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Firm Bhagwan Dass Ra... v. Watkins Mayor And Co...

Punjab & Haryana High Court

Apr 18, 1955

Judgment

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Factual and Procedural Background

The plaintiffs, Messrs. Watkins Mayor and Company of Jullundur, had imported chaff-cutter knives bearing a picture of a lion with the words "lion brand" beneath the figure since 1926–1927. The defendant firm, Bhagwan Das–Ramji Lal of Bulandshahr (manufacturing at Golden Engineering Works), began manufacturing chaff-cutter knives in December 1940 and used a mark consisting of a lion within an outline of India with the words "lion brand" underneath.

Disputes arose and the plaintiff company initiated civil and criminal proceedings; ultimately the plaintiff filed the present suit. The trial Court restrained the defendants from using and publishing the plaintiff's special mark (or a resembling mark) on their chaff-cutter knives, prohibited sale of knives bearing or resembling that special mark, and ordered the defendants to pay Rs. 5,250 as damages with costs. The trial Court also directed an attempt to efface marks on knives in the custody of the Receiver; if successful those knives would be returned to the defendants, otherwise the plaintiff would take them and pay Rs. 2 per knife. The defendants appealed against the trial Court's judgment and decree; the plaintiff-company filed cross-objections to aspects of the trial Court's directions concerning the knives in custody.

Legal Issues Presented

Whether Section 20(1) of the Trade Marks Act, 1940 operates as a complete bar to the plaintiff's suit (i.e., whether an unregistered mark restricts the plaintiff from instituting proceedings when registration was not applied for before suit).
Whether the defendants' mark (as used on their knives) infringed the plaintiffs' rights or constituted passing off — specifically, whether the defendants' mark was likely to deceive customers into believing the defendants' goods were the plaintiffs' goods.
Whether the trial Court's calculation of damages (Rs. 5,250) based on inferred sales and profit margins was justified given the evidence (including the defendants' failure to produce account books).

Arguments of the Parties

Plaintiff Company's Arguments

The plaintiff-company had used the distinctive mark (lion figure with "lion brand") continuously since 1926–1927 and customers associated that mark with the plaintiff's knives.
The defendants began using a similar mark out of greed and such use could mislead the plaintiffs' customers into buying the defendants' knives as if they were the plaintiffs' goods.
The plaintiff sought restraint against use/publication of the mark by the defendants, recovery of damages, and appropriate orders regarding knives in custody of the Receiver.

Defendant Firm's Arguments

The defendant-firm contended that the suit in its present form was not competent and that Section 20(1) of the Trade Marks Act, 1940 barred the suit because the plaintiffs had not applied for registration as required by that provision before instituting proceedings.
On the merits the defendants argued that their mark was different in shape and form from the plaintiffs' mark and customers would not be misled; they also denied that the plaintiffs had proprietary rights in the mark.
The defendants denied liability for damages and argued that their sales were small. On appeal it was also urged that the two marks were so dissimilar as not to deceive customers and that the defendants never attempted to deceive any customer.
As to damages, counsel for defendants argued that relying on 1941 sales figures to assess sales for 1940 (the early manufacturing period) was erroneous.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Draper v. Trist, (1939) 56 R.P.C. 429 at p. 437 (observations of Greene, M.R.)	Support for the proposition that absence of evidence that specific middlemen were deceived does not defeat an action where ultimate consumers are likely to be misled.	The court relied on the observations in Draper v. Trist to support the conclusion that it was unnecessary to show that particular purchasers (or middlemen) were actually deceived; it reinforced the court's finding that purchasers (cultivators) who are the ultimate customers are likely to be misled by the defendants' mark.

Court's Reasoning and Analysis

The court addressed the legal and factual matters in several discrete steps:

On competence under the Trade Marks Act, the court considered Section 20(1) (which restricts actions for infringement of an unregistered trade mark unless continuous use since before 25 February 1937 and an application for registration had been made within five years and refused). The court held that the present case was not an action for infringement of a registered trade mark but was in substance an action for passing off, preserved by Section 20(2) ("Nothing in this Act shall be deemed to affect rights of action ... for passing off"). Consequently, Section 20(1) did not bar the suit.
The court explained the difference between an action based on a registered mark (statutory infringement) and a passing off action: a registered-mark action depends on registration and focuses on identity or deceptive resemblance; a passing off action focuses on whether the defendant's mark is likely to deceive customers into believing the defendant's goods are the plaintiff's goods. The present suit was characterised as a passing off action and therefore maintainable.
On proprietary rights and deceptive resemblance, the court accepted the trial Court's finding (which the appellant did not challenge on appeal) that plaintiffs had long used the mark and had acquired proprietary rights and reputation in it. The court then compared the two marks and concluded that, although not exactly identical, the defendants' mark was a colourable imitation of the plaintiffs' mark.
The court evaluated the likely perception of the relevant purchasers: the customers were chiefly cultivators, many illiterate and not likely to read English. Both marks featured a lion picture with the words "lion brand" in English beneath; the court reasoned that purchasers were unlikely to examine differences (such as the faint map-of-India lines in the defendants' mark) and would be likely to assume defendants' goods were plaintiffs' goods. The court held that lack of evidence of a particular customer being deceived was not fatal to the plaintiffs' case.
The court rejected the defendants' contention that dealers' knowledge (invoices describing defendants' goods as 'Desi Sher Marka') absolved them, reasoning that dealers are middlemen and the ultimate customers (cultivators) are the relevant class; deception of middlemen is not decisive where ultimate consumers might be misled. The court explicitly relied on the authority of Draper v. Trist in support of this reasoning.
On damages, the court assessed the evidence: a defendants' agent (Bhim Sen, P.W.3) had procured orders totalling 1,015 knives in one and a half months (26-6-1941 to 8-8-1941), equating to about 700 knives per month. The defendants manufactured and sold from January 1940 to August 1941 (20 months), implying sales of about 14,000 knives. The trial Court assumed a profit of annas six per knife (about 20%) and computed damages at Rs. 5,250 accordingly.
The court noted the defendants' failure to produce their books of account as required by Section 106 of the Evidence Act (since the details of manufacture/sales/profits lay within their special knowledge). The court held that, given this failure, adverse presumptions arose against the defendants and there was no reason to disturb the trial Court's damage computation. The court considered, but dismissed as insufficient, the defendants' submission that 1941 sales could not be used as a guide to earlier sales.
Finally, the court dealt with the cross-objections regarding the knives in custody of the Receiver: the parties agreed that the executing Court should order transfer of the knives from Bulandshahr to Jullundur at defendants' cost; after receipt, the plaintiffs would efface the trade mark with their machine and return the knives to the defendants within three months, with the plaintiffs bearing the costs of obliteration. The appellate court ordered that the trial Court's earlier decree paragraph concerning the Receiver's efforts be deleted and this agreement incorporated in the decree.

Holding and Implications

Holding: The defendants' appeal was dismissed; the trial Court's judgment and decree were upheld. The court ordered the appeal to fail with costs.

Direct consequences and orders as stated by the court:

The injunction restraining the defendants from using and publishing the plaintiff company's special mark (picture of a lion or its resemblance and the words "lion brand") and from selling knives bearing or resembling that special mark was affirmed.
The defendants were ordered to pay damages to the plaintiffs in the sum of Rs. 5,250 (as fixed by the trial Court).
The appellate court replaced the trial Court's specific direction regarding the Receiver's attempt to efface marks with the parties' agreed procedure: the executing Court was to order transfer of the knives to Jullundur at the defendants' expense; the plaintiffs would efface the trade marks without damaging the knives and return them to the defendants within three months; the plaintiffs would bear the costs of obliteration; the executing Court could extend time if necessary. The trial Court's earlier decree paragraph relating to the Receiver was deleted and the agreement incorporated into the decree.
On the cross-objections, the appellate court decided in accordance with the parties' agreement and made no order as to costs of the cross-objections.

Broader implications: The opinion confined itself to the parties' dispute and the application of established principles regarding passing off, evidential presumptions when a party fails to produce records (Section 106, Evidence Act), and the construction of Section 20 of the Trade Marks Act, 1940. The court applied these principles to the facts and did not purport to lay down any novel legal precedent beyond its factual ruling. The direct effect is the maintenance of the trial Court's injunction, the damages award, and the agreed process for effacement and return of the knives.

Show all summary ...

1. This is a defendants' appeal against the judgment and decree of the trial Court restraining the defendants from using and publishing on their chaff-cutter knives the plaintiff company's special maik consisting of a picture of a lion or its resemblance or words "lion brand" and from selling these knives bearing the plaintiff-company's special mark or hearing a mark resembling that special mark and ordering the defendants to pay Rs. 5,250/- as damages to the plaintiff-company with plaintiffs', costs.

The trial Court has directed that an attempt should be made to efface the marks on the defendants' knives which have been, by an interim order, given in the custody of Atma Ram Receiver and, that if this attempt is successful these knives are to be returned to the defendants, otherwise the plaintiff-company will take them and pay to the defendants at the rate of Rs. 2/- per knife. The plaintiff-company has filed cross-objections against these directions.

2. The plaintiffs Messrs. Watkins Mayor and Company carry on business in Jullundur. They import chaff-cutter knives with a figure of lion ' engraved thereon and the words "lion brand" underneath that figure from various countries in Europe since 1926-1927. The defendant-firm Bhagwan Das-Ramji Lal carried on business in Bulandshahr and this firm started manufacturing chaff-cutter knives in their factory, which is known as Golden Engineering Works, in December 1940.

Their, knives have a mark consisting of a lion, within what is called a map of India and bear the words "lion brand" underneath that figure. Disputes soon arose between the parties and the plaintiff-company started civil and criminal proceedings against the defendant-firm and ultimately the plaintiff company filed the present suit out or which this appeal has arisen.

3. In this suit the plaintiff-company have alleged that they have been using this distinctive and particular mark since 1926-1927 and the customers consider this mark as the mark of the plaintiff-company. Their grievance as stated in the plaint is that the defendant firm have started using this mark or one reassembling it out of greed and that this mark of the defendant-firm in any case can mislead the customers of the plaintiffs knives.

The defendant-firm pleaded that the suit in the present form was not competent and on the merits urged that the mark on their knives was different in shape and form from the plaintiffs' mark and the customers were not and were not likely to be misled by the defendants' mark and that in any case the plaintiffs had no proprietary rights in that mark. Dealing with damages the defendants denied their liability to pay the same and urged that in any case the defendants' sale was very small.

4. The trial Court held that the suit in the present form was competent and Section 20, Trade Marks Act, 1940 was not a bar to it. On the merits the trial Court found relying on the oral and documentary evidence produced by the plaintiffs and also relying on some of the defendants' evidence that the long user of the trade mark by the plaintiff was proved, that this mark had acquired great repute and was associated with the plaintiffs' knives and that the plaintiffs had acquired proprietary rights in it.

It was further held that the defendants' mark on their knives infringed the plaintiffs' right. The trial Court then computed the damages on the basis that the defendants sold 700 knives per mensem and that calculating the profits at annas -/6/- per knife the defendants were liable to pay Rs. 5,250/-as damages to the plaintiffs as the profits which the defendants had earned by selling their knives under that mark.

5. The first point urged by the learned counsel for the defendants was that Section 20, Trade Marks Act, 1940 was a complete bar to the present suit. Section 20(1) reads:--

"20(1) No person shall be entitled to institute any proceeding to prevent, or to recover damages for, the infringement of an unregistered trade mark unless such trade mark has been continuously in use since before the 25th day of February, 1937, by such person or by a predecessor-in-title of his and unless an application for its registration; made within five years from the commencement of this Act, has been refused; and the Registrar shall, on application in the prescribed manner, grant a certificate that such application has been refused."

The contention of the appellant-firm is that under this section the plaintiffs should have made an application for registration of the trade mark and that without such an application the suit was barred. It appears that in the present case the plaintiffs did make an application under this section after the institution of this suit but there is no doubt that that application cannot be of any avail to the plaintiffs, as an application made after the filing of the suit cannot be said to satisfy the terms of this section.

The present case, however, does not relate to an infringement of a registered trade mark. It is in substance a passing off action against the defendants and such an action is maintainable under Sub-clause (2) of Section 20 which reads:--

"20(2). Nothing in this Act shall be deemed to affect rights of action against any person for passing off goods as the goods of another person or the remedies in respect thereof."

The only difference in the action based on a registered mark and a passing off action under Section 20, Sub-clause (2), is that the former action is for infringement of a statutory right and depends on the validity of registration and is subject to other restrictions laid down in the Act, and the only question that requires to be decided in such circumstances is whether the defendants' mark is identical or shows a deceptive resemblance to the plaintiffs' trade mark.

In such an action the Court need not enquire whether the infringement is likely to deceive or confuse customers of the goods. On the other hand in a passing off action the only question to be decided is whether the mark used by the defendants on their goods is likely to deceive the customers into buying defendants' goods as if they were the plaintiffs' goods and this is based on the principle that nobody is entitled to represent his goods as the goods of somebody else.

The present suit is in substance an action for passing oft goods as the goods of the plaintiffs and is maintainable. I, therefore, repel this contention of the learned counsel.

6. The learned counsel for the appellant-firm did not challenge the correctness of the finding of the trial Court that the plaintiff-company had established their proprietary rights in the mark consisting of a picture of a lion and the words "lion brand" beneath it and this mark was associate ed with the plaintiffs' goods amongst the customers. He, however, urged that the two marks were so dissimilar that they were not likely to deceive the customers and that in any case the defendants never-tried to deceive any customer.

Now, it is well settled that it is for the Judge to decide whether having regard to the appearance of the marks and of the goods the class of people to whom the goods are to be sold are likely to be deceived or not. Now, I have compared the two marks used on the knives imported by the plaintiffs and those manufactured by the defendants and in my opinion although the two marks are not exactly identical but the defendants' mark is a colourable imitation of the plaintiffs' mark. The purchasers of these goods are cultivators most of whom are uneducated and illiterate and not many of them are likely to know the English language.

Both marks consist of a picture of a lion with the words "lion brand" written in English beneath the picture. The customer is not likely to see the two marks together to see the difference in the two pictures and inasmuch as a mark of this kind is associated with the plaintiffs' goods, the cultivator seeing the goods manufactured by the defendants is likely to be misled into thinking that the goods are plaintiffs' goods. The map of India in the defendants' mark consists only of a few lines and these lines are likely to be overlooked.

It is then urged that there is no evidence that any particular customer was so deceived in the way suggested by the plaintiff-company, but such an evidence is not absolutely essential in this case as I have no doubt in my mind that the defendants' mark is likely to mislead customers.

It is also urged that in the market the defendants' goods are known as 'Desi Sher Marka' while the plaintiffs' goods are 'Wilayati Sher Marka' and in support of this allegation the defendants have produced certain invoices issued by them to the dealers to whom they sold their knives and there is no doubt that in these invoices the mark is described as 'Desi Sher Marka.' These words, however, do not occur on the knives manufactured by the defendants.

It may be that the wholesale dealers to whom the defendants sold the goods were not deceived by these marks but these dealers are merely middlemen and they purchase these goods with a view to sell them to customers and as I have already stated these customers are likely to be misled. In the circumstances the fact that no effort was made to deceive the middlemen is of no consequence whatsoever, because after all whether the defendants sold the goods direct to the consumers or through the middlemen the fact remains that the plaintiffs suffered loss by the sale of these deceptive goods.

This conclusion is supported by the observations of Greene, MR., in Draper v. Trist, (1939) 56 R.P.C. 429 at p. 437 (A). I am, therefore, of the opinion that the defandants by using the mark that they did on the knives manufactured by them infringed the plaintiffs' mark. The only point that now remains to be considered in this appeal is the amount of damages to which the plaintiffs are entitled. The trial Court has computed the damages in this manner.

According to the statement of Bhim Sen, P.W. 3, one of the defendants' agent, he had secured orders for the purchase of 1,015 knives within one and a half months, i.e., from 26-6-1941 to 8-8-1941. This comes to the sale of 700 knives per month. The defendants admittedly sold knives from January 1940 to August 1941 only, i.e., for twenty months. Therefore they sold 14,000 knives during this period. The trial Court then held that the profit of the defendants on each knife must have been at least annas six, i.e., a profit of 20 per cent, and therefore the amount of damages comes to Rs. 5,250/-.

Now, the plaintiffs were entitled to recoup the loss that they incurred as a direct and natural consequence of the defendants' wrongful action. In the present case the defendants refused to produce their books of account showing the quantities of goods manufactured or sold by them during this period and the profits earned thereon. It was their duty to produce their account books as the matter was entirely within their special and exclusive knowledge vide Section 106, Evidence Act.

It is impossible to believe that they were not keeping any account hooks at all relating to their factory. Therefore, every presumption must be raised against them. The trial Court has calculated the profit in each knife at 20 per cent, during 1940-1941 when the second World War was going on. Mr. Shamair Chand has, however, urged that the trial Court was in error in assuming that the sales in 1941 could serve as a criterion for sales in 1940 when the defendants started manufacturing the knives.

It is possible that in beginning the sales may not have been so high as they were in 1941. This is, however, only a possibility, because the defendants were manufacturing knives which were well in demand at a time when there was a shortage of imported knives and they began to use the plaintiffs' mark.

It does not follow necessarily that the sale in the beginning could not have been as high as later on. In any case the defendants must thank themselves if a presumption has been raised against them as they did not produce all the evidence that was within their control and knowledge. I, therefore, see no reason to interfere with the amount of damages fixed by the trial Court.

7. The result is that the defendants' appeal fails and must he dismissed with costs and I order accordingly.

8. As regards the cross-objections filed by the plaintiff-company, it is agreed between the parties that the executing Court should order the Receiver to transfer the knives or to get the knives transferred with the defendants' assistance from Bulandshahr to Jullundur at the defendants' costs. After receiving the knives at Jullundur, these are to be delivered to the plaintiffs who should efface the trade mark on these knives with their machine and then retina these knives to the defendants within three months.

The plaintiffs will obliterate these marks without damaging the chaff-cutter knives and the costs incurred in obliterating these marks will be borne by the plaintiffs. It necessary it will be open to the executing Court to extend time for the purpose of carrying out this work. The consequence of this arrangement is that the directions given in the trial Court's decree reading:--

"As regards the delivery of the defendants' chaff-cutter knives, entrusted to L. Atma Ram Vaish, D. W. 4, it is ordered that during execution proceeding at the expense of defendants 1 to 3 an attempt shall be made to efface the present trade marks on them. If the attempt is successful, those knives shall be delivered to defendants 1 to 3. In the latter case, Rs. 5,250/- and costs shall be deducted by the plaintiffs out of the amount payable by them to defendants 1 to 3 on account of the price of the said knives."

should be deleted and the abovementioned agreement incorporated in the decree. The cross-objections are decided accordingly. There will be no order as to costs of the cross-objections.

Falshaw, J.

9. I agree.