Sandisk Llc Plaintiff v. Amit And Others Defendants.

Sanjeev Narula, J. (Oral)—

I.A. 3600/2023 (under Order XIII-A Rule 3 and 6(1)(a) r/w Section 151 of CPC seeking summary judgment)

1. The present suit, inter-alia, seeks permanent injunction restraining infringement of Plaintiff's registered trademarks, copyright, passing off, rendition of accounts, damages, delivery-up, among other ancillary reliefs.

2. The facts narrated in the suit : Plaintiff - ‘SanDisk LLC’ (formerly ‘SanDisk Corporation’), a US corporation, registered in the State of Delaware, is engaged in the business of providing data storage solutions. It is one of the world's largest dedicated providers of flash memory storage solutions under the house mark ‘SanDisk’ since the year-1995. Plaintiff's data storage solutions pride themselves on incorporating essential components such as flash memory, controller, and firmware technologies. Plaintiff possesses trademark registrations in more than 150 jurisdictions apart from India, including USA, European Community, China, Canada, etc. In India, they have variety of word and device marks under registrations under house mark ‘SanDisk’, details whereof [hereinafter collectively “SanDisk Trademarks”] are set out below:

REGISTRATION NO. TRADEMARKS DATE OF APPLICATIONS CLASSES 1249761 SANDISK 14th November, 2003 09 2632942 25th November, 2013 09 1805766 13th April, 2009 09 2261469 CRUZER BLADE 04th January, 2012 09 1249763 SANDISK ULTRA 14th November, 2003 09 2898190 SANDISK 10th February, 2015 09, 35, 37, 41, 42, 45

3. Plaintiff has invested considerable time and currency to market and advertise products bearing the SanDisk Trademarks by way of campaigns and product launches specifically catering to the Indian market since the year-2005. They sell their products in India through their country-wide network of official national distributers who have been authorised to import and distribute in the Indian market original SanDisk products directly from Plaintiff or their subsidiaries. This distribution network is selected to ensure that genuine products bearing SanDisk Trademarks and packaging are sold/offered for sale at every offline retail outlet or e-commerce portals.

4. Plaintiff's SanDisk Trademarks are extensively advertised and popularised and enjoy immense goodwill and cachet. High Court of Judicature at Bombay in Commercial IP Suit (L) No. 8349 of 2021 vide order dated 31 March, 2021, prima facie found the mark ‘SanDisk’ to have all attributes to qualify as a “well known trade mark”, under Section 2(1)(zg) r/w Section 11(6) of the Trade Marks Act, 1999 [hereinafter “Trademarks Act”]. They sell their memory cards and USB flash drives in a distinct and unique packaging, which constitutes as original “artistic work” within the meaning of Section 2(c) of the Copyright Act, 1957 [hereinafter “Copyright Act”], and thus, are entitled to exclusive rights therein under Section 14(c) of the Copyright Act. Key elements of Plaintiffs' packaging include : (a) Red product packaging with white lettering; (b) Red frame logo [‘’] describing the capacity of the device; and (c) SanDisk logo [‘’].

5. Plaintiff is aggrieved with Defendants indulging in unauthorized third-party distribution of counterfeit microSDHC cards and Cruzer Blade USB Flash Drives bearing Plaintiff's SanDisk Trademarks ‘SanDisk’, ‘’, ‘Cruzer Blade’ and Red Frame Logo [‘’] with identical, packaging as that of Plaintiff's products. In August 2019, Plaintiff gained knowledge of use of the said marks in Old Lajpat Rai Market. To ascertain the extent and identity of person(s) involved in manufacturing, selling, marketing and distributing counterfeit products using Plaintiff's SanDisk Trademarks, an investigator was deputed to survey the market which revealed : Mr. Amit/Defendant No. 1 [operator/owner of display counter opp. Shop No. 695 at Old Lajpat Rai Market, Delhi - 110006 - hereinafter “Location 1”] and several other temporary/makeshift establishments were selling impugned products, who remain unidentified and were arrayed as John Doe(s)/Defendant No. 2.

6. A comparison of front and backside of Plaintiff's product, with that of Defendants' infringing products, are given below:

7. On the scrutiny of the images depicted above, the features which distinguish Plaintiff's original/genuine products from Defendant No. 1's counterfeit products are listed hereinbelow:

7.1. Inferior/low-quality print of Defendant No. 1's packaging vis-à-vis that of Plaintiff's products. Images on the packaging are blurred and colour quality is heavily compromised when compared with Plaintiff's product packaging. 7.2. Poor quality packaging of Defendant No. 1's products, as it easily flips open and does not tear on opening, as in case of Plaintiff's products.

7.3. Memory card contained in Defendant No. 1's packaging does not contain the serial number or the legend “Made in Taiwan”/“Made in China”; particulars which are embossed on Plaintiff's original products.

7.4. The lettering, font and colour quality featured on Defendant No. 1's counterfeit products are different from that of Plaintiff's.

7.5. Simple/inexpensive blister packaging of Defendant No. 1 is of a lower quality than that of Plaintiff's and protrudes further out of the packaging. The memory card placed inside is at a significant elevation from the base of the packaging material when compared with Plaintiff's placement.

7.6. The print quality of Cruzer Blade USB drives is of a significantly lesser quality than that of Plaintiff. Images depicted therein are blurred/smudged and colour quality as well is significantly compromised.

7.7. The back of Defendant No. 1's counterfeit Cruzer Blade USB packaging refers to the product as “Cruzer Facet” instead of “Cruzer Blade”.

INTERIM ORDER AND REPORTS OF LOCAL COMMISSIONERS

8. On 02 September, 2019, while issuing summons, an ex-parte ad interim injunction was granted against Defendants and two Local Commissioners [hereinafter “LCs”] were appointed to visit “all makeshift counters in Old Lajpat Rai Markets” for the purpose of seizing and sealing counterfeit goods and to prepare an inventory of the infringing articles. Operative portion of the afore-said order reads as under:—

“8. Noting the submissions made by the counsel for the plaintiff and also perusing the documents it is clear that the plaintiff has made out a prima facie case in its favour and the balance of convenience is in favour of the plaintiff, for it to be entitled to grant of interim relief and accordingly, defendants, their partners, proprietors, servants, agents and all others in active concert or participation with them are restrained from manufacturing, selling, offering for sale, advertising, directly or indirectly dealing in products which infringe the plaintiffs copyrights in the artistic work comprised in its products packaging. Defendants, their partners, proprietors, servants, agents and all others acting in active concert with them are restrained from manufacturing, marketing, offering for sale, selling, advertising, directly or indirectly dealing in any product bearing the plaintiffs registered trademarks ‘SanDisk’, the Sandisk logo, ‘Cruzer Blade’ and the ‘Red Frame Logo’ and/or any mark/s conflisingly or deceptively similar thereto, amounting to infringement to the product, registered trademarks/copyright of the plaintiff till the next date of hearing.”

9. On the day of execution of the commission, one LC visited the premises of Defendant No. 1, and the other LC identified and visited six (06) locations at Old Lajpat Rai Market; Delhi - 110006], Delhi - 110006] they both found counterfeit microSDHC card and Cruzer Blade USB pen drives bearing Plaintiff's SanDisk Trademarks. The details of the seizure are as follows:

Location 1 : -

SL. NO. DESCRIPTION OF THE PRODUCTS QUANTITY 1. 4 GB Micro SDHC cards 111 2. 8 GB Micro SDHC cards 83 3. 32 GB Micro SDHC cards 93 4. 64 GB Micro SDHC cards 02 5. 16 GB Cruzer Blade USB 10 6. 32 GB Cruzer Blade USB 05 7. 64 GB Cruzer Blade USB 01 TOTAL NUMBER OF PRODUCTS SEIZED 305 units

Location 2 : -

SL. NO. DESCRIPTION OF THE PRODUCTS QUANTITY 1. Product packaging for 16 GB MicroSD Card 223 2. 16 GB Pen Drive 02 3. 32 GB Pen Drive 32 4. 4 GB MicroSD card 45 5. 8 GB MicroSD card 01 6. 16 GB MicroSD card 01 7. 32 GB MicroSD card 07 8. 64 GB MicroSD card 01 TOTAL NUMBER OF PRODUCTS SEIZED 312 units

Location 3 : -

SL NO. DESCRIPTION OF THE PRODUCTS QUANTITY 1. 6 GB Pen Drive 01 2. 16 GB Pen Drive 10 3. 32 GB Pen Drive 03 4. 64 GB Pen Drive 09 5. 4 GB MicroSD Card 15 6. 16 GB MicroSD Card 03 7. 32 GB MicroSD Card 01 8. Loose Products without packaging: i. 8 GB Pen Drive ii. 32 GB Pen Drive iii. 62 GB Pen Drive iv. 128 GB Pen Drive 01 02 03 02 9. Product packaging material for: i. 4 GB MicroSD Card ii. 8 GB MicroSD Cards iii. 16 GB Ultra MicroSD Card 04 05 03 TOTAL NUMBER OF PRODUCTS SEIZED 62 units

Location 4 : -

SL NO. DESCRIPTION OF THE PRODUCTS QUANTITY 1. 4 GB Pen Drive 123 2. 8 GB Pen Drive 244 3. 32 GB Pen Drive 424 4. 64 GB Pen Drive 220 5. 128 GB Pen Drive 14 6. 4 GB MicroSDHC Card 22 7. 8 GB MicroSDHC Card 105 8. 16 GB MicroSDHC Card 96 9. 32 GB MicroSDHC Card 177 10. Loose packaging material for: i. 4 GB MicroSDHC Card ii. 8 GB MicroSDHC Card iii. 16 GB MicroSDHC Card iv. 32 GB MicroSDHC Card 1590 180 1248 1335 TOTAL NUMBER OF PRODUCTS SEIZED 5837 units

ANALYSIS

10. The Joint Registrar vide order dated 17 January, 2020, impleaded Defendants No. 2 to 6 as parties to the suit. Later, on Plaintiff's request, vide order dated 11 November, 2020, Defendants No. 2 and 4 were deleted from the array of parties. All Defendants have been served with the summons, in the suit, but have failed to file their written statement(s), within the stipulated timelines. Defendants/proprietor of Defendants were present at the time of execution of the commission and copy of the order was also served upon them. The order dated 18 February, 2020 records the appearance of Defendants No. 3, 5 and 6 in-person, however, since then they have never appeared. Thus, Defendants obviously have knowledge of the orders passed by this Court and the present proceedings, yet have stayed away. Based on the aforementioned details, the Court proceeded ex-parte against Defendant No. 1 on 18 February, 2020, and similarly, against Defendants No. 3, 5, and 6 on 11 January, 2022.

11. Plaintiff is the registered proprietor of the SanDisk Trademarks and their registrations are valid and subsisting, a fact proved on the basis of the documents placed on record. No evidence to the contrary has been produced by Defendants. By virtue of provisions encapsuled in Section 28 of the Trademarks Act, Plaintiff has exclusive rights to use the SanDisk Trademarks in relation to the goods for which the marks have been registered.

12. Photographs of the impugned products that have been seized by LCs annexed along with the Reports of the LC also demonstrate that Defendants have been indulging in sale and distribution of products displaying identical packaging and idenitical marks of the Plaintiff's SanDisk Trademarks. These photographs demonstrate that the impugned products are nothing but counterfeit packaging of Plaintiff's ‘SanDisk’ products. Defendants are clearly indulging in blatant violation of Plaintiff's statutory and common law rights in the SanDisk Trademarks.

13. In view of the pleadings, documents as well as LC Reports that have been placed on record, the Court is of the view that affixation of Plaintiff's registered marks on Defendants' goods is done with the intention to unlawfully profit from and create unauthorised association with the goodwill and cachet enjoyed by Plaintiff's ‘SanDisk’ products. The use of Plaintiff's SanDisk Trademarks is bound to cause palpable losses, harm and injury to Plaintiff as well as public. Defendants were attempting to deceive the public into buying their counterfeit products. The likelihood of confusion and deception feuled by the mala-fide intention of Defendants is evident. Defendants have made use of identical trade marks, in relation to identical goods (counterfeit microSDHC cards and USB Flash drives), while catering to the same end-use consumers, hence a clear case of trade mark infringement and passing-off is proved.

14. In the opinion of the Court, the present case is fit for passing a summary judgment under Order XIII-A of CPC as applicable to commercial disputes read with Rule 27 of Delhi High Court Intellectual Property Division Rules, 2022 [hereinafter “IPD Rules”]. 2019 SCC OnLine Del 10764 In fact, in absence of defence, the Court is also entitled to invoke Order VIII Rule 10 of CPC to pass a judgment. The LC Reports are also read in evidence in terms of Order XXVI Rule 10(2) of CPC, 2022 SCC OnLine Del 1452 and no ex-parte oral evidence is required to be led. 2022 SCC OnLine Del 2788 Plaintiff is thus entitiled to decree of permanent injunction in terms of prayers (a), (b) and (c) of the amended Plaint.

15. On damages, Plaintiff also argues that in light of Defendants' patently dishonest activities considering the unfair trade practice and fast-moving nature of products, Plaintiff is entitled to actual loss of sales. Plaintiff's also argue that since Defendants have sold Plaintiff's counterfeit products and thereby, harmed their reputation and goodwill, heavy and punitive damages should be awarded. Co-ordinate Benches of this Court in General Electric Company v. Mr. Altamas Khan, 2008 SCC OnLine Del 1794 and Microsoft Corporation v. Yogesh Papat 2005 SCC OnLine Del 216 have granted compensatory damages based on certain assumptions of sales. Thus, considering the overall facts and circumstances of the case, Defendants' conduct invites the award of damages. However, since Plaintiff has not led any substantial evidence for the said relief, taking a reasonable assessment and considering nature of counterfeiting indulged into by Defendants, in the opinion of the Court, Plaintiff is entitled to nominal damages, which are to be quantified severally commensurate with the volume of seizure of the infringing goods.

RELIEFS

16. The goods seized by LCs, which are lying in superdari with Defendants, details whereof are recorded in the Report of LCs both dated 19 September, 2019, are directed to be handed over to counsel for Plaintiff and/or authorized representative(s) for Plaintiff, forthwith. The same shall thereafter be destroyed by Plaintiff's representative(s), in compliance with extant rules/regulations.

17. The present suit is accordingly decreed in favour of the Plaintiff and against Defendants No. 1, 3, 5 and 6 in terms of the relief of permanent injunction as sought in prayers (a), (b), and (c) of the amended Plaint.

18. Accordingly, damages are awarded in favour of Plaintiff, which shall be payable by the Defendants No. 1, 3, 5 and 6 in the following manner/breakup : Defendants No. 1 and 3 shall pay INR 50,000/- each; Defendant No. 5 is liable to pay INR 25,000/- and likewise, Defendant No. 6 shall pay INR 2,00,000/-.

19. Plaintiff has also incurred costs for executing the commissions and deposited court fees. Thus, in view of the judgment of the Supreme Court in Uflex Ltd. v. Government of Tamil Nadu, 2021 SCC OnLine SC 738 as well as in terms of the Commercial Courts Act, 2015 and Delhi High Court (Original Side) Rules, 2018 read with IPD Rules, Plaintiff is entitled to actual costs, recoverable jointly and severally from Defendants No. 1, 3, 5 and 6. Plaintiff shall file their bill of costs in terms of Rule 5 of Chapter XXIII of the Delhi High Court (Original Side) Rules, 2018 on or before 30 April, 2023. As-and-when the same is filed, the matter will be listed before the Taxing Officer for computation of costs.

20. Suit is decreed in above terms. Registry is directed to draw up the decree sheet.

21. Suit and all pending applications are disposed of.