to the following decisions:
(i) Rainforest Cafe Inc v. Rainforest Cafe & Ors. 91 (2001)
DLT 508. In this case the plaintiff Rainforest Cafe Inc has 37
restaurants world wide and is planning to open many more
restaurants throughout the globe and particularly in India. The
plaintiff has advertised in the leading and premier magazines
and newspapers. It is mentioned in the plaint that the
revenues/sales in 1997 and 1998 were to the tune of US $ 108
millions and US $ 213 millions, respectively. It is also
incorporated in the plaint that because of its success, largely
because due to its particular unusual and novel name,
ambience and decor of its outlets, its shares are even quoted
on the New York Stock Exchange. It has its own web-site.
Consequent to its phenomenal progress, the plaintiff has been
receiving trade inquiries from all corners of world. The
defendant opened a restaurant with the name of "Rainforest
Cafe" masquerading as one of the outlets of the plaintiff. The
defendant has copied the plaintiff's name, as also the tagline
of "A WILD PLACE TO EAT'. There is a certainty that because
of the shoddy manner in which the restaurant is presently
running, irreparable injury will be caused to the reputation and
good will of the plaintiff world wide, and will also have adverse
ramifications on the impending enquiries for its franchise in
New Delhi as well as other parts of India. On consideration of
the totality of the facts and circumstances, the Court found the
balance of convenience in favor of the plaintiff and observed
that the plaintiff is likely to suffer irreparable injury, if the
defendant continues to run its restaurant in its present name
and style which is a poor but blind copy of the plaintiff's cafes
world wide. On consideration of the totality of the facts the
Court granted injunction in favor of the plaintiff.
(ii) In Caesar Park Hotels v. Westinn Hospitality Services
Ltd. 1999 PTC (19) 123, the Division Bench of Madras High
Court while setting aside the judgment of the learned Single
Judge applied the principle of transborder reputation and
restrained the defendant from using the word "West inn" for Its
business.
(iii) In Poddar Tyres Ltd v. Bedrock Sales Corporation,
Bedrock Ltd. (1993) 18 IPLR 153, the Court held that the
trading style and name of defendant No. 1 containing the word
'Bedrock' did amount to infringement and passing off since
such adoption of the mark in the business name was neither
honest nor bonafide so as to claim valid use under
Section 34 of the Act.
(iv) This Court in Virendra Dresses v. Varindra Garments, AIR
1982 Delhi 482 held that the trade names of plaintiffs and
defendants are similar, sufficient to give rise to confusion.
Similarity and confusion to be determined from the point of
view of a common man. A man in the street will remember the
name Varindra he may not be able to make a distinction
between the 'Garments' and 'Dresses'. A customer intending
to go to the business premises of the plaintiffs is likely to visit
the business premises of the defendant when the two trading
names are so similar.
(v) In Tata Iron & Steel Co. Ltd. v. Mahavir Steel and Ors. I.A.
Nos. 6215 and 8804 of 1990 dated February 25, 1992 this
Court observed "An imitation remains an imitation whether it is
done by many. It acquires no legitimacy. A wrong is not righted
by the following it musters."
ORDINARY WORDS
39. The test of confusion and deception in order to prove the case
of passing off has been very well discussed in the case of Laxmikant
vs. Patel vs. Chetanbhat Shah and Another, reported in (2002) 3
SCC 65, wherein the Supreme Court while considering a plea of
passing off and grant of ad interim injunction held in no uncertain
terms that a person may sell his goods or deliver his services under a
trading name or style which, with the passage of time, may acquire a
reputation or goodwill and may become a property to be protected by
the Courts. It was held that a competitor initiating sale of goods or
services in the same name or by imitating that name causes injury to
the business of one who has the property in that name. It was held
that honesty and fair play are and ought to be the basic policy in the
world of business and when a person adopts or intends to adopt a
name which already belongs to someone else, it results in confusion,
has the propensity of diverting the customers and clients of someone
else to himself and thereby resulting in injury.
40. It was held in Laxmikant V. Patel (supra) that the principles
which apply to trade mark are applicable to trade name also. Para 10
of the aforesaid judgment reads as under:-
"The law does not permit any one to carry on his business
in such a way as would persuade the customers or clients
in believing that his goods or services belonging to
someone else are his or are associated therewith. It does
not matter whether the latter person does so fraudulently or
otherwise. The reasons are two. Firstly, honesty and fair
play are, and ought to be, the basic policies in the world of
business. Secondly, when a person adopts or intends to
adopt a name in connection with his business or services
which already belongs to someone else it results in
confusion and has propensity of diverting the customers
and clients of someone else to himself and thereby
resulting in injury."
In this case, the Supreme Court further observed that:
"Where there is probability of confusion in business, an
injunction will be granted even though the defendants
adopted the name innocently."
41. In the case of Reddaway v. Banham (1896) 13 RPC 218
which was referred in the case of Globe Super Parts vs. Blue
Super Flame Industries, AIR 1986 Delhi 245, the judgment given
by the Single Judge of this Court speaking through Shri Mahinder
Narain, J who discussed the case of Reddaway (Supra) at great
length by referring the facts of the matter. The said narration of facts
are as under:
".......The words of common language which were held to be
exclusively appropriated by Reddaway, in that case were
'Camel Hair". What was asserted in the Reddaway's case
was that beltings were manufactured and sold by various
persons; that the beltings used to be sold under the name of
various animals like Yak, Llama, Buffalo, Crocodile etc. What
Plaintiff Reddaway asserted was that Banham was their one
time employee and that he had started selling the beltings
under the name 'Camel Hair"; Reddaway also asserted that
they were entitled to stop others, like Defendants Banham,
from using the word 'Camel Hair with respect to the beltings
manufactured by them.
48. This case was decided by the House of Lords on or about
26th March, 1896. The case was started on 3rd May, 1893
when Frank Reddaway and F. Reddaway & Co. Ltd.,
commenced the suit in the Manchester District Registry of the
Queen's Bench Division against George Banham and George
Banham & Co. Ltd., for an injunction to restrain the
Defendants from infringing certain trade marks and from
continuing to use the word 'Camel in such a manner as to
pass off their goods as and for the plaintiff's goods. It was
asserted that the plaintiffs had, during the course of trade,
sold very large quantities of beltings as 'camel beltings' and
that the word 'Camel' appeared upon, or was attached to
their beltings as 'camel beltings'. In England and abroad the
word 'camel', or the figure of a camel, was universally
understood in all the places where their beltings was sold, to
indicate goods to be of plaintiffs manufacture. It was also
asserted that beltings was sold as 'camel' and 'camel hair
beltings also. The action was commenced because the
Defendants' company and the Defendant Banham had
recently sold in England and advertised for sale in
conjunction with the word "Camel" large quantities of beltings,
which belting was not made by the plaintiffs and thus, the
persons who desire for purchasing beltings of the Plaintiff
would be deceived by the Defendants' use of the word
'Camel', into the belief that they were purchasing the beltings
of the plaintiffs' manufacture.
49. The plaintiffs got the injunction from Collins, J. but the
Defendants' appeal was allowed by the Court of Appeal
holding that 'Camel Hair' Belting' was merely a truthful
description of the nature of the goods and nobody can be
prevented from using that name, although it may lead to
goods being purchased under that name, as a goods of a
particular maker. The Court of Appeal held that 'Camel Hair
Belting was a true description of the goods, and that it was
the name by which a person wanting to buy goods would ask
for them. Again a judgment was given for the Defendants.
The plaintiffs then appealed to the House of Lords.
50. The House of Lords examined the case, and held that
even "descriptive words" like 'Camel Hair Belting' were
capable of exclusively appropriation, that the words 'Camel
Hair Belting' have acquired a secondary signification with
respect to the beltings in the sense that the words 'Camel
Hair' with respect to the trade in beltings had lost their
primary meaning, to indicate belting made of camel hair, but
has acquired a secondary significance or meaning in the
trade, and came to connote the products of the plaintiffs. The
House of Lords found that there was ample evidence to
justify the finding that amongst those who were the
purchasers of such goods, the words "Camel Hair" were not
applied to beltings made of that material in general; that in
short, it did not mean in the market belting made of a
particular material, but belting made by a particular
manufacturer. The House of Lords thus came to the
conclusion that common words of a language can be
exclusively appropriated to a particular manufacturer as they
had acquired a special meaning as denoting the goods of a
particular manufacturer/ trader.
51. Lord Herschell also dealt with "coined" words, that did not
have any meaning in the language; and at page 228 line 19,
said that "words never in use before, and meaningless except
as indicating by whom the goods in connection with which it
is used were made, there could be no conceivable legitimate
use of it by another person". Thus the "coined" "created",
"Fancy", or "new" words which were not in use in any
language before, and which did not have any meaning in the
ordinary language, us evidenced by their absence in
authoritative and standard language dictionaries, were the
exclusive property of the person who first "coined", or created
them and adopted them for use, and used it in connection
with any article the only reason why a hitherto meaningless
word would be used by another in connection with his
activities would be to deceive the public, that the letters
article, thing or goods or the articles, thing or goods of the
former. He also observed that "he was unable to see why a
man should be allowed in this way, more than in any other, to
deceive purchasers into the belief that they are getting what
they are not, and thus to filch the business of a rival".
42. The likelihood of confusion or deception in such cases is not
disproved by placing the two marks side by side and demonstrating
how small is the chance of error in any customer who places his
order for goods with both the marks clearly before him, for orders
are not placed, or are often not placed, under such conditions. It is
more useful to observe that in most persons the eye is not an
accurate recorder of visual detail and that marks are remembered
rather by general impressions or by some significant detail than by
any photographic recollection of the whole.
43. In view of the aforesaid reasons, it is evident that the plaintiff's
trademark Comfort Inn is a distinctive trademark/name by virtue of
long and continuous user and the plaintiff is entitled for injunction as
prayed for.
TEST OF COMPARISON OF RIVAL MARKS
44. (i) In Pianotist Co. Ltd.'s application, 1906(23) R.P.C. 774, it
was observed as follows :
"You must taken the two words. You must judge of them,
both by their look and by their sound. You must consider the
goods to which they are to be applied. You must consider the
nature and kind of customer who would be likely to buy those
goods. In fact, you must consider all the surrounding
circumstances; and you must further consider what is likely to
happen if each of those trade marks is used in a normal way
as a trade mark for the goods of the respective owners of the
marks. If, considering all those circumstances, you come to
the conclusion that there will be a confusion-that is to say, not
necessarily that one man will be injured and the other will
gain illicit benefit, but that there will be a confusion in the
mind of the public which will lead to confusion in the goods-
then you may refuse the registration, or rather you must
refuse the registration in that case."
(ii) In Parker Knoll Ltd. v. Knoll International Ltd., 1962 R.P.C.
265, Lord Denning explained the words "to deceive" and the phrase
"to cause confusion" as follows:
"Secondly, 'to deceive' is one thing. To 'cause confusion' is
another. The difference is this :
When you deceive a man, you tell him a lie. You make a
false representation to him and thereby cause him to believe
a thing to be true which is false. You may not do it knowingly,
or intentionally, but still you do it, and so you deceive him.
But you may cause confusion without telling him a lie at all,
and without making any false representation to him. You may
indeed tell him the truth, the whole truth and nothing but the
truth, but still you may cause confusion in his mind, not by
any fault of yours, but because he has not the knowledge or
ability to distinguish it from the other pieces of truth known to
him or because he may not even take the trouble to do so."
(iii) In the case of Sandow Ltd.'s Application, 31 R.P.C. 205 it was
clarified that among the surrounding circumstances to be taken into
account, one of considerable importance is the imperfect
recollection a person is likely to have of a mark with which he is only
vaguely acquainted. While approving the above tests for comparison
of the two word-marks, the Supreme Court held in F. Hoffmann-La
Roche & Co. Ltd. Vs. Geoffrey Manner & Co. Pvt. Ltd. (1969) 2
SCC 716 that:
"It is also important that the marks must be compared as
whole. It is not right to take a portion of the word and say that
because that portion of the word differs from the
corresponding portion of the word in the other case there is
no sufficient similarity to cause confusion. The true test is
whether the totality of the proposed trade mark is such that it
is likely to cause deception or confusion or mistake in the
minds of persons accustomed to the existing trade mark."
(iv) In the case of Tokalon Ltd. v. Devidson and Co. 32 R.P.C.
133, it was observed that:
"...We are not bound to scan the words as we would in a
question of compatriotic literarum. It is not a matter for
microscopic inspection, but to be taken from the general and
even casual point of view of a customer walking into a shop."
(v) In De Cordova and Ors. v. Vick Chemical Cov. (1951) 68
R.P.C. 103, the Privy Council while considering whether the mark
'Karsote Vapour Rub' was deceptively similar to trade mark 'Vapo
Rub', inter alia, held as under:
"It is more useful to observe that in most persons the eye is
not an accurate recorder of visual detail and that marks are
remembered rather by general impressions or by some
significant detail than by any photographic recollection of the
whole."
(vi) In Amritdhara Pharmacy v. Satyadeo Gupta AIR 1963 SC
449, it was held that the trademarks Amritdhara and Laxmandhara
are closely deceptively similar. Similarly in Corn Products Refining
Co. Vs. Shangrila Food Products Ltd. AIR 1960 SC 142, it was
held that that the two trademarks GLUCOVITA and GLUVITA are
similar.
(vii) In the case of James Chadwick & Bros. Ltd. v. The National
Sewing Thread Co. Ltd., AIR 1951 Bom 147, Chagla C.J. and
Bhagwati, J.; referring to the words "likely to deceive or cause
confusion" in section 10 of the Act observed as follows:-
"Now in deciding whether a particular trade mark is likely to
deceive or cause confusion, it is not sufficient merely to
compare it with the trade mark which is already registered
and whose proprietor is offering opposition to the registration
of the former trade mark. What is important is to find out what
is the distinguishing or essential feature of the trade mark
already registered and what is the main feature or the main
idea underlying that trade mark, and if it is found that the
trade mark whose registration is sought contains the same
distinguishing or essential feature or conveys the same idea,
then ordinarily the Registrar would be right if he came to the
conclusion that the trade mark should not be registered. The
real question is as to how a purchaser, who must be looked
upon as an average man of ordinary intelligence, would react
to a particular trade mark, what association he would form by
looking at the trade mark, and in what respect he would
connect the trade mark with the goods which he would be
purchasing. It is impossible to accept that a man looking at a
trade mark would take in every single feature of the trade
mark. The question would be, what would he normally retain
in his mind after looking at the trade mark? What would be
the salient feature of the trade mark which in future would
lead him to associate the particular goods with that trade
mark?"
(viii) In the case of Aristoc Ltd. v. Rysta Ltd., (1945) 65 RPC 62
decided by the House of Lords, it was held that the comparison of
trademarks was a matter of first impression, but the mark "Rysta"
too closely resembled mark "Aristoc" phonetically and it would be
liable to lead to deception and confusion.
"38. Thus, it appears to the Court that the trademark used by
the defendant is deceptively similar to the trademark of the
plaintiff and the use of the mark MAXTRADE by the
defendant is likely to cause confusion and deception, as it is
almost identical to the trademark of the plaintiff."
Delay
46. It has been decided in many cases that such statutory right
cannot be lost merely on the question of principles of delay, laches
or acquiescence. It was also held that a mere delay after knowledge
of infringement does not deprive the registered proprietor of a trade
mark of his statutory rights or of the appropriate remedy for the
enforcement of those rights so long as the said delay is not an
inordinate delay.
The issue of delay and acquiescence has been considered by
Courts in various matters. Some of them are referred to as under:
a) In the case of Midas Hygiene Industries Pvt. Ltd. vs. Sudhir
Bhatia and Others, 2004 (28) PTC 121, relevant para-5 of the
said judgment is as under:
"5. The law on the subject is well settled. In cases of
infringement either of Trade Mark or of Copyright normally
an injunction must follow. Mere delay in bringing action is
not sufficient to defeat grant of injunction in such cases.
The grant of injunction also becomes necessary if it prima
facie appears that the adoption of the Mark was itself
dishonest."
b) In the case of Swarn Singh vs. Usha Industries (India) and
Anr., AIR 1986 Delhi 343 (DB) it was held as under :
"There is then the question of delay. Learned counsel for
the respondents had urged that the delay is fatal to the
grant of an injunction. We are not so satisfied. A delay in
the matter of seeking an injunction may be aground for
refusing an injunction in certain circumstances. In the
present case, we are dealing with a statutory right based
on the provisions of the trade and Merchandise Marks Act,
1958. An exclusive right is granted by the registration to the
holder of a registered trade mark. We do not think statutory
rights can be lost by delay. The effect of a registered mark
is so clearly defined in the statute as to be not capable of
being misunderstood. Even if there is some delay, the
exclusive right cannot be lost. The registered mark cannot
be reduced to a nullity....."
c) In the case of Hindustan Pencils Pvt. Ltd. Vs. M/s India
Stationery Products Co., AIR 1990 DELHI 19 it was held as
under :
".........It was observed by Romer, J. in the matter of an
application brought by J.R. Parkingnon and Co. Ltd.,
(1946) 63 RPC 171 at page 181 that "in my judgment, the
circumstances which attend the adoption of a trade mark in
the first instance are of considerable importance when one
comes to consider whether the use of that mark has or has
not been a honest user. If the user in its inception was
tainted it would be difficult in most cases to purify it
subsequently". It was further noted by the learned Judge in
that case that he could not regard the discreditable origin of
the user as cleansed by the subsequent history."
d) In the case of M/s. Bengal Waterproof Ltd. Vs. M/s. Bombay
Waterproof Manufacturing Co., AIR 1997 SC 1398 it was held
as under :
"20.........It is now well settled that an action for passing off
is a common law remedy being an action in substance of
deceit under the Law of Torts. Wherever and whenever
fresh deceitful act is committed the person deceived would
naturally have a fresh cause of action in his favour. Thus
every time when a person passes off his goods as those of
another he commits the act of such deceit. Similarly
whenever and wherever a person commits breach of a
registered trade mark of another he commits a recurring
act of breach or infringement of such trade mark giving a
recurring and fresh cause of action at each time of such
infringement to the party aggrieved. It is difficult to agree
how in such a case when in historical past earlier suit was
disposed of as technically not maintainable in absence of
proper relief, for all times to come in future defendant of
such a suit should be armed with a license to go on
committing fresh acts of infringement and passing off with
impunity without being subjected to any legal action against
such future acts."
The ratio of the aforesaid decisions are squarely applicable to
the facts of the present case. Thus, injunction cannot be refused on
account of delay as the plaintiff has made a strong prima facie case
of infringement of trademark and passing off.
Balance of convenience tilts in plaintiff's favour :
47. From the entire gamut of the matter, it emerges that the plaintiff has
been using the suit trademarks atleast since 1981 globally and atleast
since 1991 in India. The defendants' adoption and use of the suit
trademarks is clearly dishonest. The defendants' operations are limited
to one outlet in Hyderabad under the impugned name while the plaintiff,
being the proprietor of the suit trademarks, operates over 1500 Comfort
Inn hotels in the world and has spent huge resources in its brands. The
defendants have been using another mark 'Raj Classic Inn'. Therefore,
the balance of convenience completely tilts in favour of the plaintiff and
against the defendant. In case the defendant is allowed to use the
identical trade mark/name, the plaintiff would suffer injury in its business
not only in India but also in other parts of the world towards name,
goodwill and reputation.
JURISDICTION
45. Let me first consider the issue of territorial jurisdiction raised by
the defendants. The plaintiffs have invoked the jurisdiction of this
court in view of the averment made in Para 26 of the plaint which
reads as under:
"This Hon'ble Court has the necessary territorial jurisdiction to
entertain and try the present suit on account of the provisions of
Section 134 (2) of the Trademarks Act, 1999 as the Plaintiff
being the owner of the registered trademark COMFORT
INN/COMFORT, carries on business for profit and gain through
its master franchisee operating from Comfort Inn The President
at 4/23 B, Asaf Ali Road, Delhi. Territorial jurisdiction of this
Hon'ble Court also exists as the Defendants' interactive website
at www.rajcomfortinn.com is accessible inter alia in New Delhi
and amounts to offering the Defendants' services for sale at
Delhi since online bookings for rooms requested from Delhi are
routinely accepted by the Defendants. The Defendants are also
verily believed to have agents and coordinates at Delhi from
promotion of their business to Hyderabad-bound travelers. The
Defendants are also listed in the Just-Dial directory and
therefore are clearly offering their services for sale in Delhi.
Hence, a part of the cause of action also arises in Delhi,"
46. Recently, the Division Bench of this Court in great detail has
discussed the issue of territorial jurisdiction in the case of World
Wrestling Entertainment, Inc. vs. M/s Reshma Collection & Ors.
passed on 15th October, 2014, held in paras 11 to 22 as under :
"11. Before we proceed any further, it would be
necessary to set out the provisions of Section 134 of the
Trademarks Act, 1999 and Section 62 of the Copyright Act,
1957. They are as under :-
"134. Suit for infringement, etc., to be instituted
before district Court.- (1) No suit -
(a) for the infringement of a registered trade
mark, or
(b) relating to any right in a registered trade
mark, or
(c) for passing off arising out of the use by the
defendant of any trade mark which is
identical with or deceptively similar to the
plaintiff's trade mark, whether registered or
unregistered.
shall be instituted in any court inferior to a District
Court having jurisdiction to try the suit.
(2) For the purpose of clauses (a) and (b) of sub-
section (1), a ―District Court having jurisdiction‖ shall,
notwithstanding anything contained in the Code of Civil
Procedure, 1908 (5 of 1908) or any other law for the
time being in force, include a District Court within the
local limits of whose jurisdiction, at the time of the
institution of the suit or other proceeding, the person
instituting the suit or proceeding, or where there are
more than one such person any of them, actually and
voluntarily resides or carries on business or personally
works for gain.
Explanation.-- For the purpose of sub-section (2),
"person" includes the registered proprietor and the
registered user."
"62. Jurisdiction of court over matters arising
under this Chapter:- (1) Every suit or other civil
proceeding arising under this Chapter in respect of the
infringement of copyright in any work or the
infringement of any other right conferred by this Act
shall be instituted in the direct court having jurisdiction.
(2) For the purpose of sub-section (1), a "district
court having jurisdiction" shall, notwithstanding
anything contained in the Code of Civil Procedure,
1908(5 of 1908), or any other law for the time being
in force include a district court within the local limits
of whose jurisdiction, at the time of the institution of
the suit or other proceedings, the person instituting
the suit or other proceeding or, where there are
more than one such persons, any of them actually
and voluntarily resides or carries on business or
personally works for gain."
12. The provisions of Section 134 (2) of the Trademarks
Act, 1999 and of Section 62(2) of the Copyright Act, 1957
are material. Both the provisions are virtually identical.
They are both non-obstante provisions inasmuch as it is
clearly stated therein that they are "notwithstanding
anything contained in the Code of Civil Procedure, 1908, or
any other law for the time being in force."
Furthermore, the word "include" is used in both the
provisions so as to include a District Court within the local
limits of whose jurisdiction, at the time of institution of the
suit or other proceeding, the person instituting the suit or
proceeding, or where there are more than one such
person, any of them, actually and voluntarily resides or
"carries on business" or personally works for gain. Insofar
as the present case is concerned, it is not claimed by the
appellant/ plaintiff that it resides or personally works for
gain in Delhi. It has, as pointed out above, taken the plea
that it 'carries on business' in Delhi because, according to
it, its programmes are broadcast in Delhi; its merchandise
and books are available for sale in Delhi; and its goods and
services are sold to customers in Delhi through its website
which can be accessed in Delhi over the internet.
13. Therefore, the entire case turns on the meaning to
be given to the expression 'carries on business' as
appearing in the above two provisions. In Dhodha House
(supra), the Supreme Court, inter alia, considered the
meaning of the expression 'carries on business' The
following extracts from the said decision would be
relevant:-
"46. The expression "carries on business" and the
expression 'personally works for gain' connote two
different meanings. For the purpose of carrying on
business only presence of a man at a place is not
necessary. Such business may be carried at a place
through an agent or a manager or through a servant.
The owner may not even visit that place. The phrase
"carries on business" at a certain place would,
therefore, mean having an interest in a business at
that place, a voice in what is done, a share in the gain
or loss and some control thereover. The expression is
much wider than what the expression in normal
parlance connotes, because of the ambit of a civil
action within the meaning of section 9 of the Code. But
it is necessary that the following three conditions
should be satisfied, namely,
"(1) The agent must be a special agent who attends
exclusively to the business of the principal and
carries it on in the name of the principal and not a
general agent who does business for any one that
pays him. Thus, a trader in the mufassil who
habitually sends grain to Madras for sale by a firm of
commission agents who have an independent
business of selling goods for others on commission,
cannot be said to "carry on business" in Madras. So
a firm in England, carrying on business in the name
of A.B. & Co., which employs upon the usual terms
a Bombay firm carrying on business in the name of
C.D. & Co., to act as the English firm's commission
agents in Bombay, does not "carry on business" in
Bombay so as to render itself liable to be sued in
Bombay.
(2) The person acting as agent must be an agent in
the strict sense of the term. The manager of a joint
Hindu family is not an "agent" within the meaning of
this condition.
(3) To constitute 'carrying on business' at a certain
place, the essential part of the business must take
place in that place. Therefore, a retail dealer who
sells goods in the mofussil cannot be said to 'carry
on business' in Bombay merely because he has an
agent in Bombay to import and purchase his stock
for him. He cannot be said to carry on business in
Bombay unless his agent made sales there on his
behalf. A Calcutta firm that employs an agent at
Amritsar who has no power to receive money or to
enter into contracts, but only collects orders which
are forwarded to and dealt with in Calcutta, cannot
be said to do business in Amritsar. But a Bombay
firm that has a branch office at Amritsar, where
orders are received subject to confirmation by the
head office at Bombay, and where money is paid
and disbursed, is carrying on business at Amritsar
and is liable to be sued at Amritsar. Similarly a Life
Assurance Company which carries on business in
Bombay and employs an agent at Madras who acts
merely as a Post Office forwarding proposals and
sending moneys cannot be said to do business in
Madras. Where a contract of insurance was made at
place A and the insurance amount was also payable
there, a suit filed at place B where the insurance Co.
had a branch office was held not maintainable.
Where the plaintiff instituted a suit at Kozhikode
alleging that its account with the defendant Bank at
its Calcutta branch had been wrongly debited and it
was claimed that that court had jurisdiction as the
defendant had a branch there, it was held that the
existence of a branch was not part of the cause of
action and that the Kozhikode Court therefore had
no jurisdiction. But when a company through
incorporated outside India gets itself registered in
India and does business in a place in India through
its agent authorized to accept insurance proposals,
and to pay claims, and to do other business
incidental to the work of agency, the company
carries on business at the place of business in India"
[See Mulla on the Code of Civil Procedure, 15th
Edn., Vol.I, pp 246-47.]
47. A corporation in view of Explanation appended to
Section 20 of the Code would be deemed to be
carrying on business inter alia at a place where it has
a subordinate office. Only because, its goods are
being sold at a place would thus evidently not mean
that it carries a business at that place."
xxxx xxxx xxxx xxxx xxxx
51. The plaintiff was not a resident of Delhi. It has not
been able to establish that it carries on any business
at Delhi. For our purpose, the question as to whether
the defendant had been selling its produce in Delhi or
not is wholly irrelevant (sic). It is possible that the
goods manufactured by the plaintiff are available in the
market of Delhi or they are sold in Delhi but that by
itself would not mean that the plaintiff carries on any
business in Delhi."
14. From the above extracts, it is evident that when we
say that a person carries on business at a place we mean
that the person has an interest in a business at that place,
a voice in what is done, a share in the gain or loss and
some control at that place. There is no doubt that a person
may carry on business at a place not necessarily by
himself but through an agent or a manager or through a
servant. But, as pointed out in Dhodha House (supra),
three conditions have to be fulfilled: (i) the agent must be a
special agent who attends exclusively to the business of
the principal and carries it on in the name of the principal
and not as a general agent who does business for any one
that pays him; (ii) the person acting as agent, must be an
agent in the strict sense of the term and a manager of a
Joint Hindu Family cannot be regarded as an 'agent' within
the meaning of this condition; and (iii) to constitute
"carrying on business" at a certain place, the essential part
of the business must be performed at that place. An
illustration of which is given in the above extract itself
where a Bombay firm has a branch office at Amritsar,
where orders are received, subject to confirmation by the
head office at Bombay, and where money is paid and
disbursed. Such a firm is said to be carrying on business at
Amritsar and is liable to be sued at Amritsar.
15. Mr Praveen Anand, the learned counsel appearing
on behalf of the appellant/ plaintiff, submitted before us,
after placing reliance on Exphar SA and Another v.
Eupharma Laboratories Limited and Another: AIR 2004
SCC 1682 that the use of the word 'include' in Section
134(2) of the Trademarks Act, 1999 and Section 62(2) of
the Copyright Act, 1957 make the provisions broader than
Section 20 of the CPC. There is no dispute with this
proposition. There is also no dispute with the proposition of
the learned counsel for the appellant that the expression
"carries on business" is not confined to the head office, but
can also include a branch office. This proposition is based
on a decision of the Madras High Court in Wipro Limited
(supra). But, this proposition is of no use to the appellant/
plaintiff inasmuch as it is not the case of the appellant/
plaintiff that it has any office within the territorial limits of
this Court, what to speak of a branch office.
16. Faced with this eventuality, Mr Anand submitted
that, in fact, there is no need to have any office at all at a
particular place for establishing the fact that a person
carries on business at that place. He placed reliance, once
again, on Wipro Limited (supra), wherein it was observed
that the plain meaning of the expression "carries on
business" only conveys that wherever there is a business
activity - be it the principal place or branch or branches -
the party concerned is said to carry on business at such
places. In fact, we may point out that Mr Anand need not
haved laboured on this point at all because in Dhodha
House (supra) itself, the Supreme Court had clearly
observed that for the purpose of carrying on business, the
presence of the person concerned at a particular place was
not at all necessary and that such business could be
carried on at that place through an agent or a manager or
through a servant. Mr Anand also submitted that while
considering the question of territorial jurisdiction at the
threshold stage and particularly while considering the
question of return of a plaint under Order 7 Rule 10 CPC,
only the averments made in the plaint ought to be seen
and, if, on a demurrer, a case for territorial jurisdiction has
been made out, the plaint ought not to be returned. In our
view, there is no quarrel with this proposition either.
17. The main issue before us is one of considering as to
whether on the basis of the averments made in the plaint,
the appellant/ plaintiff carries on business in Delhi. It is
nowhere pleaded in the plaint that the appellant/ plaintiff,
has an agent or a manager or a servant, through whom the
appellant/ plaintiff carries on business in Delhi. As pointed
out above, it is also not the appellant/ plaintiff's case that it
has an office in Delhi. The question then arises as to
whether the third condition specified in Dhodha House
(supra) is satisfied or not. If we recall, in Dhodha House
(supra), the Supreme Court had observed that the
expression "carries on business" as appearing in the above
two provisions, is much wider than what the expression in
normal parlance connotes because of the ambit of a civil
action within the meaning of Section 9 of the CPC. The
Supreme Court, however, cautioned that although the
expression has a very wide meaning, it is necessary that
the three conditions specified in the said decision should
be satisfied.
18. Insofar as the first two conditions are concerned,
they relate to agents. Inasmuch as it is an admitted position
that the appellant/ plaintiff has no agent in Delhi, those two
conditions are clearly not fulfilled. However, it is the
appellant/ plaintiff's case that it carries on business in Delhi
directly inasmuch as its goods and services are sold to
consumers in Delhi through its website which is accessed
in Delhi. It is on this basis that the learned counsel for the
appellant/ plaintiff submitted that the decision in Dhodha
House (supra) as also in Archie Comic (supra) would
really not be applicable in the present case as in those
decisions web-based business models, which have been
referred to as the new media', were not considered. The
question which then arises is whether the introduction and
spread of e-commerce and business over the internet
impacts the meaning of the expression "carries on
business" at a certain place. The learned Single Judge, as
we have pointed out above, felt that the introduction of the
new business models of doing business over the internet
was not any different from the old model of doing business
over the telephone or fax. He had placed reliance on the
Supreme Court decision in the case of Bhagwan
Goverdhandas Kedia (supra).
19. Considering the fact that in Dhodha House (supra),
the third condition stipulated that to constitute 'carrying on
business' at a certain place, the essential part of the
business must take place there, it would be necessary to
examine this aspect in the backdrop of business over the
internet. When a transaction takes place over the internet,
where is the contract concluded? This is the question
which needs to be answered. In other words, at which
place does the essential part of the business transaction
take place? The example of the Bombay firm having a
branch office at Amritsar, where orders were received,
subject to confirmation by the head office at Bombay and
where money was paid and disbursed, needs to be
examined in the context of internet transactions. In that
example, it was noted that the Bombay firm could be said
to be carrying on business at Amritsar and was liable to be
sued at Amritsar. In the present case, the plaintiff/
appellant is incorporated in USA. It has a website. We do
not know as to where that website is hosted. The server
would, in all likelihood, be in USA. It has not been pleaded
that the website of the appellant/ plaintiff is hosted on a
server in Delhi. Therefore, it can be safely presumed that
the web server is not located in Delhi. However, if a
customer in Delhi wishes to purchase an article, which is
available on the website of the appellant/ plaintiff, the
purchaser in Delhi accesses the said website on his or her
computer in Delhi. The said purchaser places the order for
the said article from his computer in Delhi. The payment is
made either through a credit/ debit card or through a cash
card from Delhi and ultimately the goods are delivered to
the customer in Delhi. In the nature of such transactions,
the question arises as to which is the place where the
essential part of the business occurs?
20. We may recall that the learned Single Judge had
referred to the Supreme Court decision in Bhagwan
Goverdhandas Kedia (supra), wherein transactions over
the telephone and telegraph had been considered. It would
be instructive to examine that decision of the Supreme
Court. The facts before the Supreme Court in Bhagwan
Goverdhandas Kedia (supra) were that the plaintiff therein
had commenced an action in the City Civil Court at
Ahmedabad against the defendant for a decree of
Rs.31,150/- on the plea that the defendants had failed to
supply cotton seed cake, which they had agreed to supply
under an oral contract entered into on 22.07.1959, which
had been negotiated between the parties through a long
distance conversation over the telephone. The question
arose as to whether the City Civil Court at Ahmedabad had
jurisdiction to entertain the said suit. The offer to purchase
cotton seed cake had emanated from the plaintiff and that
offer had been accepted by the defendant. The City Civil
Court held that as the contract was concluded over the
telephone, the place where the acceptance of the offer is
intimated to the offeror is the place where the contract is
made, and, therefore, the City Civil Court at Ahmedabad
would have jurisdiction to try the suit. The matter travelled
up to the Supreme Court, which, by a majority decision,
upheld the conclusion of the City Civil Court at Ahmedabad
by holding that :-
"The trial Court was therefore right in the view
which it has taken that a part of the cause of
action arose within the jurisdiction of the Civil City
Court, Ahmedabad, where acceptance was
Communicated by telephone to the plaintiffs."
In doing so, the Supreme Court considered the relevant
provisions of the Indian Contract Act, 1872 as also the
common law of England. The Supreme Court also
undertook to compare contracts concluded over the post
and telegraph on the one hand and contracts concluded
over the telephone on the other. The Supreme Court noted
that acceptance and intimation of acceptance of an offer
are both necessary to result in a binding contract. The
Supreme Court held that in the case of a contract which
consists of mutual promises, the offeror must receive
intimation that the offeree has accepted his offer and has
signified his willingness to perform his promise. The
Supreme Court further noted that when parties are in the
presence of each other, the method of communication will
depend upon the nature of the offer and the circumstances
in which it is made and that when an offer is orally made,
acceptance may be expected to be made by an oral reply,
but even a nod or other act which indubitably intimates
acceptance, may suffice. Furthermore, if the offeror
receives no such intimation, even if the offeree has
resolved to accept the offer, a contract may not result. The
Supreme Court further observed as under:-
"But on this rule is engrafted an exception based
on ground of convenience which has the merit not
of logic or principle in support, but of long
acceptance by judicial decisions. If the parties are
not in the presence of each other, and the offeror
has not prescribed a mode of communication of
acceptance, insistence upon communication of
acceptance of the offer by the offeree would be
found to be inconvenient, when the contract is
made by letters sent by post....."
xxxx xxxx xxxx xxxx xxxx
".....The exception has long been recognised in the United
Kingdom and in other countries where the law of contracts
is based on the common law of England. Authorities in
India also exhibit a fairly uniform trend that in case of
negotiations by post the contract is complete when
acceptance of the offer is put into a course of transmission
to the offeror: see Baroda Oil Cakes Traders case ILR
(1954) Bom 1137: (AIR) 1954 Bom 451, and cases cited
therein. A similar rule has been adopted when the offer and
acceptance are by telegrams. The exception to the general
rule requiring intimation of acceptance may be summarised
as follows. When by agreement, course of conduct, or
usage of trade, acceptance by post or telegram is
authorised, the bargain is struck and the contract is
complete when the acceptance is put into a course of
transmission by the offeree by posting a letter or
dispatching a telegram." (underlining added)
21. From the above, it is clear that the general rule is
that the contract is complete when the offeror receives
intimation that the offeree has accepted his offer. An
exception to this has been carved out in respect of
contracts negotiated by postal communications or
telegrams. The exception being that the bargain in such
cases (post or telegram) would be struck and the contract
would be complete when the acceptance of the offeree is
put into a course of transmission by him by posting a letter
or despatching a telegram. The Supreme Court then held
as under:-
"10. It is true that the Post and Telegraphs Department
has general control over communication by telephone
and especially long distance telephone, but that is not
a ground for assuming that the analogy of a contract
made by post will govern this mode of making
contracts. In the case of correspondence by post or
telegraphic communication, a third agency intervenes
and without the effective intervention of that third
agency, Letters or messages cannot be transmitted. In
the case of a conversation by telephone, once a
connection is established there is in the normal course
no further intervention of another agency. Parties
holding conversation on the telephone are unable to
see each other: They are also physically separated in
space, but they are in the hearing of each other by the
aid of a mechanical contrivance which makes the
voice of one heard by the other instantaneously, and
communication does not depend upon an external
agency." (underlining added)
It is obvious that the Supreme Court distinguished the case
of a contract negotiated over the telephone from that of
contracts through letters or through telegrams. Whereas in
the latter, there was an intervention of an external agency,
which took time to deliver the acceptance of the offer by
the offeree to the offeror, in the former, the communication
of the acceptance was instantaneous once the
communication link had been established. The Supreme
Court, by virtue of its majority decision, went on to hold as
under:-
"14. Obviously the draftsman of the Indian Contract
Act did not envisage use of the telephone as a means
of personal conversation between parties separated in
space, and could not have intended to make any rule
in that behalf. The question then is whether the
ordinary rule which regards a contract as completed
only when acceptance is intimated should apply, or
whether the exception engrafted upon the rule in
respect of offers and acceptances by post and by
telegrams is to be accepted. If regard be had to the
essential nature of conversation by telephone, it would
be reasonable to hold that the parties being in a sense
in the presence of each other, and negotiations are
concluded by instantaneous communication of speech,
communication of acceptance is a necessary part of
the formation of contract, and the exception to the rule
imposed on grounds of commercial expediency is
in-applicable." (underlining added)
22. It is interesting to note that the Supreme Court had
observed that the draftsman of the Indian Contract Act
could not have envisaged use of the telephone as a means
of personal conversation between parties separated in
space and could not have intended to make any rule in that
behalf. This applies with greater vigour insofar as
commerce and business over the internet is concerned.
Just as in the case of telephone conversation, there is
instantaneous communication, so, too, in the case of
business over the internet. Therefore, the rule that applies
to contracts concluded over the telephone would apply with
equal vigour to contracts concluded over the internet. In
other words, contracts would be completed at the place
where the acceptance is communicated. In the case before
the Supreme Court, the offer had emanated from the
plaintiff, who was situated in Ahmedabad. The acceptance
of the offer was by the defendants, who were to make the
supply of cotton seed cakes to the plaintiff therein. The
acceptance, since it was over the telephone, was
instantaneously communicated via that technology to the
plaintiff at Ahmedabad. The Supreme Court held that the
cause of action would arise within the jurisdiction of the
City Civil Court at Ahmedabad, where the acceptance was
communicated by telephone to the plaintiff."
47. Even the Division Bench in the case of M/s. International Film
Distributors vs. Shri Rishi Raj, 2009 (39) PTC 173 (DEL) in paras
22 to 24 held as under :
"22. In Tata Iron & Steel Co. Ltd. V. Mahavir Steels &
Ors.; 47(1992) DLT 412 it was observed in paras 11&13
as under :
"11. The question regarding jurisdiction can only be
gone into after the evidence of the parties is
recorded in the case. Even in the Punjab case the
suit was not thrown out at the threshold under Order
7 Rule 11 CPC but only after the parties were given
an opportunity to lead evidence. The plaint in the
present suit categorically states that the defendant
no.1 was selling the channels of defendant no.2
under the offending trade mark which is deceptively
similar to that of the plaintiff. On these averments
the Court must assume jurisdiction and proceed with
the suit to determine the question relating to the
confirmation/vacation of the stay order at this stage."
23. This aspect has been decided by Justice Badar
Durez Ahmed in Pfizer Products Inc. Vs Rajesh Chopra
& Ors, 2006(32) PTC 301(Delhi) wherein it was observed
as under :-
"12. The other aspect of the matter is that a threat of
selling the offending goods in Delhi would in itself
confer jurisdiction in the courts in Delhi to entertain a
suit claiming an injunction in respect thereof.
Whether the threat perception is justified or not is
another matter which has to be considered and
decided upon in the application filed by the plaintiff
under Order 39 Rules 1 and 2 or on merits when the
suit is taken up for disposal. Insofar as Order 7 Rule
10 is concerned, assuming that whatever is stated in
the plaint is correct, one would have to also assume
that the threat or the intention of the defendants to
sell and offer for sale the offending goods in Delhi is
also correct. Therefore, if the threat exists then this
court would certainly have jurisdiction to entertain
the present suit."
24. In LG Corporation & Anr. Vs Intermarket
Electroplasters(P) Ltd. and Anr.; 2006 (32) PTC 429,
following observations were made in para 7 :-
"7. ......The question as to whether the Court has
territorial jurisdiction to entertain a suit or not has to
be arrived at on the basis of averments made in the
plaint, that truth or otherwise thereof being
immaterial as it cannot be gone into at this
stage....."
48. Considering the overall facts and circumstances of the case
and the settled law, the application being I.A. No. 2402/2010 filed by
the plaintiff is allowed. The defendants, their affiliates, successors
and assignees, their principal officers, servants and agents are
restrained from using the trademark COMFORT INN and/or any
other trademark which is identical or deceptively similar thereto in
relation to hospitality services and cognate and allied goods, printed
matter, stationary, etc. amounting to infringement of plaintiff's
registered trademark COMFORT INN. They are also restrained from
using the website www.hotelrajcomfortinn.com or any other domain
name which contains the words COMFORT INN and/or any other
trademark which is identical or deceptively similar thereto.
49. Considering the fact that the defendants are using their name
HOTEL RAJ COMFORT INN for the last about five years, on the
date of filing of suit. Thus, in order to strike the balance of
convenience and in the interest of justice and equity six months time
is granted to the defendants for the purpose of changing of the
name. However, it is clarified that defendants are at a liberty to use
the words like "RAJ COMFORT HOME", "RAJ COMFORT AND
LOUNGE" however subject to the condition that they shall not use
any of them in the same size of font and not in the similar script as
that of the plaintiff after expiry of six months and during the
pendency of the matter.
50. It is clarified that the finding arrived by this Court are tentative
which shall have no bearing when the matter would be decided at
final stage after recording the evidence of the parties.
51. List before Joint Registrar on 16th March, 2015 for further
proceedings.
(MANMOHAN SINGH)
JUDGE
FEBRUARY 09, 2015
