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Hindustan Pencils Ltd. v. Aptudet Industries

Delhi High Court

Jul 10, 1991

Judgment

Subsequent
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CaseIQ

Smart Summary (Beta)

Structured Summary of the Opinion (J.K. Mehra, J.)

Factual and Procedural Background

The plaintiff filed an application under Order 39 Rules 1 and 2 read with Section 151 CPC seeking an interim injunction (including ex parte relief) restraining the defendant, its agents, servants and employees from manufacturing, offering, advertising or dealing in sealing wax, chalk sticks and other goods under the trade mark "NATRAJ" and the device of NATRAJ or any deceptively similar mark. The plaintiff claimed prior adoption of the mark NATRAJ for pencils in 1961 and asserted registrations including Trade Mark Nos. 225923 (registered 14.12.64, claiming user since 22.7.61), 260466 and later Nos. 400868 and 400869 (registered 3.2.83) covering goods in Class 16. The plaintiff tendered sales and advertising figures (sales running into crores and annual advertisement expenditure exceeding one million rupees since 1985) and stated an intention to enter the market for stationery items such as inks, sealing wax and carbon.

On 19.2.1991 Mahinder Narain, J. granted an ad interim ex parte injunction restraining the defendant from manufacturing and dealing with sealing wax under the mark NATRAJ similar to Registration No. 400868. The defendant appeared, filed a written statement and an application under Order 39 Rule 4 read with Section 151 CPC (I.A. 6253/91) for vacation of the injunction.

Legal Issues Presented

Whether an interim injunction (including an ex parte injunction) should be granted to the plaintiff to restrain the defendant from using the mark NATRAJ and the device in relation to sealing wax and chalk sticks.
Whether the plaintiff's alleged false statement (concerning the date it first became aware of the defendant's use) and the subsequent affidavit correcting that statement disentitles the plaintiff to interim relief.
Whether the defendants' asserted prior and continuous use of the mark NATRAJ (dating from 1970 for sealing wax and 1975 for chalks), and the protection afforded by Section 33 of the Trade & Merchandise Marks Act, 1958, preclude the plaintiff from obtaining injunctive relief.
Whether differences in the goods marketed by the parties reduce the likelihood of confusion and thereby affect entitlement to interim relief.

Arguments of the Parties

Plaintiff's Arguments

The plaintiff adopted the trade mark NATRAJ (with device) in 1961 for pencils and has continuously used it; it holds multiple registrations including Nos. 225923, 260466, 400868 and 400869.
The plaintiff has substantial sales and advertising expenditure (sales running into crores; annual advertising expenditure exceeding one million rupees since 1985), demonstrating reputation and goodwill in the mark.
The plaintiff had plans to expand into a broad range of stationery goods including inks, sealing wax and carbon.
The plaintiff stated (initially) that it first became aware of the defendant's infringing activities in the first week of December 1990 and sought ex parte relief on that basis.

Defendant's Arguments

The plaintiff made a false statement in the plaint and affidavit by alleging that it first learned of the defendant's use only in December 1990, whereas the plaintiff had issued a notice to the defendant in 1986; this misrepresentation disentitles the plaintiff to equitable relief.
The defendants have openly and honestly used the mark NATRAJ and the device since about 1970 (sealing wax) and 1975 (chalks), with significant advertising, and therefore have acquired rights by prior user.
The goods sold by the defendant (sealing wax, chalk sticks) are different from the plaintiff's existing products and there is no likelihood of confusion among consumers.
The defendants produced newspaper cuttings and certificates to support their claim of prior use predating the plaintiff's 1983 registrations (Nos. 400868 and 400869).

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The court proceeded in a stepwise manner, addressing the parties' contentions on the available record:

On the allegation of a false statement: The court noted that paragraphs in the plaint and the affidavit (paras 9 and 19 of the plaint and para 9 of the injunction application) stated that the plaintiff first learned of the defendant's use in December 1990. The defendant contended this was false because the plaintiff had issued a notice in 1986. The plaintiff's director subsequently filed an affidavit acknowledging the incorrect statement, explaining it as an oversight while handling multiple litigations, and expressing regret.
The court observed that, although such a false statement could have justified action against the deponent, the explanation and subsequent affidavit led the court not to initiate criminal proceedings. The conduct was termed negligent, but the court emphasised that negligence alone would not automatically disentitle the plaintiff to relief if the plaintiff otherwise demonstrated a prima facie case.
On the merits of prior use and distinctness of goods: After examining documents placed on record, the court found that the defendants had been using the mark NATRAJ and the device prior to 1983 and that such use appeared prima facie to have been open and honest since before 1975. The court also noted the plaintiff was not manufacturing or selling sealing wax or chalk sticks and had not taken steps to enforce any rights against the defendants for about five years, which gave rise to equities favouring the defendants.
The court analysed Section 33 of the Trade & Merchandise Marks Act, 1958 (quoted in full in the opinion), which preserves the rights of prior users: a registered proprietor cannot, by virtue of registration alone, restrain the use of an identical or nearly resembling mark in relation to goods in respect of which another person (or predecessor) has continuously used the mark from a date prior to the proprietor's use or registration (whichever is earlier).
Because the defendants' use predated the plaintiff's 1983 registrations (Nos. 400868 and 400869) and because the plaintiff had not yet commenced manufacture/marketing of the products in question, the court found that the plaintiff's exclusive rights were constrained by Section 33 and that the plaintiff had failed to establish a prima facie entitlement to interim injunctive relief on the present material.
Recognising that the factual issues of prior user and other equities required evidence, the court refrained from resolving ultimate rights on affidavit material alone and directed an interim measure: the defendants were ordered to file quarterly accounts showing sales of products under the impugned mark, so that the parties' positions could be examined further on the basis of evidence.

Holding and Implications

EX PARTE INJUNCTION VACATED

Direct consequences and implications announced by the court:

The ad interim ex parte injunction granted on 13.2.1991 in respect of the use of the impugned trade marks for sealing wax and chalk sticks is vacated.
The defendants are directed to file quarterly statements of accounts in the court, clearly showing their sales of products sold under the impugned trade mark NATRAJ and device.
There will be no order as to costs. The interlocutory applications (I.As) are disposed of.
The court observed that, in light of Section 33 of the Trade & Merchandise Marks Act, 1958, the defendants' prior use may entitle them to continue using the mark in relation to the goods in respect of which they had continuous prior use, and that the defendants might even be entitled to registration for those products if prior use is proven. Thus, the plaintiff's statutory exclusivity is subject to the limitation in Section 33 where prior user rights exist.
The court did not purport to lay down any new legal precedent; its decision was fact-specific and based on the material then on record, with further proof to be led by the parties at trial.

Show all summary ...

J.K Mehra, J.:— This is an application under Order 39 Rules 1 and 2 read with Section 151 CPC on behalf of the plaintiff praying for an interim injunction against the defendant, its agents, servants employees from interfering, offerifig or advertising directly or indirectly, dealing in sealing wax, chalks sticks and other goods under the trade mark NATRAJ and device of NATRAJ and any other mark which is deceptively similar to the plaintiff's registered trade mark and device amounting to passing off of the defendants goods or which is the goods or the business of the plaintiff. The plaintiff had also prayed for an exparte injunction.

2. Mahinder Narain, J. affter hearing the counsel for the plaintiff on 19.2.91 granted an ad interim ex-parte injunction against the defendant, its agents, servants from manufacturing, offering or dealing with the sealing wax under the mark NATRAJ similar to the mark covered by Registration No. 400868. The case of the Plaintff is that it is in the year 1961 that it had adopted the trade mark NATRAJ with the device of NATRAJ in respect of pencils and has ever since been using the said trade mark and device in respect of the said goods. The plaintiff also got the Mark NATRAJ and device of NATRAJ duly registered as Trade Marks No. 400868 and No. 400869 respectively as of 3.2.83 in respect of goods tailing in class 16 of schedule iv of trade & merchandise marks rules 1959 including stationery, advertising materials, arts, material pen, office requisites other than apparatus. The mark NATRAJ and the device of NATRAJ was first registered by the plaintiff in respect of writing pencils, under the trade Mark No. 225923 as of 14.12.64 claiming user since 22.7.61 They also hold registrarion No. 260466 in respect of pencils, pencil sharpners, pens, fountain pens, erasers, pins, clips and staples which also fall in class 16 of goods. The plaintiff has also furnished in Annexure “A” to the plaint the sales figures and also the amounts spent by it in popularising their trade mark by advertisements. The sales of the plaintiff run into crores and even the expenses on advertisements exceed rupees one millon in each year since 1985. The plaintiff has contended that it being an expanding company it has a scheme to enter into market in a big way for the entire range, of stationery goods like inks, sealing wax, carbon etc. However, there is nothing on record to suggest that the plaintiff is manufacturing or using its said mark in respect of sealing wax and chalks.

3. In response to the summons and notice of the injunction application, the defendents put in their appearance and filed an application under order 39 Rule 4 read with Section 151 CPC being I.A 6253/91 for vacation of the injunction order, along with its written statement.

4. The main grounds of attack by the defendants on the right of the plaintiff to claim injunction are three. Firstly, that the plaintiff has made a false, statement by alleging in the plaint and in the application for injunction, that the fact of infringing activities by the, defendants came, to the notice of the plaintiff for the first time in the first week of December 1990 and thereby the plaintiff had concealed the material fact of its having knowledge of defendants trade and having issued a notice in 1986 to the defendant in this respect. According to the defendant, this by itself is sufficient to disentitle the plaintiff from getting any relief whatsoever from this court. Secondly, the defendant has contended that he has been all along using the trade Mark NATRAJ and the device of NATRAJ openly, and honestly since 1970 in respect of sealing wax and chalk since the year 1970 and 1975 respectively. They also claim to have spent huge amount on advertisements for popularising the said mark in respect of their products. Thirdly, even the goods manufactured and marketted by the defendant are different from the goods manufactured and marketted by the plaintiff and there is no posibility of confusion being caused to the unwary purchasers. The defendant in support of its user has filed a few cuttings from some papers purporting to be advertisemerts apart from certain certificates to show that they are in business from a particular date very much prior in time to the registration of the plaintiff's trade marks No. 400868 and 400869.

5. The first contention of the defendants pertains to the plaintiff having made a false statement and having filed a false affidavit which had the effect of misleading the court into believing that the plaintiff had acquired knowledge of the user of the trade mark NATRAJ by the defendant much earlier than December 1990. The defendant contends that the plaintiff in any event had knowledge in the year 1986 when it had issued a notice to the defendant. Therefore, it is contended by the defendant that the plaintiff's statenent that it come to know of the infringing activities of the defendant only in December 1990 are false. The said statement is contaided in the paras 9 and 19 of the plaint and para 9 of the application for injunction which is supported by an affidavit of Mr. P.J Sanghvi, Director of the plaintiff. The said Director of the plaintiff has filed a further affidavit acknowledging the incorrect statement and has stated that the fact of the issuance of Notice in 1986 did not come to his notice at the time of swearing the affidavit in support of the injunction application in this suit. The possibilty of the court having been persuaded to grant exparte injunction on the basis of this false statement cannot be ruled out. Normally such false statement would have called for action against the deponent guilty of making such a false statement, but fortunately for the plaintiff, filed the further affidavit explaining the circumstances where under such a statement was made through an oversight and have expressed regret for the same. In the light of this explanation, I am not inclined to initiate any criminal action against the plaintiff or the deponent. Because in view of the explanation that such an oversight took place because the deponent was dealing with several litigations relating to the infringement of the plaintiff's trade marks and while swearing the affidavit, the earlier notices and defendant's reply thereto did not come to his notice. The conduct of the plaintiff even if such explanation is accepted can be termed as negligent. However, this fact alone in the light of subsequent affidavits to my mind, would not be enough to disentitle the plaintiff to claim injunction provided, it has, otherwise a prime facie good case to succeed.

6. Coming to the second and third contentions of the defendants, taking into account the various facts and also the documents placed on record by both the parties, I find that the defendants have been using the trade mark NATRAJ as also the device of NATRAJ prior to 1983 and even to the knowledege of the plaintiff since 1986. Such use of mark by the defendants prima facie to have been open and honest since before 1975 and that their products are different from those of the plaintiff who is admittedly not producing or selling either sealing wax or the chalks sticks or clouring chalks. These facts coupled with the fact that the plaintiff had taken no steps to enforce any right that it may be having against the defendants for about 5 years has given rise to certain equities in favour of the defendants. It is true that in a number of cases it has been repeatedly held that in an action for infringement of trade mark, delay in initiating an action for infringement is not fatal and that the statutory protection should not be lightly denied to the registered proprietor and that if there is some delay alone. Such would be the case in the absence of the circumstances and provision of law referred to hereafter.

7. In view of the fact that except for the trade Marks No. 400868 and No. 400869, the other registrations of plaintiff do not cover the products being produced and marketed by the defendants and these two trade marks No. 400868 and 400869 were registered as of 1983 only which means that the defendants were already using the trade mark NATRAJ and the device in respect of the products long before the plaintiff got its trade mark No. 400868 and 400869 registered.

8. section 33 of the trade & merchandise marks act, 1958 provides as under:—

S. 33 Saving for vested rights: Nothing in this Act shall entitle the proprietor or a registered user of a registered trade mark to interfere with or restrain the use by any person of a trade mark identical with or nearly resembling it in relation to goods in relation to which that person or a predecessor in title of his has continuously used that trade mark from a date prior; —

a) to the use of the first mentioned trade mark in relation to those goods by the proprietor or a predecessor in title of his; or

b) to the date of registration of the first mentioned trade mark in respect of those goods in the name of the properitor or a predecessor in title of his;

Whichever is the earlier, and the Registrar shall not refuse (on such use being proven) to register the second-mentioned trade mark by reason only of the registration of the first-mentioned trade mark.

9. The possibility of the defendants also securing registration of the said, trade mark in its favour for the products, namely, sealing wax and chalk sticks cannot be ruled out in the light of the above provision of law.

10. Furthermore, the proprietor of the trade mark is also not entitled to interfere with or restrain the use by any. person of the trade mark identical with or nearly resembling it in relation to goods in relation to which that person has continuously used that trade mark from a date prior to the use of the first mentioned trade mark in relation to those goods. Thus the exclusive right of the proprietor of a registered Trade Mark to use such trade mark is subject to the restriction provided under section 33 of the trade & merchandise marks act, 1958 and gets considerably, diluted in case covered by Section 33 qua the prior users. It is admitted case of the parties that plaintiff has not yet started manufacturing or marketing the products in respect whereof the defendants are already in the market under the impugned trade mark, However, the fact of prior user etc. is a matter of evidence and can really be considered only after the evidence has been recorded, but in the light of the discussions above, I am of the view that the plaintiffs have failed to make a prima facie good case for an interim injunction.

11. Since my above finding is based only on the material so far brought, on record and the parties have still to prove their respective cases by leading evidence, I feel that it will be in the interest of justice to direct the defendants to file quarterly statements of accounts clearly showing their sales of the products under the impugned trade mark.

12. The result is that exparte injunction granted on 13.2.91 in respect of the use of the impugned trade marks in respect of sealing wax and chalk sticks stands vacated and the defendants are directed to file the aforesaid quarterly statements, of account in the court.

13. In the facts and circumstances, there will be no order as to costs. The I. As. stand disposed off.