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BOMBAY HIGH COURT
S.S. Nijjar, J.
MAHESH JAYALAL DADHIA AND ANOTHER - PLAINTIFFS
v.
THIO PHARMA AND OTHERS - DEFENDANTS
Notice of Motion No....of 1999 in Suit No.576 of 1999, D/- 16/17-2-1999,
Decided on: February 17, 1999
TRADE MARK - INFRINGEMENT - INJUNCTION - FAMILY ARRANGEMENT - TRANSFER OF TRADE MARKS - CONDITIONS PRECEDENT - NON-COMPLIANCE - ENTITLEMENT TO INJUNCTION - JOINT PROPRIETORSHIP - USE OF TRADE MARK - RIVALRY AND COMPETITION - PUBLIC INTEREST - BALANCE OF CONVENIENCE - IRRETRIEVABLE LOSS - DELAY - SUPPRESSION OF MATERIAL FACTS - MISREPRESENTATION - DUTY OF CANDOUR - DISMISSAL OF SUIT.
Fact of the Case:
Plaintiffs, members of the same family, sought an injunction restraining the defendants from manufacturing, selling, or trading pharmaceutical products bearing the trade marks BROSMIN, ACTIZYME, ENERPRO, PRESTIGESIC, and/or PRESTIFEN. The trade marks were initially used by defendant No. 1, and later transferred to the marketing company, Synthiko Formulations Pvt. Ltd. A family arrangement was entered into in 1995, dividing the family businesses and properties. Clause 1 of the arrangement provided that all trade marks marketed by the marketing company belonged to the plaintiff. Clause 2 stipulated that products manufactured by defendant No. 1 and marketed by the marketing company belonged to the plaintiff. A job work agreement was executed in 1996, whereby defendant No. 1 manufactured drugs on behalf of the plaintiff. Disputes arose, and the job work agreement was terminated in 1997. The plaintiffs claimed that the execution of the job work agreement indicated the transfer of title in the trade marks to the plaintiff. The defendants, on the other hand, alleged that the family arrangement had been given a go-by and that the trade marks were not transferred unconditionally. They also raised issues of suppression of material facts and misrepresentation by the plaintiffs.
Finding of the Court:
The court found that the trade marks were not transferred to the plaintiff unconditionally. The family arrangement clearly stated that the trade marks belonged to M/s. Syrup Thio-kof Mfg. Com. (India), and that the plaintiff had full right and responsibility for profits and losses for manufacturing products under the label of the company. The partnership of the firm continued, and the trade marks did not become the sole property of the plaintiff. The court also found that the plaintiff had failed to comply with the reciprocal obligations under the family arrangement, including the settlement of liabilities and payment of dues. The subsequent agreements dated 1st May 1997 and 12th September 1997 further supported the defendants' contention that the plaintiff had not fulfilled the conditions precedent for the transfer of the trade marks.
Issues: 1. Whether the trade marks were transferred to the plaintiff unconditionally under the family arrangement? 2. Whether the plaintiff had complied with the reciprocal obligations under the family arrangement? 3. Whether the subsequent agreements dated 1st May 1997 and 12th September 1997 affected the transfer of the trade marks? 4. Whether the plaintiff was entitled to an injunction restraining the defendants from using the trade marks? 5. Whether the defendants' allegations of suppression of material facts and misrepresentation were substantiated?
Ratio Decidendi: 1. The court held that the trade marks were not transferred to the plaintiff unconditionally under the family arrangement. The family arrangement clearly stated that the trade marks belonged to M/s. Syrup Thio-kof Mfg. Com. (India), and that the plaintiff had full right and responsibility for profits and losses for manufacturing products under the label of the company. The partnership of the firm continued, and the trade marks did not become the sole property of the plaintiff. 2. The court found that the plaintiff had failed to comply with the reciprocal obligations under the family arrangement, including the settlement of liabilities and payment of dues. The subsequent agreements dated 1st May 1997 and 12th September 1997 further supported the defendants' contention that the plaintiff had not fulfilled the conditions precedent for the transfer of the trade marks. 3. The court held that the subsequent agreements dated 1st May 1997 and 12th September 1997 affected the transfer of the trade marks. These agreements showed that the plaintiff had agreed to discharge certain liabilities and obligations in exchange for the transfer of the trade marks. The plaintiff's failure to fulfill these obligations meant that the trade marks were not transferred to him unconditionally. 4. The court held that the plaintiff was not entitled to an injunction restraining the defendants from using the trade marks. The plaintiff was not the sole proprietor of the trade marks, and the defendants were also entitled to use them as joint proprietors. The court also considered the public interest, the balance of convenience, and the irretrievable loss, and found that the grant of an injunction would not be appropriate in the circumstances. 5. The court found that the defendants' allegations of suppression of material facts and misrepresentation were substantiated. The plaintiff had failed to disclose the subsequent agreements dated 1st May 1997 and 12th September 1997 in the plaint, and had made misleading statements about the transfer of the trade marks.
Final Decision: The court dismissed the plaintiff's Notice of Motion for an injunction, with no order as to costs.
S.S. Nijjar, J. - Leave under Rules 147 and 148 of the High Court of Judicature at Bombay (O.S.) Rules, 1980 is granted to the plaintiffs to take out the Notice of Motion in terms of the draft Notice of Motion handed in. Notice of Motion made returnable forthwith. Defendants have been served and affidavits in reply and rejoinder have been filed. By consent of the party, the Notice of Motion is being disposed of finally at this stage.
2. By this suit, the plaintiffs are seeking an order restraining the defendants from manufacturing, selling and/or trading their pharmaceutical products bearing the trade marks BROSMIN, ACTIZYME, ENERPRO, PRESTIGESIC and/or PRESTIFEN or any other mark identical and/or deceptively similar thereto as, according to the plaintiffs, the defendants are not entitled to use the same.
3. Plaintiff No.1, defendant Nos. 2, 3 and 4 are members of the same family. They are partners in the family partnership firms being plaintiff No.2 and defendant No.1. Defendant No.2 is the brother of the first plaintiff. Defendant No.3 is the sister-in-law of the first plaintiff and defendant No.4 is the niece of the first plaintiff. They are members of a family known as Dadhia family. This family owns several firms, companies, properties and plaintiff No.1 along with his father and his four brothers including defendant No.2 were carrying on business as a joint family known as "Dadhia group". The business of the Dadhia family is spread over various cities in India, including Mumbai.
4. In the year 1981 when the entire business of the family was being jointly conducted, defendant No.1 commenced the use of trade mark BROSMIN. At that time, plaintiff No.1 was one of the partners of defendant No.1. Since the year 1981 the mark BROSMIN has been in continuous use on an extensive scale. Defendant No.1 had made an application for registration of the trade mark which was subsequently abandoned. It was decided by the Dadhia family that the products manufactured by defendant No.1 shall be marketed by a Company viz., Synthiko Formulations Pvt. Ltd., hereinafter referred to as "the Marketing Company". It is the common case that BROSMIN by continuous use on an extensive scale has acquired envisable reputation and goodwill in the market. Differences and disputes arose amongst the members of the Dadhia family. In the year 1995 the dispute came to be resolved at the intervention of the father of plaintiff No.1 and defendant No.2. On 29th May, 1995 an agreement was arrived at between all the male members of the Dadhia family including plaintiff No.1 and defendant No.2. 'This agreement' shall hereinafter be referred to as "the family arrangement." By this family arrangement, various businesses and properties of the Dadhia family have been separated. By Clause 1 of the family arrangement it is provided that M/s. Syrup Thio-kof Mfg. Com. (India), Bombay is a manufacturing concern of pharmaceutical formulations and products. All the products are marketed by the marketing company. Both these Companies were looked after by the plaintiff. It provides that whatever patent or proprietary medicines, registered or not registered, under the Trade Mark Act and marketed by the marketing Company, those all products belonged to the plaintiff. It further stipulates that with effect from 1-4-1994 the plaintiff has full right and responsibility for profits and losses for manufacturing the product under the label of Syrup This-kof Mfg. Com. (India). This clause also provides that the aforesaid Company is not provided or given to any single partner of the firm. Thus all the trade marks have been given to plaintiff No.1. The entity of the firm continues to hold the assets of the said firm. The partnership continues. Clause 2 of the agreement pertains No.1. This clause provides that the products manufactured by defendant No.1 and marketed by the marketing Company belonged to the plaintiff. It also provides that from 1-4-1994 plaintiffs will be the propriet
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