M/S Inter Ikea Systems Bv Anr vs Imtiaz Ahamed & Anr
2016 Latest Caselaw 5935 Del

12.
*           IN THE HIGH COURT OF DELHI AT NEW DELHI

+                                CS(OS) 3295/2014

                                                      Decided on 09.09.2016
IN THE MATTER OF:
M/S INTER IKEA SYSTEMS BV ANR                   ..... Plaintiffs
                   Through : Ms. Swetashree Majumder and
                   Ms. Tanya Verma, Advocates

                 versus
IMTIAZ AHAMED & ANR                                        ..... Defendants
                 Through : None.

CORAM
HON'BLE MS.JUSTICE HIMA KOHLI
HIMA KOHLI, J. (Oral)

1. The plaintiffs have instituted the present suit for the relief of permanent injunction, restraining infringement of trademark, passing off, infringement of copyright, rendition of accounts, damages, etc., against the defendant No.1 and defendant No.2 (wife of the defendant No.1), both proprietors of two separate firms based in Cochin.

2. Summons were issued in the suit on 3.11.2014, returnable on 15.1.2015. On the same day, an ex parte ad interim order was passed in favour of the plaintiffs and against the defendants, restraining them from manufacturing , selling, offering for sale, advertising, directly or indirectly dealing in products and services which are identical or deceptively similar to the plaintiffs‟ products and services under the trademark "IKEA" or any other trademark which is either identical or deceptively similar in trade dress, colour combination and layout amounting to infringement and

passing off.

3. On 15.1.2015, the service report in respect of the defendants was awaited and fresh summons were issued to them. The defendants were duly served through e-mail on 11.2.2015, but none appeared on their behalf; nor did the defendants file their written statement. As a result, vide order dated 8.5.2015, they were proceeded against ex parte and the plaintiffs were directed to file their affidavit by way of evidence along with the original documents. Pursuant to the aforesaid order, the plaintiffs have filed an affidavit by way of evidence of Mr. Vishal Vig (PW-1), the constituted attorney of the plaintiff No.1, marked as Ex.PW-1A.

4. PW-1 had produced the original power of attorney appointing him as the constituted attorney of the plaintiffs, exhibited as Ex.PW-1/1. He has deposed that the suit had been signed and instituted by Mr. Gurjot Singh on behalf of the plaintiff No.1, as a constituted attorney of the plaintiffs. The signatures of Mr. Gurjot Singh have been duly identified by PW-1. The power of attorney dated 18.7.2014, authorizing Mr. Gurjot Singh to sign and institute the suit on behalf of plaintiff No.1 has been marked as Ex.PW- 1/2. The power of attorney executed by the Managing Director of the plaintiff No.1, authorizing Mr. Gurjot Singh to sign on behalf of the plaintiff No.1 has been marked as Ex.PW-1/3. PW-1 has further deposed that Ms. Nitika Redhu and Ms. Preet Kamal have been authorized to sign and institute the suit on behalf of the plaintiff No.2, by virtue of the minutes of the meeting dated 27.6.2014, of the Board of Directors of the plaintiff No.2/company, that have been marked as Ex.PW-1/4.

5. As per the narration of facts in the plaint, plaintiff No.1 is a company organized and incorporated under the laws of Netherlands and is the owner

of the IKEA Concept, which it franchises for various IKEA stores. The IKEA stores sell a wide range of furniture, accessories, bathrooms and kitchen fittings, home and office furnishing products, stationery, tools and implements and they offer various services in connection therewith. The extracts of the websites of the plaintiff providing the details of its business have been marked as Ex.PW-1/5. The plaintiff No.1‟s trademark "IKEA" was coined, conceived and adopted by the founder of the plaintiff in the year 1943. The extracts of the plaintiff No.1‟s website indicating the same have been exhibited as Ex.PW-1/6, wherein it has been stated that the trade name/trademark "IKEA" was conceived by the founder, Ingvar Kamprad from his name and surname in the year 1943, by using the first letters of his own name and surname plus the first letters of „Elmtaryd‟ and „Agunnaryd‟, the farm and village where he was brought up.

6. The plaintiffs have filed copies of a book published by them under the name, „The Ikea Story‟, authored by Bertil Torekull in the year 2011, containing a chapter on how the brand name had originated. The said book has been marked as Ex.PW-1/7. The extracts of the plaintiff‟s website that records that it has 44 stores in Germany, followed by 40 stores in the United States, have been collectively marked as Ex.PW-1/8. The plaintiff No.1 is stated to be the registered proprietor of the word IKEA, IKEA label and a unique colour combination and has secured registrations for the same in English and Devanagri scripts, which is depicted herein below :

7. The word "IKEA" forms a part of the plaintiffs‟ trading style and is used in the names of the Group Companies. Copies of the Certificate for use in legal proceedings for registration of the plaintiff‟s trademark "IKEA" have been exhibited as Ex.PW-1/9. The extracts of the website of the Trademark Registry indicating registrations of the plaintiffs‟ trademark have been marked as Ex.PW-1/10 (colly). A list comprising of the international registrations of the plaintiffs‟ trademark "IKEA" in various countries worldwide have been marked as Ex.PW-1/11. Copies of some of the trademark registration certificates of various jurisdictions filed by the plaintiffs have been assigned Mark-A (colly). Copies of the advertisements and other sales and promotional literature of the plaintiffs, have been assigned Mark-B (colly). Some of the brochures of the plaintiffs downloaded from the internet have been marked as Ex.PW-1/12. The web extract of articles written about the plaintiff company and updated versions thereof have been marked as Ex.PW-1/13 (colly).

8. In his affidavit, Mr. Vishal Vig, PW-1 has deposed that the plaintiff No.1 operates three separate companies in India from the same registered office, namely, IKEA India Pvt. Ltd., IKEA Trading (India) Pvt. Ltd. and IKEA Services (India) Pvt. Ltd. IKEA India Pvt. Ltd. has been impleaded in the suit as plaintiff No.2. Plaintiff No.2 was organized and registered in India in the year 1994 and to substantiate the said fact, the extracts from the website of the Registrar of Companies have been filed by the plaintiffs and marked as Ex.PW-1/14. A copy of the lease deed of the premises from where plaintiff No.2 runs its operations, has been filed and marked as Ex.PW-1/15 (colly).

9. Plaintiff No.1 is stated to be one of the 40 Superstar Trading Houses in India, a special status accorded by the Government of India for companies with trading activities in excess of INR 7 billion (USD 140 million). The plaintiff No.2 is stated to be a major regional buying centre for the plaintiff group of companies, specializing in purchases of textiles and fabrics from South Asia. Copies of the invoices issued by the plaintiff No.2 to third parties have been assigned Mark-C (colly) and copies of the articles written about the activities of the plaintiff No.2 have been assigned Mark-D (colly). The press coverage given to the activities of the plaintiff No.2 in India through internet extracts and articles from various India publications have been exhibited as Ex.PW-1/20.

10. Plaintiff No.1 operates the website www.ikea.com, which incorporates the trademark "IKEA". It is stated that the said domain name was registered by the said plaintiff on 29.7.1995 and has been duly renewed. Extracts from the said website have been filed and marked as Ex.PW-1/22. An extract from the website, www.whois.com indicating that the domain name www.ikea.com is registered in the name of the plaintiff No.1 has been marked as Ex.PW-1/23.

11. Coming to the defendants herein, PW-1 has deposed in his affidavit that in the month of August, 2014, the plaintiffs became aware that the defendants were providing home interior decoration services in Cochin, Kerala under the plaintiffs‟ mark "IKEA". Immediately thereupon, the plaintiffs had deputed an investigator, who had visited the premises of the defendants to determine the extent of infringement of their trademark, "IKEA". The investigator was able to obtain photographs of the defendants‟ premises and the visiting card of the defendant No.1, which have been

marked as Ex.PW-1/24 and PW-1/25. The extract of the LinkedIn profile of the defendant No.1 has been marked as Ex.PW-1/26. PW-1 has deposed that the defendant No.1 has been indulging in dishonest activities of trading to dilute the plaintiffs‟ goodwill, reputation and brand value by infringing upon its trademark, which amounts to adoption of an unfair trade practice. Hence, the present suit.

12. Ms. Majumder, learned counsel for the plaintiffs contends that the defendants have adopted and started using the trademark, "IKEA", which is identical and deceptively similar to the plaintiffs‟ registered trademark/trade name in every respect, including phonetically, structurally and with regard to all the essential features. Even the colour combination used by the defendants is stated to be identical to the one used by the plaintiffs in their registered trademark. She submits that the defendants are providing interior designing services under an identical mark "IKEA", just as the plaintiffs are, to the extent that they have used the mark "IKEA" on their signage with ® appearing next to the said mark so as to falsely represent to the public that it is their registered trademark. A pictorial representation of the said signage is reproduced herein below:-

13. Learned counsel argues that the defendants have adopted and are using the plaintiffs‟ trademark and label "IKEA" in relation to services which are virtually overlapping with their business interests and existing services under the trademark, trade name, colour combination, copyright and trade dress, which is similar to that of the plaintiffs, thus giving an

impression to the public at large that they are somehow connected/ affiliated with the plaintiffs. It is asserted that the defendants are blatantly infringing the statutory and common law rights of the plaintiffs under various heads and are guilty not only of infringing the plaintiffs‟ rights in the mark "IKEA", but also of the copyright in the label/artwork vested in them. Thus, they are passing off their services as those of the plaintiffs.

14. Counsel for the plaintiffs submits that the aforesaid dishonest and fraudulent acts that the defendants have indulged in is with a view to take advantage of and ride on the goodwill and reputation of the plaintiffs in the trademark/trade name "IKEA", which has resulted in incalculable losses, both tangible and intangible to the goodwill, business and reputation of the plaintiffs. The damages claimed by the plaintiffs against the defendants are to the tune of Rs.20.00 lacs.

15. The Court has heard learned counsel for the plaintiffs, carefully perused the averments made in the plaint and examined the documents placed on record along with the affidavit by way of evidence filed by the sole witness, PW-1. The plaintiffs have produced copies of their trademark registration certificates in different classes in India (Mark-A) and have also produced copies of the legal proceedings Certificates (Ex.PW-1/9). Further, the plaintiffs have produced copies of advertisements and other sales and promotional literature and brochures and the downloaded documents from their website as also placed on record the relevant copies of the news reports and articles written in the press with regard to their activities in India.

16. This Court is of the opinion that on the basis of the documents filed by the plaintiffs, they have been able to amply demonstrate and prove that

the plaintiff No.1 is the registered proprietor of the trademark "IKEA" not only in India, but worldwide. The plaintiffs have also successfully established that the trademark "IKEA" was coined by the founder of the plaintiff No.1 in the year 1943, as is apparent from Ex.PW-1/6 and Ex.PW-7. On the strength of their presence across 70 countries in the world, which is apparent from a perusal of the sales and promotional literature filed by them, the plaintiffs have been able to establish that they enjoy trans-border goodwill and reputation and are armed with extensive marketing network through the internet, retail, e-commerce and their affiliates/subsidiaries, including plaintiff No.2 company which is registered in India. Furthermore, the plaintiffs have been able to satisfactorily demonstrate that ever since the adoption of the trademark "IKEA", they have been using the same regularly and continuously and have promoted the said mark along with their goods through publications, broadcast, print/visual media, advertisement, etc. Thus, over the past several years, the plaintiffs have acquired an enviable goodwill and reputation in respect of their goods/services under the trademark/trade name "IKEA", not only in India, but worldwide. The evidence brought on record by the plaintiffs has remained unchallenged and un-rebutted as after being served with the summons in the suit, the defendants have elected to stay away from the suit proceedings.

17. Taking into consideration the evidence placed on record by the plaintiffs and on comparing the impugned trademark of the defendants with that of the plaintiffs, this Court is of the opinion that the trademark of the defendants "IKEA" is identical to the trademark of the plaintiffs in each and every respect, including, phonetically, structurally and with regard to

essential features and colour combination. It is also a relevant factor that the defendants are engaged in the same business activity as the plaintiffs, namely, providing interior designing services, by adopting an identical mark "IKEA".

18. The plaintiffs are therefore justified in stating that they have suffered loss of business due to the defendants illegally riding over their goodwill and reputation in the market and that they have been deliberately causing confusion/deception in the mind of the purchasing public at large with respect to the source of the goods/services that are in fact originating from the defendants. In view of the above, there is every likelihood of the consumers and prospective purchasers carrying an impression in their mind that the goods of the defendants originate from the plaintiffs or that there is some commercial nexus between them, thus resulting in dilution of the trademark of the plaintiffs in their goods and services. Furthermore, by projecting to the industry and the purchasing public that they have a commercial connection or relationship with the plaintiffs, the defendants have been encashing the hard earned goodwill and reputation established by them over the past several years and passing off their goods as those of the plaintiffs, which is impressible.

19. Counsel for the plaintiffs stresses the fact that the plaintiffs are not only entitled to the relief of permanent injunction in terms of the prayers made in para 33(a), (b) and (c) of the plaint, but they are also entitled to a decree of damages against the defendants towards the loss of sales, reputation and goodwill of their trademark caused by their illegal activities.

20. As noted above, despite service of summons on them, the defendants have elected to stay away from the present proceedings so as to thwart any

enquiry into their account for determination of damages. As a result, no inquiry into their accounts could be conducted for this court to pass an order of rendition of accounts of profits and delivery up, so as to compensate the plaintiffs for the extent of damages suffered by them. But, that alone would not be a deterrent. Merely because the defendants have deliberately elected to stay away from the court proceedings, cannot be a ground to permit them to reap the benefits of evading the suit proceedings and its outcome.

21. The court is mindful of the fact that in such a situation where the defendant chooses to stay away from the court proceedings, he should not be permitted to enjoy the benefits of such an evasion. Any view to the contrary would result in a situation where a compliant defendant who appears in court pursuant to summons being issued, participates in the proceedings and submits his account books, etc., for assessment of damages, would end up on a worse footing, vis-à-vis a defendant who chooses to conveniently stay away after being served with the summons in the suit. That was certainly not the intention of the Statute. Section 135 (1) of the Trademarks Act, 1999 provides that relief that may be granted in any suit for infringement of or for passing off includes injunction and at the option of the plaintiff, either damages or an account of profits. The plaintiffs in the present case have opted for claiming damages and have established beyond doubt that they have suffered damages on account of the conduct of the defendants which are a result of infringement of their trademark and copyright.

22. It is well settled that damages in cases like the present one must be awarded and a defendant, who elects to stay away from the court

proceedings, should not be permitted to enjoy the benefits of staying away from the said proceedings. With regard to the relief of damages claimed by the plaintiffs herein, it may be noted that courts have been granting both, exemplary and punitive damages against the defendant in ex-parte matters of similar nature. In the case of Times Incorporated v. Lokesh Srivastava & Anr. reported as 2005 (30) PTC 3 (Del), while awarding punitive damages of Rs.5 lacs against the defendant therein, in addition to compensatory damages of a similar amount, a learned Single Judge of this Court had observed as below:

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

8. This Court has no hesitation in saying that the time has come when the Courts dealing actions for infringement of trade

marks, copy rights, patents etc. should not only grant compensatory damages but award punitive damages also with a view to discourage end dishearten law breakers who indulge in violations with impunity out of lust for money so that they realize that in case they are caught, they would be liable not only to reimburse the aggrieved party but would be liable to pay punitive damages also, which may spell financial disaster for them. In Mathias v. Accor Economy Lodging, Inc. reported in 347 F.3d 672 (7th Cir. 2003) the factors underlying the grant of punitive damages were discussed and it was observed that one function of punitive damages is to relieve the pressure on an overloaded system of criminal justice by providing a civil alternative to criminal prosecution of minor crimes. It was further observed that the award of punitive damages serves the additional purpose of limiting the defendant's ability to profit from its fraud by escaping detection and prosecution. If a tortfeasor is caught only half the time he commits torts, then when he is caught he should be punished twice as heavily in order to make up for the 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 flee bite and quantum thereof should depend upon the flagrancy of infringement." (emphasis added)

23. Similarly, in the case of Lachhman Das Behari Lal vs. Sri Ghanshyam Das Jetha Nand & Others reported as 2007 (35) PTC 693 (Del.), following the principle laid down in the case of The Himalaya Drug Company v. Sumit, reported as 126 (2006) DLT 23 : 2006 (32) PTC 112

(Del.), wherein it was held that apart from compensatory damages, in cases of infringement of trade marks, copyrights, etc., courts should not only grant compensatory damages, but should also award punitive damages with a view to discourage and dishearten law breakers who indulge in violations with impunity, out of lust for money so that they are made to realise that in case they are caught, they would be liable not only to reimburse the aggrieved party, but also pay punitive damages, which may spell financial disaster for them, the said suit was decreed in favour of the plaintiff therein with punitive damages of Rs.25 lacs imposed on the defendant. The aforesaid observations were made on the basis of certain other decisions namely, Times Incorporated (supra) and Mathias vs. Accor Economy Lodging (supra).

24. In the case of Microsoft Corporation v. Rajendra Pawar & Anr. reported as 2008 (36) PTC 697 (Del.), considering the aspect of punitive damages, it was held as below:-

"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 added)

25. In a suit filed by the plaintiffs herein in the year 2008, entitled M/s Inter Ikea Systems BV vs. M/s Ikea Furniture Pvt. Ltd. [CS(OS) 523/2008] that was decided on 26.3.2014, and where, despite service, the defendant therein had deliberately stayed away from the suit proceedings, following the principle laid down in the case of Tata Sons Ltd. vs. Hoop Anin & Ors., reported as 188 (2012) DLT 327, where punitive damages to the tune of Rs. 5 lacs were awarded in favour of the plaintiff, the court had proceeded to award punitive damages.

26. In the case of Cartier International AG and Ors. vs. Gaurav Bhatia and Ors. reported as 226 (2016) DLT 662, echoing the view taken in the captioned case, it was held that where a defendant chooses to stay away from the court proceedings, he should not be permitted to enjoy the benefits of evasion of the said proceedings, had imposed punitive damages on the defendant therein to the tune of Rs. 1 crore.

27. Another salutary object behind awarding punitive damages is to ensure that it acts as a deterrent against fence sitters who may find it lucrative to imitate registered trademarks of leading and established brands in the industry. It is with the said purpose that those who are brought before

the court must be made to feel the pinch of coughing up damages from their illegal gains. If only token damages are imposed on them, then it would hardly hurt them and they would continue indulging in infringing activities. India has leaped into the league of those countries that have made giant economic advances. Several companies from all over the world have entered the Indian markets to tap its large consumer base and have made substantial investments with the idea of earning profit, promoting and establishing their business. The said business helps in generating employment and earning revenue for the country. If the courts do not extend adequate protection to them in respect of their intellectual property rights including patents, trademarks and copyrights, they are bound to have serious second thoughts about doing business here.

28. In the case in hand, the plaintiffs having successfully established that they have an enviable cross-border reputation and they enjoy a huge brand equity in over 70 countries worldwide, this Court is of the opinion that they are entitled to protection. Any hesitation in granting adequate relief to the plaintiffs and similarly placed companies that enjoy a huge brand equity and presence in the market on a foundation built brick by brick over the years, through the dint of their hard work and by maintaining high standards, is bound to encourage piracy and permit fly by night operators like the defendants herein to illegally make profit at the cost of the registered trademarks owner.

29. Any other view would tantamount to putting a premium on the dishonest, illegal, malafide and unfair trade practices adopted by parties, such as the defendants herein who had no compunction in unauthorizedly using the registered trademark of the plaintiffs for their personal gains.

[Refer: Relaxo Rubber Limited and Anr. Vs. Selection Footwear and Anr. (1999 PTC 578); Hero Honda Motors Limited vs. Rafiq Memon [2012 (52) PTC 449 (Del.)] and Gora Mal Hari Ram Ltd. Vs. Ashique Exports [2012 (50) PTC 428 (Del.)]

30. Accordingly, an ex-parte decree is passed in favour of the plaintiffs and against the defendants in terms of prayer 33(a),(b) and (c). In lieu of prayer of rendition of accounts as contained in the prayer clause 33(d) of the plaint, it is held that the plaintiffs are entitled to a decree for a sum of Rs.25 lacs, by way of punitive /exemplary damages against the defendants. The damages awarded shall be payable by the defendants jointly and severally, within a period of six months from the date of passing of the judgment failing which, the said amount shall carry interest @ 9% p.a. from the date of the decree, till realisation. The plaintiffs are also entitled to costs of the suit. The suit stands decreed accordingly. Before the decree sheet is drawn, the balance court fee shall be paid by the plaintiffs.

                                                           (HIMA KOHLI)
SEPTEMBER 09, 2016/ sk/ap                                     JUDGE