Badar Durrez Ahmed, J.

1. The appellants (Intex) are aggrieved by the judgment and/or order dated 24.12.2016 delivered by a learned single Judge of this court in IA No. 17138/2013, which was an application filed under Order XXXIX Rules 1 & 2 of the Code of Civil Procedure, 1908 (Code) in CS(OS) 2060/2013, filed by the respondents (AZ Tech). The said suit and application were filed in respect of the trade mark AQUA. The respondents filed the said suit seeking a permanent injunction against the appellants (Intex) restraining them from using the mark AQUA in respect of mobile phones/cellular phones. The case was one of purported passing off. By virtue of the impugned judgment and/or order, the learned single Judge has allowed the application (IA No. 17138/2013) filed by the respondents under Order XXXIX Rules 1 & 2 of the Code and has restrained Intex from using the mark "AQUA" or any other deceptively similar mark in respect of cellular/mobile phones and their accessories. Of course, when the present appeal came up for hearing on 06.01.2017, we had granted stay of the operation of the said judgment.

2. Mr. Sudhir Chandra, the learned senior counsel, appearing on behalf of Intex, submitted that as per the respondents, Intex had launched its product under the mark "AQUA" in 2012. This is evidenced by paragraph 17 of the amended plaint. However, Mr. Sudhir Chandra submitted specifically that Intex launched its mobile phones under the mark "AQUA" in August 2012. He also submitted that, as indicated in their written statement, the adoption of the mark "AQUA" was an honest adoption as it had no knowledge whatsoever of the respondents product under the mark "AQUA". In fact, it was submitted that at the time when the Intex launched its product under the mark "AQUA", the respondents alleged product with the mark "AQUA" was non-existent in the market.

3. The learned senior counsel further submitted that the suit was filed on 28.10.2013, that is, after 14 months of the launch of the mobile phones of Intex under the mark "AQUA" which was, as pointed out above, within the knowledge of the respondents. Within this period, Intex had sold "AQUA" phones to the extent of Rs. 200 crores. It was pointed out that between 01.08.2012 and 31.03.2013, Intex had sold 1.75 lakh phones under the mark "AQUA". Between 01.04.2013 and 13.11.2013, a further 2 lakh phones under the mark had been sold by Intex. It was also pointed out that approximately Rs. 27 crores were spent on advertising and, in particular, on TV Commercials, which include commercials featuring the famous actor, Mr. Farhan Akhtar. It was also submitted that the TV advertisements were first telecast on 11.06.2013 and the second video clip was telecast on 01.10.2013 onwards.

4. Mr. Sudhir Chandra further pointed out that the sales in 2015-16 of the appellants mobile phones under the mark "AQUA" had grown to Rs. 3193 crores. He also pointed out that far from the appellant attempting to ride on the goodwill and reputation of the respondents, it was the latter who tried to benefit from the appellants mark "AQUA". He submitted that this is evidenced by the fact that AZ Tech, which allegedly had been using a different font and style for its mark "AQUA", adopted an identical font and style which had been used by Intex. This imitation, according to the appellant, was done in the year 2015 during the pendency of the suit filed by the respondents [CS(OS) 20602013]. The font and style of the word mark "AQUA", as used by AZ Tech and Intex and copied by AZ Tech in 2015, are set out in tabular form hereinbelow:-

image

5. Because of this, Intex filed CS(OS) 2668/2015 against the respondents for infringement of copyright and for passing off. It was pointed out by the learned counsel for the appellant that no explanation was offered by AZ Tech as to why this was done and the only reply forthcoming was that this was done to give a fresh approach. However, the said suit was disposed of by a learned single Judge of this court on 05.12.2016 as AZ Tech had indicated its intention not to use the artistic work, which was the subject matter of the suit. The operative portion of the order passed on 05.12.2016 in that suit is as under:-

"Learned Senior counsel appearing on behalf of the defendants submits that the defendants do not intend to use the artistic work, subject matter of the present suit, without prejudice to the rights and contentions as raised by the defendants in Suit No. 2060/2013 on the word mark "AQUA" and the plaintiffs giving up the relief and costs. Mr. Anand, learned counsel for the plaintiffs very fairly agrees to the same.

Accordingly, the suit is disposed of binding the defendants to the statement made by the learned Senior Counsel appearing on their behalf, on instructions. The statement so made shall be treated as an undertaking to this Court. The undertaking is accepted."

6. It was submitted that the fact that the respondents copied the font and style and the artistic work in the logo employing the word mark "AQUA", clearly demonstrated two things. First of all, it demonstrated the dishonest conduct on the part of the respondent, particularly because this was done during the pendency of the suit filed by the respondents which was pending before this court. Secondly, this indicated that it was not Intex which was trying to pass off its goods as those of the respondents, but just the other way round.

7. Mr. Sudhir Chandra, however, submitted that the impugned judgment and/or order cannot be sustained on account of several points of law which were not taken into account by the learned single Judge. The points were as under:-

"I. Before an injunction in a passing off action can be passed in favour of the plaintiff, the plaintiff must establish that it had a goodwill/reputation in the mark on the relevant date, that is, the date when the defendant is alleged to have launched its product under the same or deceptively similar mark;

II. Insofar as the point of similarity or deceptive similarity of the mark is concerned, the issue of added matter is also an important one while considering the grant of an injunction in a passing off action;

III. Delay in filing the suit is also to be considered as a factor going towards disentitling the plaintiff to an injunction and, at least, to an ad interim injunction;

IV. The principles of grant of an interim injunction had not been considered in the correct light by the learned single Judge;

V. The plaintiffs (AZ Techs) conduct in copying the font and style of the logo used by Intex was clearly dishonest and would disentitle it to the equitable remedy of injunction;"

We shall consider each of these points in detail.

I. Before an injunction in a passing off action can be passed in favour of the plaintiff, the plaintiff must establish that it had a goodwill/reputation in the mark on the relevant date, that is, the date when the defendant is alleged to have launched its product under the same or deceptively similar mark.

8. On behalf of the appellants, it was submitted that in order to succeed in a passing off action, the classical trinity of (1) goodwill/reputation; (2) misrepresentation; and (3) likelihood of damage has to be established. Insofar as goodwill is concerned, it is gauged by the volume of sales and the extent of advertisements. Reference was made to the decision of the Supreme Court in Satyam Infoway Limited v. Sifynet Solutions Pvt. Ltd: 2004 (28) PTC 566 (SC) [LQ/SC/2004/690] and, in particular, to paragraph 12 thereof which reads as under:-

"12. The next question is would the principles of trade mark law and in particular those relating to passing off apply An action for passing off, as the phrase "passing off itself suggests, is to restrain the defendant from passing off its goods or services to the public as that of the plaintiffs. It is an action not only to preserve the reputation of the plaintiff but also to safeguard the public. The defendant must have sold its goods or offered its services in a manner which has deceived or would be likely to deceive the public into thinking that the defendants goods or services are the plaintiffs. The action is normally available to the owner of a distinctive trademark and the person who, if the word or name is an invented one, invents and uses it. If two trade rivals claim to have individually invented the same mark, then the trader who is able to establish prior user will succeed. The question is, as has been aptly put, who gets these first It is not essential for the plaintiff to prove long user to establish reputation in a passing off action. It would depend upon the volume of sales and extent of advertisement."

(underlining added)

9. Reliance was also placed on Laxmikant V. Patel v. Chetanbhai Shah and Another: 2002 (3) SCC 65 [LQ/SC/2001/2807] . In the said decision, the Supreme Court observed as under:-

"8. It is common in trade and business for a trader or a businessman to adopt a name and/or mark under which he would carry on his trade or business. According to Kerly (Law of Trade Marks and Trade Names, 12th Edn, para 16.49), the name under which a business trades will almost always be a trade mark (or if the business provides services, a service mark, or both). Independently of questions of trade or service mark, however, the name of a business (a trading business or any other) will normally have attached to it a goodwill that the courts will protect. An action for passing-off will then lie wherever the defendant companys name, or its intended name, is calculated to deceive, and so to divert business from the plaintiff, or to occasion a confusion between the two businesses. If this is not made out there is no case. The ground is not to be limited to the date of the proceedings; the court will have regard to the way in which the business may be carried on in the future, and to its not being carried on precisely as carried on at the date of the proceedings. Where there is probability of confusion in business, an injunction will be granted even though the defendants adopted the name innocently.

10. A person may sell his goods or deliver his services such as in case of a profession under a trading name or style. With the lapse of time such business or services associated with a person acquire a reputation or goodwill which becomes a property which is protected by courts. A competitor initiating sale of goods or services in the same name or by imitating that name results in injury to the business of one who has the property in that name. The law does not permit any one to carry on his business in such a way as would persuade the customers or clients in believing that the goods or services belonging to someone else are his or are associated therewith. It does not matter whether the latter person does so fraudulently or otherwise. The reasons are two. Firstly, honesty and fair play are, and ought to be, the basic policies in the world of business. Secondly, when a person adopts or intends to adopt a name in connection with his business or services which already belongs to someone else it results in confusion and has propensity of diverting the customers and clients of someone else to himself and thereby resulting in injury.

11. Salmond & Heuston in Law of Torts (20th Edn., at p. 395) call this form of injury as "injurious falsehood" and observe the same having been "awkwardly termed" as "passing-off and state:

"The legal and economic basis of this tort is to provide protection for the right of property which exists not in a particular name, mark or style but in an established business, commercial or professional reputation or goodwill. So to sell merchandise or carry on business under such a name, mark, description, or otherwise in such a manner as to mislead the public into believing that the merchandise or business is that of another person is a wrong actionable at the suit of that other person. This form of injury is commonly, though awkwardly, termed that of passing-off ones goods or business as the goods or business of another and is the most important example of the wrong of injurious falsehood. The gist of the conception of passing-off is that the goods are in effect telling a falsehood about themselves, are saying something about themselves which is calculated to mislead. The law on this matter is designed to protect traders against that form of unfair competition which consists in acquiring for oneself, by means of false or misleading devices, the benefit of the reputation already achieved by rival traders."
12. In Oertli v. Bowman [1957 RPC 388 (CA)] (at p. 397) the gist of passing-off action was defined by stating that it was essential to the success of any claim to passing-off based on the use of given mark or get-up that the plaintiff should be able to show that the disputed mark or get-up has become by user in the country distinctive of the plaintiffs goods so that the use in relation to any goods of the kind dealt in by the plaintiff of that mark or get-up will be understood by the trade and the public in that country as meaning that the goods are the plaintiffs goods. It is in the nature of acquisition of a quasi-proprietary right to the exclusive use of the mark or get-up in relation to goods of that kind because of the plaintiff having used or made it known that the mark or get-up has relation to his goods. Such right is invaded by anyone using the same or some deceptively similar mark, get-up or name in relation to goods not of plaintiff. The three elements of passing-off action are the reputation of goods, possibility of deception and likelihood of damages to the plaintiff. In our opinion, the same principle, which applies to trade mark, is applicable to trade name."

(underlining added)

10. A reference was also made to Kerlys Law of Trade Mark and Trade Names (13th Edition) (Sweet and Maxwell) and, in particular, to the following passage at pages 419 to 420:-

"Reputation

It is essential to the success of any claim in respect of passing off, based on the use of a given mark, get-up or other indication of origin, for the claimant to show that this had (at the relevant date) become by user in this Country distinctive, to some section of the public, if not of the claimants goods or business alone, at least of a defined class of goods or business to which those of the claimant belong.

"It is, of course, essential to the success of any claim in respect of passing off based on the use of a given mark or get up that the plaintiff should be able to show that the disputed mark or get up has become by user in this country distinctive of the plaintiffs goods so that the use in relation to any goods of the kind dealt in by the plaintiff or that mark or get up will be understood by the trade and the public in this country as meaning that the goods are the plaintiffs goods. The gist of the action is that the plaintiff, by using and making known the mark or get up in relation to his goods, and thus causing it to be associated or identified with those goods, has acquired a quasi-proprietary right to the exclusive use of the mark or get up in relation to goods of that kind, which right is invaded by any person who, by using the same or some deceptively similar mark or get up in relation to goods not of the plaintiffs manufacture, induces customers to buy from him goods not of the plaintiffs manufacture as goods of the plaintiffs manufacture, thereby diverting to himself orders intended for and rightfully belonging to the plaintiff."
The mark or other indication concerned need not be universally known. A small trader with limited clientele is as much entitled to protect his brands and business name as any large concern. The overriding consideration, in judging extent of reputation, is whether the claimant has built up a goodwill to the point where substantial damage will be caused to it by the acts he complains of.

The relevant date, when it comes to proving reputation is the date when the defendant commenced the acts complained of."

(underlining added)

11. The observations of the Supreme Court in Uniply Industries Limited v. Unicorn Plywood Pvt. Ltd. and Others: 2001 (5) SCC 95 [LQ/SC/2001/1184] were also relied upon by Mr. Sudhir Chandra. The observations were as under:-

"7. It is no doubt true that advertisement of goods had been made by the respondents in 1993 itself. Whether that was followed up by goods being dealt with the trade marks in question is not clear as is to be seen by the following discussion:

So far as the invoices are concerned, it is not very clear from the same that they were in relation to goods containing the trade marks in question because there is no mention of any particular trade mark in the same and maybe they pertain to such goods, but this is a fact which is yet to be established by placing proper material before the Court. So far as the declarations made before the Excise Authorities are concerned, the High Court itself found the material to be dubious. The letters issued by the dealers are both in favour of the appellant and the respondents. In this state of materials the courts below should have been wary and cautious in granting an injunction which would affect the trade and business of another person using an identical trade mark. Both the appellant and the respondents have applied for registration of their respective trade marks before the Registrar under the Trade and Merchandise Marks Act, 1958 and the respective rights of the parties will have to be investigated by the Registrar and appropriate registration granted to either of them or both of them, as the case may be, bearing in mind the provisions of Section 12(3) of the Trade and Merchandise Marks Act, 1958. There are many precedents to the effect that for inherently distinctive marks ownership is governed by the priority of use of such marks. The first user in the sale of goods or service is the owner and senior user. These marks are given legal protection against infringement immediately upon adoption and use in trade if two companies make use of the same trade mark and the gist of passing off in relation to goodwill and reputation to goods.
8. Some courts indicate that even prior small sales of goods with the mark are sufficient to establish priority, the test being to determine continuous prior user and the volume of sale or the degree of familiarity of the public with the mark. Bona fide test of marketing, promotional gifts and experimental sales in small volume may be sufficient to establish a continuous prior use of the mark. But on some other occasions courts have classified small sales volume as so small and inconsequential for priority purposes. Therefore, these facts will have to be thrashed out at the trial and at the stage of grant of temporary injunction a strong prima facie case will have to be established. It has also to be borne in mind whether the appellant had also honestly and concurrently used the trade marks or there are other special circumstances arising in the matter. The courts below have merely looked at what the prima facie case is and tried to decide the matter without considering the various other aspects arising in the matter. Therefore, we think, the appropriate order to be made is that injunction either in the favour of the appellant or against them or vice versa is not appropriate and the proceedings in the suit shall be conducted as expeditiously as possible or the Registrar under the Trade and Merchandise Marks Act, 1958 may decide the matter which may govern the rights of the parties.

9. The order made by the High Court shall stand set aside and it is made clear that there shall be no order of temporary injunction in favour of either party."

(underlining added)

12. In the context of the legal propositions set out in the above extract, it was submitted that there is nothing in the plaint with regard to the volume of sales or the extent of advertisements. However, in the replication, there is mention that AZ Tech had made sales of over Rs. 10 crores by selling the mobile/cellular phones under the brand "AQUA" while the plaintiff No. 2 had made sales of over 5 million US $ under the "AQUA" brand in India. However, no dates or periods were given as to when the sales were made. Though, in the written submissions submitted before the learned single Judge, the respondents had indicated that as on February, 2014, the plaintiff No. 1 had made sales of over Rs. 10 crores by selling the mobile phones under the brand "AQUA" while the plaintiff No. 2 had made the sales of over 5 million US $. The learned counsel for the appellant pointed out that even these alleged figures were as of February 2014, that is, after the filing of the suit. The relevant date, as pointed out in the cases referred to above, was when the defendant (Intex) allegedly launched its product with the mark "AQUA". This happened in 2012. It is nowhere indicated as to what were the sales or the advertisement expenses of the plaintiffs/respondents on that date. Therefore, it was contended that the present case cannot be regarded as one where the respondents/plaintiffs had been able to establish even prima facie that they had an established goodwill/reputation vis-à-vis the mark "AQUA" in respect of mobile phones.

13. Ms Pratibha M. Singh, the learned senior counsel, appearing on behalf of the respondents, submitted that AZ Tech (Plaintiff No. 1) is the sole proprietorship concern of Mr. Arvind Kumar Adukia. Plaintiff No. 2 is a Hong Kong based company - Peace Zone (HK) Limited. Plaintiff No. 1 has a 40% shareholding in plaintiff No. 2, that is, the Hong Kong company, the balance 60% of the shares are held by the son and daughter-in-law of the said Mr. Arvind Kumar Adukia. It was submitted that the Hong Kong Company applied for registration of the trade mark "AQUA" in 2011 and the same was registered in 2012 for mobile phones and accessories. The plaintiff No. 1 (AZ Tech), had also applied in India for registration of the trade mark "AQUA" in respect of mobile phones on 22.12.2009 and, in that application, it claimed user since 01.04.2009. However, registration has not yet been granted. Ms Pratibha Singh stressed the point that the respondents were prior users and, therefore, they were entitled to the interim injunction which the learned single Judge had directed. She made a reference to several decisions. In the first place, she referred to a Division Bench decision of this court in Century Traders v. Roshan Lal Duggar & Co.: PTC (Suppl) (1) 720 (Del)(DB). Particular reference was made to paras 9, 12 and 14, which read as under:-

"9. The prima facie case in favor of the appellant stands established by admitted user of the mark by the appellant on voiles produced and marketed by it. It has been rightly so held even by the learned Single Judge. But this prima facie case made out by the appellant is said to be considerably watered down or weakened by the fact that the mark is alleged to be common to the trade and the various registrations adverted to in the learned Single Judges order. The first point, Therefore, that arises for consideration is whether this approach is correct. It must be remembered that the suit is one based on a claim of passing off. It is not a suit for infringement of a registered trademark. In a passing off action registration of the trade mark is immaterial. Section 27 of the Trade and Merchandise Marks Act; 1958, hereinafter referred to as the, reads as under:-

"27. No action for infringement of unregistered trade mark:-

(1) No person shall be entitled to institute any proceeding to prevent, or recover damages for the infringement of an unregistered trade mark.

(2) Nothing in this Act shall be deemed to affect rights of action against any person for passing off goods as the goods of another person or the remedies in respect thereof."

The relevant parts of Section 106 of theread as under:-

"106. Reliefs in suits for infringement or for passing off:-

(1) The relief which a court may grant in any suit for infringement or for passing off referred to in Section 105 includes an injunction (subject to such terms, if any, as the court thinks fit) and at the option of the plaintiff, either damages or an account of profits, together with or without any order for delivery-up of the infringing labels and marks for destruction or erasure.

(2) Notwithstanding anything contained in sub-section (1), the court shall not grant relief by way of damages (other than nominal damages) or an account of profits in any case-

(a)......

(b)......

(c) where in a suit for passing off the defendant satisfies the court-

(i) that at the time he commenced to use the trade mark complained of in the suit he was unaware and had no reasonable ground for believing that the trade mark of the plaintiff was in use; and

(ii) that when he came aware of the existence and nature of the plaintiffs trade mark, he forthwith ceased to use the trade mark complained of."

From a reading of the above sections it is clear that registration of mark in the trade mark registry would be irrelevant in an action for passing off. Furthermore, it will be clear that in deciding whether a particular mark is common to the trade use of that mark would be extremely relevant. Mere registration would not be enough.

xxxx xxxx xxxx xxxx xxxx

12. For the purpose of claiming such proprietorship of a mark, it is not necessary that the mark should have been used for considerable length of time. As a matter of fact, a single actual use with intent to continue such use eo instanti confers a right to such mark as a trade mark. It is sufficient if the article with the mark upon it has actually become a vendible article in the market with intent on the part of the proprietor to continue its production and sales. It is not necessary that the goods should have acquired a reputation for quality under that mark. Actual use of the mark under such circumstances as showing an intention to adopt and use it as a trade mark is the test rather than the extent or duration of the use. A mere casual, intermittent or experimental use may be insufficient to show an intention to adopt the mark as a trade mark for specific article or goods.

xxxx xxxx xxxx xxxx xxxx

14. Thus, the law is pretty well-settled that in order to succeed at this stage the appellant had to establish user of the aforesaid mark prior in point of time than the impugned user by the respondents. The registration of the said mark or similar mark prior in point of time to user by the appellant is irrelevant in an action passing off and the mere presence of the mark in the register maintained by the trade mark registry did not prove its user by the persons in whose names the mark was registered and was irrelevant for the purposes of deciding the application for interim injunction unless evidence had been led or was available of user of the registered trade marks. In our opinion, these clear rules of law were not kept in view by the learned Single Judge and led him to commit an error."

(underlining added)

She relied on this decision, as will be seen from the above extract, to submit that it is not necessary to show that the trade mark had been used for a considerable length of time, but a single actual use with the intent to continue such use was enough to establish priority.

14. She also referred to the decision of the Supreme Court in S. Syed Mohideen v. P. Sulochana Bai : 2016 (66) PTC 1 (SC) [LQ/SC/2015/405] . The Supreme Court observed that traditionally, passing off in common law is considered to be a right for protection of goodwill in the business against misrepresentation caused in the course of trade and for prevention of the resultant damage on account of the said misrepresentation and that the three ingredients of passing off are goodwill, misrepresentation and damage. The Supreme Court reiterated that these ingredients are considered to be the classical trinity under the law of passing off. It was observed that the use of a mark in respect of a business confers the rights in favour of the person, who has used it and generates goodwill in the market. It was also observed that a later user of the same mark or deceptively similar mark cannot be permitted to misrepresent his business as that of the prior right holder. It was further observed that this is the reason why essentially the prior user is considered to be superior than that of any other rights.

15. Ms Pratibha Singh also referred to the Supreme Court decision in Dhariwal Industries Limited and Another v. M.S.S. Food Products: 2005 (30) PTC 233 (SC) [LQ/SC/2005/275] . The said decision was referred to because of an observation therein to the effect that while one party may be having a large volume of trade, that did not mean that the big fish should be allowed to swallow the smaller fish. This was submitted in the context of the present case stating that Intex being a big player cannot be permitted to swallow the business of the respondents which were much smaller players in the market of mobile phones, particularly because the respondents were prior users of the mark "AQUA". A reference was also made to McCarthy on Trademarks and Unfair Competition, 4th Edition (Thomson West). The following table appearing at page 11-5 of the said authority was referred to as:-

table

It was submitted that since the word "AQUA" was arbitrary and fanciful in relation to mobile phones, it was inherently distinctive and no secondary meaning was required.

16. In the context of these decisions and authorities, it was submitted that the respondents were prior in time insofar as the use of the word mark "AQUA" in respect of mobile phones was concerned. The respondents had used the said mark in India since 2009, whereas, Intex had used the mark "AQUA" only from 2012. It was further submitted that insofar as the respondents are concerned, the word mark "AQUA" is the only mark in respect of their entire range of mobile phones and is not just an identifier as in the case of Intex which markets other phones also under different word marks. It was also submitted that as per the VAT registration, the CIC Media Magazine, the Indian Trade Magazine, it was evident that the respondents were using the mark "AQUA" since 2009. It was submitted that the website of the respondents was "www.aqua-mobiles.com" and all its products were sold under the brand name "AQUA". The domain name registration was obtained on 31.12.2010. Reference was made to several pamphlets indicating the use of the word "AQUA" in respect of mobile phones. However, none of those pamphlets bear any reference to dates. Several other documents were referred to by Ms Pratibha M. Singh, including pie-charts, reviews of smart phones in Amar Ujala, hoardings, etc in an attempt to indicate that the mobile phones were being sold by the respondents under the mark "AQUA". She, therefore, submitted that the respondents had a clear reputation and goodwill in India. Reference was also made to Kerlys Law of Trade Marks and Trade Names, 15th Edition (Sweet and Maxwell) on the aspect of goodwill and reputation. The reference was made to the following passages:-

"3. Goodwill

18-024 Goodwill in the jurisdiction is a requirement of the tort of passing off. Goodwill and reputation are closely linked; there can be no goodwill in a sign or other indication unless it is known to the public and distinguishes the goods or services in relation to which it is used. In the context of passing off, goodwill has been stated to represent, in connection with any business or business product, the value of the attraction to customers which the name and reputation possesses. It is often described as "the attractive force which brings in custom", an extract from the classic statements concerning goodwill in IRC v Mullers Margarine by Lords Macnaghten and Lindley. The nature of goodwill, and the nature of the business or customer base within the jurisdiction required to establish goodwill in England and Wales as compared with other common law jurisdictions will be considered in detail the section on goodwill below.

DISTINGUISHING BETWEEN REPUTATION AND GOODWILL

18-025 The concepts of reputation and goodwill are very closely related, not least because they are generated in the vast majority of cases by the same trading activity. However, it will aid understanding of difficult cases to have clearly in mind the difference between reputation and goodwill, since they are not synonymous. As "the attractive force which brings in custom", goodwill is a form of legal property, representing the connection between business and customer. Reputation is a matter of fact: to what extent is the indiciam in question known in the public mind The existence of reputation does not require there to be a business in this country, whereas there must be some business or market in this country for goodwill to exist.

18-026 The cases concerning the territoriality of goodwill (discussed below) demonstrate the distinction between goodwill and reputation. If goods bearing the relevant indicia are in or about to be1 in circulation in this country, then both reputation and goodwill exist here, even if the goods are known here (reputation) and the public would buy the goods if they were available here. The provision of services creates different problems. If the services are in fact provided abroad, the presence of customers here would appear to establish reputation but not goodwill unless some business was actually transacted here, for example by way of bookings made from within the jurisdiction. Although the Court of Appeal in Cipriani indicated that requirement for direct bookings in the case of overseas services might well be reviewed in an appropriate case it did not do so on the basis that on the facts in that case, whatever the precise test the defendants had failed to establish a concurrent goodwill within the United Kingdom at the relevant date."

(underlining added)

17. The above extract makes it clear that goodwill in the jurisdiction is a necessary ingredient of the tort of passing off and that although goodwill and reputation are closely linked, they are not necessarily the same thing. For example, an internationally known mark may have a reputation in this country, but yet have no goodwill because there are no sales of the product under that mark in this country. In the above extract, it has been clearly indicated that goodwill is the attractive force which brings in custom and is a form of legal property representing the connection between the business and customer. Whereas, reputation is a matter of fact and its existence does not require that there should be a business in this country. However, there must be some business or market in this country for goodwill to exist.

18. Based on the submissions made by the learned counsel for the parties, this much is clear that the establishment of goodwill is an essential ingredient of the tort of passing off. There is also a clear distinction between reputation and goodwill. Thus, while the respondents and, in particular, the respondent No. 2 may have a reputation in Hong Kong or in other parts of the world insofar as its mark "AQUA" is concerned, it cannot be regarded as having a goodwill in India unless and until there are sales and an established market in India. It is also evident that insofar as a registered trade mark is concerned, the property exists in the mark, but in the case of passing off, the property is not in the mark but in the goodwill. The establishment of goodwill is indicated by the extent of sales and the advertising expenses etc. We agree with Mr. Sudhir Chandra that the decision in Century Traders (supra) may have been misunderstood and perhaps misapplied in a number of cases.

19. Proprietorship of a trade mark and goodwill in respect of a mark are entirely different concepts. Insofar as a trade mark is concerned, it is acquired eo instanti. A single use or a short use, insofar as proprietorship of the mark is concerned, may be sufficient but, it is not so in the case of establishing goodwill in respect of that mark. Insofar as the question of goodwill in the present case is concerned, we find that as on August, 2012, when Intex started selling its mobile phones under the mark, "AQUA", it cannot be stated with any degree of confidence that the mark AQUA had acquired a goodwill or reputation in respect of the respondents mobile phones. The property which is protected in an action of passing off is not the plaintiffs proprietary right in the mark which the defendant allegedly misappropriates, but the goodwill and reputation of his business, which is likely to be harmed by the defendants misrepresentation (see: Reddaway v. Banham [1896] AC 199; A.G. Spalding & Bros v. Gamage Ltd: [1915] 32 RPC 273 and Harrods Limited v. Harrodian School Limited: 1996 RPC 697.

20. Thus, insofar as this point is concerned we are of the view that AZ Tech has not been able to establish that it had a goodwill/reputation in India in the mark in August 2012 when Intex launched its product under the mark AQUA.

II. Insofar as the point of similarity or deceptive similarity of the mark is concerned, the issue of added matter is also an important one while considering the grant of an injunction in a passing off action.

21. Mr. Sudhir Chandra argued that the word mark "AQUA" is used in conjunction with the appellants trade mark Intex. Consequently, there is no scope for deception or misrepresentation. Reliance was placed on Kaviraj Pandit Durga Dutt Sharma v. Novaratna Pharmaceutical Laboratories: 1965 (1) SCR 737 (equivalent AIR: 1965 SC 980) [LQ/SC/1964/275] . In that case, the Supreme Court observed as under:-

"28......In an action for infringement, the plaintiff must, no doubt, make out that the use of the defendants mark is likely to deceive, but where the similarity between the plaintiffs and the defendants mark is so close either visually, phonetically or otherwise and the court reaches the conclusion that there is an imitation, no further evidence is required to establish that the plaintiffs rights are violated. Expressed in another way, if the essential features of the trade mark of the plaintiff have been adopted by the defendant, the fact that the get-up, packing and other writing or marks on the goods or on the packets in which he offers his goods for sale show marked differences, or indicate clearly a trade origin different from that of the registered proprietor of the mark would be immaterial; whereas in the case of passing off, the defendant may escape liability if he can show that the added matter is sufficient to distinguish his goods from those of the plaintiff."

(underlining added)

It was contended by Mr. Sudhir Chandra that the addition of the word mark Intex, to the word mark "AQUA" was sufficient to distinguish the appellants goods from those of the respondent. A reference was also made to a Division Bench decision of this court in Star Bazar Pvt. Ltd. v. Trent Limited and Another: 2010 (43) PTC 154 (Del) [LQ/DelHC/2010/841] (DB). Paras 21 and 22 of the said decision are relevant and they are set out hereunder: -

"21. On a consideration of the entire case law placed before us as well as on the facts as presented, it is quite clear that one of the primary requirements for the grant of temporary injunction in a case of passing off is that the customers of a Plaintiff might be led to believe or might be confused between the goods of that Plaintiff and the goods of the Defendant. To avoid any such confusion, learned Counsel for the Respondent has made it absolutely clear that his client is willing to add the words "A Tata Enterprise" or words to the same effect above "Star Bazaar" in respect of its retail store in Delhi. In our opinion, once these words are added, it is unlikely that there would remain any confusion in the mind of any customer that the retail departmental store of the Respondent is the same as the retail departmental store of the Appellant. This by itself should dispel all doubts that any customer might have and should be adequate protection in so far as the Appellant is concerned.

22. However, learned Counsel for the Appellant submitted that the prior use of "Star Bazaar" by his client cannot be forgotten. We agree (and this was argued by learned Counsel for the Respondent on a demurrer) that the Appellant is a prior user of "Star Bazaar" and if another store by the same name is opened up by somebody else in another part of Delhi, it is likely to lead to a diversion of customers in the normal course of business. However, if it is made absolutely clear to those customers that the two stores are distinct entities having no connection with each other, even this likelihood of diversion will disappear. In our opinion, this can be achieved by the Respondent using the words "A Tata Enterprise" above "Star Bazaar" in its retail departmental store to be opened in Delhi."

(underlining added)

22. This was relied upon by Mr. Sudhir Chandra to indicate that by addition of the words, two similar marks can be easily distinguished so as to enable the customers to differentiate the two products as having no connection with each other and indicating that the sources of the two products were different. In that case, the Division Bench was of the view that the use of the words "A Tata Enterprise" above Star Bazar was sufficient to distinguish the appellant from the respondent. Mr. Sudhir Chandra submitted that even when there was a similarity, the court directed that the above words be added to bring about a distinction. But, in the present case, even this is not necessary. The word "Intex" is already used alongwith the word mark "AQUA" in respect of mobile phones.

23. Ms Pratibha M. Singh, in response to the added matter argument, submitted that the issue was much more complex than what Mr. Sudhir Chandra made it out to be. There were the concepts of initial interest confusion, reverse confusion as also the case that on facts, the present case would not be one of added matter. Insofar as the concept of initial interest confusion was concerned, reliance was placed on the decision of a Division Bench of this court in the case of Shree Nath Heritage Liquor Pvt. Ltd. and Another v. Allied Blender and Distillers Pvt. Ltd: 2015 (63) PTC 551 (Del) [LQ/DelHC/2015/1517] (DB). In that decision, it was pointed out that confusion can be of the following categories:-

(1) Point of Sale confusion;

(2) Post-sale confusion;

(3) Initial interest confusion, which refers to the confusion that may be caused initially, that is, prior to purchase, but at the time of purchase of alleged infringers/tortfeasors product or using its service, the consumer is not confused;

(4) Reverse confusion. This occurs when consumers purchase the goods or use services of senior user thinking them to originate from the junior user. It was also noted in the said decision that when a person knows that the mark in question does not originate from the senior user but the senior user is called to mind, then it is a step before confusion. If on the other hand, the consumer is in a state of wanderment if there is a connection, this is confusion. It was further observed that if this consumer then purchases the junior users product, this is then deception."

24. A reference was also made to a single Bench decision in the case of Baker Hughes Limited v. Hiroo Khushalani: 1998 PTC (18) 580. In that decision, a learned single Judge of this court noted that there could be an informed class of purchasers, who had a degree of knowledge and a sense of discrimination more substantial than that of ordinary purchasers, but the mere fact that the consumers are sophisticated, knowledgeable and discriminating does not rule out the element of confusion if the trade marks/trade names/corporate names of two companies were identical or if the similarity between them was profound. It was further observed that in several cases it has been held that initial confusion is likely to arise even amongst sophisticated and knowledgeable purchasers under the mistaken belief that the two companies using the same corporate name, trading name or style are inter-related. Therefore, it does not matter if, after the initial confusion, the same is removed and there does not exist any confusion at the point of purchase.

25. The learned counsel also referred to McCarthy on Trade Marks and Unfair Competition, 4th Edition (Thomson Reuters), wherein reverse confusion has been dealt with as under:-

"23:10 Reverse confusion

What is "Reverse Confusion" The traditional pattern of classic "forward confusion" occurs when customers mistakenly think that the junior users goods or services are from the same source as or are connected with the senior users goods or services. Customers want to buy the senior users product and because of the similarity of marks, mistakenly buy the junior users product instead. In "reverse confusion," customers purchase the senior users goods under the mistaken impression that they are getting the goods of the junior user. That is, reverse confusion occurs when the junior users advertising and promotion so swamps the senior users reputation in the market that customers are likely to be confused into thinking that the senior users goods are those of the junior user: the reverse of traditional confusion.

In a reverse confusion situation, rather than trying to profit from the senior users mark, the junior user saturates the market and "overwhelms the senior user." "The result is that the senior user loses the value of the trademark, its product identity, corporate identity, control over its goodwill and reputation, and ability to move into new markets." The Second Circuit has said that: "Reverse confusion is the misimpression that the junior user is the source of the senior users goods.... [Consumers may consider [the senior user] the unauthorized infringer, and [the senior users] reputation and impair its goodwill."

A reverse confusion case is proven only if the evidence shows that the junior user was able to swamp the reputation of the senior user with a relatively much larger advertising campaign. As the Third Circuit remarked: "[T]he doctrine of reverse confusion is designed to prevent the calamitous situation we have here - a larger, more powerful company usurping the business identity of a smaller senior user."

Large Company Rolls Over Small Senior User. The archetypical case of reverse confusion occurs when the junior user is a larger company which, prior to its nationwide launch, discovers a small (usually regional) senior user with a very similar mark in a related field. Because the smaller senior user has only a relatively small group of customers, the large company may (mistakenly) think that there is no conflict because there will be only a local and minimal level of forward confusion. And the junior user has no intention of taking a free ride on the goodwill and reputation of the small, local user. So the junior user rolls out its new mark nationally, swamping the local recognition of the senior user. For example, assume the hypothetical senior user uses AUNTIE ISABELLAS as its mark for a chain of three small pizza restaurants in the vicinity of Seattle, Washington. Hypothetical national marketer Colossal Foods Inc. coincidentally chooses the mark AUNT ISABELLA for its new nationally distributed line of frozen pizza. Colossal Foods finds the senior user on a trademark search, but dismissing it as a tiny user with only local recognition, decides to launch nationally.

Forward confusion will be likely to occur only when people in Seattle who know of the local senior user first come into contract with the junior users nationally advertised and distributed product and, because of the similarity of the marks, mistakenly think that the junior user is an offshoot or licensee of the senior user. Reverse confusion will be likely to occur when a person who only knows of the well-known junior user (e.g. a visitor from San Francisco) first comes into contact with the lesser-known senior user in Seattle and, because of the similarity of the marks, mistakenly thinks that the senior user is the same as or is affiliated or connected with the junior user. Simply put, when a large national company finds a conflicting mark of a small local user on a trademark search, it cannot simply go ahead and roll over the smaller senior user. To avoid the risk of losing a case of reverse confusion, Colossal Foods must either buy the senior users mark or change to another mark.2"

26. Insofar as the issue of added matter is concerned, there is no doubt that if the added matter is so prominent as to completely distinguish one product from the other, then there would be no case for confusion whether it be confusion proper or, initial confusion or reverse confusion. In the present case, we find that the mark "Intex" is as prominent, if not more, than the mark "AQUA" in the appellants product packaging. This is also evident from the images of the packaging employed by the parties as given below:-

image

27. Although the point of reverse confusion was taken up by the respondents before us, in order to establish it there must be tangible evidence to show that Intex being the alleged junior user of the mark AQUA was able to swamp the goodwill and reputation of AZ Tech being the alleged senior user of the said mark. Such evidence, even upon a prima facie consideration, is lacking. As already pointed out above it has not even been established that the respondents had goodwill in India. Moreover, rather than being swamped the respondents business in the mobile phones has grown over the years.

28. Insofar as the question of initial interest confusion is concerned, that, in our view, does not arise in the facts of the present case. The added matter in the form of the word mark INTEX is so also prominent and distinct as to dispel any chance of even an initial confusion.

29. Thus, following the decision in Kaviraj Pandit (supra), it is clear in the present case which is one of passing off, the appellant/defendant would escape liability inasmuch as the added matter is, in our view, sufficient to distinguish the appellants products from those of the respondents.

III. Delay in filing the suit is also to be considered as a factor going towards disentitling the plaintiff to an injunction and at least to an ad interim injunction.

30. Mr. Sudhir Chandra submitted that there was clear delay of at least 14 months in the filing of the suit from the date on which the appellant launched its products under the mark "AQUA". During this period, the respondents allowed the appellants business to grow. A huge amount of expenditure amounting to approximately Rs. 27 crores was spent by the appellants on TV Commercials, as already noted above. He submitted that there was no explanation whatsoever for the delay, there was also no cease and desist notice issued to the appellant by the respondents. A reference was made to the decision of a learned single Judge of this court in BDA Pvt. Ltd. v. Paul P. John & Another: 152 (2008) DLT 405, which was upheld by the Division Bench in FAO(OS) 347/2008, decided on 29.09.2008. The Division Bench held as under:-

"18. We need not note the plethora of authorities on the issue whether acquiescence or an inordinate delay in bringing an action for injunction can non-suit the plaintiff. We note the latest the pronouncement on the issue by the Honble Supreme Court being the decision reported as 2008 AIR SCW 4560 Khoday India Ltd. v. Scotch Whisky Asson. & Ors. It has been categorically held that where acquiescence is established or there is an inordinate delay in bringing an action for infringement of a trade-mark or passing off, the discretionary relief of injunction may be denied."

(underlining added)

31. The learned counsel for the appellant also referred to the decision of the Supreme Court in the case of Power Control Appliances and Others v. Sumeet Machines Pvt. Ltd: 1994 (2) SCC 448 [LQ/SC/1994/180] . In that case, the Supreme Court observed as under:-

"33. Now, we come to the principles in relation to the grant of interim injunction. The case in K.E. Mohammed Aboobacker v. Nanikram Maherchand and Anr. (1957 II MAD LJ 573 makes a reference to the case law and holds at page 574-75 as under:-

The principles which should govern the Court in granting or withholding a temporary injunction in trade-mark infringement actions are well-settled: See recent decision Henry Hemmings, Ltd. v. George Hemmings, Ltd. (1951) 68 R.P.C. 47. As a temporary injunction is merely of a provisional nature and does not conclude the rights of the parties in any way, the Court will exercise its discretion in favour of the applicant only in strong cases. The plaintiff must make out a prima facie case in support of his application for the ad interim injunction and must satisfy the Court that his legal right has been infringed and in all probability will succeed ultimately in the action. This does not mean, however, that the Court should examine in detail the facts of the case and anticipate or prejudice the verdict which might be pronounced after the hearing of the suit or that the plaintiff should make out a case which would entitled him at all events to relief at the hearing. Colman v. Farrow & Co. (1898) 15 R.P.C. 198, Hoover, Ltd. v. Air-way Ltd. (1936) 53 R.P.C. 399, The Upper Assam Tea Company v. Herbert and Co. (1890) 7 R.P.C. 183, Star Cycle Company, Ltd. v. Frankenburg (1906) 23 R.P.C. 337. In fact the Court will not ordinarily grant an interlocutory injunction if a large amount of evidence is necessary to support the plaintiffs case. The proper course in such a case is to ask for the trial of the action. The injury must be actual or imminent. Pinel & Cle v. Mission Pinet, Ltd. (1895) 14 R.P.C. 933. Where the defendant disputes the plaintiffs title to the mark or contends that the plaintiff is not entitled to a relief by a reason of the acquiescence or delay or other estoppel or of the defendants concurrent rights, the Court will be guided by the balance of inconvenience which may arise from granting or withholding the injunction as well as the justice of the cause after considering all the circumstances in the suit. In other words, where the plaintiffs title is disputed or the fact of infringement or misrepresentation amounting to a bar to the action or some other defence is plausibly alleged upon the interlocutory motion, the Court in granting or refusing the interim injunction is guided principally by the balance of convenience that is by the relative amount of damage which seems likely to result if the injunction is granted and plaintiff ultimately succeeds; Read Brothers v. Richardson and Co. (1881) 45 L.T. 54, Hommel v. Bauer & Co. (1903) 20 R.P.C. 801.
...It is necessary that an application for interlocutory injunction should be made immediately after the plaintiff becomes aware of the infringement of the mark. Improper and unexplained delay is fatal to an application for interlocutory injunction. The interim injunction will not be granted if the plaintiff has delayed interfering until the defendant has built up a large trade in which he has notoriously used the mark. North British Rubber Company, Ltd. v. Gormully and Jeffery Manufacturing Company (1894) 12 R.P.C. 17, Army and Navy Co-operative Society, Ltd. v. Army Navy and Civil Service Co-operative Society of South Africa Ltd. (1902) 19 R.P.C. 574, Hayward Bros. Ltd. v. Peakall (1909) 26 R.P.C. 89. Yost Typewriter Company; Ltd. v. Typewriter Exchange Company (1902) 19 R.P.C. 422, Royal Warrant Holders Association v. Slade & Co., Ltd. (1908) 25 RP.C. 245."

32. From the above extract, it is evident that improper and unexplained delay is fatal to an application for an interlocutory injunction and an interim injunction is not to be granted if the plaintiff had delayed action until the defendant had built-up a large trade in which he has notoriously used the mark. Furthermore, the considerations where a defendant is yet to commence his enterprise and where he has already done so, would be different. This would be particularly relevant in the backdrop of delay in filing the suit and in seeking an interlocutory injunction.

33. It was sought to be contended on behalf of the respondents that the point of delay was not raised before the learned single Judge. However, in any event, it was contended that, in fact, there was no delay. It was submitted that till June 2013, there was no publicity of the appellants marks and the suit was filed in 2013. Reference was made to the decision in Sumeet Machines (supra) as also to Cadila Pharmaceuticals Limited v. Sami Khatib of Mumbai and Another: 2011 (47) PTC 69 (Bom.) [LQ/BomHC/2011/805] (DB).

34. Upon considering the arguments on this aspect of the matter, we would tend to agree with the submissions made by Mr. Sudhir Chandra that there was delay in filing the suit. In paragraph 17 of the amended plaint itself, it was stated by the respondent/plaintiff that Intex had launched its product in 2012. The suit was filed much later on 28.10.2013. During this period, the appellant had sold phones under the mark "AQUA" to the extent of Rs. 200 crores. Approximately, Rs. 27 crores had been spent on advertisements and, particularly, the TV commercials featuring the famous actor, Mr. Farhan Akhtar. By 31.03.2013, the appellant had sold 1.75 lakh phones under the mark "AQUA" and this number rose to 3.14 lakh phones between 01.04.2013 and 13.11.2013. It, therefore, becomes clear that the presence of the appellant in the market in India under the mark "AQUA" was not insignificant. The respondent itself noted that the appellant (Intex) had launched its product under the mark "AQUA" in 2012. There is no explanation forthcoming as to why there was a delay of at least 14 months in approaching the court. During this period, the business of the appellant grew to a large extent. It was not as if the appellant was about to commence the sale of its products under the word mark "AQUA" or that it had just recently commenced such marketing. In fact, the appellant was in the market and with a great deal of publicity. In this backdrop, the aspect of delay attains a greater significance and, therefore, would disentitle the respondent from obtaining an interlocutory injunction.

IV. The principles of grant of an interim injunction had not been considered in the correct light by the learned single Judge.

35. It was submitted on behalf of the appellants that one of the principles of grant of interim injunction was to consider the injury that may be caused to the defendant in case an injunction is granted. It was submitted that if this was considered in the correct perspective, which the learned single Judge did not do, the balance of convenience would be in favour of the defendant/appellant and against the grant of an interlocutory injunction. It was submitted that irreparable injury would be caused to the appellant as, by the time the impugned judgment was passed, the sales of the appellants phones under the mark "AQUA" had attained massive proportions. As an example, in 2015-16, the revenue from the sale of such phones was Rs. 3193 crores and in 2016-17 till December, the sales were approximately Rs. 2000 crores. Advertising costs till December 2016 in respect of the products sold under the "AQUA" mark had gone up to Rs. 250 crores. Even on the date of filing of the suit, the appellants were in the market under the mark "AQUA" in a big way. It was submitted that if the appellant is injuncted, irreparable injury would be caused to it, whereas there would be no corresponding injury to the respondent/plaintiff. In fact, it was submitted that they even tried to ride piggy back on the goodwill and reputation of the appellant by attempting to copy the font and style of the word mark "AQUA", as already mentioned above. It was submitted that in case the injunction is not granted, the respondents phone under the mark "AQUA" would sell even more.

36. Reliance was placed on para 9 of the decision of the Supreme Court in Wander Limited & Another v. Antox India P. Ltd: 1990 (Supp) SCC 727. It reads as under:-

"Usually, the prayer for grant of an interlocutory injunction is at a stage when the existence of the legal right asserted by the plaintiff and its alleged violation are both contested and uncertain and remain uncertain till they are established at the trial on evidence. The court, at this stage, acts on certain well settled principles of administration of this form of interlocutory remedy which is both temporary and discretionary. The object of the interlocutory injunction, it is stated:

".... is to protect the plaintiff against injury by violation of his rights for which he could not adequately be compensated in damages recoverable in the action if the uncertainty were resolved in his favour at the trial. The need for such protection must be weighed against the corresponding need of the defendant to be protected against injury resulting from his having been prevented from exercising his own legal rights for which he could not be adequately compensated. The court must weigh one need against another and determine where the balance of convenience lies."
The interlocutory remedy is intended to preserve in status quo, the rights of parties which may appear on a prima facie. The court also, in restraining a defendant from exercising what he considers his legal right but what the plaintiff would like to be prevented, puts into the scales, as a relevant consideration whether the defendant has yet to commence his enterprise or whether he has already been doing so in which latter case considerations somewhat different from those that apply to a case where the defendant is yet to commence his enterprise, are attracted."

37. On the other hand, the learned counsel for the respondent submitted that the principles of grant of injunction were considered by the learned single Judge. The question of irreparable injury as well as of balance of convenience were elaborately dealt with by the learned single Judge which did not call for any interference.

38. We are of the view that while it is true that a larger company cannot be permitted to run roughshod over a smaller company, who has been in the market and is the senior user of a mark, at the same time, if the senior user and smaller company permits the junior user and larger company to grow rapidly and establish a huge market presence without any action on the part of the senior user, if an injunction were to be granted at a belated stage, it would amount to causing irreparable injury to the junior user (larger company). The balance of convenience, when considered in the light of delay, would be in favour of the junior user, that is, Intex.

V. The plaintiffs (AZ Techs) conduct in copying the font and style of the logo used by Intex was clearly dishonest and would disentitle it to the equitable remedy of injunction.

39. The learned counsel for the appellant submitted that the conduct of the respondent was dishonest on several counts. First of all, because of the fact that the respondent had copied the font and style of the word mark "AQUA" as used by the appellant. Secondly, the respondents packaging indicates "AQUA" as a registered trade mark by using the ® symbol, when, in fact, the mark has not been registered in India. A reference was made to Section 107 of the Trade Marks Act, 1999 which provides that if somebody represents an unregistered mark as a registered mark, it would be an offence punishable with upto three years imprisonment. The purported registration of the mark "AQUA" in Hong Kong is an entirely different issue and the same cannot be used in India. Thirdly, the sale invoices submitted by the respondents were contested by the appellants. According to them, none of the invoices show sales to a retailer or to individuals. It was pointed out that many of the sales invoices were generated between 15.01 hrs and 15.04 hrs. However, we do not get into this issue of sale invoices as that is highly debatable and would have to be established through evidence. It is sufficient for us to note that the learned counsel for the appellant has raised serious concerns about the sale invoices between the period 2009 to 2013 which have been filed by the respondents. A reference was made to Uniply (supra) and, in particular, to paragraphs 7 and 8 thereof, which we have already extracted above. It was submitted in that context that the question of priority and prior user needs to be thrashed out in the trial. There must not only be prior sales, but the sales must be substantial and continuous. This, according to the learned counsel for the appellant, has not even been established prima facie.

40. The learned counsel for the respondents submitted that insofar as the issue of copying the font and style of logo are concerned, they had adopted the Typeface Microgramma However, there is no worthwhile explanation forthcoming as to why during the pendency of the suit filed by the respondents with regard to passing off of a product under the word mark "AQUA", the respondents adopted the same font and style for the logo as was being used by the appellants. Even before us, no explanation was forthcoming. This leads us to believe that rather than the appellants, it were the respondents, who were trying to come as close to the appellants products as possible so that they may ride on the appellants reputation and goodwill. Insofar as the use of the ® symbol is concerned, no explanation, other than stating that it was an honest mistake, has been offered.

41. We have already set out in tabular form the manner in which the font and style of the appellants logo concerning the word mark "AQUA" was copied by the respondent. We may point out that the respondents logo at the time when the suit was instituted, comprised of capital letters. On the other hand, the appellants logo was in small Caps. The font of the appellants logo was also different from that of the respondents logo. But, during the pendency of the suit, the respondents adopted exactly the same logo in small caps style and font as that of the appellants. Prima facie, this would amount to a deliberate act of copying in an attempt to ride on the reputation and goodwill of the appellant. We may also note that the mark as registered and used in Hong Kong by the respondent No. 2 is as under: -

image

42. The certificate of registration of the trade mark in Hong Kong is as under:-

image

43. This certificate makes it is clear that the respondent No. 2 claimed the colours white and blue and red as elements of the trade mark. The mark and logo as used by the respondents in India was in the colours silver on blue. In other words, "AQUA" was written in silver with a blue background and it was in the same font and style as that of the mark "AQUA" used by the appellant. Thus, it is apparent that not just the words and the font style, but all the elements of colour were changed in order to adopt the appellants logo. So, far from the respondent establishing, even prima facie, a case of passing off against the appellants, it appears to be the other way round. Apart from this, the conduct of the respondents in using the ® symbol and adopting the font and style of the appellants logo has not been honest, to say the least.

Conclusion

44. For all these reasons, on all the aspects, which we have discussed above, we feel that the respondents have neither made out a prima facie case in their favour nor is the balance of convenience in their favour. In fact, irreparable injury would be caused to the appellants if an injunction were to be granted or continued. And, above all, the conduct of the respondents has not been honest, to say the least. This by itself disentitles the respondents from getting an order of injunction in their favour. Consequently, the impugned judgment is set aside and IA No. 17138/2013 is dismissed. The appeal is allowed as above. The parties shall bear their own costs.