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High Court Of Delhi
IEC SCHOOL OF ART AND FASHION - Appellant
Versus
GURSHARAN GOYAL - Respondent
Interim Application 6285 of 1997
Decided On : 04/01/1998
IEC SCHOOL OF ART AND FASHION V. GURCHARAN GOYAL - RESTRAINT OF TRADE - SECTION 27 OF THE CONTRACT ACT - COPYRIGHT ACT - TRADE AND MERCHANDISE MARKS ACT - INJUNCTION - PASSING OFF - FRANCHISE AGREEMENT - USE OF SIMILAR NAME AND LOGO AFTER TERMINATION OF FRANCHISE.
Fact of the Case:
Plaintiff, IEC School of Art and Fashion (SAF), a sole proprietorship, entered into a franchise agreement with Defendant, Gurcharan Goyal, for conducting fashion designing courses under the name "SAF". The agreement contained clauses restricting the defendant from using the name "SAF" or any deceptively similar name after the termination of the franchise. After the termination of the franchise, the defendant started using the name "SAIF" (School of Art, Interior and Fashion) and conducting similar courses. Plaintiff filed a suit for permanent injunction, alleging passing off and infringement of copyright and trademark.
Finding of the Court:
The court held that the restraint of trade clauses in the franchise agreement were valid and enforceable, as they were reasonable and necessary to protect the plaintiff's goodwill. However, the court found that the defendant's use of the name "SAIF" was not deceptively similar to "SAF" and did not amount to passing off. The court also held that the plaintiff did not have a copyright in the idea of conducting fashion designing courses or in the training material provided to the defendant.
Issues: 1. Whether the restraint of trade clauses in the franchise agreement were valid and enforceable. 2. Whether the defendant's use of the name "SAIF" amounted to passing off. 3. Whether the plaintiff had a copyright in the idea of conducting fashion designing courses or in the training material provided to the defendant.
Ratio Decidendi: 1. The court held that the restraint of trade clauses in the franchise agreement were valid and enforceable, as they were reasonable and necessary to protect the plaintiff's goodwill. The court relied on the Supreme Court's decision in Gujarat Bottling Co. v. Coca Cola Co., which held that a restraint of trade is valid if it is reasonable and necessary to protect the legitimate interests of the parties. 2. The court found that the defendant's use of the name "SAIF" was not deceptively similar to "SAF" and did not amount to passing off. The court noted that the two names were different in appearance, sound, and meaning, and that the defendant had taken steps to distinguish its business from the plaintiff's. 3. The court held that the plaintiff did not have a copyright in the idea of conducting fashion designing courses or in the training material provided to the defendant. The court noted that ideas and methods of instruction are not copyrightable, and that the plaintiff had not shown that the defendant had copied any of its copyrighted works.
Final Decision: The court granted an injunction restraining the defendant from using the name "SAF" or any deceptively similar name, and from using the plaintiff's courseware and training materials. The court also ordered the defendant to issue an advertisement stating that it had no connection with the plaintiff.
( 1 ) IN this case, the plaintiff is sole proprietory concern of Mr. S. L. Gupta. The plaintiff is running the business of imparting education in the field of fashion designing in the name of saf and has licence to use the "1ec" logo from 1ec Limited. The plaintiff by this application seeks to restrain the defendants from using the name SAIF/saif/school of Art, Interior and Fashion and/or any other name which is identical and / or deceptively similar to the plaintiff s name SAF / IEC SAF /isaf/iec School of Art and Fashion/school of Art and Fashion, either in full form or in abbreviated form thereby resulting in passing off of its business/service as that of the plaintiff or as directly or indirectly connected with that of the plaintiff.
( 2 ) ACCORDING to the plaintiff s version, the sole proprietor of plaintiff concern S. L. Gupta conducts courses in fashion designing, computerised fashion, art and the illustration, textile designing and fashion and textile science in the name of 1ec School of Arts and Fashion ( saf for short ). SAF is also engaged, as a part of its curriculum, in conducting various fashion shows with dresses designed by its own students. SAF also interacts with eminent fashion personalities and conducts workshops and seminars, shows and other interactive programmes organised by it and getting the students of the said institution absorbed in their own organisation. At present SAF has a large number of franchisees in Delhi and around and has over 15 numbers of franchisees. The plaintiff has been spending huge sum of amounts and publicity from over Rs. 4 lacs to over Rs. 11 lacs in 1994-1995 to 1996-1997. The annual turnover of the plaintiff has gone up over Rs. 13 lacs to around Rs. 45 lacs in 1996-1997. The name, mark and logo of the plaintiff have acquired sufficient distinctiveness and use of the mark SAF, 1ec SAF or I SAF by it in relation to training courses related to fashion is bound to create confusion and deception in the minds of the public. The use of deceptively similar name, mark/logo would also create confusion thereby amounting to passing off such other business as that of the plaintiff or as that connected with the plaintiff. SAF also enters into franchise agreement with its franchisees. On payment of initial franchise fee and running royalty, the franchisee becomes entitled to all the technical expertise, marketing support, study material, issue of diplomas and certificates from SAF and can further use the name and logo of SAF. The plaintiff monitors the quality of teaching faculty, training, conduct of examinations etc. being given by its franchise centres. One such franchise agreement was entered into by the defendants. Defendant No. 1, Sh. Gurcharan Goyal, conducting business under the name and style of Chandigarh School of Professional Courses, entered into a similar Franchise Agreement dated 2nd December, 1995 (hereinafter called "the agreement" for short) with the plaintiff for a period of five years. One of the terms of the agreement is that in the event of there being default in the payments, the plaintiff have the right to terminate the agreement and further "the defendant will not be entitled to carry on the business of fashion and designing courses or allied courses at the franchise premises under any name whatsoever". The franchisee shall not run any other parallel training centre in the field of fashion and designing or allied courses directly or indirectly at any place under the name or in any manner open any additional centre for the said purpose. The defendant shall not have any right in SAF name, mark and/or logo. It also provides that disputes relating to the said agreement shall also subject to the jurisdiction of the Courts in Delhi only. The defendant, Sh. Gurcharan Goyal, failed to ractify the irregularities mentioned in the show cause notice and failed to pay the outstanding dues of: (i) Franchise fee of Rs. 75. 000. 00 ; (ii) Monthly royalty since i
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