2006 Supreme(SC) 791

2006(7) Supreme 224
SUPREME COURT OF INDIA
(From Gujarat High Court)
S.B. Sinha and P.P. Naolekar, JJ.
Ramdev Food Products Pvt. Ltd.—Appellant
versus
Arvindbhai Rambhai Patel & Ors.—Respondents
Civil Appeal Nos. 8815-16 of 2003
With
Civil Appeal No. 8817 of 2003
Decided on 29-8-2006
Counsel for the Parties :
For the Appellant : Ashok H. Desai, C.A. Sundaram, Mihir Joshi, Sr. Advocates, Hazefa Ahmadi, Devang S. Nanavati, Lalit Chauhan, Saurin Mehta, Nokul Diwan, Anshuman Mohapatra, Shiva Santanam and P.H. Parekh (for M/s. P.H. Parekh & Co.), Advocates.
For the Respondents : F.S. Nariman, Dr. Abhishek M. Singhvi, Mihir Thakore, Sr. Advocates, Mahesh Agarwal, Unmesh Shukla, Janak Shah, Nitin Mehta, Manu Krishnan and E.C. Agrawala, Advocates.

IMPORTANT POINTS
1. Making use of another’s trade mark is not only a violation of business ethics but has also been linked to dishonestly making use of the goodwill and reputation built up and associated with the mark.
2. If an infringement of trade mark is established, the onus would be on the defendants to show that he is entitled thereto either by reason of acquiescence on the part of the owner of the registered trade mark or he himself has acquired a right thereto.
3. In an action for trade mark infringement where the defendant’s trade mark is identical with the plaintiff’s mark, the Court will not enquire whether the infringement is such as is likely to deceive or cause confusion. The test, therefore, is as to likelihood of confusion or deception arising from similarity of marks is the same both in infringement and passing off actions.
4. In an infringement of trade mark, delay by itself may not be a ground for refusing to issue injunction.
5. Registration of a trade mark and user thereof per se may lead to the conclusion that the plaintiff has a prima facie case, however, existence thereof would also depend upon the determination of the defences raised on behalf of the defendant.

Headnote:(i) Trade and Merchandise Marks Act, 1958—Sections 2(d), (i), (q), 15 and 17—Trade mark violation—Passing off action—Memorandum of Understanding (MOU) between three brothers, being a family settlement—In year 1965, one ‘RP’ started a business of grinding and selling spices under the name and style of ‘Ramdev’—He had three sons and two daughters—Appellant company was incorporated whereunder pattern of shareholding amongst the three brothers was specified—Registered trade mark was assigned by ‘Ramdev Masala Stores’ in favour of appellant—MOU stipulated that manufacturing and selling of masala (spices) and instant mix was being done by the appellant company and the goods were being sold in retail in the name of ‘Ramdev Masala’ to seven outlets named therein—Trade mark or trade name which was registered in the name of the company went to the Company—Respondent, eldest brother became exclusive owner of the business—Two brothers were given the right to carry on export business under the name of ‘Ramdev’—Respondents have been manufacturing spices under the name and style of ‘Swad’—However, mark used by respondents was deceptively similar to the trade mark registered in favour of appellant—Concurrent finding of fact that the packing material and wrapper of both the parties was phonetically and visibly similar to the registered mark—Whether respondents were entitled to use the trade mark by reason of the stipulations contained in MOU—(No)—Whether Section 15 of the Act can be held applicable in such a case—(No).

       Held : The learned Trial Court as also the High Court proceeded on the basis that the respondents are entitled to use the said trade mark by reason of the stipulations contained in the said MOU as a result whereof they became entitled to use the trade mark Ramdev for their retail business of spices in seven outlets, which used to be belonging to the company. The said outlets were meant to be used for retail sale of the products of the appellant alone.(Para 54)

       The learned Trial Judge as also the High Court, however, failed to notice two significant and important provisions in the said MOU, viz., (i) the defendants could not carry on business in wholesale of the said products; (ii) it was meant to be sold directly to the consumers and on the productions "not for resale" was required to be printed on each packet. What, therefore, could be done by the respondents was to sell the products of the appellant through the said outlets. It was one of the primary business of the partnership firm which was given to the first respondent. Prima facie, therefore, the first respondent could sell only the product of the appellant. The respondents, however, were not restrained from manufacturing spices in their own factory. They were entitled to do so. They started the same under the brand name of Swad. They could even use the same retail outlets for the purpose of promoting their own products but prima facie they could not use the mark registered in the name of the appellant Company. The registration number of trade mark is 447700. Once the appellant had acquired goodwill and reputation thereto, in the event of any infringement to the said right, the remedies provided for in the 1958 Act would be available to it. The terms of the MOU, in our opinion, are clear and unambiguous. It was required to be construed, even if it was obscure to some extent by making attempt to uphold the one which would be in consonance with law and not offend the same. Quality control by a registered trade holder vis-a-vis the one produced by an unregistered one is one of the factors which is required to be taken into consideration for the purpose of passing an order of injunction. It is one thing to say that the respondents were permitted to carry on trade but it would be another thing say that they would be entitled to manufacture and market its products under a name which would be deceptively similar to that of the registered trade mark of the appellant. So long the parties to an arrangement can continue to carry out their respective businesses without infringing the right of another, indisputably the terms thereof must be given effect to. But the matter would be entirely different when a party who has not been expressly authorised to manufacture the goods in which the Company had been carrying on business under the same name, the respondents under law could not have been permitted to carry on the manufacturing and marketing of their products under the same name. In a case of this nature, even a mandatory injunction can be granted. The respondents in the instant case have adopted a part of the appellants registered trade mark as a part of its corporate name. They had merely been permitted to trade from seven outlets. In that view of the matter, they had a limited right under the MOU and by reason thereof they could not have been permitted to start manufacturing of spices under the name and style of Ramdev Masala. Even under the common law, licence has to be interpreted to subsume the law and prevent the mischief which is deceptive having regard to the fact that trafficking in trade mark is not permitted.(Para 55)

       It is true that the respondents have been permitted in terms of the MOU to continue their business in the name of the partnership firm and to use the label mark, logo, etc. but the said MOU must be construed in the light of the law operating in the field. For the said purpose, prima facie, the deeds of retirement are not required to be looked into. When a right to use a trade mark is given, such a right can be exercised only in the manner laid down therein. If in absence of any express licence or agreement to use its label the respondents use the self-same trade mark, the same would not only lead to confusion but may also cause deception. Even a common law licence, it is well-settled, cannot result in the dilution of the trade mark.(Para 56)

       In that view of the matter, we are not in a position to subscribe to the views of the learned Trial Judge and the High Court that although the first respondent would be at liberty to carry on the business of manufacture of spices.(Para 57)

       What is registered is a logo wherein the words Ramdev and Masala are prominent. A person may be held to be permitted to carry on business in spices as contradistinguished from the permission to carry on manufacturing goods which are similar to that of the appellant, but in terms of the statutory provisions, the respondents were not legally permitted to sell its products in packages or labels which would be deceptively similar to that of the registered owner of a trade mark. The right to manufacture masala and to sell the same with the registered logo, it will bear repetition to state, was assigned as far back in 1991. If the contention of the Senior Counsel is accepted, the said purpose would be lost. In a case of this nature, therefore, ordinarily an injunction would issue.(Para 63)

       By reason of interpretation of MOU, trade mark cannot be infringed and further when the right of user has been relinquished, the same could not have been claimed by the respondents.(Para 64)

       Section 15 of the 1958 Act postulates registration of the whole and a part thereof as separate trade marks. The nature of the trade mark of the appellant has been noticed hereinbefore. (Para 69)

       There are three elements in the said trade mark, viz., Ramdev, Masala and the horse. The deception could be as regard the prominent features of the said trade mark.(Para 70)

       Section 15 of the 1958 Act, in our considered opinion, is not attracted in the instant case. By reason of the said provision, registration of trade mark in regard to the exclusive use is permissible both in respect of the whole trade mark as also the part thereof separately. Where such separate trade mark in regard to a part of it is applied for, the applicant must satisfy the conditions applying to and have all the incidents of an independent trade mark. Sub-section (3) of Section 15 of the 1958 Act provides for a case where the proprietor of several trade marks claimed registration in respect of the same goods or description of the goods which while resembling each other in the material particulars thereof yet differ in respect of the matters provided for therein. We are not, in this case, concerned with such a legal question. (Para 71)

       We, in view of our findings aforementioned, direct:

       (i)The respondents be restrained from using the trade mark including the trade name Ramdev Masala in any of their products.

       (ii)They may, however, carry on their business in any other name insofar as manufacturing of spices is concerned.

       (iii)The appellant shall, as and when demands are made, supply spices produced by it for retail sale thereof to seven outlets belonging to respondents on usual terms, and in respect of such articles on the labels/pouches, on the reverse thereof, the following shall be mentioned in the minimum permissible size in terms of the provisions of Weights and Measures Act and Prevention of Food Adulteration Act:

       "This product is manufactured and marketed by M/s. Ramdev Masala (Arvindbhai Group) (Or M/s. Ramdev Exports Arvindbhai Group) having no relationship whatsoever with Ramdev Food Products Pvt. Ltd."

       (iv)The appellant shall deposit a sum of Rs. 50 lakhs before the Trial Court or furnish a bank guarantee for the said sum by way of security.(Para 122)

       (ii) Trade and Merchandise Act, 1958—Sections 15 and 17—Registration of parts of trade marks and of trade marks as a series—Registration of trade mark in regard to the exclusive use is permissible both in respect of the whole trade mark as also the part thereof separately—Where such separate trade mark in regard to a part of it is applied for, applicant must satisfy the conditions applying to and have all the incidents of an independent trade mark.(Paras 69 to 71)

       (iii) Trade and Merchandise Act, 1958—Sections 28 and 29—Remedies for infringement of trade mark—What is needed by way of cause of action for filing a suit of infringement of trade mark is use of a deceptively similar mark which may not be identical.

       Held : Section 28 of the 1958 Act confers the right of registration whereas Section 29 thereof provides for the remedies for infringement of trade mark. What is needed by way of cause of action for filing a suit of infringement of trade mark is use of a deceptively similar mark which may not be identical. What would be deceptively similar, as defined in Section 2(d) of the 1958 Act, would be a mark if it nearly resembles that other mark as to be likely to deceive or cause confusion. It is, therefore, not a case where the respondents could raise valid defence in terms of Section 29 of the 1958 Act. (Para 74)

       The right conferred in terms of Section 28 of the 1958 Act although is required to be read with Sections 15 and 17 thereof but it is difficult to accept that each part of the logo was required to be separately registered. Section 28 of the 1958 Act confers an exclusive right of using trade mark to a person who has got the trade mark registered in his name. Such right is, thus, absolute. Sub-section (3) of Section 28 raises a legal fiction for the purposes specified therein but we are not concerned therewith in the instant case. Sub-section (2) of Section 29 inter alia provides for the defences. (Para 75)

       (iv) Trade and Merchandise Act, 1958—Sections 2(d), (i), (q), 28 and 29—Passing off action—Deceptively similar test—Applicability.

       Held : The doctrine of passing off is a common law remedy whereby a person is prevented from trying to wrongfully utilise the reputation and goodwill of another by trying to deceive the public through passing off his goods.(Para 80)

       Although, the defendant may not be using the actual trade mark of the plaintiff, the get up of the defendants goods may be so much like the plaintiffs that a clear case of passing off could be proved. It is also possible that the defendant may be using the plaintiffs mark, the get up of the defendants goods may be so different from the get up of the plaintiffs goods and the prices also may be so different that there would be no probability of deception of the public. However, in an infringement action, an injunction would be issued if it is proved that the defendant is improperly using the plaintiffs mark. In an action for infringement where the defendants trade mark is identical with the plaintiffs mark, the Court will not enquire whether the infringement is such as is likely to deceive or cause confusion. The test, therefore, is as to likelihood of confusion or deception arising from similarity of marks is the same both in infringement and passing off actions.(Para 82)

       (v) Trade and Merchandise Act, 1958—Sections 2, 15 and 29—Trade mark violations—Plea of acquiescence —Applicability of principle of acquiescence—In an infringement of trade mark, delay by itself may not be a ground for refusing to issue injunction—Defence of acquiescence would be satisfied when the plaintiff assents to or lay by in relation to the acts of another person—Specific knowledge on the part of plaintiff and prejudice suffered by defendant is also a relevant factor.

       Held : Acquiescence is a facet of delay. The principle of acquiescence would apply where: (i) sitting by or allow another to invade the rights and spending money on it; (ii) it is a course of conduct inconsistent with the claim for exclusive rights for trade mark, trade name, etc. (Para 93)

       The defence of acquiescence, thus, would be satisfied when the plaintiff assents to or lay by in relation to the acts of another person and in view of that assent or laying by and consequent acts it would be unjust in all the circumstances to grant the specific relief.(Para 96)

       Applying the aforementioned principles in the instant case, it is evident that the time gap between the issuance of the notice and filing of an application for grant of injunction was not a voluntary act on the part of the appellant herein. It had to wait for the outcome of various proceedings pending before different courts. The respondents having themselves taking recourse to judicial proceedings, as noticed hereinbefore, cannot now be permitted to set up the defence of acquiescence on the part of the appellant. Indisputably, in a case of infringement of trade mark, injunction would ordinarily follow where it is established that the defendant had infringed the trade mark and had not been able to discharge its burden as regard the defence taken by it.(Para 99)

       (vi) Trade and Merchandise Act, 1958—Sections 2, 21, 29 and 33—Trade mark infringement—Injunction suit—When a prima facie case is made out and balance of convenience is in favour of plaintiff—It may not be necessary to show more than loss of goodwill and reputation to fulfil the condition of irreparable injury—If the first two pre-requisites are fulfilled, in trade mark actions irreparable loss can be presumed to have taken place—Civil Procedure Code, 1908—Order 39, Rules 1 and 2.(Para 112)

       (vii) INTERPRETATION OF STATUTES—Non Obstante Provisions—Interpretative process must be kept confined to the legislative policy—A non obstante clause must be given effect to, to the extent the Parliament intended and not beyond the same.(Para 58)