New Balance Athletics v. Apex Shoe Company Pvt. Ltd.

Rajiv Sahai Endlaw, J.:— The application of the plaintiff for interim injunction in this suit for permanent injunction restraining infringement of trade mark, passing off and for ancillary reliefs is for consideration.

2. The counsel for the parties were heard on 22 November, 2018 when after hearing, personal presence of Mr. Simarpreet Singh, Director of the defendant was directed. Mr. Simarpreet Singh, Director of the defendant appeared before this Court yesterday and his statement was recorded; the counsels were further heard and on request of the counsel for the defendant, the hearing adjourned to today. The counsel for the defendant has been further heard today.

3. The plaintiff instituted this suit, pleading (i) to be a company existing under the laws of USA; (ii) to be engaged in the manufacturing, marketing and sale of all types of footwear, readymade apparel including footwear and apparel in the field of sportswear under the trade marks ‘NEW BALANCE’; (iii) that the trade mark ‘NEW BALANCE’ was adopted by the plaintiff's predecessor in title in the year 1906 and thereafter has been in continuous use in USA and around the world; (iv) that ‘NEW BALANCE’ constitutes not only the mark of the plaintiff but also constitutes an important and essential feature of the trading name of the plaintiff; (v) that the plaintiff has six manufacturing facilities in USA and wholly owned subsidiaries in U.K., Hong Kong, Singapore, Australia, New Zealand, Mexico, Canada and South Africa; (vi) that the plaintiff is the registered proprietor of the mark ‘NEW BALANCE’ in India since 2 February, 1990 in Class 18, in respect of bags such as backpacks and tote bags for carrying sporting articles and since 18 May, 1987 in Class 25, in respect of articles of athletic and sports, footwear and clothing; both the said registrations are subsisting; (vii) that the plaintiff sells its goods under the mark ‘NEW BALANCE’ in more than 120 countries including India through specialty retailers, departmental stores etc.; (viii) that the plaintiff also sells its goods online and the goods of the plaintiff are offered for sale in India on Newbalance.co.in, Amazon.in, Jabong.in, Myntra.in, Flipkart.in, Snapdeal.in and Liveyoursport.in; (ix) that the plaintiff is also the owner of domain names comprising of ‘NEW BALANCE’ in different countries; (x) that “the plaintiff has been using the trade mark ‘NEW BALANCE’ in respect of its various goods and services in India since at least as early as 1986; however, it is only in the year 2016, that the plaintiff appointed a full time distributor in India; prior to 2016, the sales in India were sporadic in nature”; (xi) that plaintiff's trade mark ‘NEW BALANCE’ has been endorsed by leading sportsmen as well as reputed teams/national teams in various sports; (xii) that the plaintiff, sometime in March, 2017 came to know that the defendant had filed a trade mark application for the mark ‘NEW BALANCE’ in respect of footwear; and, (xiii) that the plaintiff served a cease and desist notice dated 17 March, 2017 to the defendant and to which the defendant replied on 18 April, 2017; a meeting was arranged of the parties and in which meeting, the defendant conveyed that it was willing to comply with the demand of the plaintiff provided a monetary consideration was given to the defendant and which demand of the defendant was rejected by the plaintiff.

4. The suit was entertained, though no ex parte injunction sought granted.

5. The defendant, in its written statement has pleaded that (a) the defendant has been in the footwear industry since early 1970s and the goods sold by the defendant are available throughout India and are well known; (b) the defendant has adopted various trade marks and of which ‘NEW BALANCE’ is one; (c) the defendant has used the mark ‘NEW BALANCE’ since the year 1999 in conjunction with its house mark ‘APEX’, resulting in enormous goodwill and reputation and also acquired distinctiveness in favour of the defendant; (d) the defendant has superior rights over the mark ‘NEW BALANCE’ in India; (e) the defendant filed application for registration of ‘NEW BALANCE’ on 13 April, 2000, claiming use since 1999; (f) the plaintiff has no user of the subject trade mark in relation to the subject goods; (g) the registration in Class 18 cited by the plaintiff is in the name of ‘New Balance Licensing Inc.’ and the plaint does not disclose the relationship between the plaintiff and ‘New Balance Licensing Inc.’; (h) the plaintiff has not filed any evidence of claimed use since 1986 and on the contrary has admitted its sales prior to 2016 being ‘sporadic’; (i) the defendant honestly adopted the mark ‘NEW BALANCE’ in the year 1999; (j) there is no likelihood of confusion owing to the difference in price, trade channels, class of consumers, target market, manufacturing material/nature of goods and character and performance of goods of the parties; (k) the suit is highly belated, the defendant having commenced use of the mark in 1999 and there is no explanation for the delay; (l) even after coming to know in March, 2017 of the defendant, the present suit has been filed only in March, 2018; the plaintiff has thereby acquiesced in use of the mark by the defendant; and, (k) there is no document filed by the plaintiff of use of the mark in India since 1999.

6. The plaintiff, in its replication, with respect to ‘New Balance Licensing Inc.’ has pleaded that the present suit is based on registration dated 18 May, 1987 in Class 25 in the name of the plaintiff and the counsel for the plaintiff explains that the application of the plaintiff for rectification of the registration dated 2 March, 1990 in Clause 18 in the name of ‘New Balance Licensing Inc.’ to the name of the plaintiff is pending.

7. The counsel for the defendant at this stage states that the replication has not been taken on record as yet.

8. It was the contention of the counsel for the plaintiff on 22 November, 2018, that (i) the plaintiff learnt of the rights claimed by the defendant in the trade mark ‘NEW BALANCE’ of the plaintiff, from the application filed by the defendant for registration of the said mark; (ii) otherwise, the plaintiff has not found any sales by the defendant under the said mark, though in the application for registration as well as in the reply to the notice preceding the suit, the defendant claimed so; (iii) the defendant has filed documents in proof of sale, at pages 26 to 40 of their documents, but the same also do not indicate as to what product is being sold thereunder; (iv) the defendant has also not pleaded their sales figures; and, (v) the defendant, from pages 41 to 153 has filed its brochure but not a single product bears the trade mark ‘NEW BALANCE’. It was on the aforesaid contention that the personal presence of Mr. Simarpreet Singh, Director of the defendant before this Court was directed.

9. Mr. Simarpreet Singh, Director of the defendant in his statement recorded yesterday has stated that the mark ‘APEX NEW BALANCE’ is reflected in the brochure filed by the defendants before this Court and has pointed out the pages of the said brochure. He has also stated that the mark ‘APEX NEW BALANCE’ is embossed on the shoes under the said mark though not visible in the photographs thereof filed before this Court. It has further been clarified by Mr. Simarpreet Singh that all goods are sold in the name of ‘APEX NEW BALANCE’ and not under the mark ‘NEW BALANCE’ alone, i.e. without the word ‘APEX’ and that the sales of ‘APEX NEW BALANCE’ are not recorded separately.

10. The counsel for the plaintiff has argued that, (i) the defendant, who is in the same trade as the plaintiff, is to be presumed to have known of the market of the plaintiff in relation to the same shoes; (ii) the defendant intentionally squatted over the mark of the plaintiff, with a view to extort money from the plaintiff; (iii) in N.R. Dongre v. Whirlpool Corporation, (1996) 5 SCC 714, the damage to the mark by the defendant on account of poor technology and low pricing was taken into consideration while granting the interim injunction; (iv) in para no. 6 of Milmet Oftho Industries v. Allergan Inc., (2004) 12 SCC 624, N.R. Dongre supra was analysed; and, (v) all the registered trade marks of the defendant are with the prefix ‘APEX’ and the defendant has no registration of ‘NEW BALANCE’; even ‘NEW BALANCE’ is being used by the defendant in conjunction with ‘APEX’.

11. Per contra, the counsel for the defendant has argued that, (a) the plaintiff, while applying for registration, applied on ‘proposed to be used’ basis; on the contrary the defendants in their application claimed use since 1999; (b) the registration of the plaintiff under Class 18 is with the disclaimer with respect to the word ‘NEW’; the plaintiff thus cannot claim any right to the exclusive use of the word ‘NEW’; (c) it is falsely stated that the defendant intended to squat on the mark to extort monies; the question of payment came up during the discussions held between the parties and it was in the said context that the defendant had sent the communication to which reference is made by the plaintiff; (d) the adoption by the defendant is honest and owing to the technology adopted by the defendant of, the shoes of the defendant having a unique balance which does not exist in the other shoes available in the market and which imparts comfort; (e) there is no possibility of any confusion/deception inasmuch as the market segment of the shoes of the plaintiff and the defendant is different; the shoes of the defendant under the mark ‘NEW BALANCE’ are priced under Rs. 1,000/-; (f) the annual sale of the shoes under the mark ‘NEW BALANCE’ is over 32 lacs pairs of shoes; (g) while the shoes of the defendant are meant for farmers; the shoes of the plaintiff qualify as sportswear; (h) the plaintiff itself in the plaint has admitted its sales in India to be sporadic prior to the year 2016; (i) the plaintiff has not produced a single document to prove sale and use of the mark in India before 2016; (j) the registration of the mark of the plaintiff is not a word mark registration but a device mark registration; (k) the plaintiff, after the knowledge of the use by the defendant also, has instituted this suit after considerable delay and thereby acquiesced in use of the mark by the defendant; (l) trafficking in trade marks is prohibited and it is the plaintiff who obtained registration of the mark in India without any intent of use thereof, as is obvious from non use thereof till 2016; (m) attention is drawn to Section 47 of the Trade Marks Act, 1999 providing for removal of the mark from Register for non use for five years; (n) the registration in favour of the plaintiff is not of a ‘word mark’ but of a ‘device’ and the parameters, as of a ‘word mark’, will not apply; (o) in N.R. Dongre supra, there were documents on record and admission of use of the mark by Whirlpool Corporation in India and it was in the said context that injunction was granted; (p) Milmet Oftho Industries supra relied upon by the counsel for the plaintiff is in relation to pharmaceutical products and interim injunction therein was granted in the context of public harm and the doctors in India also keeping abreast of the developments in the field worldwide; (q) attention is drawn to Columbia Sportswear Company v. Harish Footwear, 2017 (70) PTC 489 where a Co-ordinate Bench vacated the injunction reasoning that though the mark of the plaintiff therein may be well known in foreign country but the presence of the plaintiff in India had not been shown from any of the documents filed by the plaintiff and the percentage of customers of the plaintiff remained a mystery; and, (r) reliance is placed on Toyota Jidosha Kabushiki Kaisha v. Prius Auto Industries Ltd., (2018) 2 SCC 1 containing reference to Professor Critopher Wadlow's book “The Law of Passing Off”, 5 Edition, Sweet & Maxwell, opining that bona fide domestic traders should not be open to litigation at the suit of unknown or barely known claimants from almost anywhere in the world.

12. I have considered the rival contentions.

13. Having weighed the rival contentions on the anvil of the ingredients of prima facie case, irreparable injury, balance of convenience and public interest, I find the plaintiff entitled to the interim injunction sought. My reasons are stated herein below:

A. It is undisputed that as of today, the plaintiff is the registered proprietor vide registration dated 18 May, 1987 in Class 25 (articles of athletic and sports, footwear and clothing, such as hats, sweat bands, visors, sport shirts singlets, T-shirts, running shorts, running suits, all weather suits, recreational tops and shorts, aerobic exercise wear, socks athletic shoes, walking shoes, aerobic dancing shoes and hiking boots) of “Trade Mark Type: Device” and “Word Mark: New Balance” as under:

B. Though the aforesaid registration describes the type of the trade mark as ‘device’ but also describes the registration as of the word mark ‘NEW BALANCE’. The registration is thus of a composite mark. The argument of the counsel for the defendant, that the registration is not of word mark, does not find favour because even if registration is considered as that of a device, the device is nothing but of a rectangle with the words ‘NEW BALANCE’ in capital letters on it, without any other frills. Such a registration, though may be classified as of a device but conveys only the word mark and there is nothing else in the device by which the consumers can identify the same dehors the word mark. The consumers are unlikely to distinguish between the words ‘NEW BALANCE’ placed in a rectangle and the same words without the lines of the rectangle around them. The contention of the counsel for the defendant that the plaintiff cannot claim benefit of the said registration to restrain the defendant from using the word mark ‘NEW BALANCE’ owing to being of a device mark, thus cannot be accepted. Reference in this regard may be made to Amir Chand Om Prakash v. Rajni Industries, 2011 (124) DRJ 743 holding that the prominent part of even the device mark, cannot be used by the defendant. Here, as aforesaid, the device mark is nothing but the words ‘NEW BALANCE’ which have been used by the defendant. Though in S.M Dyechem Ltd. v. Cadbury (India) Ltd. ., (2000) 5 SCC 573 it was held qua comparison of device mark and word mark that where common marks are included in the rival trade marks, more regard is to be paid to the parts not common but subsequently in Cadila Health Care Ltd. v. Cadila Pharmaceuticals Ltd. ., (2001) 5 SCC 73, the same was disagreed with and it was held that the test is of similarity and not dissimilarity.

C. The contention of the counsel for the defendant that the aforesaid registration is of no avail, being on a proposed to be used basis, does not also disentitle the plaintiff from the interim injunction. It is not the case that the defendant or any other person, on account of non-user of the mark by the plaintiff, at any time, till the institution of the suit, took any steps for having the mark of the plaintiff removed from the register. It is not open to the defendant to today, when faced with the prospect of being restrained, raise the said pleas. I have in Sun Pharmaceuticals Industries Limited v. Cipla Limited, 2009 (39) PTC 347 and H&M Hennes & Mauritz AB v. HM Megabrands Pvt. Ltd., (2018) 251 DLT 651 held that a defendant in a suit for infringement cannot set up pleas of nonuse without seeking remedies before the Registrar of Trademarks under Section 47 of the Trade Marks Act, 1999 as the same, if permitted would undermine the efficacy of registration and the presumption of validity of registration under Section 31 of the Trade Marks Act and therefore an action for infringement of trade mark cannot be defeated for disuse.

D. It is also not in dispute that at least as of today and since 2016, the plaintiff has a full time distributor in India. Thus, again as of today, both the plaintiff and the defendant are in use of the mark with the mark of the plaintiff being registered and that of the defendant not being registered.

E. The use by the defendant of the mark ‘NEW BALANCE’ in conjunction with ‘APEX’ is incapable of distinguishing the goods of the defendant from that of the plaintiff. In Jain Riceland Pvt. Ltd. v. Sagar Overseas, 2017 (72) PTC 523 (Del) it was held that the addition of the brand name is not sufficient. Moreover, the arrangements between foreign and Indian parties, whereunder a foreign party allows an Indian party to use its mark for goods manufactured in India, are not unknown. The possibility of the consumers, notwithstanding the plaintiff having not permitted the defendant to sell the goods under the brand/mark ‘NEW BALANCE’ of the plaintiff, assuming so, cannot be ruled out. This Court in Piruz Khambatta v. Soex India Pvt. Ltd., (2012) 193 DLT 670 and the High Court of Bombay in Hem Corporation Pvt. Ltd. v. Itc Limited, 2012 SCC OnLine Bom 551 held that use of mark as a sub mark amounts to infringement and that sub-brand is a brand/mark.

F. It is also not in dispute that at least internationally, the user of the mark by the plaintiff is of at least a century before that of the defendant. The only question is, whether use in India by the defendant of the mark on a bigger scale than the use by the plaintiff, should disentitle the plaintiff from an interim injunction.

G. In my view considering the nature of the product, with respect to which the plaintiff as well as the defendant are using the mark, and considering the targeted consumers thereof, a more extensive use in India by the defendant of the mark even if any, does not disentitle the plaintiff from interim injunction. The product of the plaintiff, with admittedly no distributor in India, prior to the year 2016, could be procured by consumers in India only through the online platforms through which the plaintiff claims to have effected sales in India or on travel abroad. A browsing of some such platforms qua shoes shows a huge disparity in prices of shoes, with sports/walking/hiking shoes being available for at least one tenth of the price of their branded counterparts. Besides the perceived differences in quality and comfort, what drives the purchasers of branded products, as the product of the plaintiff is, to dish out ten times or more the price for which other shoes are available, is the brand value and brand consciousness, which plays a large part in the purchase of branded products. In fact, All India Footwear Manufacturers & Retailers Association, a consortium of retailers of shoes, had initiated legal proceedings [W.P.(C) No. 7479/2015] in this Court to restrain sale of shoes through online platforms, enabling the sellers thereof to sell the same at a fraction of a price. A large part of the revenue of the plaintiff goes into building the value of its brand ‘NEW BALANCE’.

H. On the contrary, the defendant does not claim any brand value of its mark ‘NEW BALANCE’, though claims brand value of its mark ‘APEX’ under umbrella of which all shoes of the defendant including under the mark ‘NEW BALANCE’ are sold.

I. It is thus a mark having brand value which is pitted against a mark having no brand value and on building of value whereof the defendant has not spent any monies.

J. Availability of the shoes of the defendant under the mark ‘NEW BALANCE’, which it is not disputed, is similar if not identical to the mark of the plaintiff, thus has potential of putting off the intending consumers of the product of the plaintiff owing to the brand of the plaintiff being dented by the presence in the market of other products under a mark which can be confused with the brand of the plaintiff.

K. The difference in price, trade channels and class of consumers, all have capability of devaluing the brand/mark of the plaintiff.

L. The argument of the counsel for the defendant, that the product of the defendant is aimed at farmers, also does not cut ice inasmuch as though not visible from the brochure of the defendant filed by the defendant, Mr. Simarpreet Singh, Director of the defendant when appeared before this Court on 22 January, 2019 stated that the defendant embosses the mark ‘APEX NEW BALANCE’ on its shoes though the same is not visible in the photographs thereof. Mr. Simarpreet Singh, Director of the defendant however had carried with him samples of such shoes on which embossment of ‘APEX NEW BALANCE’ was found to be prominent on the rims of the soles thereof. The brochure of the plaintiff shows the shoes of the plaintiff also bearing the mark ‘NEW BALANCE’ on the tongue and soles thereof. Moreover, once both the plaintiff and the defendant are in the business of manufacturing and marketing shoes, no restraint can be put on either, from manufacturing different varieties and classes of shoes and merely because the shoes of the defendant, as per the brochure of the defendant may today appear to be different from the shoes as found in the brochure of the plaintiff, is no ground to refuse interim injunction.

M. The class of consumers targeted by the plaintiff are prone to frequent travel to foreign territories where the plaintiff has been marketing its shoes and to buying the shoes of the plaintiff through online platforms. Such class of consumers, notwithstanding the sporadic sales before 2016 of the plaintiff in India, can be presumed to be aware of the mark of the plaintiff and the availability of shoes of the defendant under the said mark is capable of deception, confusion and dilution of the mark of the plaintiff. It is now well settled that local reputation is no longer the only consideration in determining goodwill and reputation. Brands, in today's context, can enjoy transnational repute, and advertisement in the media and on the internet is enough to secure repute even if the plaintiff's products are not being traded in the country in which it is seeking protection. Reference in this regard may be made to (i) N.R. Dongre supra; (ii) Jolen Inc. v. Doctor & Co., (2002) 98 DLT 76; (iii) Milmet Oftho Industries supra; (iv) Cadbury Uk Ltd. v. Lotte India Corpn. Ltd., 2014 SCC OnLine Del 367; (v) Neon Laboratories Limited v. Medical Technologies Limited, (2016) 2 SCC 672; and (vi) H&M Hennes & Mauritz supra

N. The plaintiff thus has a prima facie case in its favour.

O. The hit which the brand/mark of the plaintiff is likely to take from the defendant, during the pendency of the suit continuing to sell the goods under the same mark, will be irreparable and any monetary compensation is unlikely to suffice. Once the consumers of the goods of the plaintiff switch to another brand, it will be an uphill task for the plaintiff to win them back. Thus, the element of irreparable injury is also satisfied.

P. I find the balance of convenience to be in favour of the plaintiff and against the defendant because if notwithstanding finding prima facie case interim injunction is refused and the defendant continues to sell the goods under the same mark, the defendant is also likely to, if ultimately restrained, suffer loss and injury. Moreover, the defendant though verbally is claimed to have sales of 32 lacs pairs of shoes under the mark ‘NEW BALANCE’ has shied from pleading so in the written statement and has not pleaded in the written statement any particulars of the volume of its sales of shoes under the said mark, under the umbrella mark ‘APEX’ and/or the expenditure if any incurred by the defendant on publicizing the mark ‘NEW BALANCE’. The plea of the defendant is that it does not maintain accounts sub-mark wise. Thus, we have a mark pitted against a sub-mark, and the sub-mark is to give in.

Q. The balance of convenience is also found in favour of the plaintiff because there are on record, (i) a cease and desist notice dated 17 March, 2017 got issued by the plaintiff to the defendant; (ii) the response dated 18 April, 2017 of the advocate of the defendant thereto and in which the advocate for the defendant also stated that the defendant was “ready for an amicable settlement in the subject matter. The matter can be personally discussed in a joint meeting if so agreeable in order to avoid futile litigation”; (iii) a printout of e-mail dated 30 May, 2017 of the advocate for the defendant to the advocate for the plaintiff though “WITHOUT PREJUDICE” but referring to the meeting held on 16 May, 2017 and seeking to know whether the advocate for the plaintiff had “received any further instruction from your clients in regard to the settlement discussions, including the term of monetary compensation to our client”; and, (iv) the response dated 8 June, 2018 of the advocate for the plaintiff to the advocate for the defendant “vehemently” rejecting the suggestion of a monetary compensation to be given and reiterating the demand for immediate cessation of use of the mark ‘NEW BALANCE’ by the defendant. Therefrom it prima facie appears that the defendant was willing for a monetary compensation to give up the use of the mark. The counsel for the defendant has of course tried to explain that it was in response to a proposal during the meeting of the plaintiff. However, from the tenor of the correspondence, it does not appear so. The e-mail dated 30 May, 2017 does not refer to any compensation offered by the plaintiff or a higher compensation demanded by the defendant. It is felt that if the defendant, for monetary compensation was willing to give up the use of the mark, the damage which the defendant will suffer from being restrained during the pendency of the suit from use of the mark can always be compensated in the event of the defendant ultimately succeeding in the suit.

R. It can safely be assumed that the defendant, at the time of applying on 13 April, 2000 for registration of the word mark ‘NEW BALANCE’, must have conducted a search and would have come across the registration in favour of the plaintiff. The defendant even then did not take any steps to have the registration in favour of the plaintiff removed on account of non-user by the plaintiff of the mark. On the contrary, the defendant proceeded with its own registration and which has not been granted as yet. Resultantly, in the fight between a registered mark and an unregistered mark, at this stage the registered mark has to statutorily succeed.

S. The argument of the defendant of the plaintiff being not entitled to interim injunction on account of delay and laches is also not found to have any force. Owing to the said delay and laches, though ex parte injunction was not granted to the plaintiff, however the same cannot now at the ‘After Notice Stage’, after the counsels have been fully heard, have any bearing. Reference in this regard can be made to order dated 21 October, 2016 in CS(COMM) No. 1433/2016 and Ramaiah Life Style Café v. Eminent Entertainment, 2017 (70) PTC 532.

T. Observations in Toyota Jidosha Kabushiki Kaisha supra relied upon are in the context of passing off and not infringement.

14. IA No. 6402/2018 thus succeeds. The defendant is restrained, during the pendency of this suit, from using the mark ‘NEW BALANCE’ and/or any other mark similar or deceptively similar thereto, amounting to infringement/passing off by the defendant of its goods as that of the plaintiff under the mark ‘NEW BALANCE’

15. The defendant shall however have liberty to apply for grant of time to enable it to inform its consumers of the new mark, instead of the mark ‘NEW BALANCE’.