R.j. Reynods Tobacco Company v. Indian Tabacco Company Ltd

1. This application under Order 39 Rules 1 and 2 of the Code of Civil Procedure has been filed by the plaintiffcompany for the grant of interim injunction in a suit for perpetual injunction against the respondent to restrain it from infringing the applicants registered trade mark NOW and from passing of its goods as those of the applicants as well as for rendition of accounts.

2. The plaintiff is an American Company and is the registered proprietor of trade mark NOW in nearly 80 countries of the world including India. It is alleged in the plaint as also in the application that the trade mark is used by the plaintiff in relation to cigarettes made by it and sold in a large number of the countries in the world. As far as the manufacture and sale of cigarette is concerned, it is sold in various countries but not in India. The plaintiff has given details of its sales and publicity expenses in the plaint. According to the figures mentioned, the sales are worth millions of dollars and the expenses of advertisement also run into lacs of dollars. It is further stated that in January, 1986, the plaintiff learnt through their Hong Kong Office that the defendant had introduced in India cigarettes under the trade mark NOW. Thereafter the plaintiff made enquiries and learnt that NOW cigarettes had been introduced and were being sold not only in Delhi but in many parts of the country by the defendant. According to the plaintiff, the defendant was taking advantage of the ban on the import of cigarettes which prevented the plaintiff from selling in India. It is further alleged that the defendants trade mark NOW is deceptively similar to the plaintiffs registered trade mark and in fact the mark is exactly the same i.e. NOW. It is stated that the applicants trade mark Now represents high quality fine tobacco and is associated with the cigarettes originated exclusively from the applicants house. The respondents use of the mark is clearly intended to establish a nexus between its own goods and the applicants. Since the applicants trade marks is registered, he has a good prima facie case and the balance of convenience is in favour of the applicant. In case the interim injunction, as prayed for, is not granted, the applicant will suffer an irreparable injury whereas the respondent was marketing goods of much lesser and as a result the respondent will not suffer any irreparable harm or injury.

3. The application has been seriously contested by the defendant-company. In the affidavit in reply, it is stated that the defendant has filed form TM-26 dated 7th January, 1986, being an application for rectification to remove the registered trade mark NOW of the plaintiff from the Register of Trade Mark as specifically on the ground that the said trade mark was registered without any bona fide intention, on the part of the plaintiff that it should be used in relation to the goods of the plaintiff and that there has in fact been no bona fide use of the said trade mark in relation to the said goods by the plaintiff and that the said trade mark does not qualify for registration. It is further stated that the registration of the trademark NOW is invalid and could not in law have been registered and is, therefore, liable to be struck off the Register of Trade Marks. On merits, it is pleaded that the defendant-company has been in the cigarette manufacturing trade since 1910 and from time to time has developed and Marketed a wide range of cigarettes of different types and flavours under a large number of trade marks, and the defendant has never been accused of much less have any proceedings filed against it alleging infringement of a registered mark. It is further stated that the cigarette industry is a highly competitive industry and the manufacturers are constantly striving to improve their market and have been marketing cigarettes of different brand names to meet the changing tastes of consumers. Over the years, the defendant bad to compete and has effectively done so without even indirectly attempting to infringe the mark of a competitor, whether foreign or indigenous. It is further stated in the affidavit that as a result of Central Government Notification dated 2nd September 1985 excise duty on cigarettes was raised very steeply bringing about a significant drop in industry volume, compelling manufacturers, including the defendant, to consider ways and means to augmenting their volumes. Thereafter the defendant has stated the reason for adopting NOW as its trade mark .but it is not necessary to reproduce the reasons as the same are not relevant for the purpose of this application. It is further stated that though the trade mark NOW was registered in July 1975, the same has not been used and the plaintiff had no bona fide intention to use the same at any point of time. Such a trade mark is liable to be removed from the Register. According to the defendant, the plaintiff has never advertised the trade mark NOW in any journal which has a circulation in this country and has not spent anything for advertisement as far as this country is concerned. The defendants cigarettes bearing the trade mark NOW have already captured a share equal to 2.5% of the total cigarette market in India and the defendant-company has spent an enormous amount on publicity and advertisement as far as the brand NOW is concerned. According to the defendant, the balance of convenience is in favour of the defendant-company and the plaintiff-company will not suffer any injury inasmuch as the cigarettes manufactured by the plaintiff under the trade name NOW have never been sold in India and are not likely to be sold in the near future.

4. I was shown the packets of cigarette being marketed by the plaintiff as also by the defendant-company under the trade name NOW. It was not disputed that the design, lettering, lay out, colour scheme and general get up of the packets in which the respondent has marketed its NOW brand is entirely deferent from the packets in which the plaintiff is marketing its cigarettes. In fact, no serious case of passing of, has been made out and it was rightly not argues by the learned counsel for the plaintiff. The contentions were confined to infringement of the trade mark. It is true that purity of the Register of trade Marks is of much importance to the trade in general but it is equally true that if a mark which exists on the Register, cannot be justified in law, it is the duty of the court to purify the Register and expunge the illegal entry in the interest of the trade itself.

5. It is an admitted fact that an application for rectification filed by the defendant is pending. under Section 111 of the Trade and Mercantile Act (herein-after called the) makes it mandatory for the Court to stay the suit. However, under Sub-section 5 of section 111 of the Act, the Court is not debarred from dealing with the interlocutory matters including application for injunction, that is to say even if the trade mark on which the plaintiff sues or is under challenge, it does not preclude the Court from giving relief for the intervening period. Therefore, I have heard this application at length. The plaintiff-company got the mark registered in July, 1975 and has admittedly not used the mark in India either before or after getting it registered. There has been a ban on the import of foreign cigarettes in this country since around 1957 and is still continuing. The mark was got registered after about 18 years of the ban having been imposed. The question for consideration is whether in such a situation the mark is liable to be removed from the Register and if the defendant has a prima facie case for getting the mark removed then whether the plaintiff is entitled to an interim injunction during the pendency of the suit. The learned counsel for the plaintiff relied upon a judgment of this Court in Philio Morris Belgium v. Golden Tobacco Co. Ltd., AIR 1986 Delhi 145. It is no doubt true that the facts in that case are more or less similar to the facts in the present case. That was also a suit for the grant of permanent injunction and rendition of accounts filed by the plaintiff against the defendant-company. In that suit, an application for interim injunction was filed to restrain the defendant-company from using the trade mark VISA in relation to cigarettes on account of its registration in India. The judgment supports the case of the plaintiff inasmuch as a learned Single Judge of this Court had granted the ad-interim injunction restraining the defendant-company from using the trade mark during the pendency of the suit. It was held that the non-use of the trade mark by the plaintiff-company was due to the imports restrictions imposed by the Government of India and the same would constitute special circumstances within the meaning of Section 43(3) of thejustifying non-use of trade mark. However, from the judgment, it is not clear whether it was a case where the trade mark was got registered during the period when the ban on the import of cigarettes was in existence and whether the plaintiff had never used the mark or never sold the cigarettes under that mark in this country. In the present case, it is an admitted fact that the mark was registered in 1975 i.e., much after the ban was imposed and the plaintiff has never marketed the cigarettes in this country under this mark whether before or after the registration of the trade mark. Further the learned Single Judge relied upon section 46(3) of thewhich covers the cases under Section 45(1)(b) and is not applicable to section 46(1)(a). It was strenuously urged by Mr. Nariman, the learned counsel, for the defendant that the case was covered by section 46(1)(a) and not by section 46(1)(b) and as such the provisions of section 46(3) of thewere inapplicable. Section 46(1) of theprovides for two cases in which the registered trade mark may be taken off the Register in which it is registered. The first case is set out in clause (a) of Section 46(1) and the second is in clause (b) of that Sub-section. There are two conditions to be satisfied before the clause (a) can become applicable. These conditions are that the trade mark was registered without any bona fide intention on the part of the applicant for registration that it should be used in relation to those goods by him and in a case to which the provisions of section 45 apply by the company concerned and that there has been, in fact, no bona fide use of the trade mark in relation to those goods by any proprietor thereof for the packet being upto date one month before the date of the application. As far as the second condition is concerned, it is fully covered inasmuch as admittedly there has been no use of the trade mark in relation to those goods by the plaintiff up to date one month before the date of the application. It is the first condition which requires consideration.

6. On the first condition, the contention of the learned counsel, for the applicant, was that the applicant had got the mark registered in 1975 with the bona fide intention of using the same when and if the import restrictions were relaxed by the Government of India. It cannot be disputed that the import restrictions existed at least for 17 or 18 years prior to the registration of the mark. A similar contention was raised before their lordships of the Supreme Court in American Home Product Corporation v. Mac Laboratories Private Ltd. and Another, AIR 1986 Supreme Court 137. While dealing with the question of Trafficking in Trade Mark it was observed in paragraph 39 of the Report:

The intention to use a trade mark sought to be registered must be, therefore, genuine and real as pointed out by Tomlin, J. in re Duckers Trade Mark (1928) 1 Ch. 405, 409, the fact that the mark was thought to be something which some day might be useful would not amount to any definite and precise intention at the time of registration to use that mark. The intention to use the mark must exist at the date of the application for registration and such intention must be genuine and bona fide. In fact, Section 46(1)(a) expressly speaks of bona fide intention on the part of the applicant for registration which would mean at the date when such applicant makes his application for registration.

Similar view was expressed by the Chancery Division in Imperial Group Ltd. v. Philip Moris and Co. Ltd., 6 Fleet Law Reports 1980, 146. In view of these authorities, it cannot be said that the defendants have no prima facie case for getting the mark removed from the register in their proceedings for rectification. When once a prima facie case has been made by the defendants for rectification of the register, it is well settled that it will be inequitable to grant interim injunction against the said defendants as it would be stopping their trade altogether, particularly, when the plaintiff can be well-compensated by damages if and when the plaintiffs succeed in its action. A similar question was considered by a learned Single Judge of this Court in M/s. Sarwan Singh and Sons v. M/s. Mac Industries and Others. 1A 4039 of 1978 in suit No. 880 of 1978 decided on 19.12.1978. In that case, the mark had been discontinued for long and the learned Single Judge of this Court refused interim injunction on the ground that prima facie case existed for removal of the mark from the register in rectification proceedings.

7. Now coming to the question of balance of convenience, the contention of Mr. Shanti Bhushan, the learned counsel, for the applicant, was that the applicants had acquired reputation for quality and as such if the defendants are permitted to carry on with the use of the mark, their reputation would suffer in the mark. It was further contended that their cigarettes had certain peculiarities and as such the imputation was likely to suffer. I fail to understand as to how can the reputation for quality suffer in a country where the cigarettes have never been marketed by the applicant. The Division Bench of this Court in Synthesis v. Samperit Aktier Geselshaft, 1980 RLR 263 [LQ/PunjHC/1979/430 ;] ">1980 RLR 263 [LQ/PunjHC/1979/430 ;] [LQ/PunjHC/1979/430 ;] had the occasion to deal with the question of balance of convenience in a case where the Import of combs was banned by the Government of India and the plaintiff had asked for temporary injunction against the use of the name by an Indian manufacturer. It was observed:

Firstly, according to the statement of law in Kerley on Trade Marks and Trade Names, 10th Edition, paragraph 15.65 the balance of convenience in granting temporary injunction is to be determined by relative amount of damages which is likely to result after the injunction is granted and the plaintiff ultimately fails. The damages which would be caused to the appellant could be total. On the contrary no damage would be caused to the respondent-plaintiff for the simple reason that from the 1954 on wards the import of the plaintiff-respondents combs has been banned in India. The legal injury by the infringement of the trade mark of the respondent is a question of law while the amount of damage that can be caused to the respondent is a question of equity. The strength of the plaintiffs case on the former is not reflected in the latter.

Respectfully following the decision of the Division Bench by which I am bound, I am of the opinion that the balance of convenience clearly lies in favour of the defendants.

8. For the reasons recorded above, I am not inclined to grant the injunction prayed for and consequently dismiss the application but leave the parties to bear their own costs. However, the defendants would maintain accounts of their manufacturing and sale of the cigarettes under the brand name NOW and would file quarterly statements in this Court. The quarterly statements would commence from the last quarter of 1986 and would be filed on or before the end of the quarter.