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Case Number

Appeals Nos. 37 and 38 of 1946.

Advocates

Messrs. A. Viswanatha Aiyar and D.C Krishnamurthi for Appts.
Mr K.V Ramachandra Aiyar for Respts.

Judges

Subba Rao
Panchapakesa Ayyar, JJ.

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Smart Summary

Structured Summary of the Opinion (Delivered by Subba Rao, J.)

Factual and Procedural Background

These two appeals arise from two cross suits (O.S. Nos. 13 of 1944 and 14 of 1944) in which each side sought a declaration of title in certain trade marks and an injunction restraining the other from interfering with those rights.

Background facts as stated in the opinion:

K.A. Kadir Sahib and S.A. Sattar Sahib carried on business in partnership under the name “S.A. Sattar and K.A. Kadir and Co.” Sattar Sahib died in June 1938.
After Sattar's death Kadir filed O.S. No. 363 of 1938 seeking a declaration that the firm was dissolved and for accounts; that suit was settled by arbitration.
The arbitrators (25th March 1940) decided to sell the firm's properties and the trade marks separately in auction; the trade marks “Rising Sun,” “Tiger Shooting” and “Asal Jadi” were sold to Zuleika Bibi. An award confirming the sales was passed and a decree (Ex. P-1) in terms of the award was entered on 20th April 1940.
On 7th July 1940 Zuleika Bibi sold those three trade marks to her brother, Abdul Waheb Sahib. The plaintiff in O.S. No. 14 of 1944 then purchased the three trade marks from Abdul Waheb under Ex. P-1(b) dated 10th February 1941.
The plaintiffs in O.S. No. 13 of 1944 (K.A. Khadir and sons, through K.A. Khadir Sahib and his family) alleged that after dissolution they started a new beedi business in 1938 and designed a trade mark whose prominent feature was the number “7”; they claimed the defendants were using that mark without right.
The learned District Judge held that (a) plaintiffs in O.S. No. 14 of 1944 did not acquire any right to the three trade marks because the sale simpliciter was invalid in law, and (b) plaintiffs in O.S. No. 13 of 1944 had acquired a right to the “original lion 7” trade mark and defendants had no right to use it or any colourable imitation.
The result at first instance: O.S. No. 14 of 1944 was dismissed; O.S. No. 13 of 1944 was decreed except as to damages and accounting. The plaintiffs in O.S. No. 14 and defendants 1 and 2 in O.S. No. 13 appealed.

Legal Issues Presented

Whether a trade-mark can be validly assigned by sale simpliciter (i.e., separate from the goodwill or business with which it has been used), and whether the sale chain (Zuleika Bibi → Abdul Waheb → plaintiff) conveyed a legal title in the three trade marks (“Rising Sun”, “Tiger Shooting”, “Asal Jadi”).
Whether the vendor (or other defendants) may be estopped or barred by acquiescence from denying the purchasers' title to the trade marks on the facts of this case.
Whether the plaintiffs in O.S. No. 13 of 1944 had acquired a valid right in the trade mark featuring the number “7” (used since 1938) and whether the defendants' mark was a colourable imitation warranting injunctive relief.

Arguments of the Parties

Appellants' Arguments

The allotment of the trade marks should not be considered apart from the other terms of the compromise decree — since the sale proceeds and assets were divided between partners and goodwill was not specifically sold or allotted, the goodwill must be deemed to remain with all partners; thus the trade marks were allotted together with other assets and an interest in the goodwill.
The defendants (or vendors in the sale chain) could not derogate from their grant — relying on the equitable principle that a vendor who has sold goodwill (or assets carrying goodwill) must not solicit the custom sold or otherwise depreciate the thing sold (citing Jennings v. Jennings).
Alternatively, the defendants were estopped by acquiescence — the defendants' delay in contesting the use of the trade marks and the plaintiffs' prior short use without being questioned amounted to acquiescence and should preclude defendants from denying plaintiffs' rights (relying on O.K. Mohideen Bawa v. Rigaud Perfuma Manufacturers and authorities on acquiescence).

The opinion does not contain a separate, detailed narrative of the respondents' (other parties') oral or written submissions as distinct entries; responses to the appellants' arguments are set out in the court's reasoning and disposition.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
The British American Tobacco Co., Ltd. v. Mahboob Buksh	Definition of a trade-mark: a mode of warranting the origin of the goods and that its representation should be true.	Used to state the general nature and purpose of a trade-mark as part of the legal framework for deciding the disputes.
Lacteosote Ltd. v. Alberman	States the manner in which a trade mark can be validly assigned (i.e., assignment rules applicable to trade-marks).	Cited as authority on the proper manner of assignment; informed the conclusion that a trade-mark cannot be transferred validly separate from the associated goodwill/business.
Leather Cloth Co. v. American Leather Cloth Co.	Established principle that the purchaser of a mark becomes owner only if he also purchases the manufactory or the business concerned in the goods to which the mark has been affixed.	Applied to conclude that a sale of the trade-mark simpliciter (separate from goodwill or business) does not convey ownership of the mark; influenced the dismissal of O.S. No. 14.
Edwards v. Dennis	No trade-mark can be assigned except in connection with the goodwill of the business in which it has been used.	The court accepted and applied this principle to hold that the sales in question did not validly transfer title to the three trade marks.
Jennings v. Jennings	Equitable principle that a vendor may not derogate from his own grant; implied covenant on sale of goodwill that vendor will not solicit the custom sold.	The court considered this authority but rejected its applicability on the facts, observing that in the present case only trade-marks (not goodwill) were conveyed and the vendor was not acting to derogate from any right actually conveyed to Zuleika Bibi.
O.K. Mohideen Bawa v. Rigaud Perfuma Manufacturers	Relates to the plea of acquiescence; indicates that mere delay in bringing a suit does not necessarily constitute acquiescence.	Cited by appellants in support of an acquiescence plea; the court relied on authority establishing stricter requirements for acquiescence and held the facts here (delay and short unchallenged use) were insufficient.
Proctor v. Bennis	Describes the law of acquiescence: the person who alleges acquiescence must have acted in ignorance of the title of the other, and the other person must have known of that ignorance and not mentioned his own title.	Quoted and applied to reject the appellants' acquiescence argument — the court found the facts did not meet this standard.
Ramsden v. Dysen	Referenced as authority on the law of acquiescence (contextual companion to Proctor v. Bennis in the opinion).	Used with Proctor v. Bennis to set the legal standard for acquiescence; the court applied those standards and found no acquiescence on the facts.

Court's Reasoning and Analysis

The court's reasoning proceeds by first setting out the legal principles governing trade-marks and their assignment, then applying those principles to the specific factual chain of sales and to the facts concerning the “7” mark dispute.

Legal principle on assignment: The court emphasized (with citation to Leather Cloth Co., Edwards v. Dennis and Lacteosote Ltd.) that a trade-mark cannot be validly assigned except in connection with the goodwill of the business in which it has been used (i.e., transfer of the business or the goodwill is essential). The opinion quotes the established rule that “the purchaser of a mark becomes owner of it only if he becomes at the same time the purchaser of the manufactory or ... the business concerned in the goods to which the mark has been affixed.”
Application to the sale chain (Rising Sun, Tiger Shooting, Asal Jadi): The court examined the arbitration award and the subsequent sales: trade marks were sold to Zuleika Bibi under the arbitration/sale scheme; Zuleika sold to Abdul Waheb; Abdul Waheb sold to the plaintiff in O.S. No. 14. The court concluded that however the initial allotment to Zuleika might be characterized, the subsequent conveyances (Zuleika → Abdul Waheb → plaintiff) were sales of the trade marks simpliciter and the law does not recognize transfer of a trade mark separate from the goodwill/business. Therefore, these sales could not convey a valid legal title to the three trade marks to Abdul Waheb or to the plaintiff. For that reason the lower court's dismissal of O.S. No. 14 was affirmed.
On the “derogation from grant” point: The appellants relied on Jennings v. Jennings (the vendor may not derogate from his own grant). The court examined that authority and found it inapplicable to the facts because Jennings involved allotment of assets that included goodwill, whereas in the present case what was conveyed (to Zuleika Bibi and then onwards) was only the trade-marks simpliciter and there was no evidence the vendor had acted so as to derogate from an actual conveyance of goodwill. Thus this argument was rejected.
On acquiescence/estoppel: The appellants argued defendants were estopped by acquiescence (delay, and short unchallenged use). The court applied the standards drawn from Proctor v. Bennis, Ramsden v. Dysen and O.K. Mohideen Bawa v. Rigaud Perfuma Manufacturers — namely that acquiescence requires that the party asserting it have acted in ignorance of the other's title and that the other knew of that ignorance and stood by while the party expended time or money in that ignorance. The court held the facts (some delay and short unchallenged use) were insufficient to meet that standard and therefore the plea of acquiescence failed.
Concerning the “7” trade mark (O.S. No. 13): The court noted that after dissolution the plaintiffs designed a new trade mark whose prominent feature was the number “7” and had used it since 1938 in association with their business. The court compared the plaintiffs' mark with the “Rising Sun” mark and with the mark then used by defendants: it found differences between “Rising Sun” and the plaintiffs' mark, and, crucially, concluded that the defendants' mark was a colourable imitation of the plaintiffs' mark (as used since 1938). Since the defendants had no right to the “Rising Sun” mark, and because the plaintiffs had an established association between their “7” mark and their business, the court held the lower court was correct in declaring the plaintiffs' title and issuing an injunction against the defendants' use of the colourable imitation.

Holding and Implications

Holding:

- With respect to the three trade marks “Rising Sun”, “Tiger Shooting” and “Asal Jadi”: the court held that the sale/conveyances in the chain (Zuleika Bibi → Abdul Waheb → plaintiff) did not convey a valid legal title because a trade-mark cannot be transferred simpliciter apart from the goodwill/business in which it has been used. As a result, the plaintiffs in O.S. No. 14 of 1944 did not acquire legal title and O.S. No. 14 was dismissed.

- With respect to the “original lion 7” trade mark (O.S. No. 13 of 1944): the court held that the plaintiffs had established a right in the trade mark (used since 1938), and that the defendants' mark constituted a colourable imitation. The lower court's decree in favour of the plaintiffs in O.S. No. 13 was upheld (except as to damages and accounting, for which there was no proof).

Final disposition as recorded in the opinion: App. No. 38 of 1946 is dismissed with costs, and App. No. 37 of 1946 is dismissed without costs.

Implications

Direct effect on the parties: The purchasers of the three trade marks do not obtain legal title where the transfers are effectively sales of trade-marks simpliciter without transfer of the relevant goodwill/business; the plaintiffs who developed and used a distinct “7” mark are entitled to a declaration of title and an injunction against a colourable imitation.
On precedent: The opinion applies and reaffirms established principles (Leather Cloth Co., Edwards v. Dennis, Lacteosote Ltd.) that trade-marks cannot be assigned independently of goodwill. The judgment did not purport to create a new principle beyond applying these authorities to the facts before the court.

End of summary. All statements above are drawn exclusively from the text of the provided opinion and do not add material not contained therein.

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K.M Oosman And Company Alias K.M Khadir Brothers By Managing Proprietor, K.M Oosman Sahib And Another v. K. Abdul Malick Sahib And Others.

(Delivered by Subba Rao, J.)

These two appeals arise out of two cross suits, O.S Nos. 13 of 1944 and 14 of 1944, filed by the respective parties for declaration of their title in the trade marks and for an injunction restraining the other parties from interfering with their rights. One K.A Kadir Sahib, father of defendants 2 to 6 and husband of the 7th defendant carried on business in partnership with another, S.A Sattar Sahib, under the name and style of “S.A Sattar and K.A Kadir and Co.” Sattar Sahib died in June 1938. Kadir Sahib, the other partner filed O.S No. 363 of 1938 on the file of the District Munsif's Court, Vellore for a declaration that the firm of “S.A Sattar and K.A Kadir and Co.” was dissolved on 10th June 1938 and for accounts. The suit was settled by arbitration. The arbitrators, on 25th March 1940, decided to sell the properties of the firm and the trade marks separately in auction and also to sell the amount of decree dues and the arrears of shop rent in another lot. Pursuant to that resolution the assets of the business were sold and divided between the parties. The trade marks “Rising Sun,” “Tiger Shooting” and “Asal Jadi” were sold to one Zuleika Bibi. After the sale and the allotment, an award was passed confirming the various sales which was unanimously agreed to by all the parties. On 20th April 1940 a decree was passed, Ex. P-1, in terms of the aforesaid award. On 7th July 1940 Zuleika Bibi sold the three trade marks to her brother, Abdul Waheb Sahib. The plaintiff in O.S No. 14 of 1944 purchased the three trade marks from Abdul Waheb Sahib, under Ex. P-1(b) dated 10th February 1941. The effect of the arbitration, the sales and the decree passed in terms of the award was that the proceeds of the assets and the trade marks of the firm were divided between erstwhile partners. The title in the goodwill, not having been sold, must be deemed to have continued in all the partners. The plaintiff in O.S No. 14 of 1944, having purchased the aforesaid three trade marks, filed the suit for a declaration of his title and for an injunction restraining the defendants from interfering with his rights. “K.A Khadir and sons” by proprietor, K.A Khadir Sahib, filed the other suit, O.S No. 13 of 1944 regarding the “original lion 7” trade mark. Plaintiffs 2 to 8 are the children of Khadir Sahib, and the 9th plaintiff, his widow. Plaintiffs 2 and 4 to 9 are defendants in O.S No. 14 of 1944. The first defendant in O.S No. 13 of 1944 is the company styled as “K.M Oosman and Co.” alias “K.M Khadir and Brothers.” The second defendant is K.M Oosman Sahib who is the plaintiff in O.S No. 14 of 1944. After the dissolution of the aforesaid partnership, the case of the plaintiffs is that they started another beedi business at Gudiyattam in the year 1938. For the purpose of that trade they have designed the trade mark, the subject-matter of the suit, and the prominent feature of the same was number “7”. They alleged that the defendants, who had no right to the said trade mark, were using the said mark, and that therefore they were entitled to an injunction restraining them from doing so.

The learned District Judge held, in O.S No. 14 of 1944, that the plaintiffs therein did not acquire any right to the three trade marks as the sale in favour of Zuleika Bibi of the trade marks simpliciter was invalid in law. In the other suit, the learned District Judge held that the plaintiffs acquired a right to the trade mark, and that, therefore, the defendants had no right to either use that trade mark or any colourable imitation thereof. In the result, he dismissed O.S No. 14 of 1944 and decreed O.S No. 13 of 1944, except as regards the damages claimed and the accounting, since there was no proof of damages, and no question of accounting arose. The plaintiffs in O.S No. 14 of 1944 and the defendants 1 and 2 in O.S No. 13 of 1944 preferred the above two appeals.

At this stage we may notice the law on the subject.

“A trade-mark is a mode of warranting the origin of the goods to which it is attached, or their trade association, and it is of the essence of a trade mark that its representation should be true,”

[The The British American Tobacco Co., Ltd. v. Mahboob Buksh (1)]. The manner in which a trade mark can be validly assigned is stated in Lacteosote Ltd. v. Alberman (2).

“It has been established since the decision in the Leather Cloth Co. v. American Leather Cloth Co. (3) that the purchaser of a mark becomes owner of it only if he becomes at the same time the purchaser of the manufactory or—(to put it rather more widely, in view of modern developments)—the business concerned in the goods to which the mark has been affixed.”

The same principle has been accepted and applied in another decision by Fry Lord Justice in Edwards v. Dennis (4). The learned Lord observes:

“No trade-mark can be assigned except in connection with the goodwill of the business in which it has been used, which business must be co-extensive with the goods or classes of goods in respect of which the trade-mark is registered.”

The learned Advocates accepted the correctness of the principles embodied in the aforesaid decisions.

The first argument of the learned Advocate for the appellants may be put thus. The lower Court was wrong in considering the allotment of trade marks apart from the other terms of the compromise decree. Under the terms of the decree not only the trade marks were allotted to Zuleika Bibi but the sale proceeds of the assets were also divided between the various partners. In any view, the goodwill not having been sold or allotted to any of the parties must be deemed to continue to vest in all partners. He therefore argued that the trade marks simpliciter were not assigned but they were allotted to Zuleika Bibi along with other assets and her interest in the goodwill. This argument is rather attractive but in our view does not help the plaintiffs at all. Whatever might be said in regard to the effect and the gist of the transaction under which Zuleika Bibi got the right to the trade marks, Zuleika Bibi herself, in her turn, only sold under Ex. P. 1(a) her right in the trade marks to Abdul Waheb Sahib who, in his turn, under Ex. P. 1(b), sold the three trade marks to the plaintiff. As the law does not recognise transfer of trade mark per se, separate from goodwill or the business, the sale deeds could not have conveyed any valid title in the trade marks either to Abdul Waheb Sahib or to the plaintiff. We therefore agree with the lower Court that the plaintiffs in O.S No. 14 of 1944 did not acquire a legal title in the three trade marks, “Rising Sun”, “Tiger Shooting” and “Asal Jadi”.

The learned Advocate then argued that the defendants could not derogate from their grant and he relied upon Jennings v. Jennings , in support of his contention. The passage relied upon by him may be extracted:

“A man may not derogate from his own grant; the vendor is not at liberty to destroy or depreciate the thing which he has sold; there is an implied covenant, on the sale of goodwill, that the vendor does not solicit the custom which he has parted with; it would be a fraud on the contract to do so.”

In that case, a suit was filed for recession of the partnership on the ground of misrepresentation. The suit was compromised and the defendant got all the assets of the firm except a sum of Rs. 1,200 which was allotted to the plaintiff. In the assets the goodwill was not mentioned. Taking advantage of that B went on canvassing the customers of the old firm. A filed a suit on the ground that the allotment of assets carried with it also the right to the goodwill and therefore B could not canvass the customers of the old firm in derogation of the right conveyed to A. The learned Judges held that goodwill is an asset and therefore it formed part of the assets that were allotted to A and therefore B could not canvass the customers of the old firm. This case absolutely has no application to the facts of the present case. In the present case what was conveyed was only the trade-marks, and the vendor was not doing anything to derogate from the title he actually conveyed to Zuleika Bibi. The only question is whether the trade mark was validly conveyed under the compromise decree. We, therefore, reject this argument of the learned Advocate.

It was then argued that, in any view, the defendants are estopped in view of their acquiescence. The learned Counsel relied on the decision reported in O.K Mohideen Bawa v. Rigaud Perfuma Manufacturers . In that case the plea of acquiescence was raised but the learned Judges did not accept it on the ground that mere delay in bringing the suit could not amount to acquiescence in law. The law of acquiescence is succinctly stated in two judgments, in Proctor v. Bennis , and in Ramsden v. Dysen . In Proctor v. Bennis Lord Justice Cotton observed,

“It is necessary that the person who alleges this lying-by should have been acting in ignorance of the title of the other man, and that the other man should have known that ignorance and not mentioned his own title.”

And at page 761 Lord Justice Bowen observed.

“In order to make out such acquiescence it is necessary for them to establish that the plaintiff stood by and knowingly allowed the defendants to proceed and to expend money in ignorance of the fact that be had rights and meant to assert such rights.”

Applying this principle it is impossible to hold that in this case there was any acquiescence on the part of the defendants so as to preclude them from denying the right of the plaintiff to the trade-marks. The two facts relied upon are: one, some delay in filing the suit, the other, that the plaintiffs used the trade-marks for a short period without being questioned. In our view these facts are not sufficient to substantiate the plea of acquiescence.

In the other suit as we have already stated after the dissolution of the partnership the plaintiffs designed a new trade mark, the main feature of which was the number “7”, perhaps an auspicious number from the standpoint of the plaintiffs. We have seen the plaintiffs' trade-mark and compared it along with the trade-mark “Rising Sun” and also the trade-mark that is now being used by the defendants. Between the trademark “Rising Sun” and the plaintiffs' trade mark there are differences in design, in colour scheme and also in details. The main feature in the “Rising Sun”, namely, the rising sun, is not to be found in the plaintiffs' trade mark but, instead the Crown is found. As we have already held, the defendants have no right to the trade mark “Rising Sun”. The plaintiffs' trade mark is being used from the year 1938 and has been associated with the business of the plaintiffs. The trade mark used by the defendant is clearly a colourable imitation of the plaintiffs' trade-mark. We, therefore, hold that the lower Court was right in declaring the title of the plaintiffs in the suit trade-mark and issuing an injunction against the defendant from using the same.

In the result, App. No. 38 of 1946 is dismissed with costs, and App. No. 37 of 1946, without costs.

N.R.R

K.M Oosman And Compa... v. K. Abdul Malick Sahi...