Delhi High Court
Koninlijke Philips N.V. & Anr. vs Amazestore & Ors. on 22 April, 2019
$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CS(COMM) 737/2016 & I.A. 7469/2016
KONINLIJKE PHILIPS N.V. & ANR. ..... Plaintiffs
Through: Mr. Pravin Anand with
Ms. Vaishali Mittal, Mr. Siddhant
Chamola, Ms. Vrinda Gambhir,
Advocates
versus
AMAZESTORE & ORS. ..... Defendants
Through: None
AND
+ CS(COMM) 1170/2016 & I.A. 2685/2017, 16768/2018
KONINLIJKE PHILIPS N.V. & ANR. ..... Plaintiffs
Through: Mr. Pravin Anand with
Ms. Vaishali Mittal, Mr. Siddhant
Chamola, Ms. Vrinda Gambhir,
Advocates
Versus
AMITKUMAR KANTILAL JAIN & ORS. ..... Defendants
Through: None
Reserved on: 08th April, 2019
% Date of Decision: 22nd April, 2019
CS(COMM) 737/2016 & CS(COMM) 1170/2016 Page 1 of 48
CORAM:
HON'BLE MR. JUSTICE MANMOHAN
JUDGMENT
MANMOHAN, J:
BACKGROUND
1. Present suits have been filed seeking decree of damages as well as
permanent injunction restraining violation of multiple statutory and
common law rights, namely:
a. Piracy of registered design number 253140 in CS(COMM) 737 of
2016. The prayer clause 49(i) of the said plaint is reproduced
hereinbelow as the Plaintiffs have not pressed their reliefs for delivery
up and rendition of accounts.:-
―49. In light of the above, it is therefore prayed before this
Hon'ble Court that it may be pleased to pass the following
reliefs:-
(i) An order for permanent injunction restraining the
Defendants, their partners or proprietors, principal
officers, servants, agents, distributors and all others acting
on its behalf as the case may be from manufacturing,
selling, offering for sale, advertising, directly or indirectly
dealing in any manner with health and personal care
appliances products and/or any other goods and/or
services (including on their own websites as well as third
party websites) resulting in :
(a) Infringement of the Plaintiff's design number 253140 as
set out hereinabove;
(b) Unfair competition on part of the Defendants as set out
hereinabove;‖
b. Infringement of copyright and passing off of the trade-dress in
CS(COMM) 1170 of 2016. The prayer clause 50(i) of the said plaint is
reproduced hereinbelow as the Plaintiffs have given up their reliefs of
delivery up and rendition of accounts as prayed for in paragraph 50(ii)
and (iii) of the plaint:-
―50. In light of the above, it is therefore prayed before this
Hon'ble Court that it may be pleased to pass the following
reliefs:-
(i) An order for permanent injunction restraining the
Defendants, their partners or proprietors, principal
officers, servants, agents, distributors and all others acting
on its behalf as the case may be from manufacturing,
selling, offering for sale, advertising, directly or indirectly
dealing in any manner with health and personal care
appliances products and/or any other goods and/or
services (including on their own websites as well as third
party websites) using the Plaintiff's trade dress, copyright
and any other mark deceptively similar thereto leading to:
Infringement of the Plaintiff's copyright as set out
hereinabove;
Passing off of the defendants' impugned products
as belonging to the Plaintiff by using trademarks, trade
dress and copyright which are identical and/or
deceptively similar to the Plaintiff's trademarks, trade
dress and copyright as set out hereinabove;
Unfair Competition on part of the Defendants as
set out hereinabove;
2. On 18th March, 2019, with consent of the parties, present two suits,
being Koninklijke Philips N.V. &Anr. vs Amitkumar Kantilal Jain &Ors.,
CS (COMM) 1170/2016 and Koninklijke Philips N.V. & Anr. vs Amaze
Stores &Ors., CS (COMM) 737/2016, were consolidated.
3. Additionally, on the said date, this Court passed consensual decrees
in both the suits against the contesting Defendants, i.e. Amitkumar Kantilal
Jain, Nova Homes Appliances Pvt. Ltd., Nova Marketing Group, Amaze
Stores, Mr. Hitesh Lunawath, Mr. Raju Lunawath, Million Lights and Mr.
Ramesh Chand. The relevant portion of the order dated 18th March, 2019 is
reproduced hereinbelow:-
―Mr. H.P. Singh, learned counsel for Amitkumar Kantilal Jain
and Nova Homes Appliances Pvt. Ltd. states that the names of
his clients have wrongly been mentioned on the products by way
of a sticker by defendant no.7. He further states that he has no
objection if CS(COMM) No.1170/2016 and CS(COMM)
No.737/2016 are decreed in accordance with 50 (i) and 49 (i) of
the plaints respectively.
Learned counsel for Nova Marketing Group, Amaze Stores, Mr.
Hitesh Lunawath, Mr. Raju Lunawath, Million Lights and Mr.
Ramesh Chand states that his clients tender their unconditional
apology and are agreeable to pay consolidated costs of
Rs.2,50,000/- in both the suits.
In view of the aforesaid statement, learned counsel for the
plaintiffs states that he does not wish to press the present suits
for any other and/or further relief against the aforesaid
defendants. He further states that the costs be used for a
charitable purpose.
The statements made by learned counsel for Amitkumar Kantilal
Jain and Nova Homes Appliances Pvt. Ltd., Nova Marketing
Group, Amaze Stores, Mr. Hitesh Lunawath, Mr. Raju
Lunawath, Million Lights and Mr. Ramesh Chand are accepted
by this Court and the said defendants are held bound by the
same. Registry is directed to prepare a decree sheet
accordingly.
It is further directed that the costs of Rs.2,50,000/- shall be
deposited with AIIMS Poor Fund Account No.10874588424
with SBI, Ansari Nagar, New Delhi (IFSC Code :
SBIN0001536) within a period of two weeks.
In view of the above, present suit stands disposed of qua
Amitkumar Kantilal Jain and Nova Homes Appliances Pvt. Ltd.,
Nova Marketing Group, Amaze Stores, Mr. Hitesh Lunawath,
Mr. Raju Lunawath, Million Lights and Mr. Ramesh Chand.‖
4. Presently, the two suits survive against the remaining Defendants
who have been identified as the primary sources of infringing products in
India. The particulars of these Defendants in the two proceedings are as
follows:-
Name of the Impugned Particulars in Particulars in
Defendant activity CS (COMM) CS (COMM)
1170 of 2016 737of 2016
Nova Manufacture of Defendant No. 4 Defendant No. 8
Manufacturing the infringing
Industries product
Limited
Badri Electro Parent company Defendant No. Defendant No.
Trading Manufacturing
Company Industries
(BESTCO)
Owner of the
L.L.C.
trademark
NOVA
Omni Exim Importer and Defendant Defendant
the infringing
product
5. It is pertinent to mention that injunction orders had been passed
against Defendant-Nova Manufacturing Industries Limited (NOVA) in
both suits, vide orders dated 20th October, 2015 and 03rd June, 2016 by the
learned Predecessor of this Court. The right to file the written statement of
M/s Nova Manufacturing Industries Limited (NOVA) in CS(COMM)
737/2016 was closed vide order dated 18th April, 2018 and it was
proceeded ex parte in FAO(OS) 578/2015 vide order dated 28th January,
2016.
6. Since the Defendants-M/s Badri Electro Supply and Trading
Company (BESTCO) LLC. and M/s Omni Exim Private Limited
voluntarily did not enter appearance in both the proceedings they were
proceeded ex parte vide orders dated 09th January, 2019 and 18th March,
2019. M/s Nova Manufacturing Industries Limited (NOVA) is also
proceeded ex parte.
7. On 25th March, 2019, this Court allowed the Plaintiffs' applications
to amend its claim under Order VI Rule 17, Code of Civil Procedure, 1908,
(hereinafter referred to as "CPC") with respect to the surviving Defendants
and its claims for damages.
8. On the aforesaid date, this Court also took Plaintiffs' evidence by
way of affidavit(s) on record.
ARGUMENTS ON BEHALF OF THE PLAINTIFFS
9. Mr. Pravin Anand, learned counsel for the Plaintiffs advanced the
following contentions and submissions:-
I. The Plaintiffs are electronic conglomerate of immense global repute.
In the past hundred years, the Plaintiffs have revolutionized the
world with path breaking innovations and unprecedented consumer
products.
II. The Plaintiffs have instituted the present suits to protect and enforce
their statutory and common law rights in relation to their products,
QT4000, QT4001, QT4005, QT4006 and QT4011, forming part of
the Advanced Beard Trimmers series 3000.
III. The packaging for its Advanced Beard Trimmer Series 3000 consists
of several unique elements inter alia the design, layout, color
scheme, as depicted below:
# Characteristic Feature
1. Rectangular shaped box
Blue colored background theme of the box (light blue in the
2. middle and dark blue near the top and bottom)
Thin white strip near the top of the box with trademark
3. written in blue font
4. Trademark written in blue font
5. Product description against white, black, orange and silver
backgrounds
Circular bubble on the lower right side of the beard trimmer
6.
Shaded rectangular box with the words "Face Style" in
7. orange.
IV. These Advanced Beard Trimmer range of products is sold along with
product literature containing artistic and literary work, the copyright
of which subsists with the Plaintiffs. The packaging for the
Plaintiffs' beard trimmer series was designed by one Mr. M.S.
Sutton, who was an erstwhile employee of a group company of the
Plaintiffs in Netherlands and was subsequently transferred to it by
virtue of a deed of assignment.
V. The literary work, artistic work and the photographs in the Plaintiffs'
product literature and promotional material and packaging fall within
the meaning of Sections 2(c), 2(o) and 2(s) of the Copyright Act,
1957 respectively. By virtue of Sections 13 and 14 of the Copyright
Act, 1957, Plaintiffs are entitled to the exclusive rights in the
copyright vested in the literary work, artistic work, etc. as well as the
packaging of the product, which has been developed and sold by the
Plaintiffs.
VI. The Plaintiffs have been granted and have since been enjoying
protection over the design of the beard trimmer forming part of its
design registration No. 253140 dated April 12, 2013 that is valid and
subsisting.
VII. The Defendants are engaging in the manufacture, advertisement,
export, import etc. of beard trimmers under the trademark NOVA.
The Plaintiffs are aggrieved with the fact that the Defendants'
trimmers are an imitation of the shape and configuration of the beard
trimmers for which the Plaintiffs enjoy the abovementioned design
registration.
VIII. Besides gaining customers on account of the fact that the
Defendants' trimmers closely resemble the Plaintiffs' trimmers; the
Defendants also solicit customers by adopting a packaging which is
deceptively similar to the packaging of the Plaintiffs' trimmers.
IX. The Defendants are members of a systematic, international criminal
syndicate and are reaping profits at every stage at which the
Defendants commercialize their beard trimmers. This is evident from
the following graphical representation:
X. The fact that the Defendants are reaping gross profits and enjoy a
very sumptuous and rich financial position is evident from the
following:
a. M/s Badri Electro Supply and Trading Company (BESTCO)
LLC. is the owner of the brand NOVA, and is
situated in Dubai, U.A.E.;
b. The infringing products also specify the name of M/s Nova
Manufacturing Industries Limited as the manufacturer of the
infringing products. In fact, all products manufactured by the
Nova Manufacturing Industries bear the trademark NOVA;
c. That Nova Manufacturing Industries Limited, situated in Hong
Kong is the "branch office" of M/s Badri Electro Supply and
Trading Company (BESTCO) LLC.;
d. M/s Badri Electro Supply and Trading Company (BESTCO)
LLC. and M/s Nova Manufacturing Industries Limited (NOVA)
group export their products to several countries and regions such
as CIS, GCC, Africa, India, Eastern Europe, Pakistan, India,
Bangladesh;
e. M/s Badri Electro Supply and Trading Company (BESTCO)
LLC. has three offices overseas (including China and Austria)
and seven showrooms;
f. M/s Badri Electro Supply and Trading Company (BESTCO)
LLC's operations commenced in 1975 and have expanded ever
since;
g. The Nova Manufacturing Industries Limited started operations in
1996 in the field of consumer electronics.
XI. The vastly spread and profitable network employed by the
Defendants is also evident from the fact that M/s Badri Electro
Supply and Trading Company (BESTCO) LLC. and Nova
Manufacturing Industries engage at least seventeen importers and
twenty-one importers/resellers to market their infringing NOVA
trimmers in India alone. Response to the questionnaire under Order
X CPC by the erstwhile contesting Defendant no.7 establishes that
the previous contesting Defendants used to purchase the infringing
products from M/s Omni Exim Private Limited at least since 2017
and from other entities since 2013.
XII. M/s Badri Electro Supply and Trading Company (BESTCO) LLC.
purposefully evaded and chose not to appear in the present
proceedings, though its subsidiary/branch office Nova
Manufacturing Industries Limited was already arrayed as a party in
the proceedings and several of its importers were also contesting the
proceedings.
XIII. The Defendants have been clandestinely changing the model
numbers of trimmers which violate the rights in the trade-dress of the
Plaintiffs' beard trimmers. As a result, the Defendants have
continued to sell trimmers which violate the Plaintiffs' rights under
different model numbers, solely to escape being detected easily. This
is evident from the following:
a. On 9th October, 2015 [at the time of institution of the lawsuit]-
The Defendants' sold their trimmers under NOVA NHT 4000
Trimmer for Men;
b. On 28th February, 2017 - The Defendants' sold their trimmers
under the new model number Nova NHT 1085 Professional
Trimmer (subject matter of I.A. 2685/2017);
c. On 03rd July, 2018 - The Defendants' sold their trimmers under
the new model numbers Nova NHT 1071 Professional Trimmer
and Nova NHT 1072 Professional Trimmer.
XIV. Since the Nova Manufacturing Industries Limited continued to
violate the injunction orders passed by this Court, restraining further
violation of the trade-dress of the Plaintiffs' trimmers, the Plaintiffs
filed an application, being I.A. 2685 of 2017 under Order 39 Rule 2A
of the CPC, 1908) highlighting the wilful contempt conducted by the
said Defendant.
XV. The misconduct of the Defendants in the present proceedings is
manifold and can be classified under various heads. At the outset,
the Defendants calculated the massive profits that they will earn by
violating the rights of the Plaintiffs. These profits will be negligible
in comparison to the quantum of damages that the Defendants
expected to be awarded against them. These Defendants were aware
of the lawsuit against them and the monetary claim of damages
contained in the plaint.
XVI. The Defendants have violated the rights vested in multiple aspects of
the Plaintiffs' intellectual property. The Plaintiffs instituted two civil
suits before this Court alleging infringement of such rights.
(i) CS (COMM) 1170 of 2016 is in relation to the imitation of trade-
dress of the Plaintiffs' products, as well as infringement of copyright.
The Defendants' actions were so unabashed that they imitated each
and every word on the Plaintiffs' product-description. This resulted
in the advertisements of the Defendants' products stating that they
were "Philips' trimmers".
(ii) CS (COMM) 737 of 2016 - These proceedings have been initiated
alleging piracy of registered design as vested in the Plaintiffs' beard
trimmers.
XVII. The Defendants have slavishly copied the photograph of the model,
the copyright of which is owned by the Plaintiffs and have merely
replaced the Plaintiffs' beard trimmer with the Defendants' hair
trimmer. The extent of the Defendants' imitation is evident from the
fact that the product description which accompanies the Plaintiffs'
beard trimmer series also has the Plaintiffs' registered trademark
PHILIPS mentioned in the product literature. This fraudulent
imitation is evidenced by the following:
Plaintiff's original photographs Photographs used by the
Defendant
(Defendants' Literature)
(Product Description)
XVIII. The Defendants have imitated the entire shape of the container, the
color scheme employed, the manner of description of the product's
specifications etc. from that of the Plaintiffs' Advanced Beard
Trimmer range of products.
XIX. The infringing products which are manufactured by M/s Nova
Manufacturing Industries Limited (NOVA) and M/s Badri Electro
Supply and Trading Company (BESTCO) LLC. are imported by M/s
Omni Exim Private Limited and other entities which reveals that the
said actions of the Defendants amount to a clear infringement of
copyright owned by the Plaintiffs. The comparison chart reveals the
multiple instances of imitation by the Defendants of the Plaintiffs'
product as shown below:
Plaintiff's original Photographs used by the
photographs Defendant 400 series
1. Rectangular shaped box
2. Blue colored background
theme of the box (light blue
in the middle and dark blue
near the top and bottom)
3. Thin white strip near the
top of the box with
trademark written in blue
font
4. Trademark written in blue
font
5. Product description against
white, black, orange and
silver backgrounds
6. Circular bubble on the
lower right side of the
beard trimmer
Shaded rectangular box
7. Shaded rectangular box
with the words "Hair Style"
with the words "Face
Style" in orange. in orange .
XX. These comparison charts confirm Defendants mala fide intention to
piggy back upon the immense goodwill and reputation vested in the
Plaintiffs' advanced beard trimmer range of products. The
Defendants have commercialized their infringing trimmers under a
deceptively similar trade-dress under model numbers NHT 1071,
NHT 1072 and NHT 1085.
XXI. The reproduction of artistic and literary work, photographic work
and the use of a deceptively similar trade-dress in relation to the
same product, i.e. beard trimmers, is bound to create a mistaken
impression in the minds of consumers that:
a. The Defendants' products/services emanate from the Plaintiffs
themselves;
b. The Defendants are permitted and authorized users of the
Plaintiffs' trademark;
c. There is a nexus between the Defendants and the Plaintiffs.
XXII. The fact that consumer confusion is inevitable becomes clear from
the following diagram created by the Plaintiffs to represent a
hypothetical illustration of the two products being placed next to one
another in a retail outlet.
XXIII. Additionally, infringing products manufactured by M/s Nova
Manufacturing Industries Limited and M/s Badri Electro Supply and
Trading Company (BESTCO) LLC. are clearly fraudulent and
obvious imitations of the Plaintiffs' QT 4000 product and other
products under the Advanced Beard Trimmer 3000 series, which is
covered by Design Registration No. 253140. A comparative chart of
the Plaintiffs' design registration, its products and the Defendants'
impugned products is as follows:
Design No. Plaintiff's QT Defendants' Defendants' NHT
253140 4000 NHT 4000 5001 product
XXIV. Actions of the Defendants to manufacture products which are an
identical and/or fraudulent imitation of the Plaintiffs' registered
designs No. 253140 amounts to piracy under Section 22 of the
Designs Act, 2000.
XXV. The Plaintiffs have a strong and credible apprehension that M/s.
Omni Exim Private Limited would also be importing and/or trading
in infringing products which infringe the Plaintiffs' design bearing
Design Registration No. 253140.The said Defendants are trading in
products which clearly infringe the copyright and trade-dress of the
Plaintiffs' Advanced Beard Trimmer 3000 series and have also
unlawfully used Plaintiffs' marks "Durapower" and "Lift and Trim
Technology".
XXVI. The Plaintiffs have led evidence by way of affidavit of Mr. Pankaj
Pahuja in support of its claim of damages against the Defendants.
This affidavit takes into account the international trade of infringing
trimmers bearing model numbers NHT 1071 and NHT 1072 and the
re-sale of such products in the Indian market. The affidavit further
specifies that these infringing products violate rights in the trade-
dress of the Plaintiffs' beard trimmers.
XXVII. The damages suffered by the Plaintiffs in the said case are two-fold:
(i) Actual Damages;
(ii) Aggravated Damages
XXVIII. Actual damages which are payable to the Plaintiffs include the
individual profits made by the importer, Omni Exim Private Limited
as well as the separate and distinct profits made by the
manufacturers(Badri Electro Supply and Trading Company
(BESTCO) LLC. and Nova Manufacturing Industries Limited).
XXIX. Ex PW 1/4 reflects the sale of infringing trimmers between
M/s Nova Manufacturing Industries Limited (NOVA) and M/s Omni
Exim Private Limited. This document evidences the following facts:
(i) Description of the infringing products -NHT Hair Trimmer
1071, Hair Trimmer NHT 1072
(ii) Nature of the infringing product - This product violates the
rights vested in the trade-dress of the Plaintiffs' beard
trimmers.
(iii) Number of imported products - 1,10,000/-
(iv) Total value of the imported goods - Rs.1,74,95,630.24/-
(Indian Rupees One Crore, Seventy Four Lakh, Ninety Five
Thousand, Six Hundred and Thirty)
(v) Import value of each infringing trimmer = Rs.159/-
XXX. In other words, M/s Omni Exim Private Limited purchases one
individual trimmer for Rs.159/- from M/s Nova Manufacturing
Industries Limited.
XXXI. The affidavit of Mr. Pankaj Pahuja clearly evidences that M/s Omni
Exim Private Limited (amongst others) used to further resell
infringing trimmers to retailers, like Million Lights, i.e. the previous
contesting Defendants in the present suits.
XXXII. Ex PW 1/5 (colly) which contains responses by previous defendants
to interrogatories of the Plaintiffs, states the following in clear terms:
―7. In the month of July 2017, Defendant No. 7 had also started
procuring the NOVA trimmers directly from the importer, Omni
Exim Private Limited....‖
XXXIII. Therefore, the profits earned by M/s Omni Exim Private Limited on
such transactions are the damages payable to the Plaintiffs.
XXXIV. The actual damages owned by M/s Omni Exim Private Limited to
the Plaintiffs are calculated in the following terms:
(i) Import price of 1 trimmer = Rs.159/-
(ii) Profit margin = 20%
(iii) Profit earned on sale of 1 trimmer = Rs.31.8/-
(iv) Total number of infringing trimmers imported = 1,10,000
(v) Total profits earned by the Defendants (damages owed to
Plaintiff) = Rs.34,98,000/-
(vi) This amount can be multiplied by five as the said Defendants
have been importing products at least for the past five years,
since it is estimated that infringement has been taking place for
over five years at least. However, even if one were to take a
conservative estimate of infringement over a period of two
years alone, the total damage awarded to the Plaintiffs on a
conservative basis that infringement took place for over two
years =Rs.69,96,000/-.
XXXV. Further evidence led by Mr. Pahuja shows that the profits made by
M/s Badri Electro Supply and Trading Company (BESTCO) LLC.
and M/s Nova Manufacturing Industries Limited (NOVA) are as
follows:
(i) Sale price of the trimmer: Rs.159/-
(ii) Profit margin on which the trimmer was sold by
the said Defendants: 20%
(iii) Thus, cost price of the trimmer: Rs.132.5/-
(iv) Profit earned by the Defendants on sale of 1
trimmer = Rs.26.5/-
(v) Total number of infringing trimmers exported to
India = 1,10,000
(vi) Total profits earned by the Defendants (damages
owed to Plaintiff) in one year= Rs.29,15,000/-
XXXVI. This amount can be multiplied by five as the said Defendants have
been importing products at least for the past five years, since there is
a categorical admission by erstwhile Defendants that infringing
products manufactured by M/s Nova Manufacturing Industries
Limited (NOVA) were being imported and re-sold into India since
2013 at least. This admission, contained in Ex PW 1/5 is reproduced
herein for ease of reference:
―3. Defendant No. 7 had started selling NOVA trimmers from the
year 2013...‖
XXXVII. Thus, upon multiplying the figure attained above by five, the total
profits earned by M/s Badri Electro Supply and Trading Company
(BESTCO) LLC. and Nova Manufacturing Industries Limited
amounts to Rs.1,45,75,000/-.
XXXVIII. The margins of profits enjoyed by entities in the field of international
sale and resale of consumer electronics go as high as 50% - 80%. A
comparison between the sale price of the manufacturer in the present
case and the cost price paid by the end-user is as high as 840%, and
this is clearly evident from the fact that while M/s Nova
Manufacturing Industries Limited (NOVA) sold an infringing
trimmer for Rs.159/-, the end-user purchased the same trimmer for
Rs.1,495/-. However, the Plaintiffs are taking a conservative estimate
of 20% on the profit margin in the present proceedings.
XXXIX. The damages are payable to the Plaintiffs individually by M/s Omni
Exim Private Limited since it has made individual profits for itself,
which are completely separate from the profits earned by the
manufacturer [M/s Badri Electro Supply and Trading Company
(BESTCO) LLC. and M/s Nova Manufacturing Industries Limited
(NOVA)] and other entities involved in this international syndicate.
XL. Thus the damages payable by M/s Omni Exim Private Limited are
Rs.69,96,000/-and those paid jointly and severally by M/s Badri
Electro Supply and Trading Company (BESTCO) LLC. and M/s
Nova Manufacturing Industries Limited (NOVA) are to the tune of
Rs.1,45,75,000/-.
XLI. Whereas, insofar as damages qua piracy of design of the Plaintiffs is
concerned, it can be safely assumed that:
(a) The period of infringement is the same as in the case above;
(b) The total number of pieces run into lakhs (at least 1,10,000 as
the previous case);
(c) It can be assumed that margin of profit is 20% as in the
previous case.
Therefore, the damages payable to the Plaintiffs can be calculated
accordingly.
XLII. Additionally, the Defendants are liable to compensate the Plaintiffs
with aggravated damages on account of the extreme mala fide actions
and the wrongful conduct of the Defendants. The
actual/compensatory damages are disproportionately dwarf in
comparison to the actual amount recoverable by the Plaintiffs.
XLIII. The principles governing proof of actual damages and aggravated
damages, punitive damages in intellectual property disputes are
enshrined in the decision of the Division Bench of this Court in
Hindustan Unilever Limited v. Reckitt Benckiser India Limited,
2014 (57) PTC 495 [Del] [DB]. The relevant extract from the
judgment is reproduced herein below:
―67 .... Furthermore - and perhaps most crucially - the punitive
element of the damages should follow the damages assessed
otherwise (or general) damages; exemplary damages can be
awarded only if the court is ―satisfied that the punitive or
exemplary element is not sufficiently met within the figure which
they have arrived at for the plaintiff's solatium.‖
XLIV. The Defendants having infringed the Plaintiffs' copyright and
design are liable to pay damages to the Plaintiffs not only in terms
of the calculated actual damages but also punitive damages for the
award of atleast 5 years.
COURT'S REASONING
THE DEFENDANTS WITH MALA FIDE INTENT HAVE DELIBERATELY
IMITATED THE SHAPE AND CONFIGURATION OF THE PLAINTIFFS'
BEARD TRIMMERS UNDER THE QT 4000 SERIES. CONSEQUENTLY,
THE PLAINTIFFS ARE HELD ENTITLED TO A DECREE OF
PERMANENT INJUNCTION AGAINST THE DEFENDANTS
RESTRAINING INFRINGEMENT OF REGISTERED DESIGN AS
PRAYED FOR IN PARAGRAPH 49(i) OF CS(COMM) 737/2016
10. Having heard the learned counsel for the Plaintiffs and having
perused the ex parte evidence led by the Plaintiffs as well as the documents
placed on record, this Court is of the opinion that the Plaintiffs have proved
the facts stated in the plaint in relation to their claims for permanent
injunction as well as damages payable by the Defendants.
11. In arriving at this conclusion, this Court has taken into consideration
the fact that the Defendants chose not to appear before this Court despite
being duly served with summons. In fact, M/s. Badri Electro Supply and
Trading Company (BESTCO) LLC. refused to accept service of the
summons as is clearly evident from the affidavit of service filed by the
Plaintiffs. Consequently, the claims in the plaint have gone unrebutted.
12. It is settled law that this Court can pass a judgment against the
Defendants on the basis of the contentions made against them by the
Plaintiffs in the plaint alone. The Supreme Court in C.N. Ramappa Gowda
v. C.C. Chandregowda, (2012) 5 SCC 265 has held, ―....if the Court is
clearly of the view that the plaintiff's case even without any evidence is
prima facie unimpeachable and the defendant's approach is clearly a
dilatory tactic to delay the passing of a decree, it would be justified in
appropriate cases to pass even an uncontested decree‖.
13. Upon comparing the Defendants' impugned products with the
registration granted to the Plaintiffs in relation to their unique and aesthetic
shape and configuration, this Court is of the view that the beard trimmers
of the Defendants very closely resemble these aesthetics. In fact, the
Defendants' trimmers seem to have imitated the registered design of the
Plaintiffs bearing No.253140 in all respects.
14. This Court is further of the opinion that the Defendants with mala
fide intent have deliberately imitated the shape and configuration of the
Plaintiffs' beard trimmers under the QT 4000 Series as the Defendants
operate in the same industry as the Plaintiffs, i.e. the provision of consumer
care products.
15. Since the Defendants have carried out their activities without any
authorization being granted by the Plaintiffs, this Court is satisfied that the
Plaintiffs have proved that the Defendants' activities constitute piracy of
the sole and exclusive, statutory rights vested in the Plaintiffs' registered
design No.253140 under Section 22 of the Designs Act, 2000.
16. Consequently, the Plaintiffs are held entitled to a decree of
permanent injunction against the Defendants restraining infringement of
registered design as prayed for in paragraph 49(i) of CS(COMM)
737/2016.
DEFENDANTS' UNAUTHORISED AND BRAZEN REPRODUCTION OF
THE PLAINTIFFS' LITERARY, ARTISTIC WORK AS WELL AS
PACKAGING AND TRADE DRESS AMOUNTS TO INFRINGEMENT OF
COPYRIGHT IN TERMS OF SECTION 51 OF THE COPYRIGHT ACT,
1957. CONSEQUENTLY, THE PLAINTIFFS ARE HELD ENTITLED TO
A DECREE OF PERMANENT INJUNCTION RESTRAINING
INFRINGEMENT OF COPYRIGHT, PASSING OFF AND UNFAIR
COMPETITION IN TERMS OF PARAGRAPH 50(i) OF THE PLAINT IN
CS(COMM) 1160/2016.
17. From a perusal of the pleadings and evidence on record, this Court is
of the view that the Defendants are also liable for violating the statutory
and common law rights of the Plaintiffs on multiple counts. Without
repeating the evidence highlighted by the learned counsel for Plaintiffs, this
Court concludes as under:-
(i) The Defendants have reproduced the same photograph of the
model whose services were hired by the Plaintiffs in relation
to the advertisement of their beard trimmer products.
(ii) The Defendants have merely digitally replaced their trimmer
in the hands of the model, whereas the original photograph has
the model holding the Plaintiffs' trimmer.
(iii) The Defendants reproduced the product description of the
Plaintiffs' trimmer. Such is the extent of the reproduction that
the Defendants' trimmer were also described as being
"PHILIPS" trimmers, in the following terms:
NOVA SKIN FRIENDLY PRECISION NHT 4000 TRIMMER
FOR MEN (BLACK) PRICE: RS 695
.....The trimmer is ergonomically designed for ease of hold
and use, hence making it easy to trim the tricky areas.
Besides, it comes with the comfortable grip. This Philips
trimmer comes with a detachable head which can be easily
cleaned under the tap.....
(emphasis supplied)
18. This Court is satisfied with the Plaintiffs' contention that the literary
work, artistic work and the photographs in the Plaintiffs' product literature
and promotional material and packaging fall within the meaning of
Sections 2(c), 2(o) and 2(s) of the Copyright Act, 1957 respectively and
that the Plaintiffs are the owners of the copyright vested therein.
19. Consequently, the Plaintiffs are entitled to sole and exclusive rights
to reproduce the said works in terms of Sections 13 and 14 of the Copyright
Act, 1957.
20. The Defendants' unauthorised and brazen reproduction of the
Plaintiffs' literary and artistic work also amounts to infringement of
copyright in terms of Section 51 of the Copyright Act, 1957.
21. This Court is of the view that the trade dress of a particular product
serves the same function as a trade mark, i.e. identifying goods and services
of a particular entity as emanating from it. Customers have an intuitive
instinct to select goods by the design, color, get-up, packaging etc.
22. Upon comparing the packaging of the Defendants' products with that
of the Plaintiffs, it becomes clear that they are deceptively similar to one
another.
23. This Court also takes cognizance of the comparison charts produced
by the Plaintiffs as well as the fact that consumer electronic goods are sold
over common platforms on the internet and in brick-and-mortar stores and
consumers are bound to be confused upon seeing the packaging of the
Defendants and they are bound to mistake them as emanating from the
Plaintiffs.
24. This Court is satisfied that the Plaintiffs have successfully
established that the Defendants' activities are in clear violation of the
common law rights vested in the packaging of the Plaintiffs' beard
trimmers. Consequently, the Plaintiffs are held entitled to a decree of
permanent injunction restraining infringement of copyright, passing off and
unfair competition in terms of paragraph 50(i) of the plaint in CS(COMM)
1160/2016.
PLAINTIFFS ARE ENTITLED TO COMPENSATORY DAMAGES
25. A Coordinate Bench of this Court in M/s. Inter Ikea Systems B.V. &
Anr. v. Sham Murari & Ors., 2018 SCC OnLine Del 11221 has awarded
compensatory damages in favour of the Plaintiffs, after considering the
principles enshrined in Hindustan Unilever (supra) in the following terms:-
―24. In the present case, the Plaintiffs do not claim direct
damages on account of any actual losses suffered by them. The
losses claimed by the Plaintiffs are intangible loss, dilution, loss of
confidence and trust of customers and exemplary damages due to
disregard of the principle of fair trading. Under Section 73 of the
Indian Contract Act, 1872, damages can be both direct and
indirect. However, the nature of damages claimed in the present
case, are for violation of trademark rights. While this Court does
not wish to encourage any party, which misleads the trademark
authorities, the question is whether a false affidavit filed before
the trademark office can by itself form the basis of grant of
exemplary damages. The documents placed on record point to the
fact that the Defendants had actually registered the domain
name www.ikeaindustries.com only on 7th May, 2014. The
Defendant No. 3 firm was formed on 2nd May, 2014 and the VAT
registration was obtained on 11th September, 2014. Clearly, the
user claimed by the Plaintiffs in its trademark application filed by
Defendant No. 4, Shilpa Metal Industries was completely
incorrect. Thus as on the date when the ex-parte injunction was
granted, i.e., 22nd December, 2014, the Defendants may have
merely used the mark for a few months. Thus, on the basis of the
inventory prepared by the Local Commissioner, which according
to the Plaintiffs is worth Rs. 67,44,800/- and according to the
Defendants is worth approximately Rs. 25,00,000/-, the Court
takes the value of the said products to be in the range of Rs. 25
lakhs to Rs. 30 lakhs, as the said products were not sold. Even
treating the said stock to be the stock of one month, the total
turnover of the Defendants for three months from September to
December 2014, could not have been more than Rs. 1 crore. This
is a rough and ready estimate on the basis of the seizure made.
Since the Defendants would have had to sell these products with
proper dealer/retailer margins, the profit is estimated at 15% of
the total value of the products, which comes to about Rs. 15 lakhs.
In view of the tests laid down in Rookes and Cassell, the present is
not a case for award of punitive damages.
25. The Defendants' conduct has been far from bonafide. The
manner in which misleading statements have been made and a
false affidavit has been filed before the trademark registry also
calls for the award of exemplary costs, as the trademark authority
is a quasi-judicial authority and any party filing an affidavit
before the said authority should do so with a complete sense of
responsibility. Under the Commercial Courts, Commercial
Division and Commercial Appellate Division of High Courts Act,
2015 read with the Delhi High Court (Original Side) Rules, 2018,
actual costs can be awarded to the party. The cost sheet has been
placed on record by the Plaintiff. This Court is of the opinion that
costs of Rs. 10 lakhs are liable to be imposed upon the Defendants.
Half of the said sum would be paid to the Plaintiff and the other
half shall be deposited in favour of the ‗Controller General of
Patents, Designs and Trade marks'. The amount of Rs. 5 lakhs
shall be retained in a fund by the Controller General and shall be
utilised for providing legal assistance for those trade mark
applicants and patent applicants who require legal aid or
assistance for paying official fees or other fees.
26. The suit is thus decreed for damages of Rs. 15,00,000/- and
costs of Rs. 10,00,000/-. Out of the cost of Rs. 10,00,000/-, Rs.
5,00,000/- would be payable to the Plaintiffs. Remaining amount
of Rs. 5,00,000/- shall be deposited with the Controller General of
Patents, Designs and Trademarks. Thus the Plaintiffs are entitled
to a sum of Rs. 20,00,000/- towards general damages and costs.‖
26. This Court is satisfied with the evidence led by the Plaintiffs and the
arguments advanced by the learned counsel for the Plaintiffs that a
conservative margin of profit of 20% can be assumed in the present suits
while assessing the actual damages payable by the Defendants.
27. As regards the compensatory damages payable qua piracy of
registered design, though Mr. Anand submitted that they should be
computed after making some realistic assumptions, this Court is of the
view that as the compensatory damages payable in relation to violation of
trade-dress and copyright have already been computed by the Plaintiffs, it
is not necessary to go into a separate computation of damages for the
violation of rights vested in the Plaintiffs' registered design.
28. As the Defendants have wilfully and repeatedly infringed the
Plaintiffs' rights as vested in their copyright, trade dress and design, the
Plaintiffs are entitled to an award of compensatory damages to the extent of
Rs.69,96,000/- payable by M/s Omni Exim Private Limited and
Rs.1,45,75,000/- which is to be paid jointly and severally by M/s Nova
Manufacturing Industries Limited (NOVA) and M/s Badri Electro Supply
and Trading Company (BESTCO) LLC.
PLAINTIFFS ARE ALSO ENTITLED TO AGGRAVATED/EXEMPLARY
DAMAGES
29. This Court is of the opinion that the degree of misconduct by
Defendants in a civil suit is often determinative of the nature of relief to be
granted by a Court to the Plaintiffs. The law is well-settled that the degree
of mala fide conduct has a direct impact on the quantum and nature of
damages that could be awarded in addition to a claim for actual /
compensatory damages.
30. The Hindustan Unilever Limited (supra) judgment relied upon by
learned counsel for Plaintiffs with regard to punitive and aggravated
damages in turn relies on the decisions of the House of Lords in Rookes v.
Barnard, [1964] 1 All ER 367 and Cassell & Co. Ltd. v. Broome, 1972 AC
1027 as is apparent from the following extract reproduced hereinbelow:-
―65. As far as punitive damages are concerned, the learned
Single Judge relied in Lokesh Srivastava and certain other
rulings. Here, since the Court is dealing with a final decree
- and a contested one at that (unlike in the case of
trademark and intellectual property cases, where the courts,
especially a large number of Single Judge decisions
proceeded to grant such punitive damages in the absence of
any award of general or quantified damages for
infringement or passing off), it would be necessary to
examine and re-state the governing principles.
66. Rookes v. Barnard, [1964] 1 All ER 367, is the seminal
authority of the House of Lords, on the issue of when
punitive or exemplary (or sometimes alluded to as
―aggravated‖) damages can be granted....‖
The later decision in Cassell & Co. Ltd. v. Broome, 1972
AC 1027, upheld the categories for which exemplary
damages could be awarded, but made important
clarificatory observations......‖
(emphasis supplied)
31. The House of Lords in Rookes v. Barnard (supra) defines three
categories of cases in which punitive/exemplary damages might be
awarded as under:-
a. Oppressive, arbitrary or unconstitutional action by the
servants of the government;
b. Wrongful conduct by the defendant which has been
calculated by him to make profit for himself which may well
exceed the compensation payable to the claimant; and
c. Any case where exemplary damages are authorized by the
statute.
(emphasis supplied)"
32. The second category of cases enshrined in Rookes (supra) relates to
those cases where the Defendant calculates a net amount of profit that it
would have earned, even after being imposed with an award of damages by
the Court. The said decision of the House of Lords in Rookes (supra)
further sheds light on the circumstances which justify the award of
damages in cases which fall in the second category, i.e. the category
specified in (b) above in the following terms:-
―Cases in the second category are those in which the
Defendant's conduct has been calculated by him to make a
profit for himself which may well exceed the compensation
payable to the plaintiff. I have quoted the dictum of Erle C.J.
in Bell v. The Midland Railway Company. Maule J. in
Williams v. Curry, at page 848, suggests the same thing; and
so does Martin B. in an arbiter dictum in Crouch v. Great
Northern Railway Company, [1856] 11 Ex. 742, at 759. It is
a factor also that is taken into account in damages for libel;
one man should not be allowed to sell another man's
reputation for profit. Where a Defendant with a cynical
disregard for a Plaintiff's rights has calculated that the
money to be made out of his wrongdoing will probably
exceed the damages at risk, it is necessary for the law to
show that it cannot be broken with impunity. This category is
not confined to moneymaking in the strict sense. It extends to
cases in which the Defendant is seeking to gain at the
expense of the Plaintiff some object, -- perhaps some
property which he covets,--which either he could not obtain
at all or not obtain except at a price greater than he wants to
put down. Exemplary damages can properly be awarded
whenever it is necessary to teach a wrongdoer that tort does
not pay.‖
(emphasis supplied)
33. Rookes v. Barnard (supra) also stipulates that three conditions need
to be satisfied before an award for aggravated or exemplary damages is
granted. The relevant principles propounded by the House of Lords are:
―I wish now to express three considerations which I think
should always be borne in mind when awards of exemplary
damages are being considered.
First, the Plaintiff cannot recover exemplary damages
unless he is the victim of the punishable behavior. The
anomaly inherent in exemplary damages would become an
absurdity if a Plaintiff totally unaffected by some oppressive
conduct which the jury wished to punish obtained a windfall
in consequence.
Secondly, the power to award exemplary damages
constitutes a weapon that, while it can be used in defense of
liberty, as in the Wilkes cases, can also be used against
liberty. Some of the awards that juries have made in the past
seem to me to amount to a greater punishment than would
be likely to be incurred if the conduct were criminal; and
moreover a punishment imposed without the safeguard
which the criminal law gives to an offender. I should not
allow the respect which is traditionally paid to an
assessment of damages by a jury to prevent me from seeing
that the weapon is used with restraint. It may even be that
the House may find it necessary to follow the precedent it
set for itself in Benham v. Gambling, and place some
arbitrary limit on awards of damages that are made by way
of punishment. Exhortations to be moderate may not be
enough.
Thirdly, the means of the parties, irrelevant in the
assessment of compensation, are material in the assessment
of exemplary damages. Everything which aggravates or
mitigates the Defendant's conduct is relevant.
(emphasis added)
34. The present cases clearly satisfy all these conditions, as is evident
from the following:
(i) It is clear that the Plaintiffs are the victims of the Defendants'
unlawful activities since not only have their statutory rights been
violated, but they have also suffered loss of goodwill and
reputation at the hands of the Defendants;
(ii) The evidence in the present proceedings clearly showcases the
high profits enjoyed by the Defendants on the sale of infringing
trimmers, and those figures need to be taken into consideration
while quantifying aggravated damages.
35. Rookes v. Barnard (supra) specifically states that the award of
aggravated damages is justified when the Court finds the conduct of the
Defendant to be extremely mala fide and wanton. The relevant extract is
reproduced hereinbelow:
―.... But when this has been said, there remains one class of
case for which the authority is much more precise. It is the
class of case in which the injury to the plaintiff has been
aggravated by malice or by the manner of doing the injury,
that is, the insolence or arrogance by which it is accompanied.
There is clear authority that this can justify exemplary
damages, though (except in Loudon v. Ryder) it is not clear
whether they are to be regarded as in addition to, or in
substitution for, the aggravated damages that could certainly
be awarded.‖
(emphasis supplied)
36. Given the facts of the present cases, the injury caused to the
Plaintiffs has been aggravated by malice on part of the Defendants. In the
judgment of Cassell & Company Limited (supra), it has been held as
under:-
―...TERMINOLOGY
This brings me to the question of terminology. It has been more
than once pointed out the language of damages is more than
usually confused. For instance, the term "special damage" is
used in more than one sense to denominate actual past losses
precisely calculated (as in a personal in-juries action), or
"material damage actually suffered" as in describing the factor
necessary to give rise to the cause of action in cases, including
cases of slander, actionable only on proof of " special damage".
If it is not too deeply embedded in our legal language, I would
like to see "special damage" dropped as a term of art in its
latter sense and some phrase like "material loss" substituted.
But a similar ambiguity occurs in actions of defamation, the
expressions "at large", "punitive", "aggravated", "re-tributory",
"vindictive" and "exemplary" having been used in, as I have
pointed out, in extricable confusion.
In my view it is desirable to drop the use of the phrase
"vindictive" damages altogether, despite its use by the County
Court judge in Williams v. Settle [1960] 1 W.L.R. 1072. Even
when a purely punitive element is involved, vindictiveness is not
a good motive for awarding punishment. In awarding
"aggravated" damages the natural indignation of the court at
the injury inflicted on the plaintiff is a perfectly legitimate
motive in making a generous rather than a more moderate
award to provide an adequate solatium. But that is because the
injury to the plaintiff is actually greater and as the result of the
conduct exciting the indignation demands a more generous
solatium.
Likewise the use of "retributory" is objectionable because it is
ambiguous. It can be used to cover both aggravated damages
to compensate the plaintiff and punitive or exemplary damages
purely to punish the defendant or hold him up as an example.
As between "punitive" or "exemplary", one should, I would
suppose, choose one to the exclusion of the other, since it is
never wise to use two quite interchangeable terms to denote the
same thing. Speaking for myself, I prefer "exemplary", not
because "punitive" is necessarily inaccurate, but "exemplary"
better expresses the policy of the law as expressed in the cases.
It is intended to teach the defendant and others that "tort does
not pay" by demonstrating what consequences the law inflicts
rather than simply to make the defendant suffer an extra penalty
for what he has done, although that does, of course, precisely
describe its effect.
The expression "at large" should be used in general to cover all
cases where awards of damages may include elements for loss
of reputation, injured feelings, bad or good conduct by either
party, or punishment, and where in consequence no precise
limit can be set in extent. It would be convenient if, as the
appellants' counsel did at the hearing, it could be extended to
include damages for pain and suffering or loss of amenity. Lord
Devlin uses the term in this sense in Rookes v. Barnard at p.
1221,when he defines the phrase as meaning all cases where
―the award is not limited to the pecuniary loss that can be
specially proved ". But I suspect that he was there guilty of a
neologism. If I am wrong, it is a convenient use and should be
repeated.
―Finally, it is worth pointing out, though I doubt if a change of
terminology is desirable or necessary, that there is danger in
hypostatising "compensatory", ―punitive", ―exemplary‖ or
―aggravated" damages at all. The epithets are all elements or
considerations which may, but with the exception of the first
need not, be taken into account in assessing a single sum. They
are not separate heads to be added mathematically to one
another.
(emphasis supplied)
37. The case clearly holds that that such damages are not to be added as
separate components. Instead, they should be awarded in substitution, if the
Court is of the opinion that the mala fides of the Defendants far exceed (in
proportion) the quantum of actual damages that the Plaintiff has established
against them. This critical principle on the award of damages is also spelt
out in Cassell (supra), when it analyzed the judgment in Rookes (supra) in
the following manner:-
―...THE "CONSIDERATIONS"
I turn now to Lord Devlin's three "considerations". It is worth
pointing out that neither the Court of Appeal nor any of the
counsel who appeared before us attacked these as such. Nor, so
far as I am aware, have these been attacked in the cases in
which Commonwealth judges have felt constrained to criticize
Rookes v. Barnard. This alone would be a good reason against
a simple return to the status quo ante proposed by the Court of
Appeal, because the first and second "considerations" coupled
with the passage from which I have already quoted on page
1225 are themselves, and quite independently of the
"categories", an important, and I think original, contribution to
the law on exemplary damages. Whilst, as I have indicated, I
cannot myself follow what Lord Devlin says on the second
category so far as regards the right of appellate courts to
interfere with jury awards on principles different from the
traditional nor, I think, with the proposal that Benham v.
Gambling offers a precedent for arbitrary limits imposed by the
judiciary in defamation cases, I regard it as extremely
important that, for the future, judges should make sure in their
direction to juries that the jury is fully aware of the danger of
an excessive award. A judge should first rule whether evidence
exists which entitles a jury to find facts bringing a case within
the relevant categories, and, if it does not, the question of
exemplary damages should be withdrawn from the jury's
consideration. Even if it is not withdrawn from the jury, the
judge's task is not complete. He should remind the jury(i) That
the burden of proof rests on the plaintiff to establish the facts
necessary to bring the case within the categories.(ii) That the
mere fact that the case falls within the categories does not of
itself entitle the jury to award damages purely exemplary in
character. They can and should award nothing unless(iii) They
are satisfied that the punitive or exemplary element is not
sufficiently met within the figure which they have arrived at for
the plaintiff's solatium in the sense I have explained and(iv)
That, in assessing the total sum which the defendant should pay,
the total figure awarded should be in substitution for and not in
addition to the smaller figure which would have been treated as
adequate solatium, that is to say, should be a round sum larger
than the latter and satisfying the jury's idea of what the
defendant ought to pay.(v) I would also deprecate, as did Lord
Atkin in Ley v. Hamilton, the use of the word "fine" in
connexion with the punitive or exemplary element in damages,
where it is appropriate. Damages remain a civil, not a criminal
remedy, even where an exemplary award is appropriate, and
juries should not be encouraged to lose sight of the fact that, in
making such an award they are putting money into a plaintiff's
pocket, and not contributing to the rates, or to the revenues of
Central Government.
If this be correct, the agreed list of questions submitted to the
jury in the present case is not the ideal procedure for ensuring
that the jury keeps their verdict within bounds. They should
normally be asked to award a single sum whether as solatium
or as exemplary damages. If, in order to avoid a second trial,
they are asked a second question, they should be asked, in the
event of their awarding exemplary damages, what smaller sum
they would have awarded if they had confined themselves to
solatium in the sense explained.
xxx xxx xxx
........ The emphasis placed upon the word "additional" could
not have been lost sight of by the jury. Additional to what?
Quite clearly, additional to the amount of compensation
awarded. The jury were asked "how much more" they would
award. The "more" was to be "over and above" the
compensation. It surely must have been clear to the jury that
any "more" that they decided upon or any "additional" sum
would have to be paid by those against whom they awarded it
on top of the sum that they were first awarding. Here was a jury
that listened to the case over a period of seventeen days. They
deliberated for nearly five hours. They awarded a sum of
£25,000 to be "additional" to their award of £15,000. They
knew that the total was £40,000. Thereafter they heard both
counsel agree that there should be a single judgment for that
amount. No suggestion was made (or I think could possibly
have been made) that the £25,000 included the £15,000.
............. Are we not punishing them enough by saying that they
must pay £15,000?......... I am bound to say that the figure of
£40,000 appears to me to be a high figure. Certainly it must be
a very unusual case in which on a correct application of the law
as laid down in Rookes v. Barnard the amount which
defendants must pay should so greatly exceed the amount which
is reasonably to be received by the plaintiff by way of
compensation. It is this disparity between the £40,000 and the
£15,000 that has caused disquiet as to whether the jury may
have been caused or allowed to be under a misunderstanding.
But if the conclusion is reached that the jury knew what they
were about and chose their figures advisedly then I do not think
that I ought to conclude that their "additional" figure of
£25,000 was so high that no reasonable jury could award it. To
translate injury to and attack upon reputation into monetary
terms is at all times a difficult exercise. But it was the same jury
that fixed the "additional" figure of £25,000 that also--without
being impeached for so doing--fixed the compensatory figure of
£15,000. If they did not go wide when fixing the latter why
should it be determined that they went wide in fixing the
former? The conclusion which I think can be drawn is that the
jury took a very serious view of the conduct and attitude of the
defendants.
(emphasis supplied)
38. Accordingly, the question which was left open in Rookes (supra) was
closed in Cassell (supra) as regards the manner in which aggravated or
punitive damages are to be awarded.
39. Consequently, though in assessing the aggravated damages which the
Defendants should pay, the total figure awarded should be in substitution
for and not in addition to the smaller figure, yet the rounded total sum shall
have to be calculated by adding an additional amount to the compensatory
damages.
40. Keeping in view the aforesaid, this Court is of the view that the rule
of thumb that should be followed while granting damages can be
summarised in a chart as under:-
Degree of mala fide
# Proportionate award
conduct
First-time innocent Injunction
(i)
infringer
First-time knowing
(ii) Injunction + Partial Costs
infringer
Repeated knowing infringer Injunction + Costs + Partial
(iii) which causes minor impact damages
to the Plaintiff
Injunction + Costs +
Repeated knowing infringer Compensatory damages.
(iv) which causes major impact
to the Plaintiff
Infringement which was
deliberate and calculated
Injunction + Costs + Aggravated
(v) (Gangster/scam/mafia) + damages (Compensatory +
additional damages)
wilful contempt of court.
41. It is clarified that the above chart is illustrative and is not to be read
as a statutory provision. The Courts are free to deviate from the same for
good reason.
42. In the present suits, the activities of the Defendants warrant the
payment of aggravated damages in favour of the Plaintiffs. Not only is
M/s Nova Manufacturing Industries Limited (NOVA), a subsidiary of
M/s Badri Electro Supply and Trading Company (BESTCO) LLC., in
contempt of the injunction order, but the said Defendants have also
deliberately changed their modus operandi and routed the impugned
products through M/s Omni Exim Private Limited. In fact, M/s Omni Exim
Private Limited's activities furthered the contemptuous acts of M/s Badri
Electro Supply and Trading Company (BESTCO) LLC. as well as
M/s Nova Manufacturing Industries Limited (NOVA). The mala fide
actions of the Defendants prove that they fall in the last category in the
chart hereinabove, and that compensatory damage is inadequate to punish
the Defendants for their outrageous conduct and therefore to deter them
from repeating it, the Court awards some larger sum, i.e.
aggravated/exemplary damages.
43. Accordingly, this Court is of the view that the actions of the
Defendants merit an award of aggravated damages. M/s Nova
Manufacturing Industries Limited (NOVA) and M/s Badri Electro Supply
and Trading Company (BESTCO) LLC. are directed to pay additionally
Rs.50 lakhs jointly and severally. M/s Omni Exim Private Limited is
directed to pay additionally Rs.50 lakhs.
44. Consequently, the Plaintiffs are held entitled to decree in terms of
paragraph 50(i) of the plaint in CS(COMM) 1170/2016 as well as
paragraph 49(i) of the plaint in CS(COMM) 737/2016. The Plaintiffs are
also held entitled to a decree of Rs.1,19,96,000/- (Rs. 69,96,000/- +
Rs.50,00,000/-) against M/s Omni Exim Private Limited and
Rs.1,95,75,000/- (Rs. 1,45,75,000/- + Rs.50,00,000/-) jointly and
severally against M/s Nova Manufacturing Industries Limited (NOVA)
and M/s Badri Electro Supply and Trading Company (BESTCO) LLC.
The Plaintiffs are further held entitled to actual costs of litigation including
lawyer's fees. The Plaintiffs are given liberty to file on record the exact
cost incurred by them in adjudication of the present suit. Registry is
directed to prepare decree sheets accordingly.
MANMOHAN, J
APRIL 22, 2019
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