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Uniply Industries Ltd. v. Unicorn Plywood Pvt. Ltd. And Others
Factual and Procedural Background
The appellant, established in 1996, markets plywood and related products under the trade marks “Uniply” and “Uniboard.” In July 1999 it discovered that the respondents were allegedly using identical marks in Chennai and therefore filed C.S. No. 705 of 1999 seeking a permanent and interim injunction. An ex parte temporary injunction was granted on 10-9-1999.
The respondents, claiming use of “Uniply,” “Uniboard,” and “Unidoor” since 1993, filed C.S. No. 804 of 1999 but did not secure interim relief. On 2-11-1999 the trial court continued the appellant’s injunction, holding that the appellant had shown earlier use. However, on 29-11-1999 the same court vacated that order, finding that the respondents had in fact been using the marks since 1993-94.
The appellant’s appeal was dismissed by a Division Bench of the High Court, which agreed that the respondents had established prior use. The appellant then appealed to the Supreme Court of India.
Legal Issues Presented
- Whether, on the materials available at the interlocutory stage, the appellant or the respondents showed a stronger prima facie case of prior use of the trade marks “Uniply” and “Uniboard.”
- Whether the balance of convenience and the possibility of irreparable injury justified continuation or grant of a temporary injunction in favour of either party.
Arguments of the Parties
Appellant's Arguments
- The courts below ignored principles laid down in Cadila Health Care Ltd. v. Cadila Pharmaceuticals Ltd.
- No finding was given on balance of convenience or irreparable hardship even though these are essential for an injunction.
- The respondents had not established the essential ingredients of a passing-off action, particularly misrepresentation.
- The principle of prior user was misapplied; the appellant’s use from 1996 was supported by invoices, tax payments, and trade-mark applications.
Respondents' Arguments
- Both the trial court (29-11-1999) and the High Court had concurrently found in their favour; such concurrent findings should not be disturbed.
- Advertisements from 1993 and invoices dated 14-12-1993 to 17-8-1999 showed continuous prior use.
- Interference with their established trade mark would cause damage to goodwill; the rule of prior user therefore entitled them to protection.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Cadila Health Care Ltd. v. Cadila Pharmaceuticals Ltd. (2001) 5 SCC 73 | Guidelines for grant of injunctions in passing-off and trade mark disputes, including consideration of deceptive similarity and balance of convenience. | The appellant relied on this decision; the Supreme Court observed that, because both parties operated in an identical field with identical marks, the Cadila principles were “not of much use” for resolving the present interlocutory issue of prior user. |
Court's Reasoning and Analysis
The Supreme Court emphasised that, where both parties trade in identical goods under identical marks, the decisive factor at the interlocutory stage is priority of use. It scrutinised the three categories of evidence relied upon by the courts below:
- Advertisements (1993): While early advertisements existed, there was no clear proof that they were followed by actual sales of goods bearing the disputed marks.
- Invoices: The invoices did not explicitly mention the trade marks; their linkage to goods bearing “Uniply/Uniboard” remained unproven.
- Dealer letters and Excise declarations: These were conflicting; some favoured the appellant, others the respondents, and the High Court itself viewed certain excise materials as dubious.
Given these ambiguities, the Court held that no party had shown a “strong prima facie case” warranting an interlocutory injunction. It noted that both sides had pending applications for registration of their marks and that the statutory registrar was competent to investigate priority under Section 12(3) of the Trade and Merchandise Marks Act, 1958. Granting an injunction on an equivocal record would unjustifiably hinder the other party’s business.
Holding and Implications
ORDER SET ASIDE; NO TEMPORARY INJUNCTION FOR EITHER PARTY
The Supreme Court set aside the High Court’s order and directed that no interim injunction shall operate in favour of either side. The underlying suits are to proceed expeditiously, or the Registrar of Trade Marks may determine priority, which will govern the parties’ rights.
Implications are confined to the parties: both may continue trading pending final adjudication; the judgment sets no new precedent on substantive trade-mark ownership but underscores judicial caution when evidence of prior use is inconclusive at the interlocutory stage.
S. Rajendra Babu, J.— Leave granted.
2. A suit was filed by the appellant in CS No. 705 of 1999 stating that it carries on business in all kinds of quality plywood, laminates, block boards of various types by claiming that it was established in the year 1996; that it has been a pioneer in marketing international standard plywood in innovative ways; that it is the sole selling agent and has distributorship and selling agency from various foreign dealers; that it has associates and business partners all over the world; that the said goods are sold with the trade marks “uniply”, “uniboard” and “uniwud” and so on the basis of which, it claims to have acquired a very high reputation amongst the plywood and wood product traders, architects, interior decorators, carpenters and users of plywood, boards and laminates; that it pays a very high tax both on the sales tax side and on the income tax side; that it has its registered office in Tamil Nadu and branch offices in Kerala, Karnataka and Andhra Pradesh and has distributors and agents in Maharashtra, Gujarat, Delhi and Calcutta. The appellant claims to be the proprietor of the trade marks “uniply” and “uniboard” and has extensively advertised the same in various media. In July 1999 the appellant came to know that the respondents have copied the trade marks “uniply” and “uniboard” and have been selling and distributing the same in the city of Chennai and claimed for grant of an injunction with an application for temporary injunction. The trial court granted an ex parte temporary injunction by order made on 10-9-1999.
3. The respondents also filed a suit in CS No. 804 of 1999 against the appellant claiming that they are the manufacturers of plywood and also selling the same with the trade marks “uniply”, “uniboard” and “unidoor”; that they have been registered as a small-scale industry in the year 1993; that advertisements had been made in 1993 containing the above trade marks in newspapers and souvenirs or diaries; that they have been continuously using the trade marks from 14-9-1993; and that the appellant is making use of the trade mark used by the respondents. However, no temporary injunction was granted in favour of the respondents. Thereafter in the suit of the appellant an order was made on 2-11-1999 in the following terms:
“The records filed by the plaintiff (appellant) indicate that they were using the trade marks Uniply and Uniboard anterior in point of time. Although the defendants (respondents) had filed records to show that there was inauguration and incorporation of the Company as early as 1993, no record was filed to show that it was manufacturing since 1993. As adverted to, the invoices and bills produced by the defendants (respondents) only carried the name as commercial plywoods and the brand name has not been furnished. On the other hand, the invoices and bills produced on the side of the plaintiff (appellant), in most of the documents the brand name finds a place. The first defendant (respondent) has obtained excise registration only in 1997 and the trade mark application filed by him is only with reference to Class 20. On the other hand, the trade mark application filed by the plaintiff (appellant) is dated 14-1-1996 and it relates to the goods covered under Class 19. The plaintiff (appellant) had also filed the turnover of the business for a number of years and the plaintiff (appellant) has contributed Rs 282.53 lakhs towards sales tax and also Rs 58.85 lakhs towards income tax. I am of the view that the defendants (respondents) have not made a case to suspend the order of interim injunction already granted to the plaintiff (appellant) on 10-9-1999. The balance of convenience is also only in favour of the plaintiff (appellant) and, hence, there is no valid reason to suspend the said order.”
However, by an order made on 29-11-1999, the trial court took the view that the respondents have established their factory since 1993-94 and have been using their stickers since 1994 and up to date they have been using the trade marks by roller printing/screen printing on the board itself and it cannot be removed while the appellant had only affixed stickers uniply, uniboard on the plywood; thus, there is a strong circumstance to show that even prior to the use by the appellant, the respondents have been using the trade marks in question. The trial court held that there is prima facie material to come to the conclusion that the respondents alone had been using these trade marks since 1993 and the appellant had entered into trade only from 1996. On that basis, it held that the appellant has no prima facie case and balance of convenience is not in his favour, while the respondents alone have a prima facie case and also the balance of convenience is in their favour. On appeal against this order, the Division Bench of the High Court held that the material placed before them established that the respondents have been manufacturing the products at least from the beginning of 1994. On the question of carrying on business in the State of Kerala it was noticed that in two Malayalam daily newspapers and in two souvenirs or brochures, advertisements have been made in the years 1993 and 1995 and the appellant has not placed any material to show that in spite of the fact that such advertisements had been made in those respective years the said trade marks had not been used till the appellant started using the same. The High Court also relied upon certain invoices and declarations filed before the Excise Authorities and certain letters from dealers. The High Court held that the advertisement of the respondents was only in relation to furniture and it could not be said that the trade mark was being used by the appellant in relation to plywood, boards, etc. and accepted the finding recorded by the trial court on the question of prior user and held that a prima facie case has been established to show that the respondents had made prior use of the trade marks in question.
4. In attacking the decisions of the High Court both on the original side and the appellate side, the learned Senior Advocate for the appellant submitted that principles laid down by this Court in Cadila Health Care Ltd. v. Cadila Pharmaceuticals Ltd. (2001) 5 SCC 73, JT (2001) 4 SC 243 have been ignored. Apart from giving a finding on the prima facie case, no findings have been given on balance of convenience or on question of irreparable hardship if interim injunction is not granted. He adverted to several decisions to pinpoint the distinction between action in a claim of passing off and infringement of a right arising on registration of a trade mark under the statute. He emphasised that valid cause for passing off action is misrepresentation made by a trader in the course of business to customers which is calculated to injure and cause actual damage to a business or goodwill of the trader by whom the action is brought. He elaborated that the material available to the Court did not establish the gist of the action for passing off. The principle of prior user is wrongly applied.
5. The learned Senior Advocate for the respondents controverted these contentions advanced on behalf of the appellant by stating that the two courts have concurrently held in favour of the respondents and the same should not be disturbed. The respondents having advertised their goods with the trade marks in question since 1993 and produced invoices for the period 14-12-1993 to 17-8-1999 it is clear that ample material was placed before the Court to establish the claim of prima facie case of entitlement to trade mark and infringement of the same would definitely damage his reputation in business and that the rule of prior user applied in this case is justified.
6. Considering the nature of pleadings in the two suits filed by the parties, it is clear that there is common field of activity between the two parties in respect of goods and trade marks sought to be used by either are identical. Hence the decision in Cadila case (2001) 5 SCC 73, JT (2001) 4 SC 243 and of similar context may not be of much use in this case. Inasmuch the areas of activity and the nature of goods dealt with or business carried on being identical, and the trade marks being of similar nature the only question that needs to be decided is as to who is the prior user. In deciding this question, the High Court relied upon: (1) advertisement made by the respondents, (2) invoices, and (3) letters of dealers.
7. It is no doubt true that advertisement of goods had been made by the respondents in 1993 itself. Whether that was followed up by goods being dealt with the trade marks in question is not clear as is to be seen by the following discussion:
So far as the invoices are concerned, it is not very clear from the same that they were in relation to goods containing the trade marks in question because there is no mention of any particular trade mark in the same and maybe they pertain to such goods, but this is a fact which is yet to be established by placing proper material before the Court. So far as the declarations made before the Excise Authorities are concerned, the High Court itself found the material to be dubious. The letters issued by the dealers are both in favour of the appellant and the respondents. In this state of materials the courts below should have been wary and cautious in granting an injunction which would affect the trade and business of another person using an identical trade mark. Both the appellant and the respondents have applied for registration of their respective trade marks before the Registrar under the Trade and Merchandise Marks Act, 1958 and the respective rights of the parties will have to be investigated by the Registrar and appropriate registration granted to either of them or both of them, as the case may be, bearing in mind the provisions of Section 12(3) of the Trade and Merchandise Marks Act, 1958. There are many precedents to the effect that for inherently distinctive marks ownership is governed by the priority of use of such marks. The first user in the sale of goods or service is the owner and senior user. These marks are given legal protection against infringement immediately upon adoption and use in trade if two companies make use of the same trade mark and the gist of passing off in relation to goodwill and reputation to goods.
8. Some courts indicate that even prior small sales of goods with the mark are sufficient to establish priority, the test being to determine continuous prior user and the volume of sale or the degree of familiarity of the public with the mark. Bona fide test of marketing, promotional gifts and experimental sales in small volume may be sufficient to establish a continuous prior use of the mark. But on some other occasions courts have classified small sales volume as so small and inconsequential for priority purposes. Therefore, these facts will have to be thrashed out at the trial and at the stage of grant of temporary injunction a strong prima facie case will have to be established. It has also to be borne in mind whether the appellant had also honestly and concurrently used the trade marks or there are other special circumstances arising in the matter. The courts below have merely looked at what the prima facie case is and tried to decide the matter without considering the various other aspects arising in the matter. Therefore, we think, the appropriate order to be made is that injunction either in the favour of the appellant or against them or vice versa is not appropriate and the proceedings in the suit shall be conducted as expeditiously as possible or the Registrar under the Trade and Merchandise Marks Act, 1958 may decide the matter which may govern the rights of the parties.
9. The order made by the High Court shall stand set aside and it is made clear that there shall be no order of temporary injunction in favour of either party.
10. The appeals are disposed of accordingly. No costs.
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