Delhi High Court
M/S Liberty Footwear Company vs Liberty Innovative Outfits ... on 26 May, 2020
IN THE HIGH COURT OF DELHI AT NEW DELHI
Judgment delivered on: May 26, 2020
+ CS(COMM) 637/2019, I.As. 16177/2019 & 18169/2019
M/S LIBERTY FOOTWEAR COMPANY
..... Plaintiff
Through: Mr. Rajshekhar Rao, Mr. Kapil
Wadhwa, Ms. Deepika Pokharia, Ms.
Anamika Mazumdar and Mr. Areeb
Y. Anmanullah, Advs.
versus
LIBERTY INNOVATIVE OUTFITS LIMITED
..... Defendant
Through: Mr. Sandeep Sethi, Sr. Adv. with Mr.
Amit Bansal, Mr. Ravi Singhania, Mr.
Vikas Goel, Mr. Abhishek and Ms.
Tripti Aggarwal, Advs.
AND
+ CS(COMM) 638/2019, I.As. 16180/2019, 18402/2019 & 939/2020
M/S LIBERTY FOOTWEAR COMPANY
..... Plaintiff
Through: Mr. Rajshekhar Rao, Mr. Kapil
Wadhwa, Ms. Deepika Pokharia, Ms.
Anamika Mazumdar and Mr. Areeb
Y. Anmanullah, Advs.
versus
M/S LIBERTY FASHION OUTFIT
..... Defendant
Through: Mr. Sandeep Sethi, Sr. Adv. with Mr.
Amit Bansal, Mr. Ravi Singhania, Mr.
Vikas Goel, Mr. Abhishek and Ms.
Tripti Aggarwal, Advs.
CS(COMM) 637/2019 and connected matter Page 1 of 56
CORAM:
HON'BLE MR. JUSTICE V. KAMESWAR RAO
JUDGMENT
V. KAMESWAR RAO, J
I.As. 16177/2019 & 18169/2019 in CS(COMM) 637/2019
I.As. 16180/2019 & 18402/2019 in CS(COMM) 638/2019
1. By this order, I shall decide four applications being I.As.
16177/2019 (Order 39 Rule 1 & 2) & 18169/2019 (Order 39 Rule
4) in CS(COMM) 637/2019 and I.As. 16180/2019 (Order 39
Rule 1 & 2) & 18402/2019 (Order 39 Rule 4) in CS(COMM)
638/2019.
I.As. 16177/2019 & 18169/2019 in CS(COMM) 637/2019
2. CS (COMM) 637/2019 has been filed by the plaintiff
seeking to restrain the defendant from using the identical
/deceptively similar mark LIBERTY, ,
and deceptively similar trade name LIBERTY INNOVATIVE
OUTFITS or any identical/deceptively similar mark/logo for its
goods and services so as to result in violation of the statutory and
common law rights of the Plaintiff in its well-known trade mark
'LIBERTY' along with damages / account of profits against the
defendant. It may be stated here that on November 20, 2019, ad
interim order was passed in favour of the plaintiff.
3. Some of the facts as noted from the plaint are, plaintiff, a
registered partnership firm, was established in the year 1954. The
plaintiff forms an integral part of Liberty Group of Companies
and Firms ('Liberty Group', for short), which includes
partnership firms Liberty Group Marketing Division ('LGMD',
for short), Liberty Enterprise ('LE', for short) and Liberty Shoes
Limited ('LSL', for short). The Liberty Group has since its
establishment been engaged in the business of manufacturing and
marketing footwear and fashion products. It is noted from the
plaint that the foundation of the footwear business under the
brand and banner of 'LIBERTY' was established by the elder
son of Freedom Fighter Late Lajja Ram Gupta, a renowned and
respected resident of a small town Karnal of erstwhile Punjab,
now in Haryana, before independence of India in 1944. The
business was incorporated to help the shoemaker community of
Karnal that was for generations engaged in the production of
safety shoes for army men. It is the case of the plaintiff, that the
plaintiff firm was established, founded by two sons of Late Lajja
Ram Gupta, namely Late Dharam Pal Gupta and Late
Purushottam Das Gupta with their nephew Late Raj Kumar
Bansal. The Liberty Group operations started in the year 1954
from a retail outlet in Karnal and for well over six decades, the
Liberty Group has been leading the Indian market with the most
diversified variety of quality products under its brand such as
leather bags, belts, wallets, stroller bags, school bags, ladies
handbags, leather jackets, perfumes, deodorants, sweat shirts,
sports & fitness apparels etc. It is the case of the plaintiff that
today, the Liberty Group is amongst the largest footwear and
leather accessories manufacturing group in India and forms an
integral part of the leading fashion and lifestyle retail companies
in India. It is also averred that the Liberty Group, in addition to
its well-known trademark 'LIBERTY', has launched various
international and domestic brands/sub-brands including but not
limited to TIPTOPP, FORCE 10, SENORITA, FORTUNE,
PREFECT, FOOTFUN, GLIDERS, COOLERS, WINDSOR etc.
4. The plaintiff devised a unique and appealing corporate
logo "LIBERTY LOGO" in the year 1992 and has been
continuously using the same ever since. The corporate logo has
been used by the plaintiff extensively through several advertising
mediums such as Cinema, Television, Radio, Audio Visuals,
Digital Mediums so much so, that the public associate the said
trademark / logo and the goods under it to be emanating from the
business of the plaintiff and the Liberty Group alone.
5. The Liberty Group's strong presence in the market is
established from its expansive presence through 10 branch
offices, 200 distributors, 5000 multi brand outlets and over 500
exclusive stores including 20 situated outside India. It is averred
in the plaint, that the Liberty Group has been the recipient of
plethora of prestigious awards. It is also stated that the plaintiff
maintains a high quality standard for all its products with ISO
3001:2000 certification. The Liberty Group also has a significant
online presence through its website www.libertshoesonline.com.
According to the plaintiff, the long-standing success of the
'LIBERTY' brand is illustrated by its annual turnover exceeding
INR 500 crores. That apart, the Liberty Group has created,
developed and promoted its 'LIBERTY' brand through
expenditure of extraordinary promotional and advertising efforts
by spending nearly 5% of the factory price of its products on
advertising and marketing activities, which run into crores of
rupees annually.
6. It is averred that by the virtue of such long and
continuous use since over six decades and extensive sales and
promotions, the 'LIBERTY' marks have achieved tremendous
goodwill and reputation and as a result thereof, the 'LIBERTY'
marks have become well-known for wide range of footwear and
fashion products sold by the Liberty Group.
7. On the trade mark, it is averred that plaintiff is the
proprietor of the well-known trademark 'LIBERTY', which was
coined and adopted in 1954 and variations in the trademark
'LIBERTY' with respect to various goods and services including
Classes 03, 25, 18, 35, to list a few. It is averred that an Internal
Regulation dated January 20, 2003 was also signed by majority
partners of the plaintiff firm, including Vivek Bansal, wherein it
was decided that the plaintiffs Intellectual Property related to the
mark 'LIBERTY', can only be used by a partner in his
individual capacity for a competing business subject to the
consent in writing of two-third majority and a validly executed
License Agreement. In March 2003, pursuant to a consolidation
process within the Liberty Group various assignment deeds were
executed between partnership firms whereby; (a) All
'LIBERTY' trade marks and logos along with goodwill stood
assigned to the plaintiff firm (LFC); (b) Sub brands of the Liberty
Group were transferred to the partnership firm LGMD and (c)
Industrial designs were transferred to LE. Some of the
registrations for the 'LIBERTY' marks owned by the plaintiff
are detailed in para 21 of the plaint.
8. It is the case of the plaintiff, on March 31, 2003 the
plaintiff firm entered into an Exclusive License Agreement with
Liberty Shoes Limited ('LSL', for short), a public limited
company with respect to its trademark 'LIBERTY' under Class
18 & 25 for a period of 10 years, which expired on March 31,
2013. On April 03, 2013 an Exclusive License Agreement was
entered between plaintiff firm and LSL for products falling in
Class 18 and 25. The License Agreement dated April 03, 2013
stipulated a term of five years commencing from March 01, 2013
with automatic renewal for two terms of five years each.
9. About the defendant Company, it is stated that the
defendant Company is engaged in the business of manufacturing,
trading and marketing various kinds of goods falling under Class
18 and 25 such as bags, school uniforms, socks, shoes etc. under
the brand name 'ANYTHINGSKOOL'. That Vivek Bansal is
the founder and one of the Directors of the defendant Company.
That Vivek Bansal is also a partner of the plaintiff firm and also
holds a stake in other partnership firms forming part of the
Liberty Group, however he does not have any personal rights in
the plaintiff's registered trademark 'LIBERTY' either
individually or through the defendant Company. Further, Vivek
Bansal is also an employee of LSL, the Exclusive Licensee of the
plaintiff. That by virtue of being a family member and partner of
the plaintiff firm and an employee of plaintiff's exclusive
licensee, Vivek Bansal is well aware of the plaintiff's exclusive
rights in 'LIBERTY', and variations of the
'LIBERTY' mark as well as the Exclusive License granted to his
employer LSL. Admittedly, no written consent and/or Licence
Agreement can be executed between the defendant Company and
plaintiff firm for Classes 18 & 25 and therefore, the use of the
plaintiff's registered trade marks by the defendant Company is
unlicensed and unauthorised. LSL is the Exclusive License holder
for the use of the mark 'LIBERTY' for Classes 18 & 25. That
Vivek Bansal, being a partner of the plaintiff firm has also
received royalty proceeds to the tune of Rs. 3.38 Crores for the
years 2003-2017 in terms of the Exclusive License Agreement.
10. It is averred that the defendant Company, without any
authority or license from the plaintiff, has been using the
plaintiff's registered trade marks LIBERTY, LIBERTY;
and various variations of 'LIBERTY' mark in the following
manner:
a. Incorporated 'LIBERTY' in its trade name "LIBERTY
Innovative Outfits Ltd.".
b. Using the plaintiff's corporate bird logo on its
visiting cards, pamphlets, brochures, etc. thereby giving a false
impression that the defendant is an off shoot/extension/part of the
Liberty Group.
c. Trading, marketing and sourcing footwear and other
accessories related to school products through the defendant
Company & claiming it to be a "Liberty Group Venture" in its
advertising materials.
d. Incorporated the LIBERTY mark LIBERTY written in
red colour in the identical font in the impugned trade name
logo thereby attempting to draw an association between
the Liberty Group and the defendant;
e. Using the plaintiff's registered trade mark 'LIBERTY'
individually on packaging of several products such as bags,
uniform, etc.
f. Apart from falsely advertising, the defendant Company
has also been using the logo for its footwear products,
in order to mislead the public to believe that the defendant
Company's footwear products are in fact the footwear products of
the Liberty Group.
11. It is the case of the plaintiff that ever since the
commencement of the unauthorised use of plaintiffs trade marks
'LIBERTY' (and its variations) by the defendant Company in
2010, plaintiff has taken measures to get the defendant Company
to cease the illegal and infringing use and has communicated the
same to the defendant Company time and again. Vivek Bansal
being a family member, the plaintiff firm has tried to amicably
settle the issue with the defendant Company, however the same
have failed on every occasion. It is also averred that left with no
other means to amicably settle the matter, plaintiff issued a Legal
Notice dated December 08, 2018 calling upon the defendant to
immediately cease and desist the unauthorised / unlicensed use of
the plaintiffs trade mark LIBERTY and its variations and in the
alternative gave a final opportunity to the defendant Company to
amicably settle the dispute by March 31, 2019. The defendant
Company sent a reply to the said legal notice vide letter dated
December 26, 2018 seeking to enter into an arrangement with the
plaintiff thereby agreeing to pay royalty subject to the condition
that the terms of such arrangements be similar to those imposed
on other related parties / family member entities. It is also stated
that Vivek Bansal thereafter, approached the plaintiff in
February, 2019, to amicably settle the dispute and requested time
until March 31, 2019, extendable to August 31, 2019, to induct /
transfer the business of the defendant Company with / to LSL and
assured to cease and desist the use of the plaintiff's trade mark
through the defendant concern.
12. It is the case of the plaintiff that the unauthorised use of
the impugned trade name and identical logos is completely
detrimental to the distinctive character of the plaintiff's well-
known mark 'LIBERTY' and will have a negative impact on the
distinctiveness of the goods and services as provided by the
plaintiff. It is also stated that the use of the impugned trade name
and identical logos in any manner clearly results in violation of
the vested rights of the plaintiff. It is also stated that the
confusion would definitely be caused as the plaintiffs and
defendant Company's fields of activities overlap.
13. It is stated that the defendant Company is using identical
logos and as that of the plaintiff. The same is
being done with a specific intent of illegally usurping the
plaintiff's rights in the well-known trademark 'LIBERTY'.
14. A written statement to the plaint has been filed by the
defendant Company, wherein it has raised a plea that the suit be
dismissed for want of authority of the person signing the plaint.
According to the defendant Company, the suit has been initiated
through Adarsh Gupta, who claims to be the authorized signatory
of the plaintiff firm. But there is no averment in the plaint
explaining as to how and in what manner Adarsh Gupta has been
authorized to institute the present proceedings on behalf of the
plaintiff firm. In fact, it is the case of defendant Company, that
immediately after receiving the notice dated December 08, 2018,
purportedly issued on behalf of plaintiff's firm, challenged the
authority of Adarsh Gupta for taking the said action, vide email
dated December 10, 2018. In response, a reply dated December
13, 2018 was received by the defendant Company stating that
Adarsh Gupta was authorised through a Power of Attorney issued
in December 2004. It is stated in the written statement, that a
bare perusal of Power of Attorney would reveal that the said
Power of Attorney was executed for a specific purpose of filing
some proceedings on behalf of the partners of the firm before this
Court in the year 2004. The proceedings so initiated in the year
2004 was the suit filed by LFC, LGMD, LE and LSL against
Kanishk Gupta and his sole proprietorship concern namely
Liberty Trends. In other words, the Power of Attorney executed
in December 2004 is limited to the said suit. Therefore, the
present proceedings having not been initiated through a legally
constituted / authorized person on behalf of the plaintiff firm, are
liable to be dismissed.
15. A plea of non-joinder of necessary and / or proper parties
is also taken. In this regard, it is stated that the LFC, LE, LGMD
were engaged in the business of manufacturing and selling
footwear / footwear components during different periods till
2003. The said three entities, all partnership firms, having
common partners obtained registration of different trade marks
for footwear and in the year 2003 appointed LSL as their
exclusive licensee for the footwear business. In the plaint Adarsh
Gupta has made generic allegations of infringement of trade
marks belonging to all the above entities, against defendant
Company presumably on the basis of Assignment Deeds
executed in the year 2003. Despite execution of Assignment
deeds, LFC has not been recorded as registered /subsequent user
of all the trade marks. It is stated that LIBERTY (word per se) is
still registered in the name of LE for Footwear falling in class 25.
Therefore, LFC cannot claim to be the owner of the trade mark
LIBERTY (word per se). Similarly, LSL the exclusive licensee of
LFC, LE and LGMD, who has been dealing with the defendant
Company since more than a decade is a necessary party to the
present proceedings. All the three partnership firms namely LFC,
LE and LGMD receive license fee from LSL and hence cannot
claim ignorance of existence of defendant Company, its business
activities, which are carried from the same premises as that of
LFC, LE, LGMD and LSL.
16. It is also stated that the plaintiff has also not approached
this Court with clean hands and has suppressed the material
information from this Court. In this regard, it is stated that
Adarsh Gupta purportedly acting in the name of the plaintiff firm
has made averments, which are factually incorrect and
misleading. Defendant Company was incorporated in the year
2008 and primarily deals in school uniforms including shoes and
school bags. Defendant Company does not manufacture shoes at
all and the entire stock of shoes to be used in its business by the
defendant company, is purchased by it from LSL, which is the
exclusive licensee of LFC, LGMD and LE since the year 2003.
The transactions between the defendant Company and LSL
started since the incorporation of defendant Company, or
thereabout, and are continuing till date. Adarsh Gupta was one of
the shareholders and Executive Director of LSL till the year 2015
and hence was fully aware of the existence of defendant
Company as well as its business. It is also stated that even prior
to incorporation and commencement of business by the defendant
Company, Adarsh Gupta, vide his email dated January 12, 2008
addressed to Vivek Bansal of the defendant Company, approved
idea of defendant Company exploring and promoting the business
opportunity of "One Shop School Shop". It is the case of the
defendant that Adarsh Gupta, in his aforesaid email, even
suggested a name for defendant Company i.e. Liberty Dream 18
Pvt. Ltd., which necessarily included the trade mark 'LIBERTY'
as integral part of it. Therefore, there was no objection of any
kind in use of the mark 'LIBERTY' as trade name of the
defendant Company. It is conceded by the defendant Company
that the name suggested by Adarsh Gupta could not be adopted
due to some technical reason. Defendant Company was
incorporated with the name Liberty Innovative Outfits Ltd.
('LIOL', for short) Furthermore, Adarsh Gupta has deliberately
placed on record, copies of some old packing material / catalogue
/ visiting cards, which were printed at or about the time of
commencement of business of defendant Company's in the year
2008-09. The said packing material / catalogue / visiting cards
contained one of the trade mark of LFC which was
discontinued by the defendant Company, more than 10 years ago.
Defendant Company has not been using any of the trade mark
belonging to LFC and all assertion and allegations made by
Adarsh Gupta in the plaint are false to his specific knowledge. In
so far as use of expression 'LIBERTY' as a part of corporate
name is concerned, it is stated that the defendant Company was
incorporated with consent, concurrence and knowledge of all the
partners of the plaintiff's firm and no objection of any kind was
ever raised. Ever since its incorporation the defendant Company
is carrying out its business, using corporate name LIOL. It is also
stated that defendant Company had applied for obtaining the
trade mark of the device in the year 2009, which
inadvertently got abandoned in the year 2018. Adarsh Gupta was
well aware of defendant Company's application but never
objected to the same, as the said application was filed with his
concurrence as well. The defendant Company is using only the
aforesaid trade mark on its packing material, business cards and
catalogues, none of which contains the trade mark of the plaintiff
firm. It is also stated that none of the products of defendant
Company, except shoes which are procured by it from LSL
alongwith the trademark affixed thereon by LSL, bear trade mark
of the plaintiff firm. The products of the defendant Company,
other than footwear, bear the trade mark "Anything Skool",
which is the proprietary mark registered in the name of defendant
Company. Adarsh Gupta has concealed all these facts for
obtaining interim injunction.
17. That apart, it is also stated that the present suit has been
filed for settling personal scores against promoters / shareholders
/ directors of the defendant Company, who are also partners of
plaintiff firm. Adarsh Gupta who has failed in all his
independent business ventures leading to sale of his shares in
LSL, started making illegal demands from the partners of
plaintiff firm. Having failed in achieving his illegal designs,
Adarsh Gupta has resorted to filing false and frivolous
proceedings against defendant Company and another business
venture of Bansal family namely Liberty Fashion Outfit.
18. A plea of acquiesce / limitation has also been taken,
inasmuch as the defendant Company had been using the
corporate name of Liberty Innovative Outfits Ltd. since its
incorporation in the year 2008 and commencement of business
thereafter, which fact is well within the knowledge of all the
partners of the plaintiff firm. Out of all its products sold by
defendant Company each year, more than 50% sales are
attributable to shoes/footwear, which are purchased by the
defendant's Company from LSL, the exclusive licensee of
plaintiff firm. Hence, all the partners of the plaintiff firm have
acquiesced in use of the trade mark as well as company name of
defendant since 2008. Accordingly, the plaintiff firm cannot seek
injunction for restraining the defendant Company from using the
aforesaid trade mark and trade name in any manner.
I.As. 16180/2019 & 18402/2019 in CS(COMM) 638/2019
19. This suit has been instituted seeking to restrain the
defendant from using the identical/deceptively similar mark
'LIBERTY FASHION OUTFIT' and deceptively similar
trade name 'M/s LIBERTY FASHION OUTFITS' or any other
identical/deceptively similar mark/logo for its goods and services
so as to result in violation of the statutory and common law rights
of the plaintiff in its well-known trademark 'LIBERTY'.
20. I may state here that the averments qua the plaintiff are
identical to the one made in CS (COMM) 637/2019 and an ad
interim order was passed on November 20, 2019, in favour of the
plaintiff.
21. Insofar as the defendant is concerned, the relevant
averments in the plaint are that M/s Liberty Fashion Outfits, is a
partnership firm engaged in the business of trading, importing
and marketing various kinds of goods falling under Class 18 and
25 such as purses, bags, belts, socks, etc and is illegally using the
brand names 'LIBERTY FASHION OUTFIT', and / or
plaintiff's registered trademark 'LIBERTY'. Raman Bansal is
one of the partners of the defendant firm. That Raman Bansal is
also a partner of the plaintiff firm and also holds a stake in other
partnership firms forming a part of the Liberty Group, however
he does not have any personal rights in the plaintiff's registered
trade mark 'LIBERTY' either individually or through the
defendant firm. It is also stated, Raman Bansal is also an
employee of LSL, the exclusive licensee of the plaintiff.
22. It is stated that the defendant firm, without any authority
or license from the plaintiff, has been using the plaintiff's
registered trademark 'LIBERTY' and various variations of
'LIBERTY' mark in the following manner:
a. Incorporated 'LIBERTY' in its trade name 'LIBERTY
Fashion Outfits';
b. Incorporated 'LIBERTY' in its trade mark 'LIBERTY
FASHION OUTFIT' 'LFO' and device mark for
competing business;
c. Trading, importing and marketing leather and fashion
accessories such as bags, wallets, belts, socks, etc. through
defendant firm using deceptively similar marks and claiming the
impugned marks to be a party of the 'Liberty Brand' and an
extension of Liberty Group into the accessories industries in its
advertising materials;
d. Using the plaintiff's corporate bird logo on
online portals to identify the source of the products sold under the
impugned marks;
e. Using the plaintiff's registered trademark 'LIBERTY'
individually on several products such as wallets, bags, etc.
f. Operating a website under a deceptively similar domain
name www.libertyfashionoutfits.com with the intention to give an
impression that the defendant firm is an extension of the Liberty
Group.
23. Similar submissions have been made to amicably settle
the issue with the defendant firm. A reference is also made with
regard to issuance of the legal notice dated December 08, 2018
and reply dated December 26, 2018. It is also stated that the
settlement talks reached the final stage of signing the agreements
however, the same has again failed. It is also stated that while
parties were discussing a settlement to resolve the matter related
to unauthorised use of plaintiff's trademark 'LIBERTY', the
defendant firm fraudulently applied for trade mark applications
bearing number 4173267, 4173268, 4173289 in Class 18 and 25
seeking registration of the impugned device mark and a
variation of the same. The plaintiff has filed opposition
proceedings against the said applications. It is also stated that the
plaintiff has also instituted proceedings against the defendant
firm's registered trademark , bearing no. 1995902 in
Class 25.
24. A written statement has been filed by the defendant to the
plaint. Similar objections have been taken in the written
statement, as have been taken in the written statement filed in CS
(COMM) 637/2019. Additionally, it is stated that the defendant
firm got its trade mark registered as in Class 25 vide trade
mark application no. 1995902, which is valid upto July 20, 2020.
Adarsh Gupta was well aware of defendant firm's trade mark of
the device as well as its use on the products of the
defendant firm in Class 18 as well as Class 25. He never
objected to such use, as the above trade mark was registered and
being used with his concurrence as well. It is also stated that the
defendant firm has also applied afresh for registration of its
trade mark as well as in Class 18 vide
trademark application nos. 4173268 and 4173267 both dated May
10, 2019 respectively. The defendant firm is using only the
aforesaid trade mark on its products, packing materials, business
stationery and catalogues, none of which contains the trade mark
of the plaintiff as alleged.
SUBMISSIONS:-
25. Mr. Rajshekhar Rao, learned counsel appearing for the
plaintiff firm has made common submissions to the applications
in both the suits. According to him, plaintiff firm is the first
adopter and prior user of trademark 'LIBERTY' since the year
1954 till date and has been using the 'LIBERTY' brand
continuously and uninterruptedly. According to him, this fact has
been admitted by the defendant Company in CS (COMM)
637/2019 at page 16 of the written statement, which is reply to
para 4 of the plaint as well as by the defendant Firm in CS
(COMM) 638/2019 at page 17 of the written statement, which is
reply to para 4 of the plaint. According to Mr. Rao, LE was
established later in 1976, LGMD was established in the year 1984
and LSL in the year 1989. LSL is the exclusive licensee of the
'LIBERTY' trade mark. Trade mark applications for
'LIBERTY' and LIBERTY formative marks were applied in the
name of the plaintiff firm (LFC). However, the same
inadvertently lapsed. Some applications were inadvertently filed
in the name of LE and LGMD and by a consolidation process, LE
and LGMD applications / registrations were assigned to the prior
user and owner of 'LIBERTY' i.e LFC, the plaintiff firm herein.
In substance, it is his plea that LE is not a prior user of trade mark
'LIBERTY' and only assigned the trade mark filed in its name.
Execution of assignment in favour of the plaintiff firm is
admitted and not challenged till date by the defendants and
similarly, the assignments given effect to by the plaintiff by
granting exclusive licenses to LSL from 2003 till date have not
been challenged. In fact, Mr. Rao, by drawing my attention to
reply to paras 15 and 16 of the plaint in both the written
statements would urge that this aspect has been admitted by the
defendants. He relied upon the judgment of this Court in the case
of Century Traders vs. Roshan Lal Duggar AIR 1978 (Del) 250,
in support of his contention that being a prior user, the rights of
the plaintiff in the trade mark are protected.
26. That apart, it was his submission that the rights in trade
mark registrations vested with the plaintiff immediately upon
execution of the assignments and merely non-recordal of
assignments in favour of the plaintiff does not preclude the
plaintiff firm from claiming ownership, more so, when such
application for recordal of assignments are pending with the
Trade Marks Registry. In support of his submission, he has relied
upon the judgment in the case of Sun Pharma Industries vs.
Cipla Ltd., 2009 (108) DRJ 207.
27. That apart, on the plea of the defendants that a single
partner cannot maintain an action on behalf of the partnership
firm, he has relied upon the following judgments to contend that
majority cannot be allowed to act against the interest of the firm
to protect trade mark rights.
(a) Economic Transport Carrier vs. Economic Transport
Carrier, AIR (2003) Del 201;
(b) Suresh Kumar Sanghi vs. Amrit Kumar, AIR (1982) Del
131;
(c) Novartis vs. Aventis Pharma Ltd., (2009) SCC OnLine
Bom 2067.
28. That apart, it was his submission that the defendants'
partners / Directors, Vivek Bansal / Raman Bansal admittedly
earned royalty receipts under two exclusive licenses as partners
of the plaintiff firm from 2003-13 and 2013 till date. So, they are
barred from challenging the right of the plaintiff in the trade
mark.
29. He also made a submission that the plea of the defendants
of delay / acquiescence / limitation is totally misconceived,
inasmuch as the plaintiff objected to the defendants' unauthorized
business since commencement. In this regard, he has drawn my
attention to para 26 of both the plaints, to show the steps taken by
the plaintiff firm to get the defendants to cease the illegal and
infringing use of the trade mark and also the efforts made to
amicably settle the issue. In substance, it was his submission that
the settlement talks continued till 2019, hence, there is no
question of delay or acquiescence. He stated that the defendants
being "At risk users" cannot now claim equities in their favour,
after having knowledge of the plaintiff's prior use of mark since
1954. He has relied upon the following judgments in support of
his contention.
1. Hindustan Pencils Ltd. Vs. India Stationery Products,
AIR 1990 (Del) 19;
2. Power Control Appliance vs. Sumeet Machines, (1994) 2
SCC 448;
3. Superflo vs. Sandhyamani, (2015) SCC OnLine Del
14403;
4. Alfred Dunhill Ltd. Vs. Kartar Singh Makkar & Ors.,
(1999) 19 PTC 294;
5. Novartis AG vs. Crest Pharma Pvt. Ltd. & Ors., 2009
(41) PTC 57 (Del);
6. General Mills Marketing Inc. & Anr. Vs. South India
Beverages Pvt. Ltd., 2014 SCC OnLine (Del) 3779;
30. Additionally, Mr. Rao's submission in CS (COMM)
638/2019 is that the registration of defendant firm's deceptively
similar and subsequent mark does not override the rights of
the plaintiff, who is the prior user since 1954. In other words,
passing off action based on prior use is unaffected by registration.
In this regard, he has relied upon the following judgments:-
1. S. Syed Mohideen vs. Solochana Bai, (2016) 2 SCC 683;
2. Sun Pharma Laboratories Ltd. Vs. Lupin Ltd. And Ors.,
2018 (74) PTC 103 (Del);
3. Sun Pharma vs. Ajanta Pharma, 2019 (79) PTC 86;
31. On the other hand, Mr. Sandeep Sethi, learned Senior
Counsel appearing for the defendants, in both CS(COMM)
637/2019 as well as CS(COMM) 638/2019 would submit that the
following entities are together known as Liberty group:-
(i) Liberty Footwear Company (LFC);
(ii) Liberty Group Marketing Division (LGMD);
(iii) Liberty Enterprise (LE) and;
(iv) Liberty Shoes Limited (LSL).
32. All the above entities, except LSL are registered
partnership firms and are owned by family members. Vivek
Bansal is a Director in defendant Company, LIOL, in
CS(COMM) 637/2019 as well as plaintiff firm, LE and LGMD.
33. Insofar as Raman Bansal is concerned, he is a partner in
defendant firm, LFC, in CS(COMM) 638/2019 as well as in
plaintiff firm, LE and LGMD. Both Vivek Bansal and Raman
Bansal are the shareholders as well as key managerial personnels
of LSL. Therefore, defendants are interested parties in all the
entities and cannot even think of causing any loss to either of the
entities. In 2003, the businesses of all four entities were
consolidated and LFC, LE and LGMD appointed LSL as their
exclusive licensee for manufacturing and selling footwear. The
defendant Company (in CS(COMM) 637/2019), LIOL, was
formed in 2009 and since is trading in school uniforms, school
bags, socks, shoes etc., under its registered trademark
'ANYTHINGSKOOL'. Defendant Company purchased shoes
from LSL only, which is admittedly the exclusive licensee of
trademark 'LIBERTY'. Defendant Company's products
therefore, do not compete with those of plaintiff (LFC).
According to him, it is a settled law that a registered proprietor
cannot have monopoly over the entire class of goods. Defendant
Company, LIOL, do not compete with plaintiff's or LSL's
products, hence merely because the defendant goods fall in Class
18 or 25, no infringement can be alleged. He relied upon the
judgment of the Supreme Court in the case of Nandini Deluxe vs.
Karnataka Cooperative Milk Producers Federation Ltd., (2018)
9 SCC 183.
34. The trade mark 'LIBERTY INNOVATIVE OUTFITS
Ltd.' and its trade name are being used by defendant company
since 2009 and also applied for its registration but the same was
abandoned inadvertently. Since the financial year 2012-13, its
transactions are being disclosed in the related party transaction of
LSL where Adarsh Gupta was a Director till 2015 and was
approving all the transactions. Besides, all the partners of
plaintiff including Adarsh Gupta were also being paid royalty
since last ten years for the business being carried out between
LSL and defendant.
35. Similarly, with regard to the defendant firm's LIBERTY
FASHION OUTFITS in CS(COMM) 638/20189, he stated that
the defendant firm is the registered owner of its trademark
since 2009 in Class 25. The defendant firm had also applied for
the above mark in Class 18 in 2010 but inadvertently, the same
got abandoned. It deals in leather accessories and shoe care
products such as socks, laces, belts, leather wallets, stroller bags
etc. and do not compete with either LSL or the plaintiff firm. He
stated that the defendant firm does not own any showroom or
shops and all its products are being sold through LSL, the
exclusive licensee of plaintiff. He further stated that since the
financial year 2017-18, its transactions are being disclosed in the
related party transaction of LSL where Adarsh Gupta is an
existing shareholder.
36. That apart, all the partners of plaintiff firm including
Adarsh Gupta were also being paid royalty from the turnover of
LSL, which included business being carried out between LSL and
defendant firm. He makes a similar submission based on the
judgment in the case of Nandini Deluxe (supra).
37. It was also his submission that plaintiff is not the
registered proprietor of the trademark 'LIBERTY'. In this
regard, he stated that the mark 'LIBERTY' in Class 25 is
registered in the name of LE. Therefore, plaintiff is not a
registered proprietor of the trade mark 'LIBERTY' in terms of
Section 2(1)(v) of the Trade Marks Act, 1999 ('Trade Marks
Act', for short) as claimed in the suit. The plaintiff cannot
maintain the present suit in view of Section 28 of the Trade
Marks Act. So, it follows that Mr. Rao's contention that nobody
can use the word 'LIBERTY' is also liable to be rejected.
According to Mr. Sethi, as per the document at page 28 filed by
the plaintiff, which is a document of the Trade Marks Registry
depicting the name of 'LIBERTY ENTERPRISE' clearly
establishes that even on that date, LE is the registered proprietor
of the trademark 'LIBERTY' in Class 25 and registration is valid
upto 2026. In other words, the registration having been renewed
in 2016 in favour of LE and not in the name of plaintiff, hence
the plaintiff's claim of proprietorship of assignment falls flat on
that ground alone. Mere filing of renewal application by the
plaintiff does not make it registered proprietor in terms of Section
2(1)(v) of the Trade Marks Act. In fact, it is his submission that
all family members are using 'LIBERTY' trade mark as part of
the trade name since so many years and there has never been any
dispute in that regard. It is only in the year 2018, for certain mala
fide reasons Adarsh Gupta had raised dispute. He laid stress on
the fact that, no Assignment Deed by LE in favour of the plaintiff
has been filed with the suit or even thereafter.
38. That apart, it was his submission that since admittedly
there is no recordal of assignments in favour of the plaintiff and
there are disputes between the partners, the assignments, if any
cannot be said to be valid after 17 years. In support of his
submission that recordal of assignment under Section 45 of the
Trade Marks Act is mandatory, he has relied upon the judgment
of this Court in the case of Su-kam Power Systems Ltd. Vs.
Kunwer Sachdev & Ors., 264 (2019) DLT 326.
39. It was his submission, that, in any case, even under
Section 45(3) of the Trade Marks Act, in case of dispute,
Registrar may refuse to register the assignment unless a
competent Court decides such dispute. That apart, in an
arbitration between the partners of LE, it was clearly held that all
the partners as well as their children can use 'LIBERTY'.
40. It was his endeavor to challenge the maintainability of the
suit on the ground that Adarsh Gupta lacks authority from the
plaintiff firm to institute the same. In this regard, he has stated
that the Power of Attorney of the year 2004 was for specific
purpose and the purpose having been achieved by filing a suit in
the year 2004, he could not have filed this suit on that basis. That
apart, he stated that the Power of Attorney has been revoked by
majority partners of plaintiff firm, LE and LGMD vide separate
letters dated November 08, 2019 and an undertaking dated
December 16, 2019 by the partners of the plaintiff who hold 56%
shares in the plaintiff firm and hence, the suit is liable to be
dismissed on that ground as well. That apart, it was also his
submission that under Section 12 of the Trade Marks Act, any
differences have to be decided by majority partners. In this case,
majority partners have withdrawn all the authorities from Adarsh
Gupta even before filing of these suits. He draws a distinction
between a partnership firm and a company by stating that the firm
does not have separate and independent rights from its partners
and Mr. Gupta could not have filed the present suits. In this
regard, he has relied upon the judgment of the Supreme Court in
the case of Malabar Fisheries Company vs. Commissioner of
Income Tax, 1979 (120) ITR 49 (SC) and Purushottam
Umedbhai & Co. vs. Manilal & Sons, AIR 1961 SC 325.
41. Mr. Sethi had also submitted that properties of a
partnership firm including trade mark is owned by all partners
and can be used by all partners and therefore even if it is
presumed, though not admitted, that plaintiff firm is the
proprietor of trade mark 'LIBERTY' then also, the suits are
legally untenable against one of the partners of the plaintiff firm.
In this regard, he has relied upon the judgment in the case of
Sohanlal & Ors. Vs. Amin Chand & Sons & Ors., AIR 1973 SC
2572, American Dry Fruit Stores vs. ADF Foods Limited, 2006
(3) Bom CR 837; Kalinga Gudakhu Udyog vs. Konark
Gudakhu Factory, 1990 (10) PTC 216 (Del).
42. Mr. Sethi, during his submissions, has also highlighted
conduct of Mr. Gupta, inasmuch as Adarsh Gupta was himself
carrying on business using the name 'LIBERTY' and no royalty
has been paid by him till date for such use. According to him,
Adarsh Gupta has initiated action selectively with the sole
intention of personal vendetta. Moreover, Mr. Gupta himself
suggested the use of 'LIBERTY' in his email dated January 12,
2008. He also highlighted that these suits have been filed by Mr.
Gupta after being unsuccessful in making illegal demands such as
25 years salary from LSL. According to Mr. Sethi, partners held
meetings to settle all the issues but Adarsh Gupta deliberately did
not participate in the said meetings, as his unlawful demands
were not being accepted.
43. It was also the case of Mr. Sethi that the suits are barred
by limitation, inasmuch as the suits have been filed after ten
years. The plaintiff was aware of the defendant firm and usage of
its trade mark and business since the year 2009 and also enjoying
royalty from the business between defendants and LSL. Hence, it
is a clear case of acquiescence as well. In the end, Mr. Sethi,
submitted, that, there is no compliance of Order 39 Rule 3 CPC.
This Court directed the compliance of the said provision within
two weeks, which period expired on December 04, 2019, whereas
the petition was served on December 05, 2019. He relied on
Ashwani Pan Products Pvt. Ltd. vs. Krishna Traders, 2012
(128) DRJ 592. Mr. Sethi has also contested the judgments relied
upon by Mr. Rao in support of his contentions to state that the
same are not applicable to the facts of this case.
44. Having heard the learned counsel for the parties, the first
and foremost issue that need to be decided is whether, the suit is
maintainable or not, due to lack of authority in favour of Adarsh
Gupta, as was contended by Mr. Sethi.
45. Mr. Rao has relied upon a Power of Attorney of
December, 2004 to contend that Adarsh Gupta has the authority
whereas Mr. Sethi stated that the said Power of Attorney was
executed for a specific purpose, that is filing of a suit in the year
2004, by LFC, LGMD, LE and LSL against Kanishk Gupta and
its sole proprietorship concern namely Liberty Trends from
infringing the trade mark of the plaintiffs' therein and in fact a
suit bearing No. CS (OS)1447/2004, had been filed in this Court.
Additionally, it was stated that neither the plaintiff firm nor its
partners have decided to file this suit. I have seen the Power of
Attorney executed in December 2004. Prima facie, the said
document does not appear to have been executed for the purpose
of filing a case in 2004. It has been executed by partners of the
plaintiff firm in favour of Adarsh Gupta for doing the following
acts, deeds, matters of things:-
"1. To make, declare, swear, affirm, sign, seal, deliver,
verify pleadings, affidavits, caveats, declarations,
applications, petitions, counter-claims, papers,
instruments, agreements, documents and writings usual,
necessary or expedient for or in furtherance of writ
petitions to be filed by the Partners / Firm before the
Hon'ble High Court of Delhi and to institute such
petitions (s) (hereinafter called the said "proceedings").
2. To institute, file, commence, prosecute, enforce,
defend; answer, oppose, appear in said writ petitions and
all actions and legal proceedings and demands whether
civil, political or administrative in which the Partners are
/ Firm is or may be concerned or interested in India or
appeal against, institute and prosecute appeal, revision
and review proceedings in respect of the said petitions
and all actions and legal proceedings and demands
whether civil, criminal, political or administrative in
which the Partners are/ Firm is or may be concerned or
interested in India and to file and or initiate appeal
against any, order passed by any court; tribunal or
authority in India relating to any Intellectual Property
Rights of the Partners / Firm and to sign, execute, affirm,
and verify petitions, memoranda of appeal, affidavits,
applications or any pleadings and to depose on behalf of
the Partners / Firm and if thought fit to compromise,
settle, refer to arbitration, abandon, submit to judgment,
proceed to judgement and execution or become non
suited in the said Suits / petitions or any such action as
and to defend or resist any actions or proceedings as
aforesaid and also in connection, with the said petitions.
In any such, action or proceedings, to retain employ and
remunerate advocates, solicitors and other legal
practitioners and advisors and to sign warrants,
Vakalatnamas and others necessary authorities.
3. To delegate the aforesaid powers in respect of the
institution and prosecution of the writ proceedings / civil
and / or criminal proceedings.
4. To concur in doing any of the acts, instruments,
matters, deeds and things hereinabove mentioned."
46. It is seen from the above, it is a General Power of
Attorney executed by all the partners not confining to filing of
suit referred above. It is for filing pleadings / documents etc., in
legal proceedings to be filed on behalf of partners / firm or in
which they are interested. This suit has been filed in the name of
the firm, the same could be filed on the strength of the said Power
of Attorney. In any case, the plea raised by Mr. Sethi is a mixed
question of fact and law, to be decided after evidence is adduced
by the parties on a specific issue framed in that regard. The plea
as raised by Mr. Sethi cannot come in the way of this Court to
decide these applications under consideration.
47. Now coming to the plea of Mr. Sethi that, the plaintiff is
not the registered proprietor of the trade mark is concerned, this
plea is primarily for the following reasons:-
(1) The mark 'LIBERTY' in Class 25 is registered in the
name of LE and hence the plaintiff is not a proprietor in terms of
Section 2(1)(v) of the Trade Marks Act for it to maintain a suit in
view of Section 28 of the Trade Marks Act;
(2) The plaintiff's contention that nobody can use the word
'LIBERTY' is also liable to be rejected as per Section 17 of the
Trade Marks Act;
(3) All family members are using 'LIBERTY' as trade mark
for so many years without any dispute raised in that regard;
(4) No assignment deed by LE in favour of LFC has been
filed with the suit or even with bunch of documents filed on
January 31, 2020. Even otherwise, there are disputes existing
between the partners, such assignment cannot be said to be valid;
(5) Recordal of assignment under Section 45 of the Trade
Marks Act is mandatory and in case of dispute, the Registrar has
been given power under Section 45(3) to refuse registration of the
assignment;
(6) In terms of Arbitration Award between the parties of LE,
it was clearly held that all the partners as well as their children
can use 'LIBERTY'.
48. Insofar as the pleas at (1) to (4) above are concerned, no
doubt that, the mark 'LIBERTY' is registered in the name of LE
(Ref: page No. 28 of the documents filed on January 30, 2020),
but reliance is placed by Mr. Rao on the assignment deed (s)
executed in favor of the plaintiff by which, the trade marks with
'LIBERTY' have been assigned in favour of the plaintiff, as is
stated in para 20 of the plaint (s). In fact, I find one such
assignment in favour of the plaintiff is dated March 28, 2003 and
pursuant to the assignment, a communication dated December 14,
2003 was sent to the Trade Marks Registry to change the name of
the proprietor of the mark as 'Liberty Footwear Company'
(Ref: Page 143 of plaintiff's documents). It is also the case of the
plaintiff that it has registrations of 'LIBERTY' marks in its
favour. That apart, it is a fact, that in the year 2004, on the basis
of Power of Attorney executed by Vivek Bansal and Raman
Bansal, also the plaintiff firm had filed a suit against Liberty
Trends, for infringing the same trade marks of the plaintiff firm,
which are subject matter of the these suits. So, now, Vivek
Bansal and Raman Bansal as Partners of the defendants cannot
contend otherwise.
49. Insofar as the plea of Mr. Sethi that mere assignment
without recordal of assignment by the Trade Marks Registry shall
not confer any right of the plaintiff to contend infringement, by
relying on the judgment of the Co-ordinate Bench of this Court in
Su-kam Power Systems Ltd. (supra), is concerned, this plea was
opposed by Mr. Rao by relying on the judgment of another Co-
ordinate Bench in Sun Pharmaceuticals (supra).
50. I have seen the judgments as relied upon by the counsels
including the judgment in the case of Ramaiah Life Style Café
Vs. Eminent Entertainment and Ors., CS (COMM) 1433/2016,
of which a reference is made in the judgment of Su-kam Power
Systems Ltd. (supra).
51. In Ramaiah Life Style Café (supra), the Court has in
paras 15, 16, 18, 19, 21 to 24 has stated as under:-
"15. I, in Sun Pharmaceuticals Industries Limited supra, on
consideration of the aforesaid judgments held (i) that the
reasoning which prevailed with the Madras High Court in
Soundarapandian Match Works supra had not been
considered in Modi Threads Limited supra and Grandlay
Electricals (India) Ltd. supra; (ii) however another learned
Single Judge of this Court in Astrazeneca UK Ltd. Vs.
Orchid Chemicals and Pharmaceuticals Ltd. (2006) 32 PTC
733 had also taken the same view and held that the rights in
the trade mark come on the basis of assignment deeds and
the plaintiffs cannot be denied the rights in the trade mark
which they had got on the basis of the assignment deeds in
their favour on the ground that in the records of the
Registrar of Trade Marks, the trade mark was still shown in
the name of the assignor; (iii) the Supreme Court in
Collector of Central Excise Ahmedabad Vs. Vikshara
Trading and Investment (P). Ltd. 2003 (27) PTC 603 though
not directly concerned with the issue had held that once it
was not in dispute that there was an assignment, the mere
fact that the assignment was not registered could not alter
the position; (iv) that the learned Single Judge of the
Madras High Court in Soundarapandian Match Works
supra had not considered the earlier judgment of the
Division Bench of that Court in T.I. Muhammad Zumoon
Sahib supra; (v) that registered trade mark is different from
registered proprietor; (vi) that assignment under Section
2(b) is an assignment in writing by an act of parties
concerned and does not require registration; (vii) that for
assignment to be complete, the Registrar is not involved;
(viii) that from the language of Section 45(1) of the Trade
Marks Act also, the assignee acquires title to the registered
trade mark on assignment and not by registration; (ix) that
registration is of title acquired by assignment; (x) that a
dispute as to assignment can be raised by the assignor or by
some person claiming prior assignment and not by
strangers or by persons claiming adversely to the assignor;
(xi) that thus the assignee immediately on assignment
acquires title to the registered trade mark and title to the
registered trade mark exists in assignee even before
registration under Section 45(1); (xii) that what prevailed
with the Madras High Court in Soundarapandian Match
Works supra was the inaction of the plaintiff therein to even
apply to the Registrar of Trade Marks; (xiii) that however
the plaintiff in Sun Pharmaceuticals Industries Limited
supra had applied for registration of the assignment as far
back as in the year 2000 and there was nothing to show that
the plaintiff was in any way to blame for the Registrar
having not decided the application either way; the plaintiff
could not be made to suffer for the actions of the Registrar;
(xiv) that Section 45(2) of the Trade Marks Act prohibiting
admission into evidence of any assignment till registered
was in the nature of Section 35 of the Indian Stamp Act,
1899 prohibiting the Courts from admitting into evidence
documents not duly stamped i.e. to ensure registration of
assignments; (xv) thus the plaintiff, notwithstanding being
not registered was held entitled to exercise rights as
registered proprietor of the trade mark.
16. I have wondered whether the reasoning which prevailed
with me in Sun Pharmaceuticals Industries Limited supra
should prevail in the facts of the present case also, where
the plaintiff inspite of assignment claimed in its favour as
far back as on 9th December, 2009 and inspite of
knowledge of infringement of the said trade mark by the
defendants as far back as in 2012, has till date not taken
any steps for registration of the assignment in its favour.
XXX XXX XXX
18. It needs to be considered whether Section 45 as it now
stands requires re-consideration of the view taken in Sun
Pharmaceuticals Industries Limited supra.
19. Sub-section (4) of Section 45 of the Trade Marks Act as
it now stands is new. It makes the assignment ineffective
against a person acquiring a conflicting interest in or under
the registered trade mark without the knowledge of
assignment or transmission. The defendants herein have
however not acquired any conflicting interest in or under
the registered trade mark.
XXX XXX XXX
21. The said changes in Section 45 however do not call for a
change in the view taken in Sun Pharmaceuticals Industries
Limited supra. I may however record that the Division
Bench of the High Court of Bombay in Parksons
Cartamundi Pvt. Ltd. Vs. Suresh Kumar Jasraj Burad 2012
SCC OnLine Bom 438 has held that though prior to the
amendment registration of assignment under Section
45 could not be said to be a mere formality but is so after
the amendment.
22. One thing which is however clear as a day light on a
reading of Section 45 is that registration of assignment
under Section 45 is mandatory. This is evident from the use
of the word „Shall‟ in Section 45(1).
23. Thus it is mandatory for a assignee of a registered trade
mark to apply in the prescribed manner to the Registrar,
Trade Marks to register his title thereto.
24. Seen in this light what distinguishes the present case
from Sun Pharmaceuticals Industries Limited supra and the
judgments relied upon therein is that while in all those cases
the plaintiff had applied to the Registrar, Trade Marks for
registration of his title to the trade mark by assignment or
transmission and non-registration was not attributable to
any default on the part of the plaintiff therein, the plaintiff
herein for the last nearly eight years from the date of the
claimed assignment and for the last nearly five years since
the admitted knowledge of claimed infringement has not
even applied to the Registrar of the Trade Marks for
registering the assignment of trade mark in its favour. The
possibility of the plaintiff not doing so for reasons not
spelled out before this Court cannot be ruled out."
52. From the above, it is seen the Court has held; (i) that
under Section 45 of the Trade Marks Act, registration of
assignment is mandatory; (ii) It is mandatory for an assignee of a
registered trade mark to apply in the prescribed manner to the
Registrar of Trade Marks to register his title thereto.
53. It is also seen that the Court had distinguished the case
from Sun Pharmaceuticals (supra) and the judgments relied
upon therein, by stating that in all those cases, the plaintiff had
applied to the Registrar of Trade Marks for registration of his title
to the trade mark by assignment or transmission and non-
registration was not attributable to any default on the part of the
plaintiff therein. The Court also stated that the plaintiff therein
for nearly eight years from the date of claimed assignment and
for the last five years since admitted knowledge of claimed
infringement has not applied to the Registrar of Trade Marks for
registering the assignment of the trademark in its favour.
54. In the case in hand, in reply to application under Order 39
Rule 4, the plaintiff in reply to para 4 of the application has stated
as under:-
"The plaintiff has further applied to the Registrar of Trade
Marks for recordal of assignment and consequently, taking
the Plaintiff on record as the subsequent proprietor. It is
submitted that any inaction of part of the Trade Marks
Registry with respect to a few registration, does not
preclude the Plaintiff herein from exercising its rights which
accrued to the Plaintiff immediately upon the said
assignment of LIBERTY trademarks in its favour by Liberty
Enterprises (LE) and Liberty Group Marketing Division
(LGMD) in the year 2003."
55. In rejoinder to the reply to para 4, the defendant has not
disputed the fact that the plaintiff has applied for recordal of
assignment (Refer to page 143 of the plaintiff's documents). If
that be so, the judgment in the case of Ramaiah Life Style
(supra) is distinguishable, as in that case the plaintiff has not
filed any application for recordal of assignment. In fact, this
aspect prevailed with the Court to deny interim injunction. The
effect thereof is that the ratio of the judgment in Sun
Pharmaceuticals (supra) was upheld.
56. Now coming to the judgment in the case of Su-kam
Power Systems Ltd. (supra), the said judgment is distinguishable
inasmuch as: (i) therein the Court has held the deed of assignment
to be void on the ground of breach of fiduciary duty. There is no
such challenge to the assignment in this case by the defendant;
(ii) in any case the application for recordal is made after twelve
years, after commencement of Insolvency Resolution process,
whereas in the case in hand, the plaintiff has in fact made an
application for recordal of assignment immediately in 2004 itself,
which is still pending. Any delay on the part of the Trade Marks
Registry cannot be to the prejudice of the plaintiff firm, who has
every right to protect its right in the trade marks. The observation
of the Coordinate Bench in Sun Pharmaceuticals (supra) that,
"If the interpretation canvassed by defendant herein is to be
adopted it will amount to allowing a person who is divested by
assignment of title to registered trade mark to nevertheless
continue exercising such rights; it would play havoc with
assignability and trading in trade mark, expressly permitted
under the Act. If the person in whom title has vested by
assignment is held to be not entitled to exercise such rights owing
to non-registration, the same result will follow besides giving
premium to third parties", is important and conclusive.
57. Insofar as the plea of Mr. Sethi that trade mark of a
partnership firm is owned by all the partners is concerned, the
same is primarily for the following reasons:-
(i) Majority partners have withdrawn all the authorities from
Adarsh Gupta;
(ii) Plaintiff is not a Company but a partnership firm, which
does not have separate and independent right from the partners.
In this regard, he had relied upon the judgments in the cases of;
(i) Malabar Fisheries (supra) and Purushottam Umedbhai &
Co. (supra);
(iii) Properties of a partnership firm including trade mark is
owned by all the partners and can be used by all the partners by
placing reliance on Sohanlal & Ors. (supra), American Dry
Fruit Stores (supra), Kalinga Gudakhu Udyog (supra).
58. The plea of Mr. Rao in this respect is that Adarsh Gupta
being a partner in the plaintiff firm is entitled to institute these
suits to protect the interest and intellectual property rights of the
plaintiff firm. He stated that in the past also, Mr. Gupta had filed
a suit concerning the intellectual property rights of the plaintiff
firm. This is because as a partner Mr. Gupta has a vital interest in
the activities of the partnership firm and thus is entitled to
institute these suits on behalf of the plaintiff firm against the
defendants, more so, when some of the partners of the plaintiff
firm are inclined to act in bad faith and in breach of fiduciary
duties and contrary to the interest of the partnership firm solely
for their personal gains and in this background, a suit filed by one
partner, to protect the intellectual property of the firm against
another partnership firm, whose partner is the partner of the
plaintiff firm is maintainable by relying on the judgments in the
case of Suresh Kumar Sanghi (supra), Novartis (supra),
Economic Transport Carrier (supra).
59. There is no dispute on the proposition of law as laid down
by the judgments as relied upon by Mr. Sethi, but the relevant
issue is whether a partner is precluded from initiating action, to
protect the intellectual property rights of the firm. The answer, in
view of the judgments relied upon by Mr. Rao is "NO". In
Suresh Kumar Sanghi (supra), this Court held that the majority
of the partners are not vested with a power to bind the other
persons with regard to the matter of vital importance and decision
with regard to the same must be taken with the consent of all the
partners. Further, the majority must act in good faith, is another
important aspect. The following observation of the Court in
Suresh Kumar Sanghi (supra), is also of relevance:-
"32......
No doubt, a partnership being the business of all the
partners, the powers of management of the
partnership are co-extensive but the control and
management of partnership business can be
exercised by a single partner and need not be by
majority....".
60. An identical issue arose in the case of Economic
Transport Carrier (supra), wherein a suit was filed by one of the
partners of the plaintiff therein against a firm, for using the name
and trade name. The question that arose was whether the
majority of the partners have the right to withdraw the suit filed
by one of the partners of the firm without any permission or
authority of the original partnership firm. This Court, in para 4 of
the judgment, held as under:-
"4. In such a situation the decision of the majority of
the partners cannot be binding on the other partners
particularly when the suit is for passing off the name of a
firm or infringement of the trade name as commercial
activity of every kind is prosecuted through a partnership
firm. In no circumstances, the majority of the partners
can be allowed to permit a stranger to use their name or
trade name as it would amount to offence of passing off.
Every partner has a vital interest in the activities of a
partnership firm. Majority cannot trample or impede the
interests of minority partners."
61. I find, Mr. Vivek Bansal and Mr. Raman Bansal, apart
from being partners in the plaintiff firm, are Director in the
defendant Company in CS (COMM) 637/2019 and partner in
defendant firm in CS (COMM) 638/2019 respectively. So, by
opposing the action initiated by the plaintiff firm, through Adarsh
Gupta, they stand to gain as Director/ partner of defendants.
The plea is rejected.
62. Insofar as the pleas of Mr. Sethi of acquiescence and
limitation are concerned, it is averred by the plaintiff firm that,
since 2009, the plaintiff firm, has taken measures to get the
defendants to cease the illegal and infringing use and has
communicated the same to the defendant time and again.
Instances have been given in para 26 of the plaint (s) about the
efforts made on different occasions to come to a common
understanding / settling the issue. The plaintiff firm also averred
that the defendants through Vivek Bansal and Raman Bansal had
discussed settlement, with the plaintiff firm including giving up
the use of plaintiff trade mark 'LIBERTY'. It is also stated that
the defendants had sent email, seeking to enter into a settlement
with the plaintiff, thereby agreeing to pay royalty. Noting the
averments made, suffice would it be to state that the issue of
acquiescence / limitation is a mixed question of fact and law,
which cannot be decided at this stage. Parties should be
permitted to prove their case on these aspects by leading
evidence, on specific issues framed in that regard.
63. During the course of his submissions, Mr. Sethi has,
highlighted, that conduct of Adarsh Gupta, as mala fide. The
instances highlighted are:-
(i) Adarsh Gupta was himself carrying out a business using
the name 'LIBERTY' without paying any royalty;
(ii) There are many other companies not owned by LIBERTY
family, who are using 'LIBERTY' as their trade name as
'LIBERTY' is a generic term;
(iii) Action has been initiated against selected family members
as a personal vendetta.
64. I am afraid, the said submission shall not have any
bearing on the rights of the plaintiff firm to initiate action for
infringement of the trademark 'LIBERTY', based on the
assignments of 2003 and / or in terms of registrations in its
favour. If any person has any grievance / claim, against Adarsh
Gupta, in his individual capacity (not as a Partner of the plaintiff
firm), he is at liberty to agitate the same in accordance with law.
65. Insofar as the plea of Mr. Sethi that a registered proprietor
cannot have a monopoly over the entire class of goods by relying
on the judgment of the Supreme Court in Nandini Deluxe
(supra) is concerned, there is no dispute on the proposition of law
as pleaded by Mr. Sethi, but it is also the case of the plaintiff that
passing off action based on prior use is unaffected by registration.
Whether the plaintiff is a prior user; the effect of assignment;
registrations, if any in favour of the plaintiff shall be considered,
after evidence is led by the parties, and not at this stage when the
plaintiff has made out, a prima facie case in its favour.
Moreover, the defendants have not been able to show, their right
in the trademark 'LIBERTY' and its variations.
66. That apart, the plea on behalf of the plaintiff firm that
Vivek Bansal / Raman Bansal have not taken any objection to the
institution of the suit being CS(OS) 1447/2004, against Kanishk
Gupta / Liberty Trends seeking permanent injunction from using
the plaintiff's trademark 'LIBERTY' and various sub-brands of
the LIBERTY group, which are also the prayers in these suits, is
appealing.
67. I must also, note the submission of Mr. Sethi that Adarsh
Gupta was a Director of LSL till 2015 and all partners including
Adarsh Gupta were being paid royalty since last almost 10 years
for business carried out between LSL and defendants is also
appealing, but the effect thereof, that too keeping in view the
averments made by the plaintiff, in para 26 of the plaint, has to be
seen and decided finally in the suit, after the parties lead their
evidence in support of their respective case.
68. Insofar as the submission of Mr. Sethi that the interim
order need to be vacated as the plaintiff has not complied with
Order 39 Rule 3, inasmuch as the plaint was served on the
defendant on December 05, 2019, and affidavit of compliance
was filed on December 07, 2019 by relying on the judgment of
Ashwani Pan Products Pvt. Ltd. (supra) is concerned, no doubt,
this Court has directed compliance to be made within two weeks,
which expired on December 04, 2019, which means, the plaint
was served on the defendant one day after the period expired and
the affidavit was also filed beyond time, but the delay is not fatal.
It is not a case, where the complete paper book was not served on
the defendant as has happened in the judgment relied upon by
Mr. Sethi. The said judgment is distinguishable on facts. In so
far as the plea of Mr. Sethi, that in an arbitration between the
partners of LE it was clearly held that all the partners as well as
their children can use 'LIBERTY' is concerned, the same is not
appealing. The plaintiff has no locus to make such a plea. It is
for the partners of LE to make a claim against the plaintiff, if any
right exist in their favour.
69. In view of my above discussion, this Court is of the view,
the order dated November 20, 2019 passed in the suits require no
interference, except as modified vide order dated December 24,
2019 in CS(COMM) 638/2019. The orders are confirmed till the
disposal of the suits.
70. It is made clear the aforesaid conclusion of mine is only a
tentative view.
71. The applications being I.A. 16177/2019 in CS(COMM)
637/2019 and I.A. 16180/2019 in CS(COMM) 638/2019 are
disposed of and applications being I.A. 18169/2019 in
CS(COMM) 637/2019 and I.A. 18402/2019 in CS(COMM)
638/2019 are dismissed.
CS(COMM) 637/2019
CS(COMM) 638/2019
Replication, if not filed, shall be filed as per rules.
List before Joint Registrar on July 3, 2020 for completion
of pleadings and further proceedings.
V. KAMESWAR RAO, J
MAY 26, 2020/ak/jg
