Delhi High Court
Bch Electric Limited vs Eaton Corporation And Anr. on 3 June, 2016
IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment delivered on: 03.06.2016
+ FAO(OS) 409/2013 & CM No. 14306/2013
BCH ELECTRIC LIMITED ..... Appellant
versus
EATON CORPORATION AND ANR. ..... Respondents
AND
+ FAO(OS) 488/2013 & CM No. 17017/2013 & 17020/2013
BCH ELECTRIC LIMITED ..... Appellant
versus
EATON CORPORATION AND ANR. ..... Respondents
Advocates who appeared in these cases:
For the Appellant : Mr Amit Sibal, Senior Advocate with Mr C.A.
Brijesh, Ms V. Mohini, Mr Peeyoosh Kalra
and Ms Shreyosi Pal.
For the Respondents : Mr Sudhir Chandra, Senior Advocate with Ms
Navneet Moni, Mr Shreyes Rastogi and Ms
Shraddha Deb.
CORAM:-
HON'BLE MR JUSTICE BADAR DURREZ AHMED
HON'BLE MR JUSTICE VIBHU BAKHRU
JUDGMENT
VIBHU BAKHRU, J
1. The appellant, BCH Electric Limited (hereafter 'BEL'), has filed
the present appeals impugning a common order dated 01.07.2013
(hereafter 'the impugned order') passed by a Single Judge of this Court in
I.A. No. 1204/2012 in CS(OS) 156/2012 captioned "Eaton Corporation
& Anr. v. BCH Electric Limited" and I.A. No. 4318/2012 in CS(OS)
575/2012 captioned "BCH Electric Limited v. Eaton Corporation &
Anr.". Both the said applications were filed under Order XXXIX Rule 1
& 2 of Code of Civil Procedure, 1908 seeking interim injunctions in
relation to certain trademarks. CS(OS) No.156/2012, accompanied by the
interim application I.A. No. 1204/2012, was filed on 18.01.2012 by Eaton
Corporation and its Indian subsidiary Eaton Power Quality Pvt. Ltd.
(Respondent nos.1 & 2 herein), inter alia, praying as under:-
"That a decree of permanent injunction restraining the
defendant, their servants, agents, distributors, dealers,
associates, representatives and all others acting for and on
their behalf from manufacturing and selling, offering for sale,
directly or indirectly dealing in electric goods included in
class 9 and/or any other cognate or allied goods or the goods
of the same description under the impugned arrangement
and/or marks CUTLER-HAMMER, BHARTIA CUTLER-
HAMMER, CH(logo) or CH CONTROL or any other mark
as may be identical and/or deceptively similar to the
plaintiffs' trade mark CUTLER-HAMMER registered under
no. 164435 in Class 9 amounting to infringement thereof."
2. BEL filed its written statement to the plaint and a reply to I.A. No.
1204/2012 in CS(OS) 156/2012 on 18.02.2012. Thereafter, BEL also
filed a suit against respondent nos. 1 & 2 on 03.03.2012 being CS(OS)
575/2012, inter alia, praying as under:-
"(b) Pass and pronounce a decree of permanent/perpetual
injunction restraining Defendants, its promoters,
directors, assigns, successors-in-interest, licensees,
franchisees, partners, representatives, servants,
distributors, dealers, employees, agents etc. or anyone
associated with it from using the mark/s ,
CUTLER-HAMMER and/or any mark identical or
deceptively similar to Plaintiff's trade marks/logos
CUTLER-HAMMER, BHARTIA CUTLER-
HAMMER, in any manner so as to pass off
or enable others to pass off their goods or business as that
of Plaintiff or in some way connected with Plaintiff;
(c) Pass and pronounce a decree of permanent/perpetual
injunction restraining Defendants, its promoters,
directors, assigns, successors-in-interest, licensees,
franchisees, partners, representatives, servants,
distributors, dealers, employees, agents etc. or anyone
associated with it from claiming and representing itself as
the proprietor of the trade marks , CUTLER-
HAMMER and variant/s thereof
in India;"
3. The disputes involved in that present petition relate to the use of
the following trademarks:-
Registered by Eaton Corporation with registration No.
164435 (hereafter referred to as "Cutler/Hammer")
Registration applied for by BEL under application
No. 1562940 (hereafter referred to as
"Bhartia Cutler-Hammer")
CUTLER/HAMMER Registration applied for by BEL under application
No 1189782 (hereafter referred to as
"Cutler-Hammer")
(hereafter referred to as "CH Cutler-Hammer")
Registered by BEL under registration No. 582999
(hereafter referred to as "CH Control Black")
Registered by Eaton Corporation with under
registration No. 205632 (hereafter referred to as
"CH Control")
Registration applied for by BEL under an application
number 1562938 (hereafter referred to as
"Bhartia CH Control")
Registered by Eaton Corporation under
registration No.164434 (hereafter referred
to as "CH Label")
Registered by Eaton Corporation under registration
No. 642706 (hereafter referred to as "CH Logo")
4. It is not in dispute that the trademarks Cutler/Hammer, CH Label
and CH Control belonged to Eaton Corporation and/or its predecessor
(hereafter, in certain context, Eaton Corporation including its predecessor
and affiliates are also referred to as „Eaton‟). However, BEL contends
that Eaton abandoned the said trademarks in India and further acquiesced
in their use by BEL in India and is, therefore, not entitled to the relief as
sought for in the suit CS(OS)156/2012. BEL further claims that it is now
the proprietor of the trademarks CH Control Black, Cutler-Hammer,
Bhartia Cutler-Hammer, Bhartia CH Control. Whilst the mark CH
Control Black has since been registered in its name, applications for
registration of the other trademarks, although objected to by Eaton, are
currently pending before the Trademark Authorities. Eaton, on the other
hand, disputes the contention that it has ever abandoned any of the
trademarks in question.
Factual background
5. Cutler-Hammer Mfg. Co. was incorporated in the year 1893.
Eaton Corporation (Plaintiff No.1 in CS(OS) 156/2012) was founded in
1911 and was incorporated as a company in the State of Ohio, United
States of America (USA) on 28.08.1916. Cutler-Hammer, Inc. was
incorporated on 06.12.1928.
6. It is asserted by Eaton that the trademark Cutler-Hammer was first
adopted by Cutler-Hammer Mfg. Co. (the predecessor of Eaton
Corporation) in 1893 in respect of electric apparatus for use in operating
machines, engines, motors and other goods included in Class 9. It is
further asserted that goods included in Class 9 under the trademark
Cutler-Hammer, were shipped to India for the first time in the year 1919.
7. Cutler Hammer, Inc. applied for the registration of the trademark
Cutler/Hammer under Registration No. 164435 in respect of goods in
Class 9 on 08.06.1954 and the said mark was duly registered in its name.
Indisputably, Eaton Corporation is recorded as a subsequent registered
proprietor of the said trademark and the said registration stands renewed
up to 08.06.2020. Similarly, the trademark CH Label under Registration
No. 164434 was also registered in the name of Cutler-Hammer, Inc. with
effect from 08.06.1954. The said trademark was subsequently registered
in the name of Eaton Corporation. However, the said registration lapsed
on account of non-payment of renewal fee due for the period 08.06.1989
to 08.06.1996. The trademark CH Control under Registration No. 205632
was also registered in the name of Cutler-Hammer Inc. on 03.11.1961 and
Eaton Corporation was recorded as a subsequent registered proprietor of
the said mark. However, this registration also lapsed on account of non-
payment of renewal fee for the period 03.11.1989 to 03.11.1996.
8. In the year 1965, Cutler-Hammer, Inc. joined with the Indian
promoters and a joint venture company, Cutler-Hammer India Ltd., was
incorporated in India. The Indian promoters held 51% of the equity in the
said joint venture company and the balance was held by Cutler-Hammer
Inc. The name, Cutler-Hammer India Ltd., was changed to Bhartia
Cutler-Hammer Ltd. on 19.08.1977 and thereafter to Bhartia Industries
Ltd. in 1995. The name was once again changed in 2007 and the said
company is now known as BCH Electric Ltd. ( referred to as BEL herein)
9. In terms of an agreement dated 13.02.1974, Cutler-Hammer, Inc.
agreed to terminate its equity interest in BEL (then known as Bhartia
Cutler-Hammer India Ltd.) by sale of its equity shares to resident
nationals of India. As a condition of the aforesaid agreement, the parties
agreed to create certain ancillary relationships including granting a right
to BEL to act as an agent in India in respect of products manufactured by
Cutler-Hammer Group of companies located overseas.
10. In terms of the aforesaid condition of the agreement dated
13.02.1974, the three companies of the Cutler-Hammer Group, namely,
Cutler-Hammer World Trade Inc., Cutler-Hammer International C.A. and
Cutler-Hammer Export Sales Corporation entered into a „Sales
Agreement‟ with BEL on 03.06.1977 whereby, BEL was appointed as an
agent of those companies in India in respect of sales of certain products
manufactured overseas.
11. On the same date - that is, 03.06.1977 - Cutler-Hammer, Inc.
entered into a „Licence and Technical Service Agreement‟ with BEL. The
said agreement was for a term of 10 years.
12. On 26.06.1978, Eaton Corporation, Cutler-Hammer, Inc. and New
Chew Inc. subscribed to a plan of reorganisation whereby Eaton acquired
Cutler-Hammer, Inc.
13. Thereafter, on 19.02.1979 Cutler-Hammer, Inc. entered into a
„Trading Name Agreement‟ with BEL (then 'Bhartia Cutler-Hammer
Ltd.') in terms of which BEL confirmed that Eaton was the owner of the
name „Cutler-Hammer‟. Simultaneously, on the same date, that is
19.02.1979, Cutler-Hammer, Inc. entered into a Registered User
Agreement with BEL whereby, it granted non-exclusive right to BEL to
use the trademarks covered under the Registration No.164434, 164435
and 205632. The term of the 'Registered User Agreement' was agreed as
seven years.
14. On 04.09.1990, Bhartia International Pvt. Ltd., a Group company
of BEL entered into an Agency Sales Agreement with Eaton whereby
Bhartia International Pvt. Ltd. was appointed as an exclusive sales agent
in respect of certain products as specified under the said agreement. BEL
also entered into a Licence and Technical Service Agreement dated
11.12.1992 with Eaton Ltd., a British Company, for acquiring the licence
to knowhow and technical data to manufacture, use and sell certain
products.
15. In the meantime, on 14.10.1992, BEL applied for registration of
the trademark CH Control Black for goods under Class 9. On
11.10.1994, Eaton filed an application seeking registration of CH Logo
(under No. 642706). It is asserted by BEL that on 22.10.1999, the
Trademark Registry informed Eaton as to appellant's prior mark CH
Control Black under Registration No. 582999. However, no opposition
was filed by Eaton. The trademark CH Control Black was advertised in
the trademarks Journal No. 1328 on 30.03.2005 and thereafter was
registered in the name of the BEL on 08.11.2008.
16. On 04.04.2003, BEL filed an application for registration of the
trademark Cutler-Hammer under No.1189782 in respect of goods under
Class 9. Eaton filed a notice of objection against this application on
22.06.2004.
17. Eaton's trademark CH Logo under Registration No. 642706, was
removed from the Register of Trademarks on account of non-renewal on
24.09.2010. Eaton filed an interlocutory petition on 09.11.2010 for
restoration and renewal of the said trademark under Registration No.
642706.
18. BEL exhibited certain goods bearing the trademarks in question at
a fair in Hannover Germany. This led Eaton to approach Braunschweig
District Court, (Landgericht) and on 07.04.2011, the said Court granted
an injunction (in Case No. 90843/2011 (125) - captioned "Eaton
Corporation v. BCH Electric Ltd.") restraining BEL from offering for
sale, selling and/or acquiring for commercial purposes within Germany,
electrical appliances bearing the trademark CH Logo. BEL accepted the
aforesaid decision and submitted a declaration dated 23.08.2011
accepting the injunction issued on 07.04.2011 as binding and conclusive
and for the said purpose, BEL waived any legal remedy and particularly
the statute of limitation.
19. Eaton published a Caution Notice in the Daily, Times of India, on
19.12.2011, inter alia, claiming exclusive rights over the trademark
Cutler-Hammer. In response thereto, BEL caused its lawyers to address a
letter to Eaton, inter alia, claiming that it had used trademarks CH
Control, Cutler-Hammer and Bhartia Cutler-Hammer for several years
and has acquired rights in the said trademarks. Thereafter, on 28.12.2011,
BEL filed an interlocutory petition with the Trademark Registry opposing
the reinstatement of trademark CH Logo under Registration No. 642706.
This was followed by BEL publishing a Caution Notice in Times of
India, on 04.01.2012. Thereafter, on 06.01.2012, Eaton caused its lawyers
to address a letter calling upon BEL to cease and desist from using the
Marks Cutler-Hammer and CH Label or any other deceptive variation
thereto in relation to its business/ products. On 09.01.2012, BEL filed an
application with the Trademark Registry, Kolkata for cancellation of the
trademark Cutler-Hammer registered in the name of Eaton in respect of
goods under Class 9.
20. On 18.01.2012, Eaton and its subsidiary filed the Suit bearing No.
CS(OS) 156/2012 along with an interim application I.A. No. 1204/2012
which has been disposed of by the impugned order. Thereafter, in the
month of March, 2012, BEL filed a suit bearing No. 575/2012 along with
I.A. No. 4318/2012. These IAs were disposed of by the impugned order.
Impugned Order
21. The learned Single Judge has noted the assertions made by Eaton
in its plaint that it was founded in 1911 and is a well-known premier
diversified fortune 200 industrial company having a manufacturing
presence in several countries. It is a global corporate which has been
carrying on business for more than 100 years; it currently employs
approximately 73,000 employees worldwide and its products are sold in
150 countries. The Single Judge has also noted that Cutler-Hammer Inc.
commenced its business in India by shipping goods under the trademark
Cutler-Hammer in 1919. After briefly noting the relevant facts as
pleaded, the Court noted that the following issues were required to be
considered for deciding the subject applications:
"i) Whether the defendant is infringing the
registered mark CUTLER-HAMMER.
ii) Whether the defendant is passing off its goods
as that of the plaintiffs‟.
iii) Whether the defendant being earlier permissive
user of trademarks are entitled to claim the
proprietorship rights after the expiry of period of
licence agreement and are entitled to use the same
trademarks.
iv) Whether the plaintiffs are entitled for interim
injunction at this stage despite of delay, latches,
acquiesces and waiver as per plea raised by the
defendant.
v) Whether the defendant who is also holding the
registration of logo mark CH in Class 9 as of 14th
October, 1992 can be retrained by this Court.
vi) Whether the defendant is entitled for injunction
against the plaintiffs in its application being I.A.
No.4318/2012 restraining the plaintiffs for extending
the groundless threats to the dealers and other
representatives of the defendant.
vii) In whose favour balance of conveniences lies
in view of the facts and circumstances of the present
two actions filed by the parties."
22. The Court noted that the BEL had obtained registrations in respect
of the trademark CH Control Black and had further applied for
registration of the trademarks Cutler-Hammer, Bhartia Cutler-Hammer
claiming the user of the Trademarks as its own even for the period when
the said marks were used under a license granted by Eaton (Cutler-
Hammer, Inc). The Court observed that the applications made by the
BEL for registration of the trademarks were clearly contrary to their
pleadings wherein BEL had affirmed that it had continued to use the
marks in question after the expiry of the Registered User Agreement with
the knowledge of Eaton. The Court held that Eaton was a prior adopter
and user of the trademark(s) Cutler/Hammer and CH worldwide including
in India. The trademark Cutler-Hammer bearing no.164435 was
registered on 08.06.1954 which was prior to the incorporation of BEL
and the said trademark continues to be registered in the name of Eaton.
The Court rejected BEL‟s contention that the trademark Cutler-Hammer
did not belong to Eaton and observed that the application for recording
Eaton Corporation as a subsequent registered proprietor of the trademark
Cutler/Hammer was filed by the same firm, which was now acting on
behalf of BEL.
23. The Court further observed that in terms of the Registered User
Agreement dated 19.02.1979 as well as other agreements in terms of
which BEL acquired the license to use the trade name Cutler-Hammer
and the trademarks in question, BEL had expressly acknowledged and
admitted the proprietary rights of Eaton in the trademarks in question and
had further agreed not to apply for registration of the said marks. The
Court held that in the given circumstances, adoption of the trademark
Cutler/Hammer by BEL was dishonest and so were its applications for
registration of other trademarks in question including CH Control Black
under no. 582999. The Court held that registration of the said trademark
was obtained by BEL by committing a fraud on the Registry by making
false claims of proprietorship and user thereof.
24. The Court further held that BEL had no plausible
explanation/justification to adopt the marks Cutler-Hammer, Bhartia
Cutler-Hammer, CH and other variants thereof. The Court held that BEL
had committed the following wrongful acts:
"(i) The defendant has claimed the proprietorship
right in the Trademarks Registry and placed
evidence in order to obtain the registration
during the period when the defendant was
licensee.
(ii) The defendant has made every effort to impair
the trademarks of the plaintiffs.
(iii) The defendant is claiming by giving its
indication that the defendant is still part of the
plaintiffs which is untrue.
(iv) The defendant applied for registration and
obtained registration of logo „CH‟ knowingly,
intentionally and fraudulently which is contrary
to clause 7.7 of the Licence and Technical
Service Agreement.
(v) The defendant has challenged the registration
of the plaintiffs contrary to the agreements
despite of recognizing the ownership rights of
the plaintiffs. They have claimed their
independent rights by acquiring user which is
in use to the plaintiff.
(vi) The defendant is claiming independent user in
order to become proprietor of the same very
trademarks."
25. The Court rejected BEL‟s contention that Eaton had abandoned the
trademarks in India and BEL was entitled to claim independent
proprietary rights by virtue of being its user without any protest by Eaton.
The Court referred to the decision in the case of Velcro Industries v.
Velcro India Ltd.: 1993 (1) Arb. LR 465 wherein, the Bombay High
Court had noted that the defendants in that case were acting as licensees
in use of the name and even if the Licence Agreement did not provide
that on termination of the license the defendants would cease use of the
name Velcro, nonetheless, the defendants could not use the said name as
a corporate name because the same would give an impression to the
public that they are still connected with or had a license from the
plaintiffs.
26. The Court accepted that Eaton had built up a trans-border
reputation in respect of its goods under the trademarks and the use of the
same by BEL was liable to be injuncted. Insofar as the plea of delay,
laches, waiver and acquiescence is concerned, the Court noted that Eaton
and BEL had a business relationship since BEL‟s incorporation in the
year 1965 and BEL was licensed to use the trademarks as well as the
trade name Cutler-Hammer in terms of various agreements entered into
between Eaton and BEL. The Court examined the conduct of parties and
held that (i) there had been no acquiescence on the part of Eaton as all
agreements entered into expressly specified that Eaton was the registered
proprietor of the trademarks; (ii) that BEL could not claim any right over
the trademarks; (iii) BEL could not attempt to secure any statutory rights
in respect of the said trademarks. The Court further observed that it is
well settled that where there is fraud, there is no room for the doctrine of
acquiescence to operate.
27. Insofar as the plea of abandonment of trademark is concerned, the
Court held that the same depends on the intention of the parties, to be
inferred from the facts of each case; and in the present case, no such
intention could be inferred. The Court also rejected the plea of delay
urged by BEL by observing that BEL‟s user of the trademark was a
permissive user and its claim of being a proprietor even during the license
period was fraudulent and dishonest. The Court held that an ex-licensee
could not claim proprietorship of the trademark either during the license
period or after expiry thereof.
28. Lastly, the Court rejected the contention that the balance of
convenience was in favour of BEL by observing that Eaton was founded
in 1911 and was a premier diversified fortune 200 industrial company
with a presence in several countries and was selling its products under
various well known trademarks. The Court held that trademarks Cutler-
Hammer and CH Logo were well known and had an extra territorial
goodwill and reputation worldwide. And, the use of such marks by BEL
was bound to confer undue advantage of reputation and goodwill to BEL.
The Court further observed that Eaton was the registered proprietor of the
trademark Cutler/Hammer under no.164435 and, therefore, BEL would
not have any statutory right in the trademark Cutler-Hammer / Bhartia
Cutler-Hammer and or its variants.
29. In view of the above, the Court held that Eaton had established a
prima facie, case for grant of interim injunction and, accordingly, the
prayers made by Eaton in its interim application, I.A. No.1204/2012,
were allowed and BEL, its dealers, agents and representatives on its
behalf were restrained from using the impugned arrangement and all
marks Cutler-Hammer, Bhartia Cutler-Hammer, CH Control or CH Logo
or any other mark that may be identical or deceptively similar to Eaton‟s
registered trademark Cutler-Hammer under registration No.164435 in
Class 9. BEL was also restrained from dealing in goods included in Class
9 and or any other cognate or allied goods under the aforesaid
trademarks. However, BEL was granted three months time to dispose of
the existing stock. BEL‟s application being I.A. No.4318/2012 was,
accordingly, dismissed.
Submissions
30. Mr Amit Sibal, Senior Advocate appearing on behalf of the BEL
contended that BEL was a leading manufacturer of premium low voltage
Electrical and Electronic products in India and was supplying goods to a
large number of organizations including several leading public sector
undertakings. He submitted that BEL was a registered proprietor of the
trademark CH Control Black under the Registration No. 582999 in Class
9 since 14.10.1992 and BEL had also applied for registration of the
trademark Bhartia CH Control. He contended that BEL had been selling
its products under the said trademarks since several years and
consequently, the said trademarks had come to be identified/associated
with BEL exclusively. On the other hand, Eaton had not used the
trademarks in question in India even after BEL had been restrained from
using the marks by the impugned order. He relied upon certain market
survey reports in support of this assertion.
31. Next, Mr Sibal referred to various agreements and correspondence
with Eaton and/or other group companies which indicated that there was
a continual business relationship between BEL and Eaton and/or their
group companies. In addition, the representatives of Eaton had been
visiting BEL's facilities in India and some of the ex-employees of Eaton
had also been employed by BEL. On the strength of the aforesaid facts,
he contended that Eaton had due knowledge of BEL's use of the
trademarks but it had taken no steps to either object to or prevent such
user. He also drew the attention of this court to paragraph 17 of the
rejoinder filed by Eaton in response to the reply filed by BEL to Eaton's
application for interim relief, wherein, according to him, Eaton had
admitted that it had knowledge of the use of the mark Cutler-Hammer by
BEL. In view of the aforesaid, he argued that there was acquiescence on
the part of Eaton in the use of the trademark in question by BEL and
consequently, Eaton was not entitled for an interim injunction restraining
BEL from using the trademarks in question. He referred to the decision of
the Supreme Court in Power Control Appliances and Another v. Sumeet
Machines Pvt. Ltd.: (1994) 2 SCC 448 and urged that acquiescence was
one of the defences available under Section 30(1)(b) of the Trademark
and Merchandise Marks Act, 1958. On the strength of the aforesaid
decision, he contended that since Eaton had stood by while BEL was
spending substantial money on advertisements / marketing of the
products under the trademarks in question to build up the business, it was
now disentitled to claim an injunction restraining BEL from using those
trademarks.
32. Mr Sibal also urged that after Cutler Hammer, Inc. was taken over
by Eaton Corporation in 1978, it abandoned the trademarks in question
and its products in India were sold under the brand name 'Moeller' and
'Eaton'. Thus, Eaton allowed the trademarks CH Label, CH Control and
CH Logo to lapse and were thereafter removed from the Register of
Trademarks. He contended that Eaton had also not renewed the trade-
marks in question in other jurisdictions.
33. Mr Sibal contested the finding of fraud returned in the impugned
judgment and submitted that the registration of trademark CH Control
Black, Bhartia Cutler-Hammer and Cutler-Hammer were effected by
following the due process of law and after providing due opportunity to
Eaton to object to the same. Therefore, the finding that such registration
was obtained by fraud was erroneous.
34. He further contended that Eaton's allegation of passing-off was
unsustainable. Eaton was not using the trademarks in question in relation
to its products or business in India; thus, there was no risk that BEL's
products would be mistaken as that of Eaton. He emphasised that there
was no evidence on record which would establish that there was any
instance of confusion or deception in respect of the goods manufactured
and sold by BEL.
35. Lastly, Mr Sibal, contended that Eaton had failed to establish a
prima facie case and the balance of convenience also lay squarely in
favour of BEL. He strongly relied on the decision of the Supreme Court
in Wander Limited & Another v. Antox India Pvt. Ltd.: 1990 Supp.(1)
SCC 727 and contended that the relief of interlocutory injunctions ought
to be granted to preserve status-quo and not to alter a position which has
continued for several years. He also relied on the decision of House of
Lords in American Cynamid Co. v Ethicom Ltd.: (1975) 1 All ER 504 in
support of the aforesaid contention.
36. Mr Sudhir Chandra, Senior Counsel, appearing for Eaton supported
the impugned judgment and contended that the use of the trademarks in
question by BEL was patently dishonest. He referred to the agreements
dated 03.06.1977 and the Registered User Agreement dated 19.02.1979
and earnestly contended that in view of the said agreements, BEL could
never claim proprietary rights in the trademarks in question. He
emphasized that there was an express stipulation that the use of the
trademarks by BEL would inure to the benefit of Eaton and in the
circumstances, BEL's claim to any rights in respect of the said trademarks
was rightly repelled by the court as being dishonest.
37. Countering the submissions that Eaton had abandoned the
trademarks, Mr Chandra contended that the trademark CH Label and CH
Control under the Registration No. 164434 and 205632 respectively were
inadvertently removed from the register for non-payment of renewal fee.
He argued that efforts were not made to restore the registration because
Eaton had commenced using CH Logo which was similar to the
trademarks CH Label and CH Control and, therefore, the registration of
the said trademarks was not restored to avoid incurring expenses in
maintaining registrations for two substantially identical trademarks. He
submitted that the trademark CH Logo continued to be registered till the
year 2006 but was removed from the register for non-payment of renewal
fee. However, immediately on becoming aware of such removal, Eaton
had filed an interlocutory petition for reinstatement of the registration on
09.11.2010. He submitted that the trademarks Cutler/Hammer and CH
Logo were duly registered and subsisting in other countries including
USA. He further submitted that Eaton had objected to the registration and
use of trademarks on becoming aware of its use by BEL. He referred to
the action instituted in a German Court for restraining BEL from using
the trademark CH Control.
38. Mr Chandra further reiterated that Eaton was a prior user of the
trademarks in question and enjoyed a wide reputation, recognition and
publicity in the Indian and the world market for high quality products.
And, by a long and continuous user, its trademarks were well recognised
in the market and had also contributed to the generation of goodwill. He
further contended that the trademarks in question have a trans-border
reputation which has also spilled over to India and any product under the
said trademarks would naturally be assumed to be associated with Eaton.
He submitted that in the said circumstances, the Court had rightly held
that sale of goods by BEL under the subject trademarks would amount to
passing off.
39. Mr Chandra also stated that the balance of convenience was in
favour of Eaton. He contended that since Eaton had a long business
history of more than 100 years and was well established in the business,
declining Eaton‟s request for restraining use of the trademarks by BEL,
would cause irreparable loss and injury to Eaton.
Reasoning and Conclusion
40. As noticed before, the predecessor of Eaton Corporation had
commenced business in India almost a century ago; Cutler-Hammer Mfg.
Co. was incorporated in 1893 and commenced its business under the
trademark Cutler-Hammer in respect of goods included in class 9. The
first shipments in India under the trademark Cutler-Hammer were made
in India in the year 1919. Admittedly, the trademarks Cutler/Hammer
(registration No. 164435) and CH Label (Registration No. 164434) were
registered in the name of Cutler-Hammer, Inc. w.e.f. 08.06.1954.
Subsequently, Cutler-Hammer, Inc. applied for registration of its
trademark CH Control (Registration No. 205632) on 03.11.1975. The
said trademarks were owned by Cutler-Hammer, Inc. but were made
available to BEL by virtue of its association with Cutler-Hammer, Inc.,
which at the material time was in the nature of a joint venture company
between Cutler-Hammer, Inc. and the Indian promoters.
41. It is relevant to note that at the material time, Cutler-Hammer, Inc.
owned 49% of the equity capital of BEL. BEL‟s corporate name also
reflected the participation of Cutler-Hammer, Inc. in the company; BEL
was then known as Bhartia Cutler-Hammer India Ltd.
42. The recitals in the agreement dated 03.06.1977 captioned 'Sales
Agreement' entered into between BEL and three subsidiaries of Cutler-
Hammer, Inc., indicates that pursuant to an agreement dated 13.02.1974,
Cutler-Hammer, Inc. had agreed to terminate its equity interest in India
by sale of 1,96,000 shares held by it in BEL to resident nationals of this
country thereby vesting the entire issued equity capital of BEL in Indian
hands. However, the above agreement also indicates that Cutler-Hammer,
Inc. and BEL/its Indian promoters, desired to continue their association
notwithstanding the sale of equity interest by Cutler-Hammer, Inc. and,
therefore, the parties to the agreement dated 13.02.1974 agreed for
creating certain ancillary relationships which would become effective
after Cutler-Hammer, Inc. sold its equity in BEL. The recital to the Sales
Agreement dated 03.06.1977 also indicates that one such ancillary
relationship was to constitute BEL as an agent of Cutler-Hammer, Inc. for
the products manufactured by the Cutler-Hammer Group of companies
located outside India.
43. In terms of the aforesaid understanding, three companies of the
Cutler-Hammer Group, namely, Cutler-Hammer World Trade Inc.,
Cutler-Hammer International C.A. and Cutler-Hammer Export Sales
Corporation had entered into the aforementioned „Sales Agreement‟ with
BEL on 03.06.1977 whereby BEL was appointed as an exclusive agent of
those companies in India for sale of certain products manufactured
overseas. In terms of the said agreement, BEL agreed to promote sale of
the products manufactured by the Cutler-Hammer Group actively and
further agreed "neither to handle nor to promote the sale of any
merchandise competitive with the products directly or indirectly". The
said three companies on their part agreed that the orders procured by BEL
would be supplied by them and in consideration for its services as an
agent, BEL would be entitled to a distributor's discount plus 20% of the
net price as commission. Insofar as the trademarks are concerned, BEL
agreed that nothing in the said agreement dated 03.06.1977 would be
construed to confer upon BEL any right of ownership of any trade names
or trademarks. The relevant clause of the said agreement reads as under:-
"1. India agree that nothing herein shall be construed to
confer upon or to vest in India any right of ownership in any
tradenames or trademarks which heretofore or hereafter are
the registered property of International or of any of its
affiliated companies. India further agrees to do nothing
which will in any way impair International's complete
ownership of such tradenames or trademarks and to use
them only so as to reflect ownership by International. India
further agrees that it will not use such tradenames or trade-
marks to indicate or to imply in any way that India is part of
International or that International has any ownership in
India. All use of such tradenames or trademarks by India
shall cease upon termination of this Agreement. India agrees
that it will not remove or obscure any distinguishing marks
affixed by International to any product sold hereunder and
further agrees that it will not affix any additional markings
of its own to such Product without the prior approval of
International."
(In the aforesaid clause 'India' refers to BEL and
'International' referred to the three companies of the Cutler-
Hammer Group)."
44. On the same date - that is, 03.06.1977 - Cutler-Hammer World
Trade Inc. (a subsidiary of Cutler-Hammer, Inc.) entered into a 'Licence
and Technical Services Agreement' with BEL (then known as Cutler-
Hammer India Ltd. but described under the agreement by its then
proposed name Bhartia Cutler-Hammer Limited). The said agreement
was for the term of 10 years. The recitals in the said agreement indicates
that BEL had enjoyed certain benefits of technical assistance and licence
arrangement dated 04.09.1965 and the parties desired to continue the
relationship while recognising certain intervening events which included
the creation of a Cutler-Hammer World Trade Inc. as a wholly owned
subsidiary of Cutler-Hammer, Inc. and divestment by Cutler-Hammer
Inc. of its equity interest in BEL (Cutler-Hammer India Ltd.) in terms of
the agreement dated 13.02.1974.
45. In terms of the said agreement (Licence and Technical Service
Agreement dated 03.06.1977), BEL was granted, inter alia, the exclusive
licence to manufacture certain specified products within India as well as
non-exclusive right to export or otherwise dispose of the specified
products outside India. Article VII of the said agreement is relevant and
reads as under:-
"Section 7.1 Any Item of Manufacture made hereunder by
Licensee and any written or printed material published and
promulgated to the public by Licensee shall be marked only
with such Tradenames and Trademarks of Cutler-Hammer,
Inc., Licensor, and/or Associated Companies of Licensor in
the manner and to the extent as set forth hereinafter or as
shall be specifically authorized in writing by an officer of the
proprietor of such Tradename or Trademark. The mere
inclusion of any such Tradenames and Trademarks upon any
drawings or specifications furnished hereunder shall not be
construed as authorization for use. It is expressly understood
that even when use is authorized, Licensee shall not thereby
secure any rights in said Tradenames and Trademarks.
Section 7.2. It is expressly agreed that the license fee payable
to Licensor hereunder shall include all compensation for use
by Licensee of such Tradenames and Trademarks, and
Licensor shall not be entitled to any other compensation,
direct or indirect for such usage.
Section 7.3 The parties acknowledge that as at the inception
of this Agreement, Licensee (under its prior name, Cutler-
Hammer India Ltd.) is an authorized and recorded
"Registered User" of the following proprietary Trademarks of
Cutler-Hammer, Inc., for the periods indicated:
No. 164434 - Product Mark consisting of letters "C-H" in
a monogram border (registry renewed
for period of seven years from 8 June
1975)
No. 164435 - Housemark consisting of words "CUTLER-
HAMMER" in distinctive print (registry
renewed for period of seven years from 8
June 1975)
No. 205632 - Housemark consisting of letters "CH" and
word "Control" in a special arrangement
within a rectangular border (registry
renewed for period of seven years from 3
November 1975)
Licensor (and Cutler-Hammer, Inc. as proprietor) agree that
Licensee may continue its status as registered user of said
Trademarks after inception of this Agreement, PROVIDED,
HOWEVER, that such use is subject to the following
additional conditions:
(a) Unless otherwise specifically authorized in writing by
Licensor, the use of Product Mark 164434 C-H shall be
limited solely and exclusively to identify and mark Licensed
Products (except SEPM Products) manufactured by Licensee
pursuant to this Agreement. If so used Licensee agrees to
affix the legend ("Made in India by Bhartia Cutler-Hammer
Limited, a wholly Indian owned Licensee of Cutler-Hammer,
Inc., U.S.A.") to such Licensed Products.
(b) Unless otherwise specifically authorized in writing by
Licensor, Licensee agrees that the use of Housemark 164435
shall be confined to use in the company name, Bhartia
Cutler-Hammer Limited and whenever so used, it shall be
followed with a subscription "a wholly Indian Licensee of
Cutler-Hammer, Inc., U.S.A."
(c) Unless otherwise specifically authorized in writing by
Licensor, licensee agrees its use of Housemark 205632 shall
be limited solely and exclusively to identify and mark
Licensed Products (except SEPM Products) manufactured by
Licensee pursuant to this Agreement or in connection with
written or printed materials. Whenever such mark is used, it
shall be accompanied by the legend ("Made in India by
Bhartia Cutler-Hammer Limited, a wholly Indian owned
Licensee of Cutler-Hammer, Inc., U.S.A." Whenever such
mark is used in connection with written or printed materials,
it shall be used in conjunction with the Housemark of
Licensee. Whenever such mark is used to identify and mark
such Products, it shall wherever feasible be used in
conjunction with the Housemark of Licensee.
Section 7.4 When necessary to effectuate any succeeding
authorization under this Agreement, Licensor shall, as
requested by Licensee, execute or obtain the execution of all
documents necessary or required in order that Licensee shall
have the legal right to use, as a "Registered User", any
Trademarks covered under this Agreement.
Section 7.5 Licensee shall not permit any other person to
use any Trademark or Tradename contemplated hereunder, or
part thereof, in connection with the business name and title of
such person.
Section 7.6 Licensee shall, when requested by Licensor,
execute recordable documents confirming the sole right and
ownership of the proprietor thereof in and covering the use
by Licensee of any Tradename or Trademark, registered or
unregistered, contemplated herein.
Section 7.7 Licensee shall not apply for or obtain registration
of any Trademark or Tradename contemplated herein or
challenge the validity or contest the right of the proprietor
thereof to obtain registration thereof, and Licensee shall
comply with any reasonable request by Licensor or other
proprietor for assistance in obtaining registration thereof."
46. A plain reading of the aforesaid two agreements dated 03.06.1977
(the Sales Agreement and the Licence and Technical Service Agreement)
clearly indicates that it was agreed and understood between the parties
that BEL would not claim any rights in the specified trademarks and the
trade name of Cutler-Hammer. It was expressly agreed that BEL would
not apply and obtain registration of any trademark or trade name
contemplated therein or contest the rights of the proprietor to obtain any
registration thereof.
47. It is relevant to note that in 1977, BEL was known as 'Cutler-
Hammer India Ltd.' and with the Cutler-Hammer, Inc. terminating its
equity interest in the said company, the name of the company was also
changed to Bhartia Cutler-Hammer Ltd.
48. Thereafter, Cutler-Hammer, Inc. and BEL entered into another
agreement dated 19.02.1979 captioned 'Trading Name Agreement'. The
recital of the said agreement, inter alia, recorded that:
"WHEREAS, CUTLER is the owner of the words CUTLER-
HAMMER (hereinafter referred to as "the said name") when
used as a registered or unregistered trademark, corporate title
or trading style in the field of activity in which the parties are
engaged; and
WHEREAS, BHARTIA believed that various commercial
advantages could result if BHARTIA were permitted to
include the said name as part of the corporate title of
BHARTIA and..."
49. Clause 1 of the said agreement is also relevant and is reproduced
below:-
"1. CUTLER hereby confirms that CUTLER granted to
BHARTIA, prior to the date of incorporation of BHARTIA
permission to use the said name as part of the corporate title
of BHARTIA, and BHARTIA covenanted and agreed that
(a) CUTLER is the owner of the said name;
(b) The grant is terminable at will by CUTLER in
CUTLER'S sole and absolute discretion;
(c) The grant is personal to BHARTIA and shall not
be assignable by BHARTIA without CUTLER'S
prior written consent; nor will BHARTIA
incorporate the said name as part of the name of
any division, subsidiary or affiliate without first
obtaining the written permission of CUTLER;
(d) The grant shall automatically terminate upon the
happening of any of the following events:
(i) BHARTIA is ordered or adjudged bankrupt; or
is placed in the hands of a Receiver; or enters
into any scheme or composition with creditors
to make an assignment for the benefit of
creditors.
(ii) If the assets of BHARTIA are seized or
attached in conjunction with any action
against BHARTIA by a third party.
(e) The said name shall be used only upon or in
connection with goods manufactured by or for
BHARTIA under license from CUTLER."
50. Simultaneously - on 19.02.1979 - Cutler-Hammer, Inc. and BEL
entered into a "Registered User Agreement" whereby, subject to the
covenants recorded therein, Cutler-Hammer, Inc. granted BEL a non-
exclusive right to use the trademarks Cutler/Hammer (registration No.
164435), CH Control (Registration No. 205632) and CH Label
(Registration No. 164434). Clause 7 of the said agreement is relevant and
reads as under:-
"(7) User recognizes The Trade Mark Owner's title to said
Trade Marks and shall not at any time do or suffer to be
doneany act or thing which will in any way impair the rights
of The Trade Mark Owner in or to said Trade Marks. It is
understood that User shall not acquire and shall not claim any
title to said Trade Marks by virtue of the License granted to
User, or through User's use of said Trade Marks, it being the
intention of the parties that all use of said Trade Marks by
User shall at all times inure to the benefit of The Trade Mark
Owner."
(emphasis ours)
51. In view of the agreements referred to above, it is clear that the
trade name Cutler-Hammer and the trademarks referred to above
belonged exclusively to Cutler-Hammer, Inc. (and now to it's successor
Eaton Corporation). BEL had, on various occasions, reaffirmed the
ownership of the trade name and trademarks and further undertaken not
to claim any title, adverse to that of Cutler-Hammer. More importantly,
as a licensee, BEL had agreed that the use of the trademarks would inure
to the benefit of the licensor and use of the trademarks by BEL were not
as a proprietor but as a licensee.
52. The Trading Name Agreement of 19.02.1979 indicates that BEL
considered it commercially beneficial to include the name Cutler-
Hammer as a part of its corporate title and this was permitted by Cutler-
Hammer, Inc., on BEL expressly agreeing to recognise Cutler-Hammer
Inc. as the owner of the trade name Cutler-Hammer. The recital to the
agreement expressly records Cutler-Hammer, Inc. to be the owner of the
words Cutler-Hammer whether used as a trademark, corporate title or a
trading style.
53. It is amply clear from the historical background as narrated above
that Cutler-Hammer, Inc. was a constituent joint partner in BEL and
Cutler-Hammer, Inc. projected its business presence in India through
BEL. In view of the policy and legislative changes-that is, the enactment
of Foreign Exchange Regulation Act, 1974 restricting the foreign equity
participation in Indian companies to 40% - brought about in 1974, several
foreign companies which had established their presence in India through
equity participation in Indian companies, decided to sell their equity
stake. It appears that that although Cutler-Hammer, Inc. also terminated
its equity interest; it, nonetheless, continued to maintain its association
with BEL.
54. On 13.07.1988, Bhartia International Pvt. Ltd. (hereafter BIPL), a
Group Company of BEL, was appointed as an exclusive commission
sales agent to solicit sales of specified products manufactured by Eaton
outside India.
55. Clause 1 of Article 3 of the said agreement is more or less similarly
worded as clause 1 of Article 3 of Sales Agreement dated 03.06.1977
quoted hereinbefore. This agreement also, records BIPL‟s confirmation
that nothing in that agreement, would confer upon BIPL any rights of
ownership in any tradenames or trademarks or other proprietary rights
which heretofore or hereafter are owned or are registered property of
Eaton or any of its affiliated companies. BIPL further agreed to do
nothing which would in any way impair Eaton‟s complete ownership of
such trade names or trademarks or other proprietary rights and to use
them so as to reflect the ownership of Eaton. Another similarly worded
agreement was also executed between Eaton and BIPL on 04.09.1990.
56. Subsequently, BIPL merged with BEL. It is also material to note
that both these agreements - that is, Sales Agreements dated 13.07.1988
and 04.09.1990 - were executed by Mr O.P. Bhartia on behalf of BIPL.
The earlier agreements - that is, Sales Agreement dated 03.06.1977,
Licence and Technical Service Agreement dated 03.06.1977, Trading
Name Agreement dated 19.02.1979 and Registered User Agreement
dated 19.02.1979 - were also executed by Mr O.P. Bhartia on behalf of
BEL.
57. On 10.04.1990, Eaton and BEL entered into yet another "Licence
& Technical Service Agreement" in terms of which Eaton granted BEL a
licence to manufacture, use and sell certain products - viz., "Freedom
Series of Starters, Contactors and Relays and Blown Fuse indicators" - as
set forth in the schedule appended to the said agreement. The recitals of
this agreement indicates that the same was in terms of the foreign
collaboration approval granted by the Government of India by its letter
dated 07.11.1988. Although, it has been contended that the products
licensed under this agreement were different from the products licensed
under the „Licence and Technical Service Agreement‟ of 03.06.1997, it is
noteworthy that the products licensed under the earlier agreement (dated
03.06.1977) also included Contactors, Overload Relays and Solid State
Relays and Controls. It is important to note that unlike the earlier Licence
and Technical Service Agreement executed on 03.06.1977, this
agreement did not mention the use of any trademark.
58. Thereafter, on 11.12.1992, Eaton and BEL entered into another
agreement whereby Eaton licensed BEL to manufacture, use and sell
certain products viz. "Locomotive, Dynamic Breaking Resisters and
Power Resisters". This agreement also did not mention any trademarks.
59. On 16.03.1994, BEL and Eaton entered into an agreement
captioned "Export Agreement", whereby Eaton agreed to assist BEL in
export of products licensed by Eaton to BEL under the Licence and
Technical Service Agreement dated 10.04.1990.
60. Eaton has produced a letter dated 10.06.1982 addressed by Mr P.D.
Agarwal, of BEL to Mr Hector Kitscha of Eaton Corporation informing
him that the Government of India vide its letter dated 15.04.1982 has
approved payment of royalty on increased manufacturing capacity of
contactor, relays, etc. and that the Government required a new agreement
to be executed, a draft of which had been prepared and was attached with
the letter. It was further stated that the new agreement would extend
beyond the terminal date of the existing licensing and technical service
agreement which would expire on 02.06.1987. The letter further provided
the reason for not referring to trademarks in the draft agreement as
under:-
"4. The Government does not permit the use of foreign
Trade Mark for domestic sales. In view of this, we have
not made any reference to Trade Mark in this agreement
and the trade mark matter may continue to be governed
by our existing agreements."
61. The foreign collaboration approval dated 07.11.1988 pursuant to
which Eaton and BEL had entered into the Licence and Technical Service
Agreement dated 10.04.1990 also expressly provided that "foreign brand
names will not be allowed for use on the products for internal sales
although there is no objection to the use on products to be exported".
This would explain as to why the agreements entered into after
1982 were silent as to the use of the trademarks.
62. Although, BEL in its written statement has denied the assertions
made by Eaton with regard to the past association of Cutler-Hammer, Inc.
in India, no arguments were advanced to dispute the facts as noted above.
The agreements referred to above are also not disputed. In view of the
above, it is not open for BEL to claim that it had any proprietary interest
in the trademarks in question. In our prima facie view the fact that the
origin of the trademarks CH Control, CH Label and Cutler/Hammer can
be traced to Cutler-Hammer, Inc. and/or its predecessors leads to an
inescapable conclusion that trademark Cutler/Hammer as well as other
marks such as CH Label and CH Control were owned by Cutler-Hammer,
Inc.
63. Notwithstanding the above, BEL has projected that it has, by virtue
of honest, extensive and bonafide use, acquired proprietary rights in the
trademarks in question. BEL further states that it filed applications for
registration of the trademark CH Control Black to protect its business and
to prevent third parties from securing any rights in the trademarks which
it claims were abandoned by Eaton.
64. The trade name and trade mark Cutler/Hammer was used by BEL
as a licencee and not as a proprietor. BEL in its written statement claims
that "tremendous goodwill and reputation vests with the defendant and its
aforesaid marks" by virtue of the products sold by it from 1976-2011
under the trademarks Bhartia CH Control, Cutler/Hammer, Bhartia
Cutler-Hammer and CH Control. We find considerable difficulty in
accepting this assertion. It is apparent from the agreements referred to
above that BEL was never the proprietor of the trade name Cutler-
Hammer, the trademark Cutler/Hammer; and /or other related trademarks.
The letters CH in the trademarks CH Control, CH Label etc., represent
the initials of the words Cutler-Hammer. BEL was licensed to use the
said marks and in terms of the arrangement, had unequivocally accepted
the ownership of the marks to be that of Eaton (Cutler-Hammer, Inc.).
BEL had further undertaken not to assert any proprietary rights in respect
of the said trademarks and, therefore, it would not be open for BEL to
contend that it had any proprietary interests in those trademarks or that
the goodwill associated with those marks belonged to it by virtue of their
use for half a century. It is obvious that BEL had used the trademarks
belonging to Cutler-Hammer, Inc. to take advantage of the associated
goodwill and to reflect an association with Cutler-Hammer, Inc. The use
of the trademark name Cutler-Hammer was perceived by BEL to be of
significant commercial advantage; we see no other reason as to why BEL
would seek the trademarks in the first place. In the Trading Name
Agreement of 1979, BEL also acknowledged that the use of the name
Cutler-Hammer in its corporate name would result in "various
commercial advantages" to BEL.
65. In the aforesaid circumstances, the applications made by BEL for
registration of the trademark Cutler-Hammer (application no.1189782)
showing its user since 31.2.1963 is prima facie, misleading; it is, plainly,
intended to mislead the Trademark Registry to believe that BEL has been
using the trademark as a proprietor since 31.12.1963. BEL applied for
registration of brand Bhartia CH Control Black on 14.10.1992. The print
out from the Office of Registrar of Trademark indicates user of the
trademark as "proposed". This would imply that at the time of applying
for registration, BEL did not claim any past user but only indicated that it
was proposing to use that trademark. However, it was submitted on
behalf of Eaton that BEL had represented in its application that it was
using the trademark since 04.03.1968. BEL did not contest this assertion
before us. Eaton had also produced a letter dated 28.09.1992 addressed by
BEL to its agent Remfry & Sagar, in the context of registration of
trademarks, which indicates that BEL was claiming the user of the
trademark since 04.03.1968. The learned Single Judge has also prima
facie returned the finding that BEL had misrepresented its user since
04.03.1968 for obtaining the registration of the trademark Bhartia CH
Control Black. In this backdrop, we find no reason to differ from that
view. Similarly, the applications for other trademarks in question are also
misleading inasmuch as they indicated BEL to be a proprietor of those
trademarks even during the period when the same were, admittedly, used
under a licence from Cutler-Hammer, Inc.
66. The learned Single Judge, in the impugned order, held that BEL
had failed to provide any bonafide reason for adopting or claiming
ownership of the trademarks in question. The only explanation provided
by BEL was that Eaton had abandoned the marks; the same were
important to its business; and it had applied for registration to prevent
third parties from securing the said trademarks. This explanation can
most charitably be described as inconsiderable. BEL had an on-going
business relationship with Eaton and if what BEL states is correct, it
would have no difficulty in negotiating the purchase of those trademarks.
But, the undisputed fact is that whilst BEL negotiated at least two
Licence and Technical Service Agreements, it did not include any
mention of trademarks therein.
67. According to BEL, the trademarks in question were important for
its business. Therefore, even after the term of the „Licence & Technical
Service Agreement‟ dated 03.06.1977 and the „Registered User
Agreement‟ dated 19.02.1979 expired, BEL did not refrain from using the
trademarks - as it was obliged to do under the abovementioned
agreements - but continued to trade on the goodwill so associated with
those trademarks. Eaton did not object to such use; but, that would not
constitute BEL as the owner of trademarks and any endeavour to claim
their ownership at the material time would prima facie amount to
usurping Eaton‟s property. Thus, it is not possible to accept BEL‟s claim
of ownership by way of its user even for the period when it was a
licencee.
68. We are also not persuaded to accept the contention that Eaton had
abandoned its trademarks in question. BEL has produced certain
contemporaneous correspondence during the years 1992 to 1995 in
support of its contention that Eaton had full knowledge of BEL‟s use of
the trademark Bhartia CH Control as it was used as BEL‟s logo on the
letterheads. It is worthwhile to note that most of the letters/facsimiles
emanating from Eaton, which are relied upon by BEL, also clearly
mention the words Cutler-Hammer. To mention a few: the letter dated
01.11.1993 addressed by Mr M. M. Chantler, Manager, Multinational
Sales, Eaton Corporation to the General Manager, BEL is on the
letterhead which mentions "Cutler-Hammer Products"; the facsimile
dated 06.01.1994 addressed to Mr R. Sarkar of BEL also bears the
caption "EATON Cutler-Hammer and Dynamatic"; the facsimile
message dated 03.10.1994 is addressed by BEL to Cutler-Hammer,
Pittsburgh; the letter dated 19.12.1994 and facsimile message dated
30.10.1995 sent by one David of Eaton is on the letterhead "Cutler-
Hammer Westinghouse & Cutler-Hammer Products".
69. Eaton has also filed a list of countries where its trademarks,
Cutler/Hammer and CH logo, are registered. In addition, it has also
produced catalogues of its products which indicate the use of the
trademarks as well as the trade name Cutler-Hammer. In view of the
material produced by Eaton, we find no reason to fault the learned Single
Judge‟s conclusion that Eaton had not abandoned its trademarks.
70. It was earnestly contended on behalf of BEL that whilst the
products under the brand name/trademark Cutler-Hammer may be sold in
other parts of the world, Eaton had not sold its products under the said
brand name/trademark in India where it was using the trademarks Moeller
and Eaton. And, this according to BEL, constituted abandonment of the
trademarks by Eaton.
71. We are not persuaded to accept this view for several reasons. First
of all, for the reason that even if it is assumed that Eaton has not sold
products under the trademark Cutler-Hammer in India, the same would
not constitute abandonment of the trademarks if they were used
extensively overseas. The learned Single Judge has noted in the
impugned order - and in our view rightly so - that the
tradename/trademark Cutler-Hammer had acquired trans-border
reputation.
72. Secondly, there is evidence on record which indicates that Eaton
was selling its products in India under the brand name Cutler-Hammer.
Even the correspondence relied upon by BEL indicates that it had made
inquiries regarding Eaton‟s products.
73. Thirdly, BEL had entered into a licence agreement for use of
knowhow and patents for manufacture of certain products. Further BIPL
- a group company of BEL, which later merged with BEL - had entered
into Sales Agreements on 13.07.1988 and 04.09.1990 for acting as
Eaton‟s agent to solicit sales of products manufactured by Eaton.
74. Last and most importantly, BEL had expressly agreed that the use
of the trademarks by BEL would for all times inure to the benefit of
Eaton. The fact that the term of the said Registered User Agreement came
to an end does not mean that BEL stood released from this understanding.
75. As noticed hereinbefore, the agreements entered into between BEL
and Eaton after 1979 did not specifically mention licensing of
trademarks. However, BEL had already committed that its use of the
trademarks would inure for the benefit of Eaton and - as BEL‟s letter
dated 10.06.1982 indicates - Eaton and BEL understood that the use of
the trademarks would continue to be governed by the terms of the earlier
agreements. In the aforesaid circumstances, we are unable to appreciate
as to how BEL can now claim that Eaton had abandoned and it had
acquired ownership of the trademarks in question.
76. The fact that Eaton did not renew the trademarks CH Control and
CH Label does not, in the facts of the present case, indicate that Eaton
had abandoned its trademarks. Eaton had applied for the trademarks CH
Logo on 11.10.1994. The documents produced on record indicate that the
said Mark has been registered in various countries. Eaton explained that it
has inadvertently not renewed the trademarks CH Label and CH Control
as it had adopted another version of the trademark, namely, CH Logo and
it did not find it economical to maintain multiple similar marks. It is not
disputed that registration of the trademark Cutler/Hammer did not lapse.
It also cannot be disputed that Eaton continued to use the tradename
'Cutler-Hammer'. The trademarks containing the initials 'CH' merely
represent the initials of the word Cutler-Hammer and even if some of the
trademarks bearing the initials CH were not renewed, the same would not
entitle a third party to use those marks as that would indicate a
relationship with Cutler-Hammer and enable the user to trade on the
goodwill associated with that trade name.
77. BEL further claims that Eaton had not protested or taken any action
against the use of its trademarks but had encouraged BEL to use the same
as its own and, resultantly, BEL acquired title to the trademarks in
question by its ubiquitous use. It claims that since Eaton had acquiesced
to the use of trademarks in question, it is now not entitled to seek an
injunction.
78. In Power Control Appliances (supra), the Supreme Court noted
that acquiescence was one of the defences available in a suit for
infringement of trademark. It, inter alia, explained the scope of
acquiescence as under:-
"Acquiescence is sitting by, when another is invading the
rights and spending money on it. It is a course of conduct
inconsistent with the claim for exclusive rights in a trade
mark, trade name etc. It implies positive acts; not merely
silence or inaction such as is involved in laches."
79. The Supreme Court also referred to a following passage from the
decision in the case of Electrolux Ld. v. Electrix Ld.: (1954) 71 RPC
23:-
"Upon this matter, a great deal of learning has been referred
to, and we have also had our attention drawn to a number of
cases. The latter include the well-known statement in
Willmott v. Barber by Fry, J. (as he then was) at p. 105. He
said this:"It has been said that the acquiescence which' will
deprive a man of his legal rights must amount to fraud, and in
my view that is an abbreviated statement of a very true
proposition. A man is not to be deprived of his legal rights
unless he has acted in such a way as would 'make it
fraudulent for him to set up those rights'. Let me pause here
to say that I do not understand that, by the word 'fraudulent',
the learned Judge was thereby indicating conduct which
would amount to a common law tort of deceit. 'What, then,
are the elements or requisites necessary to constitute fraud of
that description?' In the first place 'the plaintiff must have
made a mistake as to his legal rights'. Secondly, the plaintiff
must 'have expended some money or must have done some
act (not necessarily upon the defendant's land) on the faith of
his mistaken belief'. Thirdly, the defendant, the possessor of
'the legal right, must know of the existence of his own right
which is inconsistent with 'the legal right, must know of the
existence of his own right which is inconsistent with' the
right claimed by the plaintiff. If he does not know of it he is
in the same position 'as the plaintiff, and the doctrine of
acquiescence is founded upon conduct with a knowledge' of
your legal rights. Fourthly, the defendant, the possessor of
the legal right, must know 'of the plaintiff's mistaken belief of
his rights. If he does not, there is nothing which' calls upon
him to assert his own rights. Lastly, the defendant, the
possessor of the legal 'right, must have encouraged the
plaintiff in his expenditure of money or in the "other acts
which he has done, either directly or by abstaining from
asserting his legal right'. In reading that passage, it is perhaps
necessary to note (because it makes it at first sight a little
more difficult to follow) that the positions of plaintiff and
defendant as they are usually met with are there transposed,
and that one of the parties who is there spoken of as the
plaintiff corresponds with the present case with the
Defendants, and vice versa."
80. It is apparent from the above that in order to make good the
defence of acquiescence, the defendant must have acted bonafide and in
an honest belief that it was not treading on anyone else's rights. Clearly, a
person who knowingly usurps a trademark of another and carries on his
trade with the intention of benefiting from the goodwill of another cannot
be heard to take the defence of acquiescence.
81. In the case of Hindustan Pencils Pvt. Ltd. v. M/s. India Stationery
Products Co. and Ors.: AIR 1990 Delhi 19, this Court held as under:-
"Even though there may be some doubt as to whether laches
or acquiescence can deny the relief of a permanent
injunction, judicial opinion has been consistent in holding
that if the defendant acts fraudulently with the knowledge
that he is violating the plaintiff's rights then in that case, even
if there is an inordinate delay on the part of the plaintiff in
taking action against the defendant, the relief of injunction is
not denied. The defence of laches or inordinate delay is a
defence in equity. In equity both the parties must come to the
Court with clean hands. An equitable defence can be put up
by a party who has acted fairly and honestly. A person who is
guilty of violating the law or infringing or usurping
somebody else's right cannot claim the continued misuse of
the usurped right."
82. In Kerly‟s Law of Trademarks and Trade Names Fifteenth Edition,
the authors state that the test of acquiescence is :
"..... whether in all the circumstances it would be
unconscionable to allow the claimant to maintain his claim. It
is, however, clear that the matters which fall to be considered
include the factors identified in the old cases: whether the
proprietor induced or encouraged the defendant's behaviour, or
represented to him that he was entitled so to act, the passage of
time, reliance by and detriment to the defendant and so on.
Mere failure to sue, however, without some positive act
of encouragement, is not in general enough to give a defence.
A defendant who infringes knowing of the claimants mark can
hardly claim if he is later sued upon it."
83. The plea of acquiescence must be considered in the context of the
facts of each case. The relevant facts that, prima facie, emerge in this case
are that BEL had been using the trademark Bhartia Cutler-Hammer and
Bhartia CH Control. BEL has produced copies of its product catalogues
and price lists for several years from 1995 to 2006. These indicate that
BEL was using the trademarks Bhartia CH Control and Bhartia Cutler-
Hammer. In the price lists of 1995 the words Cutler Hammer are reflected
as a part of the then Corporate name of BEL. In the price lists for later
years, the trademark Bhartia Cutler-Hammer is used independently as
well as reflected as a name of a division of BEL. BEL has shown letters
from various customers to indicate that its customers recognize the brand
Bhartia Cutler Hammer as BEL‟s brand. A bare perusal of these letters
indicate that there is some variance as to how the name „Bhartia Cutler-
Hammer‟ has been used and understood by various customers. As an
illustration, the letter dated 29.06.2005 sent by Steel Authority of India is
addressed to M/s Bhartia Cutler Hammer. Another letter dated
20.07.2005 issued by Bharat Sanchar Nigam Limited is addressed to
Bhartia Industries Limited but refers to the brand of the products as
Bhartia Cutler Hammer. Yet, another letter dated 26.09.2005 sent by
Power Grid Corporation of India Limited approves certain products
(MCCB) under the brand name "BCH". A tender query dated 01.02.2006
by Ministry of Power - Under Management of NTPC Limited is
addressed to Bhartia Cutler Hammer Limited. It appears from the
material produced on record that BEL was using the name Cutler
Hammer as a part of its corporate name till 1995 and, thereafter, had
named one of its divisions as Bhartia Cutler-Hammer. It is for this reason
that some of the letters are also addressed by BEL‟s Customers to M/s
Bhartia Cutler-Hammer even after BEL had changed its name to Bhartia
Industries Limited. Undisputedly, BEL was permitted to use the name of
Cutler Hammer as a part of its corporate title under the Trading Name
Agreement dated 19.02. 1979 whereunder BEL had acknowledged that it
would acquire no right or title in the words "Cutler Hammer". In view of
this express agreement, BEL cannot now claim acquiescence on the part
of Eaton as a defence for use of the said name. The said Trading Name
Agreement did not have a fixed term and therefore BEL could continue to
use the name till such time as not objected to by Eaton; a permissive use
cannot give rise to a defence of acquiescence. Insofar as the use of
Bhartia Cutler-Hammer as a trademark is concerned, its use is minimal
and in most places in the context of the corporate name or as a part of its
trading name/trading style. It is important to note that BEL applied for
registration of the trademark Bhartia Cutler-Hammer by application no.
1562940 dated 29.05.2007. This is much after Eaton had filed an
opposition to the BEL‟s application for registration of the trademark
Cutler/Hammer, which is stated to have been filed on 23.06.2004. In the
circumstances, we find it difficult to accept that the plea of acquiescence
is available to BEL.
84. Insofar as the trademark Bhartia CH Control is concerned, it is
apparent that the said trademark has been formed by using the trademark
CH Control in conjunction with the BEL's House trademark. In this
regard, it is relevant to mention that in the Licence and Technical Service
Agreement dated 03.06.1977 as referred to hereinbefore expressly
required BEL to use the trademark CH Control (Registration No. 205632)
in conjunction with the house mark of BEL. Thus, the use of the mark
Bhartia CH Control was in conformity with clause (c) of Article 7.3 of
the Licence and Technical Service Agreement dated 03.06.1977.
85. It is also noteworthy that in terms of the „Licence & Technical
Service Agreement‟ dated 03.06.1977, no royalty or charges was payable
by BEL for such use. Although, BEL was obliged to discontinue such
trademark on termination of the licence term, it did not do so. Prior to the
expiry of the term of the „Licence & Technical Service Agreement‟ dated
03.07.1977, the parties had negotiated other agreements but did not
include any clause relating to the trademarks in those agreements as they,
apparently, understood that the matter relating to trademarks would be
governed by the earlier agreements. And, in this context, it is relevant to
recount that the parties had agreed that the use of the trademarks at all
times by BEL would inure to the benefit of Eaton. At the material time,
BEL was also using the tradename Cutler-Hammer as a part of its title
under the Trading Name Agreement of 1979. It continued to use the said
name till 1995. It is also material to note that, admittedly, till 2000, BEL
was licensed to manufacture and sell certain products. It is noteworthy
that the Royalty reports in respect of the licence granted by Eaton to BEL
were also addressed to Eaton and the addressee's name included the
words Cutler-Hammer. The fact that the said products may be different
from those sold under the trademarks Bhartia CH Control or CH Control
Black, may not be material in the context of the facts as noted
hereinbefore; the parties were enjoying certain business relationship and
BEL had confirmed that insofar as trademarks are concerned earlier
agreements would govern their use. The correspondence produced by
BEL indicates that at one time Eaton had also evinced interest in
acquiring certain equity interest in BEL. In its pleadings, Eaton has
affirmed that it believed that BEL would stop using their trademarks.
Eaton was aware that BEL had applied for registration of the trademark
CH Control Black in 1999 and yet had not filed any opposition. Eaton has
explained this by stating that it missed the deadline for filing the
opposition. Given the past history and association of BEL and Eaton, it is
not difficult to understand why a precipitate action was not taken by
Eaton.
86. Whilst it is apparent that there is delay on the part of Eaton to
institute the present action, in the attendant circumstances as indicated
above, it does not follow that Eaton had encouraged infringement of its
trademarks. As explained in Power Control Appliances (supra)
acquiescence implies positive acts; not merely silence or inaction such as
is involved in laches.
87. It is now well settled that mere delay in an action in instituting a
suit would not be fatal to it. In Midas Hygiene Industries P. Ltd. v.
Sudhir Bhatia & Ors.: 2004 (28) PTC 121 (SC), the Supreme Court held
as under:-
"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."
88. Further the Learned Single Judge found the conduct of BEL
deceitful. BEL had applied for registration of various trademarks - and
had also obtained the registration of CH Control Black - on a
misrepresentation as to its user. As indicated hereinbefore, we find no
reason to differ from that view.
89. In Wander Limited & Anr. v. Antox (supra), Wander Ltd. claimed
to be the registered proprietor of the trademark 'Cal-De-Ce'. Wander had
entered into an agreement dated 28.03.1986 with Antox India (P.) Ltd.
(hereafter 'Antox'), wherein Antox had agreed to manufacture vitaminsed
Calcium Gluconate Tablets under the said registered trademark Cal-De-
Ce and sell the entire production to Wander. The said agreement was
terminated by Wander by a notice dated 30.11.1988 and Wander entered
into a separate manufacturing arrangement with another company (Alfred
Berg & Co. (I) Pvt. Ltd.). Antox filed a suit and sought temporary
injunction to restrain the manufacture of the products under the brand
name Cal-De-Ce. Antox claimed that its agreement with Wander was in
itself void as its object was forbidden by law. The Single Judge of the
Madras High Court declined to pass an interlocutory injunction. Antox
preferred an appeal before the Division Bench of the High Court, which
was allowed. It is, in this context that the Supreme Court considered the
question whether there was a prima facie case on which Antox could be
held entitled to restrain Wander and Alfred Berg from manufacturing and
marketing goods under the trade name Cal-De-Ce and whether on
consideration of balance of convenience and comparative hardship, a
temporary injunction should have been issued. The Supreme Court
reversed the decision of the Division Bench.
90. The Supreme Court noted that the Single Judge had returned the
prima facie finding that Wander was manufacturing the drug in question
under the trademark Cal-De-Ce at its factory in Bombay from August
1983 to June 1986, that is, prior to the agreement with Antox. In the
circumstances, the Supreme Court held that Antox could not explain as to
how a passing-off action could prevail over the aforesaid prima facie
finding. It also noted that the drug controller's licence which was claimed
by Antox to be the source of its rights to be the user of the trademark
itself expressly stipulated that the goods to be manufactured would be
goods under the registered Trademark of Wander Ltd.
91. The Supreme Court noted that the aforesaid aspects had not been
considered by the High Court in the order impugned before them.
Having considered the aspect of a prima facie case, the Supreme Court
further held that the object of interlocutory injunction was to protect the
plaintiff against injury from violation of its right for which the plaintiff
could not be adequately compensated and the need for such protection
must be weighed against the corresponding need of the defendant to be
protected against injury resulting from the injunction. In the present case,
the learned Single Judge has prima facie found the conduct of BEL in
claiming ownership of the trademarks in question as deceitful and its
action of using the trademarks as impairing the rights of Eaton. The
learned Single Judge in his discretion considered this a fit case for
passing an interim injunction to restrain BEL from using the trademarks
in question which has prima facie been held to be unlawful. The ratio of
the decision in Wander Limited & Anr. v. Antox (supra) cannot be read
as an authority for the proposition that in all cases, injunctions can only
be issued for preserving status quo as is contended on behalf of BEL.
The prima facie view of the case made out by the plaintiff is also a vital
consideration for issue of a restraining order.
92. It is important to note that in Wander Limited & Anr. v. Antox
(supra), the Supreme Court underscored the principle that "the Appellate
Court will not interfere with the exercise of discretion of the court of first
instance and substitute its own discretion except where the discretion has
been shown to have been exercised arbitrarily, or capriciously or
perversely or where the court had ignored the settled principles of law
regulating grant or refusal of interlocutory injunctions. An appeal
against exercise of discretion is said to be an appeal on principle.
Appellate Court will not reassess the material and seek to reach a
conclusion different from the one reached by the court below if the one
reached by the court was reasonably possible on the material. The
appellate court would normally not be justified in interfering with the
exercise of discretion under appeal solely on the ground that if it had
considered the matter at the trial stage it would have come to a contrary
conclusion. If the discretion has been exercised by the Trial Court
reasonably and in a judicial manner the fact that the appellate court
would have taken a different view may not justify interference with the
trial court's exercise of discretion."
93. We do not find any of the prima facie findings arrived at by the
learned Single Judge to be perverse or unsustainable. We are also not
persuaded to accept that any error in applying any legal principle has
been committed. Accordingly, we find no ground to interfere with the
impugned order.
94. We further clarify that all observations made in this order are in the
context of our prima facie view and nothing stated herein should be
construed as a final expression of opinion on the merits of the dispute
between the parties. Nothing stated herein should be read to prejudice the
rival claims/contentions of the parties in the trial of their respective suits.
95. The appeals are, accordingly, dismissed. Pending applications also
stand disposed of. The parties are left to bear their own costs.
VIBHU BAKHRU, J
BADAR DURREZ AHMED, J
JUNE 03, 2016
RK/MK
