Delhi High Court

Intex Technologies (India) Ltd & ... vs M/S Az Tech (India) & Another on 10 March, 2017

         THE HIGH COURT OF DELHI AT NEW DELHI
%                                Judgment delivered on: 10.03.2017

+       FAO (OS) No.1/2017 & CM Nos. 301/2017 & 303/2017

INTEX TECHNOLOGIES (INDIA) LTD & ANR                        ... Appellants

                                    versus

M/S AZ TECH (INDIA) & ANOTHER                               ... Respondents
Advocates who appeared in this case:-
For the Appellants : Mr Sudhir Chandra, Senior Advocate with Mr Pravin Anand,
                     Mr Aditya Gupta and Mr Utkarsh Srivastava
For the Respondent : Ms Prathiba M. Singh, Sr. Adv. with Mr Sagar Chandra and
                     Mr Ankit Rastogi

CORAM:-
HON'BLE MR JUSTICE BADAR DURREZ AHMED
HON'BLE MR JUSTICE ASHUTOSH KUMAR

                                JUDGMENT

BADAR DURREZ AHMED, J

1. The appellants („Intex‟) are aggrieved by the judgment and / or order

dated 24.12.2016 delivered by a learned single Judge of this court in IA

No.17138/2013, which was an application filed under Order XXXIX Rules

1 & 2 of the Code of Civil Procedure, 1908 („Code‟) in CS(OS) 2060/2013,

filed by the respondents („AZ Tech‟). The said suit and application were

filed in respect of the trade mark „AQUA‟. The respondents filed the said

suit seeking a permanent injunction against the appellants („Intex‟)

restraining them from using the mark „AQUA‟ in respect of mobile phones

/ cellular phones. The case was one of purported passing off. By virtue of

the impugned judgment and / or order, the learned single Judge has allowed

the application (IA No.17138/2013) filed by the respondents under Order

XXXIX Rules 1 & 2 of the Code and has restrained Intex from using the

mark "AQUA" or any other deceptively similar mark in respect of cellular /

mobile phones and their accessories. Of course, when the present appeal

came up for hearing on 06.01.2017, we had granted stay of the operation of

the said judgment.

2. Mr Sudhir Chandra, the learned senior counsel, appearing on behalf

of Intex, submitted that as per the respondents, Intex had launched its

product under the mark "AQUA" in 2012. This is evidenced by paragraph

17 of the amended plaint. However, Mr Sudhir Chandra submitted

specifically that Intex launched its mobile phones under the mark "AQUA"

in August 2012. He also submitted that, as indicated in their written

statement, the adoption of the mark "AQUA" was an honest adoption as it

had no knowledge whatsoever of the respondent‟s product under the mark

"AQUA". In fact, it was submitted that at the time when the Intex launched

its product under the mark "AQUA", the respondent‟s alleged product with

the mark "AQUA" was non-existent in the market.

3. The learned senior counsel further submitted that the suit was filed

on 28.10.2013, that is, after 14 months of the launch of the mobile phones

of Intex under the mark "AQUA" which was, as pointed out above, within

the knowledge of the respondents. Within this period, Intex had sold

"AQUA" phones to the extent of Rs 200 crores. It was pointed out that

between 01.08.2012 and 31.03.2013, Intex had sold 1.75 lakh phones under

the mark "AQUA". Between 01.04.2013 and 13.11.2013, a further 2 lakh

phones under the mark had been sold by Intex. It was also pointed out that

approximately Rs 27 crores were spent on advertising and, in particular, on

TV Commercials, which include commercials featuring the famous actor,

Mr Farhan Akhtar. It was also submitted that the TV advertisements were

first telecast on 11.06.2013 and the second video clip was telecast on

01.10.2013 onwards.

4. Mr Sudhir Chandra further pointed out that the sales in 2015-16 of

the appellant‟s mobile phones under the mark "AQUA" had grown to Rs

3193 crores. He also pointed out that far from the appellant attempting to

ride on the goodwill and reputation of the respondents, it was the latter who

tried to benefit from the appellant‟s mark "AQUA". He submitted that this

is evidenced by the fact that AZ Tech, which allegedly had been using a

different font and style for its mark "AQUA", adopted an identical font and

style which had been used by Intex. This imitation, according to the

appellant, was done in the year 2015 during the pendency of the suit filed

by the respondents [CS(OS) 20602013]. The font and style of the word

mark "AQUA", as used by AZ Tech and Intex and copied by AZ Tech in

2015, are set out in tabular form hereinbelow:-

AZ Tech‟s logo when Logo adopted by AZ Intex‟s logo since present suit was Tech in the year 2015 the year 2013 instituted

`

5. Because of this, Intex filed CS(OS) 2668/2015 against the

respondents for infringement of copyright and for passing off. It was

pointed out by the learned counsel for the appellant that no explanation was

offered by AZ Tech as to why this was done and the only reply forthcoming

was that this was done to give a „fresh approach‟. However, the said suit

was disposed of by a learned single Judge of this court on 05.12.2016 as

AZ Tech had indicated its intention not to use the artistic work, which was

the subject matter of the suit. The operative portion of the order passed on

05.12.2016 in that suit is as under:-

"Learned Senior counsel appearing on behalf of the defendants submits that the defendants do not intend to use the artistic work, subject matter of the present suit, without prejudice to the rights and contentions as raised by the defendants in Suit No. 2060/2013 on the word mark "AQUA" and the plaintiffs giving up the relief and costs. Mr. Anand, learned counsel for the plaintiffs very fairly agrees to the same.

Accordingly, the suit is disposed of binding the defendants to the statement made by the learned Senior Counsel appearing on their behalf, on instructions. The statement so made shall be treated as an undertaking to this Court. The undertaking is accepted."

6. It was submitted that the fact that the respondents copied the font and

style and the artistic work in the logo employing the word mark "AQUA",

clearly demonstrated two things. First of all, it demonstrated the dishonest

conduct on the part of the respondent, particularly because this was done

during the pendency of the suit filed by the respondents which was pending

before this court. Secondly, this indicated that it was not Intex which was

trying to pass off its goods as those of the respondents, but just the other

way round.

7. Mr Sudhir Chandra, however, submitted that the impugned judgment

and / or order cannot be sustained on account of several points of law which

were not taken into account by the learned single Judge. The points were as

under:-

I. Before an injunction in a passing off action can be passed in favour of the plaintiff, the plaintiff must establish that it had a goodwill / reputation in the mark on the relevant date, that is, the date when the defendant is alleged to have launched its product under the same or deceptively similar mark; II. Insofar as the point of similarity or deceptive similarity of the mark is concerned, the issue of added matter is also an important one while considering the grant of an injunction in a passing off action;

III. Delay in filing the suit is also to be considered as a factor going towards disentitling the plaintiff to an injunction and, at least, to an ad interim injunction;

IV. The principles of grant of an interim injunction had not been considered in the correct light by the learned single Judge; V. The plaintiff‟s (AZ Tech‟s) conduct in copying the font and style of the logo used by Intex was clearly dishonest and would disentitle it to the equitable remedy of injunction;

We shall consider each of these points in detail.

I. Before an injunction in a passing off action can be passed in favour of the plaintiff, the plaintiff must establish that it had a goodwill / reputation in the mark on the relevant date, that is, the date when the defendant is alleged to have launched its product under the same or deceptively similar mark.

8. On behalf of the appellants, it was submitted that in order to succeed

in a passing off action, the classical trinity of (1) goodwill / reputation; (2)

misrepresentation; and (3) likelihood of damage has to be established.

Insofar as goodwill is concerned, it is gauged by the volume of sales and

the extent of advertisements. Reference was made to the decision of the

Supreme Court in Satyam Infoway Limited v. Sifynet Solutions Pvt. Ltd:

2004 (28) PTC 566 (SC) and, in particular, to paragraph 12 thereof which

reads as under:-

"12. The next question is would the principles of trade mark law and in particular those relating to passing off apply? An action for passing off, as the phrase "passing off" itself suggests, is to restrain the defendant from passing off its goods or services to the public as that of the plaintiff's. It is an action not only to preserve the reputation of the plaintiff but also to safeguard the public. The defendant must have sold its goods or offered its services in a manner which has deceived or would be likely to deceive the public into thinking that the defendant's goods or services are the plaintiff's. The action is normally available to the owner of a distinctive trademark and the person who, if the word or name is an invented one, invents and uses it. If two trade rivals claim to have individually invented the same mark, then the trader who is able to establish prior user will succeed. The question is, as has been aptly put, who gets these first? It is not essential for the plaintiff to prove long user to establish reputation in a passing off action. It would depend upon the volume of sales and extent of advertisement."

(underlining added)

9. Reliance was also placed on Laxmikant V. Patel v. Chetanbhai

Shah and Another: 2002 (3) SCC 65. In the said decision, the Supreme

Court observed as under:-

"8. It is common in trade and business for a trader or a businessman to adopt a name and/or mark under which he would carry on his trade or business. According to Kerly (Law of Trade Marks and Trade Names, 12th Edn., para 16.49), the name under which a business trades will almost always be a trade mark (or if the business provides services, a service mark, or both). Independently of questions of trade or service mark, however, the name of a business (a trading business or any other) will normally have attached to it a goodwill that the courts will protect. An action for passing- off will then lie wherever the defendant company's name, or its intended name, is calculated to deceive, and so to divert business from the plaintiff, or to occasion a confusion between the two businesses. If this is not made out there is no case. The ground is not to be limited to the date of the proceedings; the court will have regard to the way in which the business may be carried on in the future, and to its not being carried on precisely as carried on at the date of the proceedings. Where there is probability of confusion in business, an injunction will be granted even though the defendants adopted the name innocently.

10. A person may sell his goods or deliver his services such as in case of a profession under a trading name or style. With the lapse of time such business or services associated with a person acquire a reputation or goodwill which becomes a property which is protected by courts. A competitor initiating sale of goods or services in the same name or by imitating that name results in injury to the business of one who has the

property in that name. The law does not permit any one to carry on his business in such a way as would persuade the customers or clients in believing that the goods or services belonging to someone else are his or are associated therewith. It does not matter whether the latter person does so fraudulently or otherwise. The reasons are two. Firstly, honesty and fair play are, and ought to be, the basic policies in the world of business. Secondly, when a person adopts or intends to adopt a name in connection with his business or services which already belongs to someone else it results in confusion and has propensity of diverting the customers and clients of someone else to himself and thereby resulting in injury.

11. Salmond & Heuston in Law of Torts (20th Edn., at p.

395) call this form of injury as "injurious falsehood" and observe the same having been "awkwardly termed" as "passing-off" and state:

"The legal and economic basis of this tort is to provide protection for the right of property which exists not in a particular name, mark or style but in an established business, commercial or professional reputation or goodwill. So to sell merchandise or carry on business under such a name, mark, description, or otherwise in such a manner as to mislead the public into believing that the merchandise or business is that of another person is a wrong actionable at the suit of that other person. This form of injury is commonly, though awkwardly, termed that of passing-off one's goods or business as the goods or business of another and is the most important example of the wrong of injurious falsehood. The gist of the conception of passing-off is that the goods are in effect telling a falsehood about

themselves, are saying something about themselves which is calculated to mislead. The law on this matter is designed to protect traders against that form of unfair competition which consists in acquiring for oneself, by means of false or misleading devices, the benefit of the reputation already achieved by rival traders."

12. In Oertli v. Bowman [1957 RPC 388 (CA)] (at p. 397) the gist of passing-off action was defined by stating that it was essential to the success of any claim to passing-off based on the use of given mark or get-up that the plaintiff should be able to show that the disputed mark or get-up has become by user in the country distinctive of the plaintiff's goods so that the use in relation to any goods of the kind dealt in by the plaintiff of that mark or get-up will be understood by the trade and the public in that country as meaning that the goods are the plaintiff's goods. It is in the nature of acquisition of a quasi- proprietary right to the exclusive use of the mark or get-up in relation to goods of that kind because of the plaintiff having used or made it known that the mark or get-up has relation to his goods. Such right is invaded by anyone using the same or some deceptively similar mark, get-up or name in relation to goods not of plaintiff. The three elements of passing-off action are the reputation of goods, possibility of deception and likelihood of damages to the plaintiff. In our opinion, the same principle, which applies to trade mark, is applicable to trade name."

(underlining added)

10. A reference was also made to Kerly‟s Law of Trade Mark and Trade

Names (13th Edition) (Sweet and Maxwell) and, in particular, to the

following passage at pages 419 to 420:-

"Reputation It is essential to the success of any claim in respect of passing off, based on the use of a given mark, get-up or other indication of origin, for the claimant to show that this had (at the relevant date) become by user in this Country distinctive, to some section of the public, if not of the claimant‟s goods or business alone, at least of a defined class of goods or business to which those of the claimant belong.

"It is, of course, essential to the success of any claim in respect of passing off based on the use of a given mark or get up that the plaintiff should be able to show that the disputed mark or get up has become by user in this country distinctive of the plaintiff's goods so that the use in relation to any goods of the kind dealt in by the plaintiff or that mark or get up will be understood by the trade and the public in this country as meaning that the goods are the plaintiff's goods. The gist of the action is that the plaintiff, by using and making known the mark or get up in relation to his goods, and thus causing it to be associated or identified with those goods, has acquired a quasi-proprietary right to the exclusive use of the mark or get up in relation to goods of that kind, which right is invaded by any person who, by using the same or some deceptively similar mark or get up in relation to goods not of the plaintiff's manufacture, induces customers to buy from him goods not of the plaintiff's manufacture as goods of the plaintiff's manufacture, thereby diverting to himself orders intended for and rightfully belonging to the plaintiff."

The mark or other indication concerned need not be universally known. A small trader with limited clientele is as much entitled to protect his brands and business name as any large concern. The overriding consideration, in judging extent of reputation, is whether the claimant has built up a goodwill to the point where

substantial damage will be caused to it by the acts he complains of.

The relevant date, when it comes to proving reputation is the date when the defendant commenced the acts complained of."

(underlining added)

11. The observations of the Supreme Court in Uniply Industries Limited

v. Unicorn Plywood Pvt. Ltd and Others: 2001 (5) SCC 95 were also

relied upon by Mr Sudhir Chandra. The observations were as under:-

"7. It is no doubt true that advertisement of goods had been made by the respondents in 1993 itself. Whether that was followed up by goods being dealt with the trade marks in question is not clear as is to be seen by the following discussion:

So far as the invoices are concerned, it is not very clear from the same that they were in relation to goods containing the trade marks in question because there is no mention of any particular trade mark in the same and maybe they pertain to such goods, but this is a fact which is yet to be established by placing proper material before the Court. So far as the declarations made before the Excise Authorities are concerned, the High Court itself found the material to be dubious. The letters issued by the dealers are both in favour of the appellant and the respondents. In this state of materials the courts below should have been wary and cautious in granting an injunction which would affect the trade and business of another person using an identical trade mark. Both the appellant and the respondents have applied for registration of their respective trade marks before the Registrar under the Trade and Merchandise Marks Act, 1958 and the respective rights of the parties will have to be investigated by the Registrar and appropriate registration granted to either of them or both of them, as

the case may be, bearing in mind the provisions of Section 12(3) of the Trade and Merchandise Marks Act, 1958. There are many precedents to the effect that for inherently distinctive marks ownership is governed by the priority of use of such marks. The first user in the sale of goods or service is the owner and senior user. These marks are given legal protection against infringement immediately upon adoption and use in trade if two companies make use of the same trade mark and the gist of passing off in relation to goodwill and reputation to goods.

8. Some courts indicate that even prior small sales of goods with the mark are sufficient to establish priority, the test being to determine continuous prior user and the volume of sale or the degree of familiarity of the public with the mark. Bona fide test of marketing, promotional gifts and experimental sales in small volume may be sufficient to establish a continuous prior use of the mark. But on some other occasions courts have classified small sales volume as so small and inconsequential for priority purposes. Therefore, these facts will have to be thrashed out at the trial and at the stage of grant of temporary injunction a strong prima facie case will have to be established. It has also to be borne in mind whether the appellant had also honestly and concurrently used the trade marks or there are other special circumstances arising in the matter. The courts below have merely looked at what the prima facie case is and tried to decide the matter without considering the various other aspects arising in the matter. Therefore, we think, the appropriate order to be made is that injunction either in the favour of the appellant or against them or vice versa is not appropriate and the proceedings in the suit shall be conducted as expeditiously as possible or the Registrar under the Trade and Merchandise Marks Act, 1958 may decide the matter which may govern the rights of the parties.

9. The order made by the High Court shall stand set aside and it is made clear that there shall be no order of temporary injunction in favour of either party."

(underlining added)

12. In the context of the legal propositions set out in the above extract, it

was submitted that there is nothing in the plaint with regard to the volume

of sales or the extent of advertisements. However, in the replication, there

is mention that AZ Tech had made sales of over Rs 10 crores by selling the

mobile / cellular phones under the brand "AQUA" while the plaintiff No.2

had made sales of over 5 million US $ under the "AQUA" brand in India.

However, no dates or periods were given as to when the sales were made.

Though, in the written submissions submitted before the learned single

Judge, the respondents had indicated that as on February, 2014, the plaintiff

No.1 had made sales of over Rs 10 crores by selling the mobile phones

under the brand "AQUA" while the plaintiff No.2 had made the sales of

over 5 million US $. The learned counsel for the appellant pointed out that

even these alleged figures were as of February 2014, that is, after the filing

of the suit. The relevant date, as pointed out in the cases referred to above,

was when the defendant (Intex) allegedly launched its product with the

mark "AQUA". This happened in 2012. It is nowhere indicated as to what

were the sales or the advertisement expenses of the plaintiff‟s /

respondent‟s on that date. Therefore, it was contended that the present case

cannot be regarded as one where the respondents/plaintiffs had been able to

establish even prima facie that they had an established goodwill / reputation

vis-à-vis the mark "AQUA" in respect of mobile phones.

13. Ms Pratibha M. Singh, the learned senior counsel, appearing on

behalf of the respondents, submitted that AZ Tech (Plaintiff No.1) is the

sole proprietorship concern of Mr Arvind Kumar Adukia. Plaintiff No.2 is

a Hong Kong based company - Peace Zone (HK) Limited. Plaintiff No.1

has a 40% shareholding in plaintiff No.2, that is, the Hong Kong company,

the balance 60% of the shares are held by the son and daughter-in-law of

the said Mr Arvind Kumar Adukia. It was submitted that the Hong Kong

Company applied for registration of the trade mark "AQUA" in 2011 and

the same was registered in 2012 for mobile phones and accessories. The

plaintiff No.1 („AZ Tech‟), had also applied in India for registration of the

trade mark "AQUA" in respect of mobile phones on 22.12.2009 and, in that

application, it claimed user since 01.04.2009. However, registration has

not yet been granted. Ms Pratibha Singh stressed the point that the

respondents were prior users and, therefore, they were entitled to the

interim injunction which the learned single Judge had directed. She made a

reference to several decisions. In the first place, she referred to a Division

Bench decision of this court in Century Traders v. Roshan Lal Duggar &

Co.: PTC (Suppl) (1) 720 (Del)(DB). Particular reference was made to

paras 9, 12 and 14, which read as under:-

"9. The prima facie case in favor of the appellant stands established by admitted user of the mark by the appellant on voiles produced and marketed by it. It has been rightly so held even by the learned Single Judge. But this prima facie case made out by the appellant is said to be considerably watered down or weakened by the fact that the mark is alleged to be common to the trade and the various registrations adverted to in the learned Single Judge's order. The first point, Therefore, that arises for consideration is whether this approach is correct. It must be remembered that the suit is one based on a claim of passing off. It is not a suit for infringement of a registered trade- mark. In a passing off action registration of the trade mark is immaterial. Section 27 of the Trade and Merchandise Marks Act; 1958, hereinafter referred to as the Act, reads as under:-

"27. No action for infringement of unregistered trade mark:-

(1) No person shall be entitled to institute any proceeding to prevent, or recover damages for the infringement of an unregistered trade mark.

(2) Nothing in this Act shall be deemed to affect rights of action against any person for passing off goods as the goods of another person or the remedies in respect thereof."

The relevant parts of Section 106 of the Act read as under:-

"106. Reliefs in suits for infringement or for passing off:-

(1) The relief which a court may grant in any suit for infringement or for passing off referred to in Section 105

includes an injunction (subject to such terms, if any, as the court thinks fit) and at the option of the plaintiff, either damages or an account of profits, together with or without any order for delivery-up of the infringing labels and marks for destruction or erasure.

(2) Notwithstanding anything contained in sub-section (1), the court shall not grant relief by way of damages (other than nominal damages) or an account of profits in any case-

(a) ......

(b)......

(c) where in a suit for passing off the defendant satisfies the court-

(i) that at the time he commenced to use the trade mark complained of in the suit he was unaware and had no reasonable ground for believing that the trade mark of the plaintiff was in use; and

(ii) that when he came aware of the existence and nature of the plaintiff's trade mark, he forthwith ceased to use the trade mark complained of."

From a reading of the above sections it is clear that registration of mark in the trade mark registry would be irrelevant in an action for passing off. Furthermore, it will be clear that in deciding whether a particular mark is common to the trade use of that mark would be extremely relevant. Mere registration would not be enough.

xxxx xxxx xxxx xxxx xxxx

12. For the purpose of claiming such proprietorship of a mark, it is not necessary that the mark should have been used for considerable length of time. As a matter of fact, a single actual use with intent to continue such use eo instanti confers a right to such mark as a trade mark. It is sufficient if the article with the mark upon it has actually become a vendible article in

the market with intent on the part of the proprietor to continue its production and sales. It is not necessary that the goods should have acquired a reputation for quality under that mark. Actual use of the mark under such circumstances as showing an intention to adopt and use it as a trade mark is the test rather than the extent or duration of the use. A mere casual, intermittent or experimental use may be insufficient to show an intention to adopt the mark as a trade mark for specific article or goods.

xxxx xxxx xxxx xxxx xxxx

14. Thus, the law is pretty well-settled that in order to succeed at this stage the appellant had to establish user of the aforesaid mark prior in point of time than the impugned user by the respondents. The registration of the said mark or similar mark prior in point of time to user by the appellant is irrelevant in an action passing off and the mere presence of the mark in the register maintained by the trade mark registry did not prove its user by the persons in whose names the mark was registered and was irrelevant for the purposes of deciding the application for interim injunction unless evidence had been led or was available of user of the registered trade marks. In our opinion, these clear rules of law were not kept in view by the learned Single Judge and led him to commit an error."

(underlining added)

She relied on this decision, as will be seen from the above extract, to submit

that it is not necessary to show that the trade mark had been used for a

considerable length of time, but a single actual use with the intent to

continue such use was enough to establish priority.

14. She also referred to the decision of the Supreme Court in S. Syed

Mohideen v. P. Sulochana Bai: 2016 (66) PTC 1 (SC). The Supreme

Court observed that traditionally, passing off in common law is considered

to be a right for protection of goodwill in the business against

misrepresentation caused in the course of trade and for prevention of the

resultant damage on account of the said misrepresentation and that the three

ingredients of passing off are goodwill, misrepresentation and damage. The

Supreme Court reiterated that these ingredients are considered to be the

classical trinity under the law of passing off. It was observed that the use of

a mark in respect of a business confers the rights in favour of the person,

who has used it and generates goodwill in the market. It was also observed

that a later user of the same mark or deceptively similar mark cannot be

permitted to misrepresent his business as that of the prior right holder. It

was further observed that this is the reason why essentially the prior user is

considered to be superior than that of any other rights.

15. Ms Pratibha Singh also referred to the Supreme Court decision in

Dhariwal Industries Limited and Another v. M.S.S. Food Products: 2005

(30) PTC 233 (SC). The said decision was referred to because of an

observation therein to the effect that while one party may be having a large

volume of trade, that did not mean that the big fish should be allowed to

swallow the smaller fish. This was submitted in the context of the present

case stating that Intex being a big player cannot be permitted to swallow the

business of the respondents which were much smaller players in the market

of mobile phones, particularly because the respondents were prior users of

the mark "AQUA". A reference was also made to McCarthy on

Trademarks and Unfair Competition, 4th Edition (Thomson West). The

following table appearing at page 11-5 of the said authority was referred to

as:-

"Fig. 11:1A. DISTINCTIVENESS OF MARKS INHERENTLY NON-INHERENTLY NO DISTINCTIVE DISTINCTIVE DISTINCTIENESS No Secondary Meaning Secondary Meaning No Trademark Required Required Significance Arbitrary Suggestive Descriptive, Generic and Geographic Personal Fanciful Name

It was submitted that since the word "AQUA" was arbitrary and fanciful in

relation to mobile phones, it was inherently distinctive and no secondary

meaning was required.

16. In the context of these decisions and authorities, it was submitted that

the respondents were prior in time insofar as the use of the word mark

"AQUA" in respect of mobile phones was concerned. The respondents had

used the said mark in India since 2009, whereas, Intex had used the mark

"AQUA" only from 2012. It was further submitted that insofar as the

respondents are concerned, the word mark "AQUA" is the only mark in

respect of their entire range of mobile phones and is not just an identifier as

in the case of Intex which markets other phones also under different word

marks. It was also submitted that as per the VAT registration, the CIC

Media Magazine, the Indian Trade Magazine, it was evident that the

respondents were using the mark "AQUA" since 2009. It was submitted

that the website of the respondents was "www.aqua-mobiles.com" and all

its products were sold under the brand name "AQUA". The domain name

registration was obtained on 31.12.2010. Reference was made to several

pamphlets indicating the use of the word "AQUA" in respect of mobile

phones. However, none of those pamphlets bear any reference to dates.

Several other documents were referred to by Ms Pratibha M. Singh,

including pie-charts, reviews of smart phones in Amar Ujala, hoardings, etc

in an attempt to indicate that the mobile phones were being sold by the

respondents under the mark "AQUA". She, therefore, submitted that the

respondents had a clear reputation and goodwill in India. Reference was

also made to Kerly‟s Law of Trade Marks and Trade Names, 15th Edition

(Sweet and Maxwell) on the aspect of goodwill and reputation. The

reference was made to the following passages:-

"3. Goodwill 18-024 Goodwill in the jurisdiction is a requirement of the tort of passing off. Goodwill and reputation are

closely linked; there can be no goodwill in a sign or other indication unless it is known to the public and distinguishes the goods or services in relation to which it is used. In the context of passing off, goodwill has been stated to represent, in connection with any business or business product, the value of the attraction to customers which the name and reputation possesses. It is often described as "the attractive force which brings in custom", an extract from the classic statements concerning goodwill in IRC v Muller‟s Margarine1 by Lords Macnaghten and Lindley. The nature of goodwill, and the nature of the business or customer base within the jurisdiction required to establish goodwill in England and Wales as compared with other common law jurisdictions will be considered in detail the section on goodwill below.

DISTINGUISHING BETWEEN REPUTATION AND GOODWILL

18-025 The concepts of reputation and goodwill are very closely related, not least because they are generated in the vast majority of cases by the same trading activity. However, it will aid understanding of difficult cases to have clearly in mind the difference between reputation and goodwill, since they are not synonymous. As "the attractive force which brings in custom", goodwill is a form of legal property, representing the connection between business and customer. Reputation is a matter of fact: to what extent is the indicium in question known in the public mind? The existence of reputation does not require there to be a business in this country, whereas there must be some business or market in this country for goodwill to exist.

18-026 The cases concerning the territoriality of goodwill (discussed below) demonstrate the distinction between goodwill and reputation. If goods bearing the relevant indicia are in or about to be2 in circulation in this

[1901] A.C. 217 at 223.

Pre-launch publicity establishes a connection between business and customer, the desire to purchase being fulfilled when the goods become available.

country, then both reputation and goodwill exist here, even if the goods are known here (reputation) and the public would buy the goods if they were available here. The provision of services creates different problems. If the services are in fact provided abroad, the presence of customers here would appear to establish reputation but not goodwill unless some business was actually transacted here, for example by way of bookings made from within the jurisdiction.

Although the Court of Appeal in Cipriani indicated that requirement for direct bookings in the case of overseas services might well be reviewed in an appropriate case it did not do so on the basis that on the facts in that case, whatever the precise test the defendants had failed to establish a concurrent goodwill within the United Kingdom at the relevant date."

(underlining added)

17. The above extract makes it clear that goodwill in the jurisdiction is a

necessary ingredient of the tort of passing off and that although goodwill

and reputation are closely linked, they are not necessarily the same thing.

For example, an internationally known mark may have a reputation in this

country, but yet have no goodwill because there are no sales of the product

under that mark in this country. In the above extract, it has been clearly

indicated that goodwill is the attractive force which brings in custom and is

a form of legal property representing the connection between the business

and customer. Whereas, reputation is a matter of fact and its existence does

not require that there should be a business in this country. However, there

must be some business or market in this country for goodwill to exist.

18. Based on the submissions made by the learned counsel for the

parties, this much is clear that the establishment of goodwill is an essential

ingredient of the tort of passing off. There is also a clear distinction

between reputation and goodwill. Thus, while the respondents and, in

particular, the respondent No.2 may have a reputation in Hong Kong or in

other parts of the world insofar as its mark "AQUA" is concerned, it cannot

be regarded as having a goodwill in India unless and until there are sales

and an established market in India. It is also evident that insofar as a

registered trade mark is concerned, the property exists in the mark, but in

the case of passing off, the property is not in the mark but in the goodwill.

The establishment of goodwill is indicated by the extent of sales and the

advertising expenses etc. We agree with Mr Sudhir Chandra that the

decision in Century Traders (supra) may have been misunderstood and

perhaps misapplied in a number of cases.

19. Proprietorship of a trade mark and goodwill in respect of a mark are

entirely different concepts. Insofar as a trade mark is concerned, it is

acquired eo instanti. A single use or a short use, insofar as proprietorship

of the mark is concerned, may be sufficient but, it is not so in the case of

establishing goodwill in respect of that mark. Insofar as the question of

goodwill in the present case is concerned, we find that as on August, 2012,

when Intex started selling its mobile phones under the mark, "AQUA", it

cannot be stated with any degree of confidence that the mark „AQUA‟ had

acquired a goodwill or reputation in respect of the respondents mobile

phones. The property which is protected in an action of passing off is not

the plaintiff‟s proprietary right in the mark which the defendant allegedly

misappropriates, but the goodwill and reputation of his business, which is

likely to be harmed by the defendants misrepresentation (see: Reddaway v.

Banham [1896] AC 199; A.G. Spalding & Bros v. Gamage Ltd: [1915] 32

RPC 273 and Harrods Limited v. Harrodian School Limited: 1996 RPC

697.

20. Thus, insofar as this point is concerned we are of the view that AZ

Tech has not been able to establish that it had a goodwill/reputation in India

in the mark in August 2012 when Intex launched its product under the mark

„AQUA‟.

II. Insofar as the point of similarity or deceptive similarity of the mark is concerned, the issue of added matter is also an important one while considering the grant of an injunction in a passing off action.

21. Mr Sudhir Chandra argued that the word mark "AQUA" is used in

conjunction with the appellant‟s trade mark Intex. Consequently, there is

no scope for deception or misrepresentation. Reliance was placed on

Kaviraj Pandit Durga Dutt Sharma v. Novaratna Pharmaceutical

Laboratories: 1965 (1) SCR 737 (equivalent AIR: 1965 SC 980). In that

case, the Supreme Court observed as under:-

"28. .... In an action for infringement, the plaintiff must, no doubt, make out that the use of the defendant's mark is likely to deceive, but where the similarity between the plaintiff's and the defendant's mark is so close either visually, phonetically or otherwise and the court reaches the conclusion that there is an imitation, no further evidence is required to establish that the plaintiff's rights are violated. Expressed in another way, if the essential features of the trade mark of the plaintiff have been adopted by the defendant, the fact that the get-up, packing and other writing or marks on the goods or on the packets in which he offers his goods for sale show marked differences, or indicate clearly a trade origin different from that of the registered proprietor of the mark would be immaterial; whereas in the case of passing off, the defendant may escape liability if he can show that the added matter is sufficient to distinguish his goods from those of the plaintiff."

(underlining added)

It was contended by Mr Sudhir Chandra that the addition of the word mark

Intex, to the word mark "AQUA" was sufficient to distinguish the

appellant‟s goods from those of the respondent. A reference was also made

to a Division Bench decision of this court in Star Bazar Pvt Ltd v. Trent

Limited and Another: 2010 (43) PTC 154 (Del)(DB). Paras 21 and 22 of

the said decision are relevant and they are set out hereunder:-

"21. On a consideration of the entire case law placed before us as well as on the facts as presented, it is quite clear that one of the primary requirements for the grant of temporary injunction in a case of passing off is that the customers of a Plaintiff might be led to believe or might be confused between the goods of that Plaintiff and the goods of the Defendant. To avoid any such confusion, learned Counsel for the Respondent has made it absolutely clear that his client is willing to add the words "A Tata Enterprise" or words to the same effect above "Star Bazaar" in respect of its retail store in Delhi. In our opinion, once these words are added, it is unlikely that there would remain any confusion in the mind of any customer that the retail departmental store of the Respondent is the same as the retail departmental store of the Appellant. This by itself should dispel all doubts that any customer might have and should be adequate protection in so far as the Appellant is concerned.

22. However, learned Counsel for the Appellant submitted that the prior use of "Star Bazaar" by his client cannot be forgotten. We agree (and this was argued by learned Counsel for the Respondent on a demurrer) that the Appellant is a prior user of "Star Bazaar" and if another store by the same name is opened up by somebody else in another part of Delhi, it is likely to lead to a diversion of customers in the normal course of business. However, if it is made absolutely clear to those customers that the two stores are distinct entities having no connection with each other, even this likelihood of diversion will disappear. In our opinion, this can be achieved by the Respondent using the words "A Tata Enterprise" above "Star Bazaar" in its retail departmental store to be opened in Delhi."

(underlining added)

22. This was relied upon by Mr Sudhir Chandra to indicate that by

addition of the words, two similar marks can be easily distinguished so as

to enable the customers to differentiate the two products as having no

connection with each other and indicating that the sources of the two

products were different. In that case, the Division Bench was of the view

that the use of the words "A Tata Enterprise" above Star Bazar was

sufficient to distinguish the appellant from the respondent. Mr Sudhir

Chandra submitted that even when there was a similarity, the court directed

that the above words be added to bring about a distinction. But, in the

present case, even this is not necessary. The word "Intex" is already used

alongwith the word mark "AQUA" in respect of mobile phones.

23. Ms Pratibha M. Singh, in response to the added matter argument,

submitted that the issue was much more complex than what Mr Sudhir

Chandra made it out to be. There were the concepts of initial interest

confusion, reverse confusion as also the case that on facts, the present case

would not be one of added matter. Insofar as the concept of initial interest

confusion was concerned, reliance was placed on the decision of a Division

Bench of this court in the case of Shree Nath Heritage Liquor Pvt. Ltd and

Another v. Allied Blender and Distillers Pvt. Ltd: 2015 (63) PTC 551

(Del) (DB). In that decision, it was pointed out that confusion can be of the

following categories:-

        (1)     Point of Sale confusion;
        (2)     Post-sale confusion;
        (3)     Initial interest confusion, which refers to the confusion that

may be caused initially, that is, prior to purchase, but at the time of purchase of alleged infringer‟s / tortfeasor‟s product or using its service, the consumer is not confused;

(4) Reverse confusion. This occurs when consumers purchase the goods or use services of senior user thinking them to originate from the junior user. It was also noted in the said decision that when a person knows that the mark in question does not originate from the senior user but the senior user is called to mind, then it is a step before confusion. If on the other hand, the consumer is in a state of wanderment if there is a connection, this is confusion. It was further observed that if this consumer then purchases the junior user‟s product, this is then deception.

24. A reference was also made to a single Bench decision in the case of

Baker Hughes Limited v. Hiroo Khushalani: 1998 PTC (18) 580. In that

decision, a learned single Judge of this court noted that there could be an

informed class of purchasers, who had a degree of knowledge and a sense

of discrimination more substantial than that of ordinary purchasers, but the

mere fact that the consumers are sophisticated, knowledgeable and

discriminating does not rule out the element of confusion if the trade marks

/ trade names / corporate names of two companies were identical or if the

similarity between them was profound. It was further observed that in

several cases it has been held that initial confusion is likely to arise even

amongst sophisticated and knowledgeable purchasers under the mistaken

belief that the two companies using the same corporate name, trading name

or style are inter-related. Therefore, it does not matter if, after the initial

confusion, the same is removed and there does not exist any confusion at

the point of purchase.

25. The learned counsel also referred to McCarthy on Trade Marks and

Unfair Competition, 4th Edition (Thomson Reuters), wherein reverse

confusion has been dealt with as under:-

"23:10 Reverse confusion What is "Reverse Confusion"? The traditional pattern of classic "forward confusion" occurs when customers mistakenly think that the junior user‟s goods or services are from the same source as or are connected with the senior user‟s goods or services. Customers want to buy the senior user‟s product and because of the similarity of marks, mistakenly buy the junior user‟s product instead. In "reverse confusion," customers purchase the senior user‟s goods under the mistaken impression that they are getting the goods of the junior user. That is, reverse confusion occurs when the junior user‟s advertising and promotion so swamps the senior user‟s reputation in the market

that customers are likely to be confused into thinking that the senior user‟s goods are those of the junior user: the reverse of traditional confusion.

In a reverse confusion situation, rather than trying to profit from the senior user‟s mark, the junior user saturates the market and "overwhelms the senior user." "The result is that the senior user loses the value of the trademark, its product identity, corporate identity, control over its goodwill and reputation, and ability to move into new markets." The Second Circuit has said that: "Reverse confusion is the misimpression that the junior user is the source of the senior user‟s goods.... [C]onsumers may consider [the senior user] the unauthorized infringer, and [the senior user‟s] reputation and impair its goodwill."

A reverse confusion case is proven only if the evidence shows that the junior user was able to swamp the reputation of the senior user with a relatively much larger advertising campaign. As the Third Circuit remarked: "[T]he doctrine of reverse confusion is designed to prevent the calamitous situation we have here - a larger, more powerful company usurping the business identity of a smaller senior user."

Large Company Rolls Over Small Senior User. The archetypical case of reverse confusion occurs when the junior user is a larger company which, prior to its nationwide launch, discovers a small (usually regional) senior user with a very similar mark in a related field. Because the smaller senior user has only a relatively small group of customers, the large company may (mistakenly) think that there is no conflict because there will be only a local and minimal level of forward confusion. And the junior user has no intention of taking a free ride on the goodwill and reputation of the small, local user. So the junior user rolls out its new mark nationally, swamping the local recognition of the senior user. For example, assume the hypothetical senior user uses AUNTIE ISABELLA‟S as its mark for a chain of three small pizza restaurants in the vicinity of Seattle, Washington. Hypothetical national marketer Colossal Foods Inc. coincidentally chooses the mark AUNT ISABELLA‟ for its

new nationally distributed line of frozen pizza. Colossal Foods finds the senior user on a trademark search, but dismissing it as a tiny user with only local recognition, decides to launch nationally.

Forward confusion will be likely to occur only when people in Seattle who know of the local senior user first come into contract with the junior user‟s nationally advertised and distributed product and, because of the similarity of the marks, mistakenly think that the junior user is an offshoot or licensee of the senior user. Reverse confusion will be likely to occur when a person who only knows of the well-known junior user (e.g. a visitor from San Francisco) first comes into contact with the lesser-known senior user in Seattle and, because of the similarity of the marks, mistakenly thinks that the senior user is the same as or is affiliated or connected with the junior user. Simply put, when a large national company finds a conflicting mark of a small local user on a trademark search, it cannot simply go ahead and roll over the smaller senior user. To avoid the risk of losing a case of reverse confusion, Colossal Foods must either buy the senior user‟s mark or change to another mark.3"

26. Insofar as the issue of added matter is concerned, there is no doubt

that if the added matter is so prominent as to completely distinguish one

product from the other, then there would be no case for confusion whether

it be confusion proper or, initial confusion or reverse confusion. In the

present case, we find that the mark "Intex" is as prominent, if not more,

than the mark "AQUA" in the appellant‟s product packaging. This is also

evident from the images of the packaging employed by the parties as given

below:-

Or enter into an assignment with the senior user with a licence-back. See § 18:9.

         Front View        Side View         Back View
                     (Intex's packaging)




        Front View          Side View           Back View
                        (AZ Tech's Packaging)

27. Although the point of reverse confusion was taken up by the

respondents before us, in order to establish it there must be tangible

evidence to show that Intex being the alleged junior user of the mark

„AQUA‟ was able to swamp the goodwill and reputation of AZ Tech being

the alleged senior user of the said mark. Such evidence, even upon a prima

facie consideration, is lacking. As already pointed out above it has not even

been established that the respondents had goodwill in India. Moreover,

rather than being „swamped‟ the respondents‟ business in the mobile

phones has grown over the years.

28. Insofar as the question of initial interest confusion is concerned, that,

in our view, does not arise in the facts of the present case. The added

matter in the form of the word mark „INTEX‟ is so also prominent and

distinct as to dispel any chance of even an initial confusion.

29. Thus, following the decision in Kaviraj Pandit (supra), it is clear in

the present case which is one of passing off, the appellant / defendant

would escape liability inasmuch as the added matter is, in our view,

sufficient to distinguish the appellant‟s products from those of the

respondents.

III. Delay in filing the suit is also to be considered as a factor going towards disentitling the plaintiff to an injunction and at least to an ad interim injunction.

21. Mr Sudhir Chandra submitted that there was clear delay of at least 14

months in the filing of the suit from the date on which the appellant

launched its products under the mark "AQUA". During this period, the

respondents allowed the appellant‟s business to grow. A huge amount of

expenditure amounting to approximately Rs 27 crores was spent by the

appellants on TV Commercials, as already noted above. He submitted that

there was no explanation whatsoever for the delay, there was also no cease

and desist notice issued to the appellant by the respondents. A reference

was made to the decision of a learned single Judge of this court in BDA

Pvt. Ltd v. Paul P. John & Another: 152 (2008) DLT 405, which was

upheld by the Division Bench in FAO(OS) 347/2008, decided on

29.09.2008. The Division Bench held as under:-

"18. We need not note the plethora of authorities on the issue whether acquiescence or an inordinate delay in bringing an action for injunction can non-suit the plaintiff. We note the latest the pronouncement on the issue by the Hon‟ble Supreme Court being the decision reported as 2008 AIR SCW 4560 Khoday India Ltd. Vs. Scotch Whisky Asson. & Ors. It has been categorically held that where acquiescence is established or there is an inordinate delay in bringing an action for infringement of a trade-mark or passing off, the discretionary relief of injunction may be denied."

(underlining added)

22. The learned counsel for the appellant also referred to the decision of

the Supreme Court in the case of Power Control Appliances and Others v.

Sumeet Machines Pvt Ltd: 1994 (2) SCC 448. In that case, the Supreme

Court observed as under:-

"33. Now, we come to the principles in relation to the grant of interim injunction. The case in K.E. Mohammed Aboobacker v. Nanikram Maherchand and Anr. (1957 II MAD LJ 573 makes a reference to the case law and holds at page 574-75 as under:-

The principles which should govern the Court in granting or withholding a temporary injunction in trade-mark infringement actions are well-settled: See recent decision Henry Hemmings, Ltd. v. George Hemmings, Ltd (1951) 68 R.P.C. 47. As a temporary injunction is merely of a provisional nature and does not conclude the rights of the parties in any way, the Court will exercise its discretion in favour of the applicant only in strong cases. The plaintiff must make out a prima facie case in support of his application for the ad interim injunction and must satisfy the Court that his legal right has been infringed and in all probability will succeed ultimately in the action. This does not mean, however, that the Court should examine in detail the facts of the case and anticipate or prejudice the verdict which might be pronounced after the hearing of the suit or that the plaintiff should make out a case which would entitled him at all events to relief at the hearing. Colman v. Farrow & Co. (1898) 15 R.P.C. 198, Hoover, Ltd. v. Air-way Ltd. (1936) 53 R.P.C. 399, The Upper Assam Tea Company v.

Herbert and Co. (1890) 7 R.P.C. 183, Star Cycle Company, Ltd. v. Frankenburg (1906) 23 R.P.C. 337. In fact the Court will not ordinarily grant an

interlocutory injunction if a large amount of evidence is necessary to support the plaintiff's case. The proper course in such a case is to ask for the trial of the action. The injury must be actual or imminent. Pinel & Cle v. Mission Pinet, Ltd. (1895) 14 R.P.C. 933. Where the defendant disputes the plaintiff's title to the mark or contends that the plaintiff is not entitled to a relief by a reason of the acquiescence or delay or other estoppel or of the defendant's concurrent rights, the Court will be guided by the balance of inconvenience which may arise from granting or withholding the injunction as well as the justice of the cause after considering all the circumstances in the suit. In other words, where the plaintiffs title is disputed or the fact of infringement or misrepresentation amounting to a bar to the action or some other defence is plausibly alleged upon the interlocutory motion, the Court in granting or refusing the interim injunction is guided principally by the balance of convenience that is by the relative amount of damage which seems likely to result if the injunction is granted and plaintiff ultimately succeeds; Read Brothers v. Richardson and Co. (1881) 45 L.T. 54, Hommel v. Bauer & Co. (1903) 20 R.P.C. 801.

...It is necessary that an application for interlocutory injunction should be made immediately after the plaintiff becomes aware of the infringement of the mark. Improper and unexplained delay is fatal to an application for interlocutory injunction. The interim injunction will not be granted if the plaintiff has delayed interfering until the defendant has built up a large trade in which he has notoriously used the mark. North British Rubber Company, Ltd. v. Gormully and Jeffery Manufacturing Company (1894) 12 R.P.C. 17, Army and Navy Co-operative Society, Ltd. v. Army Navy and Civil Service Co-operative Society of South Africa Ltd. (1902) 19 R.P.C. 574, Hayward Bros. Ltd. v. Peakall (1909) 26 R.P.C. 89. Yost Typewriter Company ; Ltd. v. Typewriter Exchange Company (1902) 19 R.P.C. 422, Royal Warrant Holders' Association v. Slade & Co., Ltd. (1908) 25 R.P.C. 245."

23. From the above extract, it is evident that improper and unexplained

delay is fatal to an application for an interlocutory injunction and an interim

injunction is not to be granted if the plaintiff had delayed action until the

defendant had built-up a large trade in which he has notoriously used the

mark. Furthermore, the considerations where a defendant is yet to

commence his enterprise and where he has already done so, would be

different. This would be particularly relevant in the backdrop of delay in

filing the suit and in seeking an interlocutory injunction.

24. It was sought to be contended on behalf of the respondents that the

point of delay was not raised before the learned single Judge. However, in

any event, it was contended that, in fact, there was no delay. It was

submitted that till June 2013, there was no publicity of the appellant‟s

marks and the suit was filed in 2013. Reference was made to the decision

in Sumeet Machines (supra) as also to Cadila Pharmaceuticals Limited v.

Sami Khatib of Mumbai and Another: 2011 (47) PTC 69 (Bom.)(DB).

25. Upon considering the arguments on this aspect of the matter, we

would tend to agree with the submissions made by Mr Sudhir Chandra that

there was delay in filing the suit. In paragraph 17 of the amended plaint

itself, it was stated by the respondent / plaintiff that Intex had launched its

product in 2012. The suit was filed much later on 28.10.2013. During this

period, the appellant had sold phones under the mark "AQUA" to the extent

of Rs 200 crores. Approximately, Rs 27 crores had been spent on

advertisements and, particularly, the TV commercials featuring the famous

actor, Mr Farhan Akhtar. By 31.03.2013, the appellant had sold 1.75 lakh

phones under the mark "AQUA" and this number rose to 3.14 lakh phones

between 01.04.2013 and 13.11.2013. It, therefore, becomes clear that the

presence of the appellant in the market in India under the mark "AQUA"

was not insignificant. The respondent itself noted that the appellant (Intex)

had launched its product under the mark "AQUA" in 2012. There is no

explanation forthcoming as to why there was a delay of at least 14 months

in approaching the court. During this period, the business of the appellant

grew to a large extent. It was not as if the appellant was about to

commence the sale of its products under the word mark "AQUA" or that it

had just recently commenced such marketing. In fact, the appellant was in

the market and with a great deal of publicity. In this backdrop, the aspect

of delay attains a greater significance and, therefore, would disentitle the

respondent from obtaining an interlocutory injunction.

IV. The principles of grant of an interim injunction had not been considered in the correct light by the learned single Judge.

26. It was submitted on behalf of the appellants that one of the principles

of grant of interim injunction was to consider the injury that may be caused

to the defendant in case an injunction is granted. It was submitted that if

this was considered in the correct perspective, which the learned single

Judge did not do, the balance of convenience would be in favour of the

defendant / appellant and against the grant of an interlocutory injunction. It

was submitted that irreparable injury would be caused to the appellant as,

by the time the impugned judgment was passed, the sales of the appellant‟s

phones under the mark "AQUA" had attained massive proportions. As an

example, in 2015-16, the revenue from the sale of such phones was Rs

3193 crores and in 2016-17 till December, the sales were approximately Rs

2000 crores. Advertising costs till December 2016 in respect of the

products sold under the "AQUA" mark had gone up to Rs 250 crores. Even

on the date of filing of the suit, the appellants were in the market under the

mark "AQUA" in a big way. It was submitted that if the appellant is

injuncted, irreparable injury would be caused to it, whereas there would be

no corresponding injury to the respondent / plaintiff. In fact, it was

submitted that they even tried to ride piggy back on the goodwill and

reputation of the appellant by attempting to copy the font and style of the

word mark "AQUA", as already mentioned above. It was submitted that in

case the injunction is not granted, the respondent‟s phone under the mark

"AQUA" would sell even more.

27. Reliance was placed on para 9 of the decision of the Supreme Court

in Wander Limited & Another v. Antox India P. Ltd: 1990 (Supp) SCC

727. It reads as under:-

"Usually, the prayer for grant of an interlocutory injunction is at a stage when the existence of the legal right asserted by the plaintiff and its alleged violation are both contested and uncertain and remain uncertain till they are established at the trial on evidence. The court, at this stage, acts on certain well settled principles of administration of this form of interlocutory remedy which is both temporary and discretionary. The object of the interlocutory injunction, it is stated:

".... is to protect the plaintiff against injury by violation of his rights for which he could not adequately be compensated in damages recoverable in the action if the uncertainty were resolved in his favour at the trial. The need for such protection must be weighed against the corresponding need of the defendant to be protected against injury resulting from his having been prevented from exercising his own legal rights for which he could not be adequately compensated. The court must weigh one need against another and determine where the „balance of convenience lies‟."

The interlocutory remedy is intended to preserve in status quo, the rights of parties which may appear on a prima facie. The

court also, in restraining a defendant from exercising what he considers his legal right but what the plaintiff would like to be prevented, puts into the scales, as a relevant consideration whether the defendant has yet to commence his enterprise or whether he has already been doing so in which latter case considerations somewhat different from those that apply to a case where the defendant is yet to commence his enterprise, are attracted."

28. On the other hand, the learned counsel for the respondent submitted

that the principles of grant of injunction were considered by the learned

single Judge. The question of irreparable injury as well as of balance of

convenience were elaborately dealt with by the learned single Judge which

did not call for any interference.

29. We are of the view that while it is true that a larger company cannot

be permitted to run roughshod over a smaller company, who has been in the

market and is the senior user of a mark, at the same time, if the senior user

and smaller company permits the junior user and larger company to grow

rapidly and establish a huge market presence without any action on the part

of the senior user, if an injunction were to be granted at a belated stage, it

would amount to causing irreparable injury to the junior user (larger

company). The balance of convenience, when considered in the light of

delay, would be in favour of the junior user, that is, Intex.

V. The plaintiff's (AZ Tech's) conduct in copying the font and style of the logo used by Intex was clearly dishonest and would disentitle it to the equitable remedy of injunction.

30. The learned counsel for the appellant submitted that the conduct of

the respondent was dishonest on several counts. First of all, because of the

fact that the respondent had copied the font and style of the word mark

"AQUA" as used by the appellant. Secondly, the respondent‟s packaging

indicates "AQUA" as a registered trade mark by using the ® symbol, when,

in fact, the mark has not been registered in India. A reference was made to

Section 107 of the Trade Marks Act, 1999 which provides that if somebody

represents an unregistered mark as a registered mark, it would be an offence

punishable with upto three years imprisonment. The purported registration

of the mark "AQUA" in Hong Kong is an entirely different issue and the

same cannot be used in India. Thirdly, the sale invoices submitted by the

respondents were contested by the appellants. According to them, none of

the invoices show sales to a retailer or to individuals. It was pointed out

that many of the sales invoices were generated between 15.01 hrs and 15.04

hrs. However, we do not get into this issue of sale invoices as that is highly

debatable and would have to be established through evidence. It is

sufficient for us to note that the learned counsel for the appellant has raised

serious concerns about the sale invoices between the period 2009 to 2013

which have been filed by the respondents. A reference was made to Uniply

(supra) and, in particular, to paragraphs 7 and 8 thereof, which we have

already extracted above. It was submitted in that context that the question

of priority and prior user needs to be thrashed out in the trial. There must

not only be prior sales, but the sales must be substantial and continuous.

This, according to the learned counsel for the appellant, has not even been

established prima facie.

31. The learned counsel for the respondents submitted that insofar as the

issue of copying the font and style of logo are concerned, they had adopted

the Typeface Microgramma. However, there is no worthwhile explanation

forthcoming as to why during the pendency of the suit filed by the

respondents with regard to passing off of a product under the word mark

"AQUA", the respondents adopted the same font and style for the logo as

was being used by the appellants. Even before us, no explanation was

forthcoming. This leads us to believe that rather than the appellants, it were

the respondents, who were trying to come as close to the appellant‟s

products as possible so that they may ride on the appellants reputation and

goodwill. Insofar as the use of the ® symbol is concerned, no explanation,

other than stating that it was an honest mistake, has been offered.

32. We have already set out in tabular form the manner in which the font

and style of the appellants logo concerning the word mark "AQUA" was

copied by the respondent. We may point out that the respondent‟s logo at

the time when the suit was instituted, comprised of capital letters. On the

other hand, the appellant‟s logo was in small Caps. The font of the

appellant‟s logo was also different from that of the respondent‟s logo. But,

during the pendency of the suit, the respondents adopted exactly the same

logo in small caps style and font as that of the appellant‟s. Prima facie, this

would amount to a deliberate act of copying in an attempt to ride on the

reputation and goodwill of the appellant. We may also note that the mark

as registered and used in Hong Kong by the respondent No.2 is as under:-

33. The certificate of registration of the trade mark in Hong Kong is as

under:-

"CERTIFICATE OF REGISTRATION OF TRADEMARK Trade Marks Ordinance (Chapter 559)

I hereby certify that the Trade Mark with the following particulars has been entered in the register today:

        Trade Mark No.:                         302023730




        Mark :

        Mark Type:                              Ordinary

        Mark Description :                      The applicant claims the colours white,
                                                blue and red as elements of the trade
                                                mark
        Series Mark:                            No

        Owner(s)‟s Name,                        PEACE ZONE (HK) LTD
        Address:                                FLAT-603,6TH FLOOR, HARBOUR
                                                CENTRE, TOWER-2,
                                                8, HOK CHEUNG STREET, HUNG HOM,
                                                KOWLOON, HONGKONG

        Owner(s)‟s Address for                  PEACE ZONE (HK) LTD
        Service:                                FLAT-603,6TH FLOOR, HARBOUR
                                                CENTRE, TOWER-2,
                                                8, HOK CHEUNG STREET, HUNG HOM,
                                                KOWLOON, HONGKONG

        Class(es) & Specification(s): Class 9
                                                Mobile phones and their accessories

        Disclaimer:                             N/A"
                                                             (underlining added)

34. This certificate makes it is clear that the respondent No.2 claimed the

colours white and blue and red as elements of the trade mark. The mark

and logo as used by the respondents in India was in the colours silver on

blue. In other words, "AQUA" was written in silver with a blue

background and it was in the same font and style as that of the mark

"AQUA" used by the appellant. Thus, it is apparent that not just the words

and the font style, but all the elements of colour were changed in order to

adopt the appellant‟s logo. So, far from the respondent establishing, even

prima facie, a case of passing off against the appellants, it appears to be the

other way round. Apart from this, the conduct of the respondents in using

the ® symbol and adopting the font and style of the appellant‟s logo has not

been honest, to say the least.