Delhi High Court
Flamagas, Sa vs Sunder & Ors on 4 November, 2016
$~19.
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CS (COMM) 896/2016
% Judgment dated 4th November, 2016
FLAMAGAS, SA ..... Plaintiff
Through : Ms.Kaustubh Sinha, Adv.
versus
SUNDER & ORS ..... Defendants
Through : None
CORAM:
HON'BLE MR. JUSTICE G.S.SISTANI
G.S.SISTANI, J (ORAL)
1. Plaintiff has filed the present suit for permanent injunction restraining
infringement of trademark, copyright, passing off, rendition of
accounts, etc.
2. It may be noticed that the present suit was registered as a Commercial
suit vide order dated 20.7.2016.
3. Learned counsel for the plaintiff submits that summons in the suit and
notice in the application for stay were directed to be issued vide order
dated 29.6.2015, when an ex parte ad interim injunction order was
granted in favour of the plaintiff and against the defendants. Counsel
for defendant no.1 had entered appearance on 11.8.2015. Since none
appeared on behalf of defendant no.6 despite service, he was proceeded
ex parte vide order dated 11.8.2015. Fresh summons were directed to
be issued to defendants no.2 to 5. In the order dated 2.11.2015, the
Joint Registrar had noticed that defendants no.2 and 3 have been served
and time was granted to file written statement/reply to the stay
application. Since defendants no.4 and 5 could not be served, fresh
CS(COMM) 896/2016 Page 1 of 15
summons were issued to defendants no.4 and 5. In the order dated
22.3.2016, the learned Joint Registrar had noticed that despite service
and opportunities having been granted to defendants no.1, 2, 3 and 5
written statements were not filed by them, their right to file written
statement was closed. Defendant no.4 was served through publication.
Since despite service defendant no.4 did not enter appearance nor did
he file written statement, his right to file the written statement was
closed vide order dated 17.10.2016.
4. Having regard to the fact that despite service, defendants no. 2 to 5 did
not enter appearance and even failed to file their written statement
despite opportunities having been granted, they are proceeded ex parte.
Although, defendant no.1 has entered appearance, but no written
statement has been filed by him and in fact none is appearing on his
behalf since 04.05.2016. Accordingly, defendant no. 1 is proceeded ex
parte.
5. Learned counsel for the plaintiff submits that in view of above and
having regard to the fact that being a commercial dispute, the present
suit should be tried as a summary suit and since there is no opposition
to the averments made in the plaint, the present suit should be decreed
under the provisions of Order VIII Rule 10 of the Code of Civil
Procedure in favour of the plaintiff and against all the defendants.
6. As per the plaint, the plaintiff company was the first to introduce
refillable gas lighters in the world. For this purpose, the plaintiff
adopted the mark „CLIPPER‟ for identifying its products under the
brand „Clipper‟ printed on all of plaintiff‟s products and product
packaging as represented below:
CS(COMM) 896/2016 Page 2 of 15
7. As per the plaint, the plaintiff company has over the years expanded
and grown to become one of the largest and most successful companies
in the world in the cigarette lighter segment. The plaintiff manufactures
and sells, inter-alia, a wide range of pocket and multipurpose lighters,
gas and gas refills under the mark „Clipper‟. The plaintiff company
commercializes its products in more than 100 countries in the world.
8. The cigarette lighters manufactured by the plaintiff company is
cylindrical in shape, the upper part of which is protected by a metal
casing. The lighter stone is extractable and consists of a wheel fixed at
the base, in a lengthened shape; besides the stone there is a push button
of plastic material, held by a wing that is inserted diagonally along the
body of the lighter, the size of which expands from the lower part to the
upper side.
CS(COMM) 896/2016 Page 3 of 15
9. In addition to the stone lighter, the plaintiffs‟ lighter is sold on the
market in an electronic version, with a cylindrical general body and at
the level of the push button, there is a wing that stands out, that
expands from the lower part to the upper one. The push button is also
of plastic material and is protected by a metallic housing. The flame is
produced by pressing directly on the push button.
10. The plaintiff‟s lighters are sold in classic opaque colours or engraved
with ornamentation using different themes. Plaintiff‟s lighters having a
translucent body allowing the existing gas content in the container to be
seen are also available in the market. These translucent lighters are
manufactured in pastel tones in yellow, pink, green and pale green, as
well as white.
11. As per the plaint, the plaintiff in order to protect its iconic shape of the
lighters has sought numerous trademark registrations as a three-
dimensional trademark in various foreign countries where the plaintiff
manufactures/markets its goods. Details of such countries have been
extracted in para 10 of the plaint. In India, the plaintiff holds the
following registrations:
Trademark Reg. Class Description of Application
No. Goods Date
CLIPPER 323189 34 All kinds of 18.02.1977
[word] lighters, refills,
multi-refills and
smokers‟ articles
Device Mark 803833 34 Lighters, Refills, 27.05.1998
Multi-Refills &
Smokers articles
included in Class
34
CS(COMM) 896/2016 Page 4 of 15
Device Mark 709140 4 Compressed 10.07.1996
combustible gases
included in Class 4
12. The plaintiff submits that all the aforegoing marks have been renewed
from time to time and are valid and subsisting as on date.
13. As per the plaint, the plaintiff also claims that its products i.e the
cigarette lighters in India and elsewhere are sold in a unique packaging
comprising of a pack of 60 or 80 cigarette lighters arranged within a
base or a yellow stand with slots designed to receive the cigarette
lighters. The base/stand carries the „Clipper‟ mark conspicuously. The
same is extracted as under:
14. It is further submitted that the products of the plaintiff i.e. the
CLIPPER cigarette lighters in India and elsewhere are sold in an unique
packaging comprising of a pack of 6-8 cigarette lighters arranged
within a transparent plastic slot, the slots being formed on a card base.
The card is typically yellow with the word „Clipper‟ conspicuously
imprinted thereon. The said packaging also carries safety and other
warnings. The same is extracted as under:
CS(COMM) 896/2016 Page 5 of 15
15. The plaintiff has spent huge amount of time and money in marketing
and popularizing its product „Clipper‟ in India. The plaintiff has
extracted annual sales figures in paragraph 18 of the plaint.
16. It is the case of the plaintiff that in the month of March, 2015, the
plaintiff learnt that defendant no. 1 was selling counterfeit lighters with
an identical shape as that of the plaintiff‟s lighters. Upon investigation,
the plaintiff learnt that the counterfeit lighters identical to that of the
plaintiff‟s lighters are being imported and sold in India in large
quantities by defendant nos. 2 to 6, and the only difference being that
the counterfeit lighters sold do not bear any trademark.
17. Learned counsel for the plaintiff submits that further investigation had
revealed that defendant no.1 is in fact acting in concert with defendants
no.2 to 6 and they were importing cigarette lighters from China in bulk
and the said cigarette lighters are identical in shape and bear the same
design as that of the plaintiff‟s cigarette lighters. The said infringing
lighters are being imported at the value of Rs. 3/- or Rs. 4/- and sold in
the market at around Rs. 18 to Rs. 20/-, thus, causing a huge revenue
loss to the Government of India by paying less duties. Once the goods
CS(COMM) 896/2016 Page 6 of 15
arrive in India, they are immediately collected by the defendants and
distributed to various distributors in the market and sold to the public.
18. It is contended by learned counsel for the plaintiff that the defendants
are surreptitiously importing counterfeit lighters of inferior quality and
selling the same in the market, thereby jeopardizing the lives of the
public at large. Apart from the fact that these counterfeit goods are
dangerous and harmful, they also infringe the intellectual property
rights of the plaintiff. It is further contended that the adoption of the
similar shape of the products is in order to free-ride upon the
tremenduous goodwill that the products of the plaintiff enjoy in the
market.
19. I have heard learned counsel for the plaintiff and also examined the
plaint. In this case, while issuing summons in the suit an ex parte ad
interim injunction was passed against the defendants. Defendant no. 1
entered appearance through counsel. Since none appeared on behalf of
defendant no. 6, he was proceeded ex parte vide order dated 11.8.2015.
As no written statement was filed by defendants no.1 to 5 despite
having been served, their right to file the same was closed. Defendants
no. 1 to 5 have also been proceeded ex parte vide this order.
20. Recently, I had examined the scope of Order VIII Rule 10 of the Code
of Civil Procedure particularly in the background of the new
Commercial Courts, Commercial Division and Commercial Appellate
Division of High Courts Act, 2015 in Nirog Pharma Pvt. Ltd. v.
Umesh Gupta & Anr., CS (OS) 2517/2015 dated 21.10.2016. The
relevant paragraphs read as under:
"11. Order VIII Rule 10 has been inserted by the legislature to
expedite the process of justice. The courts can invoke its
provisions to curb dilatory tactic, often resorted to by defendants,
by not filing the written statement by pronouncing judgment
CS(COMM) 896/2016 Page 7 of 15
against it. At the same time, the courts must be cautious and judge
the contents of the plaint and documents on record as being of an
unimpeachable character, not requiring any evidence to be led to
prove its contents. ...
...
28. The present suit is also a commercial suit within the definition
of the Commercial Courts, Commercial Division and Commercial
Appellate Division of High Courts Act, 2015 and it was the clear
intention of the legislature that such cases should be decided
expeditiously and should not be allowed to linger on. Accordingly,
if the defendant fails to persue his case or does so in a
lackadaisical manner by not filing his written statement, the courts
should invoke the provisions of Order VIII Rule 10 to decree such
cases."
21. In this case, the grievance of the plaintiff is that the defendants is
surreptitiously importing counterfeit lighters, which are identical in
shape as that of the lighters of the plaintiff, and the defendants are
selling it in the open market at a price of Rs.12/- to Rs.18/-, per piece.
The persons with an average intelligence are purchasing the said
lighters of the defendants believing that the said lighters are the
products of the plaintiff. The aforestated illegal activities of the
defendants are causing serious damage to the reputation and goodwill
of the plaintiff company.
INFRINGEMENT OF TRADEMARK
22. Based upon the documents placed on record, there is no doubt that the
plaintiff is the registered proprietor of the trade marks mentioned in
paragraph 11 aforegoing. Section 29 (2) of the Trade Marks Act
stipulates the conditions when usage by a person amounts to
infringement of a registered trademark. Section 29 (2) and (3) read as
follows:
"(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."
(Emphasis Supplied)
23. I have examined the lighters of the plaintiff and the lighters of
defendants, which have been scanned at paragraph 21 of the plaint as
well as in the report of the local commissioner, and am of the opinion
that the lighters being sold by defendants are an exact imitation of the
plaintiff‟s lighters in all respects including the shape of the lighter.
Since the marks being used are identical and the the goods being
applied to are also identical, I accordingly hold that the activities of the
defendants are infringing the registered mark of the plaintiff under
Section 29 of the Trade Marks Act. The presumption contained in sub-
section (3) of Section 29 also comes to the aid of the plaintiff in the
present matter.
PASSING OFF
24. Passing off action arises out of common law and is not pre-conditioned
on registration. The term „passing off‟ was explained by James, L.J. in
Singer Manufacturing Co. v. Loog, (1880) 18 ChD 395 as under:
"...I have often endeavoured to express what I am going to express
now (and probably I have said it in the same words, because it is
very difficult to find other words in which to express it) -- that is,
that no man is entitled to represent his goods as being the goods of
another man; and no man is permitted to use any mark, sign or
symbol, device or other means, whereby, without making a direct
false representation himself to a purchaser who purchases from
him, he enables such purchaser to tell a lie or to make a false
representation to somebody else who is the ultimate customer."
(Emphasis Supplied)
25. Lord Diplock in Erven Warnink Besloten Vennootschap v. J.
Townend & Sons (Hull) Ltd., [1979] A.C 731 had identified five
essentials to establish an action of passing off. The relevant excerpt is
as under:
"My Lords, A.G Spalding and Brothers v. A. W. Gamage Ltd., 84
L.J.Ch 449, and the later cases make it possible to identify five
characteristics which must be present in order to create a valid
cause of action for passing off: (1) a misrepresentation, (2) made
by a trader in the course of trade, (3) to propsective customers of
his or ultimate consumers of goods or services supplied by him,
(4) which is calculated to injure the business or goodwill of
another trader (in the sense that this is a reasonably foreseeable
consequence) and (5) which causes actual damage to a business
or goodwill of the trader by whom the action is brought or (in a
quia timet action) will probably do so."
(Emphasis Supplied)
26. The aforegoing essentials have been accepted by the Supreme Court in
Cadila Health Care Ltd. v. Cadila Pharmaceuticals Ltd., (2001) 5
SCC 73 and Heinz Italia v. Dabur India Ltd., (2007) 6 SCC 1. In
Cadila Health Care Ltd. (Supra), the Supreme Court had further laid
down the following decisive tests for checking deceptive similarity:
"35. Broadly stated, in an action for passing-off on the basis of
unregistered trade mark generally for deciding the question of
deceptive similarity the following factors are to be considered:
(a) The nature of the marks i.e. whether the marks are
word marks or label marks or composite marks i.e.
both words and label works.
(b) The degree of resembleness between the marks,
phonetically similar and hence similar in idea.
(c) The nature of the goods in respect of which they
are used as trade marks.
(d) The similarity in the nature, character and
performance of the goods of the rival traders.
(e) The class of purchasers who are likely to buy the
goods bearing the marks they require, on their
education and intelligence and a degree of care they
are likely to exercise in purchasing and/or using the
goods.
(f) The mode of purchasing the goods or placing
orders for the goods.
(g) Any other surrounding circumstances which may
be relevant in the extent of dissimilarity between the
competing marks.
36. Weightage to be given to each of the aforesaid factors
depending upon facts of each case and the same weightage
cannot be given to each factor in every case."
(Emphasis Supplied)
27. In the present case, applying the aforegoing test, I hold that the
defendants have tried to dupe the general public by portraying their
products in a manner that they originate from the plaintiff. Such usage
would inevitably lead to loss of revenue as also that of goodwill.
Accordingly, I am of the view that the defendants have indulged
themselves into the offence of passing off.
28. Having held that the defendants have infringed the registered
trademarks of the plaintiff as well as committed the tort of passing off,
the only other issue which remains in the present suit is damages.
29. A coordinate bench of this court in the case of Relaxo Rubber Limited
& Anr. v. Selection Footwear & Anr., AIR 2000 Del 60 which while
granting injunction also granted damages under Order VIII Rule 10 in a
case for infringement of copyright and trade mark.
PUNITIVE DAMAGES
30. With regard to the relief of damages as claimed by the plaintiff in
paragraph 39 h) of the plaint, this Court has previously granted both
exemplary and punitive damages against the defendants in ex parte
matters of similar nature.
31. In Time Incorporated v. Lokesh Srivastava & Anr., 2005 (30) PTC 3
(Del): 2005 (116) DLT 599, while awarding punitive damages of Rs. 5
lakhs in addition to compensatory damages also of Rs. 5 lakhs, Justice
R.C. Chopra observed as under:
"8. This Court has no hesitation on saying that the time has come
when the Courts dealing actions for infringement of trade marks,
copy rights, patents etc. should not only grant compensatory
damages but award punitive damages also with a view to
discourage and dishearten law-breakers who indulge in violations
with impunity out of lust for money so that they realise that in case
they are caught, they would be liable not only to reimburse the
aggrieved party but would be liable to pay punitive damages also,
which may spell financial disaster for them. In Mathias v. Accor
Economy Lodging Inc., 347 F.3d 672 (7th Cir. 2003) the factors
underlying the grant of punitive damages were discussed and it
was observed that one function of punitive damages is to relieve
the pressure on an overloaded system of criminal justice by
providing a civil alternative to criminal prosecution of minor
crimes. It was further observed that the award of punitive damages
serves the additional purpose of limiting the defendant's ability to
profit from its fraud by escaping detection and prosecution. If a
torfeasor is caught only half the time he commits torts, then when
he is caught he should be punished twice as heavily in order to
make up for the times he gets away. This Court feels that this
approach is necessitated further for the reason that it is very
difficult for a plaintiff to give proof of actual damages suffered by
him as the defendants who indulge in such activities never
maintain proper accounts of their transactions since they know
that the same are objectionable and unlawful. In the present case,
the claim of punitive damages is of Rs. 5 lacs only which can be
safely awarded. Had it been higher even, this Court would not
have hesitated in awarding the same. This Court is of the view that
the punitive damages should be really punitive and not flea bite
and quantum thereof should depend upon the flagrancy of
infringement."
(Emphasis Supplied)
32. This court in the case of Microsoft Corporation v. Rajendra Pawar &
Anr., 2008 (36) PTC 697 (Del.) has held:
"22. Perhaps it has now become a trend of sorts, especially in
matters pertaining to passing off, for the defending party to evade
Court proceedings in a systematic attempt to jettison the relief
sought by the Plaintiff. Such flagrancy of the Defendant's conduct
is strictly deprecatory, and those who recklessly indulge in such
shenanigans must do so at their peril, for it is now an inherited
wisdom that evasion of Court proceedings does not de facto
tantamount to escape from liability. Judicial Process has its own
way of bringing to task such erring parties whilst at the same time
ensuring that the aggrieved party who has knocked the doors of
the Court in anticipation of justice is afforded with adequate relief,
both in law and in equity. It is here that the concept of awarding
punitive damages comes into perspective.
23. Punitive damages are a manifestation of equitable relief
granted to an aggrieved party, which, owing to its inability to
prove actual damages, etc., could not be adequately compensated
by the Court. Theoretically as well as practically, the practice of
awarding of punitive damages may be rationalized as preventing
under-compensation of the aggrieved party, allowing redress for
undetectable torts and taking some strain away from the criminal
justice system. Where the conduct of the erring party is found to be
egregiously invidious and calculated to mint profits for his own
self, awarding punitive damages prevents the erring party from
taking advantage of its own wrong by escaping prosecution or
detection."
(Emphasis Supplied)
33. A coordinate bench of this court in the case of The Heels v. Mr. V.K
Abrol and Anr., CS (OS) NO.1385 of 2005 decided on 29.03.2006 has
held:
"11. This court has taken a view that where a defendant
deliberately stays away from the proceedings with the result that
an enquiry into the accounts of the defendant for determination of
damages cannot take place, the plaintiff cannot be deprived of the
claim for damages as that would amount to a premium on the
conduct of such defendant. The result would be that parties who
appear before the court and contest the matter would be liable to
damages while the parties who choose to stay away from the court
after having infringed the right of the plaintiff, would go scotfree.
This position cannot be acceptable.
12. No doubt it is not possible to give an exact figure of damages
on the basis of actual loss, but certain token amounts on the basis
of the sales of the plaintiff can certainly be made. The plaintiff is
unnecessarily dragged into litigation and the defendants must bear
consequences thereof. In fact in such a case both compensatory
and punitive damages ought to be granted apart from the costs
incurred by the plaintiff on such litigation. In view of the given
sales figure of the plaintiff, I consider it appropriate to grant a
decree of damages in favor of the plaintiff and against the
defendants for a sum of Rs 3 lakh apart from costs of the suit."
(Emphasis Supplied)
34. Having regard to the facts of this case, Rupees three lakhs as punitive
damages be granted in favour of the plaintiff and against the defendant
in terms of para 39 (h) of the plaint.
35. Accordingly, the present suit stands decreed in favour of the plaintiff
and against the defendants in terms of paragraphs 39 a), b), c), e) and i)
of the plaint along with damages of Rupees three lakhs.
36. Let decree sheet be drawn up accordingly.
I.A. No. 12211/2015 (O XXXIX R 1 & 2 CPC)
37. In view of the order passed in the suit, interim order dated 29.6.2015 is
made absolute. Application stands disposed of.
I.A. No. 12660/2015 (O I R 10 CPC)
38. This was an application under Order 1 Rule 10 of the Code of Civil
Procedure for impleadment of Flamages India Pvt. Ltd. and has been
allowed on 29.06.2015. The application stands disposed of.
I.A. No. 12661/2015 (O VI R 17 CPC)
39. This was an application under Order VI Rule 17 of the Code of Civil
Procedure seeking amendment of the plaint and has been allowed on
29.06.2015. The application stands disposed of.
G.S.SISTANI, J
NOVEMBER 04, 2016
//msr
