Delhi High Court
Sandisk Llc vs Raj Enterprises & Anr. on 26 November, 2018
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CS(COMM) 990/2018 & I.A. No. 15226/2018
SANDISK LLC ..... Plaintiff
Through Mr. Prithvi Singh, Advocate
versus
RAJ ENTERPRISES & ANR. .....Defendants
Through None.
% Date of Decision: 26th November, 2018
CORAM:
HON'BLE MR. JUSTICE MANMOHAN
JUDGMENT
MANMOHAN, J: (Oral)
I.A. 15226/2018
1. Present application has been filed under Order VIII Rule 10 read with
XIII-A Rule 2 read with section 151 of the Code of Civil Procedure, 1908,
for summary judgment.
2. It is pertinent to mention that the present suit has been filed for
permanent injunction restraining infringement of trade mark, copyright,
passing off, rendition of account of profits, damages and delivery up. The
prayer clause in the present suit is reproduced hereinbelow:-
"47. In the light of the foregoing, it is most respectfully prayed
that this Hon‟ble Court may be pleased to issue:
a) An order for permanent injunction restraining the
Defendants, their proprietors/ partners, servants, agents
and all others in active concert with them from
manufacturing, marketing, offering for sale, selling,
advertising, directly or indirectly dealing in any product
bearing the Plaintiff‟s registered trademarks „SanDisk‟,
the logo, „Cruzer Blade‟ and the „Red
Frame Logo‟ and/or any mark/s confusingly or
deceptively similar thereto, amounting to infringement of
the Plaintiffs‟ registered trademarks as are mentioned in
Paragraph 15 of the Plaint.
b) An order for permanent injunction restraining the
Defendants, their partners/proprietor, servants, agents
and all others in active concert with them from
manufacturing, selling, offering for sale, advertising,
directly or indirectly dealing in product packaging
identical or deceptively similar to the product packaging
of the Plaintiffs‟ products bearing the registered
trademarks „SanDisk‟, „Cruzer Blade‟, the
logo and the „Red Frame Logo‟
amounting to infringement of copyright of the Plaintiffs in
the said product packaging.
c) An order for delivery up to the Plaintiffs by the Defendants
of all infringing goods, advertising material, blocks, dies
etc. bearing the Plaintiff‟s trademarks and/or product
literature that appears on its packaging for the purposes
of erasure/destruction.
d) An order for rendition of accounts of profits directly or
indirectly earned by the Defendants from their wrongful
conduct and infringing activities and a decree for the
amount so found due to be passed in favour of the
Plaintiffs.
e) A sum of Rs.1,00,01,000/- for a decree of damages as
valued for the purposes of this suit towards loss of sales,
reputation and goodwill of the Plaintiffs‟ trademarks
caused by the activities of the Defendants;
f) An order as to the costs of the proceedings;
g) Any further order as this Hon‟ble Court may deem fit and
proper in the facts and circumstances of the case."
3. Vide order dated 05th July, 2018 this Court granted an ex parte ad
interim injunction in favour of the plaintiff and against the defendant. The
relevant portion of the ex-parte injunction order is reproduced herein
below:-
"Consequently, till further orders, the defendants, their
proprietors, partners, servants, agents and all others in active
concert with them are restrained from manufacturing,
marketing, selling, offering for sale, advertising, directly or
indirectly dealing in any product or any product packaging
bearing the plaintiffs‟ registered trademarks SanDisk, the
logo, „Cruzer Blade‟ and the Red Frame Logo
and/or any mark/s confusingly or deceptively similar in any
manner whatsoever."
4. On 05th July, 2018, this Court also appointed two Local
Commissioners. During the local commissions, the defendant nos. 2 to 4
were found selling counterfeit products infringing the plaintiff‟s trademark.
Vide order dated 30th August, 2018, they were impleaded as defendants.
5. Vide order dated 30th August, 2018 the defendant no.1 was proceeded
ex-parte. Since none appeared for the defendant nos. 2 to 4 despite service,
they were proceeded ex-parte on 31st October, 2018.
6. The contentions and submissions advanced by learned counsel for the
plaintiff are as under:-
i. It is stated in the plaint that the plaintiff no.1 is a company founded in
1998 and is one of the world's largest dedicated provider of flash
memory storage solutions under the mark SanDisk and has been
directly selling its products in the Indian market since 2005. The
plaintiff no.1 designs, develops and manufactures data storage
solutions in a range of form factors using the flash memory, controller
and firmware technologies. It is stated that the plaintiff no.2 is the
wholly owned subsidiary of the plaintiff no.1 and is the registered
user of the trademarks „SanDisk‟ the logo and the
Red Frame Logo.
ii. It is stated in the plaint that the plaintiff no 1‟s pioneering flash
memory technologies, which are marketed directly to retail consumers
and enterprises as well as to other equipment makers, are integrated
into and/or used in a wide range of consumer electronic devices, i.e.
mobile phones, tablets, digital cameras etc. It is further stated that
approximately 3,00,000 storefronts worldwide stock and sell the
plaintiffs‟ products and the plaintiffs spend hundreds of millions of
dollars in Research and Development of their products and on
advertising.
iii. It is stated in the plaint that the plaintiffs possess both common law
trade mark rights as well as trade mark registrations for the mark
SanDisk in more than 150 countries worldwide. It is stated that the
plaintiffs are also the registered proprietor of both, a variety of word
marks and device marks in India, including the logo
and the Red Frame logo, since 2013 and 2009 respectively, under
Class 9 of the Trade Marks Act, 1999 and all these trademarks are
valid and subsisting.
iv. It is averred in the plaint that the plaintiff no.1 sells its memory cards
in a unique packaging and some of the key elements which are
common to its product packaging are reproduced hereinbelow:
A. Red product packaging with white lettering.
B. "Red Frame Logo" which describes the capacity of the memory
card, on the top right corner.
C. The logo in a unique font with white lettering
prominently at the bottom.
v. Learned counsel for the plaintiff states that in June 2018, it came to
the knowledge of the plaintiffs‟ that unauthorised third parties, were
marketing and selling counterfeit microSDHC cards and USB flash
drives bearing identical trademarks and packing as the plaintiffs‟
products.
vi. Learned counsel for the plaintiffs states that the plaintiffs deputed an
investigator to carry out an investigation in the Koti area of
Hyderabad, to ascertain the identity of the unauthorised
manufacturers/wholesalers/retailers who were engaged in the
manufacture, marketing and sale of counterfeit microSDHC cards and
USB flash drives. She states that the investigator noticed that the
premises of defendant no.1 contained large quantities of counterfeit
„SanDisk‟ and „Cruzer Blade‟ products (microSDHC cards and USB
flash drives). She states that the investigator also purchased some
samples of the memory cards. She further states that the investigator
also found infringing goods at another shop belonging to defendant
no.1 in the same locality. She states that the analysis of the sample
products purchased from defendant no. 1 were confirmed to be
counterfeit products. A photographic comparison of the plaintiffs‟
and defendants‟ products is reproduced hereinbelow:-
vii. Learned counsel for the plaintiffs states that the following features
further make it apparent that the aforesaid products of the defendant
no.1 are pirated/counterfeit:-
a. Low quality printing-Images featured on the product packaging
of both the microSDHC cards and the USB flash drives of
defendant no.1 are less sharp and the colour quality both on the
front and back of the said packaging has been heavily
compromised.
b. Poor quality packaging of defendant no.1‟s products, easily
flips open and does not tear on opening.
c. The blister package of the counterfeit microSDHC cards are not
properly packed in new cling film packing like the microSDHC
cards of the plaintiffs. Likewise, the counterfeit USB flash
drives of defendant no.1 also have cheap quality blister
packaging because of which the USB flash drives are not
properly fitted into the packaging.
d. The counterfeit 16 GB microSDHC cards of the defendant no.1
come in simple plastic packaging where the memory card is
kept in place by an ordinary paper strip bearing adhesive.
Likewise, the counterfeit USB flash drives of defendant no.1
also has simple packaging. The plastic packaging of both the
counterfeit 16 GB microSDHC cards and USB flash drives do
not contain the unique code/serial number and symbols as are
borne on the plaintiffs‟ products.
e. Key elements and information as contained on the original and
genuine product packaging of the plaintiffs are missing in the
defendants‟ counterfeit products.
f. Lastly the lettering, font and colour featured on the counterfeit
products of defendant no.1 are different from the one borne on
the plaintiffs‟ original products.
viii. Learned counsel for plaintiff states that the total value of goods seized
during the local commission from the premises of the defendant no.1
was Rs.33,250/-, from the defendant no. 2 was Rs 60,700/-, from the
defendant no.3 was Rs 7,600/- and from the defendant no.4 was
Rs 2,400/-.
7. The plaintiffs have filed their ex parte evidence by way of affidavit of
Mr. Vishal Vig (PW1) the Constituted Attorney of the Plaintiffs. In his
affidavit, PW1 has deposed as under:-
"a) Actual lost sales:
If the quantity seized by the local commissioner is the stock for 15
days (considering the fast-moving nature of the products), and each
of the Defendants have been doing business for at least 3 months
prior to the institution of the present suit and the grant of the ex parte
ad interim injunction by this Hon‟ble Court, the actual value of the
Defendants' products have been computed below: -
Particulars of Price of Quantity Total Cost
Products Original discovered
product during the
Local
Commission
8 GB Pen Drive 350 3 1050
16 GB Pen 500 2 12,000
Drive
Drive
8 GB microSD 350 7 2,450
16 GB microSD 500 18 9,000
32 GB microSD 600 13 7,800
Total 66 33,250
The value of stocks for 3 months would be Rs. 33,250 x 6 =
Rs. 1,99,500
Defendant No. 2.
Particulars of Price of Quantity Total Cost
Products Original discovered
product during the
Local
Commission
16 GB Ultra 700 33 23,100
microSD
32 GB Ultra 800 47 37,600
microSD
Total 80 60,700
The value of stocks for 3 months would be Rs. 60,700 x 6 =
Rs.3,64,200/-
Particulars of Price of Quantity Total Cost
Products Original discovered
product during the
Local
Commission
64 GB Ultra 1,900 4 7,600
microSD
Total 4 7,600
The value of stocks for 3 months would be Rs. 7,600 x 6 = Rs.45,600/-
Particulars of Price of Quantity Total Cost
Products Original discovered
product during the
Local
Commission
32 GB Pen 800 3 2,400
Drive
Total 3 2,400
The value of stocks for 3 months would be Rs. 2,400 x 6 =
Rs. 14,400/-
b) Additionally, the Plaintiffs pray for damages of Rs. 93,76,300
for the following heads:
- Loss of business due to confusion and deception of its
customers
- Loss of confidence and trust of customers owing to poor
quality of the Defendant‟s products.
- Loss of "image" among members of the trade as the
Plaintiffs‟ goodwill as the Plaintiffs have no control over the
production.
Loss of the confidence or trust of the customers of the Plaintiffs and
its subsidiaries in genuine products of the Plaintiffs, as a consequence
of having placed undue reliance on the inferior quality, spurious
merchandise being marketed by the Defendants in identical
packaging.
14. Actual cost of litigation
The actual costs of litigation in the matter is Rs. 10,88,731.42.
The detailed Statement of costs, showing the breakdown of
costs is filed in the present proceedings and I crave leave to
exhibit the same as Ex. PW 1/5."
8. This Court is of the view that due to extensive use, the plaintiffs‟ mark
SANDISK, and Red Frame logo have acquired reputation
and goodwill globally as well as in India.
9. Keeping in view the pleadings, documents as well as evidence on
record, this Court is also of the view that the defendants are using the
registered trade mark SANDISK of the plaintiffs and its product packaging
to sell counterfeit products with a view to trade upon and benefit from the
reputation and goodwill of the plaintiffs‟ mark and pass off its services as
that of the plaintiffs.
10. Consequently, the allegation that the trademark SANDISK,
and Red Frame logo used by defendant amounts to
infringement of plaintiffs‟ trademarks is correct. The use of the plaintiffs‟
mark by the defendants is bound to cause incalculable losses, harm and injury
to the plaintiff and immense public harm.
11. Coordinate Benches of this Court in M/s General Electric Company v.
Mr. Altamas Kha & Others CS(OS) No. 1283/2006 decided on 18.12.2008
and Microsoft Corporation v. Yogesh Papat & Anr. 118 (2005) DLT 580
have granted compensatory damages based on certain assumptions of sales.
The relevant portions of the said judgments are reproduced hereinbelow:-
A) M/s General Electric Company v. Mr. Altamas Kha & Others
CS(OS) No. 1283/2006 decided on 18.12.2008:
"13. The next question which arises is of the claim of the
plaintiff for damages. The Chartered Accountant engaged by the
plaintiff by his unrebutted evidence assessed the loss caused to the
plaintiff to be of Rs.25 lac. The claim for damages in the plaint
was however confined to Rs.20 lac only. As aforesaid, 23
Dehumidifiers were seized by the court commissioner from the
premises of the defendants and were left in the superdari of the
defendant No.1... The evidence of the plaintiff shows that the
defendant was selling each Dehumidifier for approximately
Rs.25,000/-. The defendant avoided to show his books of accounts
also. From large consignment of 23 Dehumidifiers seized from the
premises of the defendants, it is apparent that the defendant No.1
was dealing in large volumes. The cost of the Dehumidifiers to the
defendants has not been established but considering that in the
last few years, the return on investments in stocks and mutual
funds itself has been in excess of 15%, it can safely be assumed
that the defendants would be carrying CS(OS) No.1283/2006
Page 9 of 10 on business for returns in excess of return on
investments in stocks and mutual funds. Following the said
principle I assume that the defendants had a margin of 22 to 25%
at least on each Dehumidifier i.e. of over Rs.5,000/- on each
Dehumidifier. On this basis I consider the award of damages in
the sum of Rs.10 lacs as appropriate.
B) Microsoft Corporation v. Yogesh Papat & Anr. 118 (2005) DLT
580:
"6. Plaintiff has also affidavit by way of evidence of Shri
Sanjiv Sharma, a Chartered Accountant. Said evidence brings on
record and proves the following:
xxxx xxxx xxxx xxxx
(iii) On the assumption that the defendant sell approximately 100
computers a year, which is purely assumptive, on the further
assumption that keeping in view the operating systems Windows
1998, 400 computers would be loaded with said system, lesser
sales of the other software, assumption would be that 200
computers and 20 computers respectively were loaded with the
Software Office 2000 STD and Visual Studio 6.0, on the cost per
unit of the licensed software estimated loss of business to the
plaintiff comes to Rs. 64 lacs.
xxxx xxxx xxxx xxxx
12. Though assumptive i.e. based on the assumption of sale of
100 computers each year and on the basis of the popularity of the
computer software, as also sold computers being loaded with the
pirated software, loss of profit to the plaintiff in sum of Rs. 19.75
lacs stands established.
13. It may be true that the financial loss is based on certain
assumption, but it cannot be helped for the reason the defendant
has chosen to remain ex parte."
12. Consequently, the suit is decreed in favour of the plaintiffs and
against defendants in terms of para 47(a) and (b) of the plaint along with
costs. The costs shall amongst others include the lawyers‟ fees as well as the
amounts spent on purchasing the court fees. The Bill of Cost already filed by
the plaintiff shall be scrutinised by the learned Registrar. The plaintiff is also
held entitled to compensation of Rs. 1,99,500/- to be paid by the defendant
no.1, Rs 3,64,200/- by the defendant no.2, Rs 45,600/- by the defendant no.3
and Rs. 14,400/- by the defendant no. 4.
13. However, keeping in view the judgments of this Court in Super
Cassettes Industries Private Limited v. HRCN Cable Network 2017 (72)
PTC 556 [Del] and in Hindustan Unilever Limited Vs. Reckitt Benckiser
India Limited, 2014 (57) PTC 495 [Del] [DB], this Court is of the opinion
that the plaintiffs are not entitled to any punitive damages.
14. The defendants shall hand over the goods seized by the Local
Commissioners to an authorised representative of plaintiffs for destruction
within three weeks.
15. Registry is directed to prepare a decree sheet accordingly.
Accordingly, the present suit stands disposed of.
MANMOHAN, J
NOVEMBER 26, 2018
mn/rn
