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Chaurasia Tobacco Co. v. Bhagwan Dass and Ors.

Delhi High Court

Apr 27, 1988

Judgment

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Judgment Summary — B.N. Kirpal, J.

Factual and Procedural Background

This opinion concerns an interlocutory application under Order 39 Rules 1 and 2 seeking a temporary injunction restraining the defendants from using the number "91" on tins in which they sell chewing tobacco, together with the impugned colour scheme, get-up and design.

The plaintiffs' pleaded case: they are registered proprietors of trade mark "91" (registered 18 August 1978) and rely also on earlier copyright registrations and continuous use of the mark since 14 February 1972. They assert substantial sales and advertising expenditure in relation to the mark.

The defendants' pleaded case: they claim prior adoption and use of "91" as early as 1972, a copyright registration in 1975, and documentary sales evidence from 23 March 1974 onwards. They allege loss of earlier records, rely on dealer affidavits to prove earlier user, assert that the plaintiffs were aware of and acquiesced in their use (precluding interim relief), and claim concurrent user and a pending application for trade mark registration.

The judge considered documentary sales evidence and corporate registration records for both parties, compared the extent of their businesses and advertising expenditure, and addressed statutory rights arising from trade mark registration and the question of delay/acquiescence.

Legal Issues Presented

Whether the defendants should be restrained by an interim injunction from using the trade mark "91" on their chewing tobacco tins (i.e., whether the plaintiffs have established a prima facie case and balance of convenience in their favour).
Whether the plaintiffs have established prior user of the mark "91" such as to support relief against the defendants' use.
Whether any delay by the plaintiffs in instituting proceedings, or alleged acquiescence, bars interim relief.
Whether the alleged concurrent user or the defendants' asserted copyright/colour use prevents granting the injunction as sought.

Arguments of the Parties

Plaintiffs' Arguments

The plaintiffs are the registered proprietors of trade mark "91" (registered 18 August 1978) and have earlier copyright registrations showing use of "91" on tins since 14 February 1972.
The plaintiffs have continuously used the mark since 1972, supported by bills and other documentary evidence showing sales from 1972 and 1973 onwards.
The plaintiffs have substantial sales, advertising expenditure and market presence; they contend the defendants' continued use of "91" will deceive the public and damage their reputation, warranting interim relief.

Defendants' Arguments

The defendants claim they began using "91" in 1972 and obtained a copyright registration in 1975; they contend they have prior user.
They assert documentary evidence of sales since 23 March 1974 and rely on dealer affidavits to prove earlier sales where other records are lost.
They argue that the plaintiffs were aware of their use for a long period and thus have acquiesced, which should preclude an interim injunction.
The defendants also assert concurrent user and have applied for registration under the Trade Marks Act.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Shri Swaran Singh trading as Appliances Emporium v. M/s. Usha Industries (India) New Delhi and another, AIR 1986 Delhi 343	The principle that delay in seeking an injunction is not necessarily fatal where a statutory right arises from registration of a trade mark; a registered trade mark confers an exclusive statutory right which is not lost by delay and requires protection to prevent deception of the public when the same mark is used by another.	The court applied this authority to reject the defendants' contention that delay or acquiescence by the plaintiffs should bar relief. It treated the plaintiffs' registration as a statutory exclusive right and held that delay alone did not preclude granting an injunction against the identical use of the same mark.

Court's Reasoning and Analysis

The court proceeded through an evidentiary and legal analysis focused on (a) prior user and documentary proof, (b) effect of registration, and (c) the impact of any delay/acquiescence or concurrent user arguments.

1. Prima facie proof of prior user:

The plaintiffs produced bills showing sales of tobacco bearing No. 91 from 1972 (first bill dated 24 January 1972) and additional bills from 1973. The judge found no reason to disregard these bills prima facie.
The defendants could not produce documentary evidence of sales earlier than March 1974 and admitted loss of earlier records. Their certificate indicated the firm came into existence on 17 October 1973 and registration by the Registrar of Firms occurred in November 1974, undermining affidavits purporting to show pre-partnership business activity.
On balance, the court found that prima facie the plaintiffs established earlier user of the mark "91".

2. Registered trade mark and statutory right:

The court observed that Section 28 of the Trade and Merchandise Marks Act, 1958 grants an exclusive right to the registered proprietor and the right to obtain relief for infringement.
The registration process involves advertisement and an opportunity for opposition; the record contained no indication that the defendants opposed the plaintiffs' registration or later sought rectification of the register.
The defendants' failure to contest registration or seek rectification was treated as indicative that they were or should have been aware of the plaintiffs' prior user and registration.

3. Delay, acquiescence and concurrent user:

The court relied on the cited precedent to hold that delay in seeking an injunction is not fatal where a statutory right is involved; a registered mark’s exclusivity cannot be lost merely by delay.
The court noted that, while delay and concurrent user might be relevant in cases of similar marks, when the same mark is used by both parties the risk of public deception is high and the court has a duty to protect the registered mark.
Given the lack of documentary evidence supporting the defendants' asserted prior use and the absence of any opposition at registration, the court did not accept acquiescence as a bar to relief.

4. Balance of convenience and potential for damage:

The plaintiffs demonstrated significantly larger sales and advertising expenditure compared to the defendants. The disparity supported the conclusion that defendants' continued use could adversely affect the plaintiffs' business reputation.
The court also noted record material suggesting customer complaints about the defendants' product quality; continuing identical use could deceive unwary customers and harm the plaintiff's goodwill.

5. Scope of relief and limitations:

While granting a temporary injunction against use of the number "91," the court declined to restrain the defendants from using the green colour on the tin because the defendants' earlier copyright registration in respect of the container/colour predated the plaintiffs' copyright relied upon in the suit.
The court therefore limited the relief to prohibiting use of the number "91" and permitted the defendants to continue using the container type and green colouring provided they do not use the number "91".

Holding and Implications

Holding: The court granted a temporary injunction in part: it restrained the defendants from using the trade mark "91" on any of the tins of chewing tobacco manufactured and sold by them. The court did not restrain the defendants from using the green colour on the tin.

Implications:

Direct effect: The defendants are prohibited, by interim order, from using the number "91" on their chewing tobacco tins. They remain free to use the green colour and the container type they currently use, provided they do not use the numeral "91".
Statutory protection emphasized: The decision applies the principle that registration of a trade mark confers an exclusive statutory right which the court will protect against identical use by others, even where there has been delay in seeking relief.
Broader precedent: The court applied existing authority concerning delay and registered marks but did not purport to lay down any novel legal principle; no new precedent was announced beyond application of established principles to the facts of this case.

I.A. (the interlocutory application) stands disposed of in accordance with the above order.

Judge: B.N. Kirpal, J.

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JUDGMENT

B.N. Kirpal, J.

1. This is an application under Order 39 Rules 1 and 2 praying that the defendants should be restrained from using tins like that of the plaintiff in which they are selling chewing tobacco using Trade Mark No. 91 along with the impugned colour scheme, get-up and the design. The case of the plaintiffs is that they are the registered owners of trade mark '91' in respect of chewing tobacco. The said trade mark was registered in their favour on 18th August, 1978. It is also their case that they are registered proprietors of a trade mark label as of 13th May, 1977 where the number which is given is 121. According to the plaintiffs they had first obtained registration of the label under the Copyright Act on 14 February, 1972 where in the number shown on the tin was 91. Thereafter another registration was obtained, using the number 91, on 25th September 1978 being Copyright No. 21549. It is this registration under the Copyright Act which the plaintiff is relying in the present case. The plaintiff is also basing its case on the trade mark No. 91 which was registered on 18th August, 1978. The submission of the plaintiff is that after 14th February, 1972 the plaintiff has been using and selling tobacco using the number 91. This mark has been adopted by it which was subsequently got registered under the Trade Marks Act on 18th August, 1978. According to the plaintiff, its sales run into crores of rupees and it has a very large advertising budget also.

2. The case of the defendants is that they had adopted the use of the number '91' in respect of chewing tobacco from a date prior to the use of the said number by the plaintiffs. According to the defendants, it used the number 91 with effect from 1972 and it has also obtained registration under the Copyright Act in 1975. The submission of the defendants is that it has lost its record with regard to sale of such tobacco prior to 1974 but it has placed on record copies of the bills showing sale of such tobacco since 23rd March, 1974. In order to prove sale of such tobacco prior to that date, reliance has been placed by the defendants on some affidavits of the dealers which it has filed. It is also contended by the learned counsel for the defendants that the plaintiffs were aware of the sale of such tobacco in tins bearing No. 91 since a long time and there has been acquiescence on its part and, therefore, interim injunction should not be issued. It is also the case of the defendants that it has applied for registration under the Trade Marks Act and further there has in any case been concurrent user of the said trade mark.

3. Before dealing with the legal arguments in this case, one further fact which may be noted is with regard to the extent of business of the two parties. According to the statement which has been filed by the plaintiffs for the accounting year 1973-74 it had a sale of Rs. 4,25,593.64 but which has gradually raised and in the year 1986-87 its total sale was Rs. 2,50,41,319.52. In that year it also spent Rs. 2,72,086.34 on advertisement. The total amount of excise duty paid from 1976-77 to 1986-87 is stated to be over Rs. 3.35 crores. On the other hand, the business of the defendants has been rather modest. Its total sale for the years 1973 to 1975 is stated to be of Rs. 25,067.83 which has creped up to Rs. 1,56,703.74 in the year 1986-87. It has been admitted by the counsel for the defendants that it has incurred no expenditure by way of advertisement in any newspaper. The only expenditure alleged to have been incurred on account of advertisement and publicity is the printing on the cartons and the packing and diaries and cloth bags. In the year 1975-76 such expenditure was Rs. 448.70 and in the year 1986-87 it is Rs. 16,306.14.

4. The plaintiffs have placed on record copies of the bills indicating sale of such tobacco bearing the trade mark No. 91 from the year 1972 onwards. The first bill is dated 24th January, 1972. This shows the sale to a sister concern and I need not place much reliance upon it but it has also placed on record copies of other bills which indicate sales made to different parties in India in the year 1973 of different types of tobacco including tobacco bearing No. 91. I see no reason why prima facie these bills should be disregarded. The defendants, on the other hand, have not been able to produce any documentary evidence to show sales earlier than March, 1974. In fact according to the defendants it is not in possession of such documents. It is, at this stage, pertinent to note that according to the certificate which has been filed by the defendants, the said firm came into existence on 17th October, 1973 and was granted registration by the Registrar of Firms on 31st November, 1974 (SIC). It is presumably for this reason that in the sale figures which has been filed by the defendants for the first year they have indicated the years as 1973-75. In view of this, I find it difficult at this stage to rely upon the affidavits purporting to show the existence of business of the defendants prior to the coming into existence of the partnership. It appears to me, therefore, that prima facie the plaintiffs have been able to establish prior user of the mark number '91'.

5. As already indicated hereinabove, the plaintiffs have also got the mark 91 registered in their name. Section 28 of the Trade and Merchandise Marks Act, 1958 gives an exclusive right to the use of the trade mark to the registered proprietor. Section 28(1) gives such a registered proprietor right to obtain relief in respect of infringement of the trade mark in the manner provided by the Act. A trade mark is registered only after the application has been advertised, objections invited and decided. If any party wants to object to the grant of the registration, it is open to them to oppose the grant of the registration. Even after the trade mark has been registered, it is open to a party to file proceedings in the High Court for cancellation of the mark. Presumably the application of the plaintiffs for grant of registration must have been advertised prior to the grant of registration. There is nothing to indicate on the record that the defendants at any time filed any objections to the grant of the registration. If the defendants were claiming prior user, as they are doing now, one would have expected the defendants to have filed objections to the grant of registration of the trade mark 91 in favour of the plaintiffs. Even thereafter, the defendants have taken no steps in asking for rectification of the register by moving an appropriate application in this Court. The conduct of the defendants, therefore, seems to imply that it must have been aware of the prior user of mark 91 by the plaintiffs.

6. It is no doubt true that the present suit has been filed a number of years after the defendants started using the mark 91 but, as held by a Division Bench of this Court in Shri Swaran Singh trading as Appliances Emporium v. M/s. Usha Industries (India) New Delhi and another, AIR 1986 Delhi 343 delay in filing of a suit for injunction is not fatal. The Court held as under:

There is then the question of delay. Learned counsel for the respondents had urged that the delay is fatal to the grant of an injunction. We are not so satisfied. A delay in the matter of seeking an injunction may be a ground for refusing an injunction in certain circumstances. In the present case, we are dealing with a statuary right based on the provisions of the Trade and Merchandise Marks Act, 1958. An exclusive right is granted by the registration to the holder of a registered trade mark. We do not think that statutory rights can be lost by delay. The effect of a registered mark is so clearly defined in the Statute as to be not capable of being misunderstood. Even if there is some delay, the exclusive right cannot be lost. The registered mark cannot be reduced to a nullity. The principles governing other types of injunctions are not to be readily applied to a case like the present. Of course, if it was a case of a similar mark as opposed to the same mark the concurrent user coupled with delay might be a ground for refusing an injunction. However, when the same mark is being used, in a sense, the public is deceived into purchasing the defendant's goods on the belief that they are the plaintiff's goods, so a registered trade mark is causality, it is the duty of the Court to protect the registration. So, we cannot refuse an injunction even if there is some delay especially when the mark is the same. To refuse the injunction would tantamount to permit a fraud being practiced on unwary customers. This is a matter of principle on which the Court cannot refuse the injunction.

7. The aforesaid observations are clearly applicable to the present case. The plaintiff is the owner of the registered trade mark. Its sales are far in excess of the sales of the defendants. In fact the advertisement expenses of the plaintiff are also much in excess of the defendant's total sales. The counsel for the plaintiff has drawn my attention to documents on the record filed by the defendants which tend to show that the defendant's customer complained about the poor quality of the defendant's products. If this be so, by allowing the defendant's customers complained about the poor quality of the defendant's products. If this be so, by allowing the defendant's to continue to sell tobacco using the trade mark '91'. It but may adversely affect the business reputation of the plaintiff as an unwary customer may mistake the defendant's product as that of the plaintiff. For the aforesaid reason, I grant a temporary injunction restraining the defendants from using the trade mark 91 on any of the tins of chewing tobacco manufactured and sold by it. I am not restraining the defendants from using the green colour on the tin in view of the fact that the copyright on which the plaintiff is relying for the purpose of this suit is later in point of time than the registered copyright of the defendants. It will be open to the defendants to use the container of the type which it is using now as long as it does not use the number 91. I.A. stands disposed of.