SUPREME COURT REITERATES THE ELEMENTS TO BE PROVED BY A PLAINTIFF IN AN ACTION FOR PASSING-OFF IN A TRADEMARK INFRINGEMENT CASE

A two Judge Bench of the Supreme Court comprising of Justice Abhay S. Oka and Justice Rajesh Bindal passed a Judgment dated 14-09-2023 in the matter of Brihan Kumar Sugar Syndicate Pvt. Ltd vs Yashwantrao Mohite Krushna Sahakari Sakhar Karkhana, Civil Appeal No. 2768 of 2023 and made observations regarding the elements to be proved by a plaintiff in an action for passing off in a trademark infringement case.

Facts

(a) In the present case, the Appellant-Plaintiff, Brihan Kumar Sugar Syndicate Private Limited was engaged in the business of selling country liquor under the label “Tango Punch” and the Respondent-Defendant, Yashwantrao Mohite Krushna Sahakari Sakhar Karkhana was engaged in the business of selling country liquor under the label “Two Punch Premium”.

(b) The Appellant filed a Suit in Regular Civil Suit No.1/2017 before the Ld. District Judge-1, Osmanabad, Maharashtra (Trial Court) seeking permanent injunction, damages and rendition of accounts and other consequential reliefs in an action for infringement of copyright under the Copyright Act 1957 and for passing off under the Trade Marks Act 1999 against the Respondent.

(c) The Trial Court, vide Order dated 24-05-2021, allowed the Suit filed by the Appellant-Plaintiff on the ground that the Plaintiff had registered its copyright in the labels displayed on the bottles of country liquor sold by it and that the Defendant had infringed the same by printing and using the said labels. Hence, the Defendant was directed to pay Rs. 1 Lakh by way of damages to the Plaintiff.

(d) Aggrieved by the Trial Court Order dated 24-05-2021, the Respondent-Defendant filed First Appeal No. 851 of 2021 before the Hon’ble High Court of Bombay at Aurangabad and subsequently, a Civil Application No. 5391 of 2021 in the said First Appeal seeking stay of the Trial Court Order dated 24-05-2021.

(e) The High Court, vide Order dated 23-06-2021 (as corrected by Order dated 29-06-2021), held that the Plaintiff had not raised any objection against the Defendant’s registration of the label, at any time prior to the filing of the Suit. Hence, the Defendant cannot be restrained from using the said label, at least till the final disposal of the First Appeal. Accordingly, the Civil Application filed by the Defendant seeking stay of the Trial Court Order dated 24-05-2021 was allowed by the High Court.

Supreme Court Observations:

Aggrieved by the High Court Order dated 23-06-2021, the Appellant-Plaintiff filed Civil Appeal No. 2768 of 2023 before the Hon’ble Supreme Court. The Apex Court, vide Order dated 14-09-2023, made the following observations:

(1) That in an action for passing off, the plaintiff has to prove the following elements:

(i) the volume of sales and extent of advertisement done for the product or services to establish that the plaintiff has achieved goodwill and reputation in the market;

(ii) that the defendant has sold its own goods or services under the same or similar label as that of the plaintiff, thereby, creating a likelihood of confusion in the minds of consumers that the goods or services sold by the defendant are the goods or services of the plaintiff;

(iii) that the plaintiff has incurred loss or there is a likelihood of incurring loss due to the aforesaid acts of the defendant.

(iv) Further, if the first element is not established, the Court need not examine whether the other elements have been satisfied or not.

(2) That the Appellant-Plaintiff, in the present case, had although filed a statement of sales, advertisement and sale promotion expenses, certified by a chartered accountant (CA), however, the CA was not examined in the Trial Court to prove the statements. The Bench held that ‘only by producing the statements without proving the contents thereof, the appellant could not have established its reputation or goodwill in connection with the goods in question.’ Hence, as the Plaintiff failed to prove the figures of sales and expenditure incurred on promotional activities of the product, the Bench held that the Appellant-Plaintiff failed to establish that it has achieved goodwill and reputation in the market by selling the country liquor under the label “Tango Punch”. Hence, the first element required to be established by the Plaintiff in the passing-off action remained unsatisfied. Hence, it made out a prima facie case for grant of stay of execution of the Trial Court Order dated 24-05-2021 in favor of the Respondent-Defendant.

(3) Moreover, during the proceedings before the Commissioner, State Excise, wherein, Defendant had sought approval of the Commissioner for use of its label, the Appellant-Plaintiff had admittedly withdrawn its objections against the Defendant’s use of such labels. This act of the Plaintiff made out a prima facie case of ‘acquiescence’ i.e. consent to the Defendant’s use of a label similar to that of the Plaintiff. Thus, the Plaintiff cannot now raise objections regarding copyright infringement against the Defendant. Therefore, the High Court rightly held that the Defendant cannot be restrained from using the said label, at least till the final disposal of the First Appeal pending before the Bombay High Court.

Conclusion

Thus, based on the aforesaid observations, the Supreme Court held that the Appellant-Plaintiff failed to establish that it has achieved goodwill and reputation in the market by selling country liquor under the label “Tango Punch” and further, that the Plaintiff had earlier acquiesced to the use of similar label by the Defendant before the Excise Commissioner. Hence, the Bench held that the Defendant cannot be now restrained from using the said label, pending final disposal of the First Appeal at the High Court. Therefore, the Apex Court upheld the High Court Order dated 23-06-2021, which granted stay of the Trial Court Order dated 24-05-2021, in favor of the Defendant.

Harini Daliparthy

Senior Associate

The Indian Lawyer