Disney Enterprises, Inc.& Anr vs Pankaj Aggarwal & Ors

Prathiba M. Singh, J

This is a suit for permanent injunction restraining infringement of copyright, passing off, damages, rendition of accounts of profits etc. filed by the

Plaintiffs against the Defendants. Defendant No.4, M/s. Aish Enterprises is a partnership firm of Defendant No.1 and 2. Defendant No.3, M/s Aish

Food Products is their marketing outlet.

The present suit has been filed in respect of the Plaintiffs’ character, characters’ names, trademark and copyright (hereinafter referred to

as “DEI Materialsâ€). The Plaintiffs claim trademark rights, copyrights in all the Disney’s character, logos, marks, images and artistic

work. The violation in the present case, however, relates to the character called as “Lightning McQueen†from the Disney movie called

“Carsâ€.  The said character “Lightning McQueen†is a race car which speaks in the movie in animated form with several distinctive

characteristics and elements. The Plaintiffs have placed on record copyright registration certificate issued by the United States Copyright Office in

respect of all the characters in the movie “Cars†of which one character is “Lightning McQueenâ€. The copyright certificate has been

exhibited as EX-PW-1/3. A perusal of this certificate issued by the United States Copyright Office shows the character as copyright “Lightning

McQueenâ€​ in the artistic mark as depicted herein below: -

The Defendants were manufacturing chocolates by the name of “Choco Carâ€. The “Choco Car†product sold by the Defendants consists

of an artistic work/character which is a complete imitation of the “Lightning McQueenâ€. The Plaintiff has, therefore, filed the present suit seeking

injunction against the Defendants and damages. The product packaging used by the Defendants is below:

Initially on 3rd February, 2014 an ex parte ad interim injunction was granted by which the Defendants were restrained from using the mark

“Lightning McQueenâ€​ or any other mark deceptively similar to that of the Plaintiff. The said injunction is operating till date.

At the time of granting the ex parte injunction, this Court had also appointed a Local Commissioner, who filed his report on 4th March, 2014. A

perusal of the report of the Local Commissioner, along with an inventory of the goods seized shows that huge quantities of goods were seized at the

Defendants’ premises. The same was given on superdari to the Defendants. The total number of infringing products and packaging material

which was seized by the Local Commissioner is set out herein below: -

“Inventory of Goods Seized

During the Proceedings, I seized lot of cartons, Packaging material, Boxes of chocolates etc. bearing the copyrighted mark and Impressions of the

Plaintiff. The complete list of seized and sealed goods is as follows:-

Three cartons containing wrapped chocolates 3750 pieces

2 Packaging material in rolls of different sizes and 2 kg - 5 Rolls

weights 3 kg - 6 Rolls

4 kg - 16 Rolls

5 kg - 14 Rolls

3 Big cardboard cartons for Packaging 700 Boxes

4 Small cartons for Packaging 16,200 Boxes

Besides the above material, we also found one hundred ninety plastic moulds (190) in all, which are in the shape of a car, however, the same are not in

the shape of the Plaintiff’s mark and as such bears no resemblance with the product in question and in no way infringing the rights of Plaintiff.

The counsel for defendant took the plea that they are using moulds of mobile, car etc. for their own confectionary products as well and secondly, there

is no order as such to seal the moulds also, particularly when they bear no resemblance with copyrighted mark. The counsel for Plaintiff states that the

moulds are in consonance of the plaintiff’s action for Passing Off against the defendants. Hence, the same should be sealed.

Though the suit is drafted extremely broadly and even the documents have been filed in respect of all Disney’s characters, the scope of the

present suit is restricted to the character “Lightning McQueen†since the Defendant has used the image of the said character on its chocolate

wrappers.Â

The present is a classic case of character merchandising. The character and the image of “Lightning McQueen†is quite distinctive and the

same is being used by the defendants on their chocolates. It is well settled that characters can acquire the status of trademarks and can also be

protected under copyright law. In Star India Private Limited v. Leo Burnett (India) Private Limited (2003) 27 PTC 81, the Bombay High Court

observed:

“62. Character merchandising involves the exploitation of fictional characters or the fame of celebrities by licensing such famous fictional

characters to others. The fictional characters are generally drawings in which copyright subsists, e.g. cartoon and celebrities are living beings who are

otherwise very famous in any particular field, e.g., film stars, sportsmen. It is necessary for character merchandising that the character to be

merchandised must have gained some public recognition, that is, achieved a form of independent life and public recognition for itself, independently of

the original product or independently of the milieu/area in which it appears. Only then can such character be moved into the area of character

merchandising. This presumes that the character has independently acquired such reputation as to be a commodity in its own right independently of

the goods or services to which it is attached or the field/area in which it originally appears.â€​

Subsequently, the Delhi High court in Chorion Rights Limited v. Ishan Apparel ILR (2010) 5 Del 481, referring to the above mentioned decision of

the Bombay High Court and dealing with the well known cartoon character NODDY also observed â€

“17. The case at hand is clearly one involving character merchandising. The plaintiff has established its huge sales in India and abroad for the

period during 2000 and 2008 but, unfortunately, it has failed to establish user of the mark prior to 1995. In fact, at best the user could be traced to 2001

for which the first sales figures are given or 2002 as it is stated in the “cease and desist†notice served upon the defendant that Egmont sold

Noddy in India for the first time in 2002. Another aspect, which the Court cannot ignore is that the plaintiff did object to the defendant's application for

registration of the “Noddy†mark, but does not appear to have followed it up. This is strange and out of character, because the materials on

record suggests that such oppositions were in other instances vigorously pursued, and other applicants, compelled to give up claims for registration.

It is settled law in India, that when contesting parties hold trademark registrations, their rights are to be determined on the basis of principles

applicable for passing off, the most important component of which is establishing prior use of the mark. The plaintiff has not adduced any evidence to

show prior user in India, it is even not the prior registered owner of the said trademark in India. A claim of dilution cannot sustain against a registered

owner of the trademark, as is clear from Section 29(4). In this case the defendant has not only established prior user, at least from 1995, but also prior

registration of the mark. While it may be true that some sections of the public, especially those exposed to a certain kind of education, and having

access to imported books were aware of Noddy and were reading about his escapades in Toyland, so vividly created by Enid Blyton, (the author of

this judgment being one such) and even retaining fond memories, yet the Court is not unmindful of the fact that there is not even a shred of evidence

disclosing sales figures, as to importation of such books, authorized stockists, periodicity of such sales, advertisements, areas where such sales took

place, and their volume, etc. There could have been stray cases of import of Noddy books, but evidence to that effect is also not placed before the

Court. The plaintiff has not claimed that there were any exclusive or other licensees, or agents in India for the sale of NODDY prior to 1995, their

best evidence dates back to 2002. NODDY could be copyrightable, yet the plaintiff has desisted from claiming copyright infringement. In these

circumstances, the Court's subjective perceptions - in the absence of objective materials, or even pleadings, cannot metamorphasize into “judicial

noticeâ€; such inferences would be dangerous, and undermine the process of judicial decision making. The court is not rendering any findings or

observations about other allegations leveled by the defendant regarding Chorian's so called “trafficking†in the trademark. No such findings, even

of the prima facie kind, are called for, as the parties have to establish their relative strengths during the trial in the suit.â€​

Thus, while recognizing the concept of character merchandising, the Ld. Single Judge had refused the injunction as the Defendants had shown prior

use and registration in India.

Further in World Wrestling Entertainment, Inc. v. Savio Fernandes & Ors. 2015 (62) PTC 573 (Del), a Ld. Single Judge of this court protected the

characters from the WWE series and held:

“26. It is submitted by the plaintiff that the plaintiff is the creator of its original characters and holds a copyright in all modes of depiction of the said

characters and the WWE Scratch Logo. Plaintiff's rights in its characters are well recognized both by the public and by the Wrestlers themselves.

Therefore, the plaintiff has sole copyright and merchandising rights over the images of its talents and the WWE Scratch Logo used by the defendants.

The illegal representation of the WWE characters and WWE Scratch Logo on the impugned products and website has been done without obtaining

any proper license or permission from the plaintiff. The said act of the defendants has led to upfront infringement of copyrights belonging to the

plaintiff as per the Copyrights Act, 1957. The WWE characters are immensely popular and appear on the various publicity material/promotional

merchandise of the plaintiff and the use of the same is a blatantly dishonest and malafide attempt by the defendants to derive unfair advantage by

creating the impression that its products emanate from the plaintiff or have some connection, nexus, association, affiliation with or endorsement from

the plaintiff.â€​Â

There is no uniform opinion as to whether character merchandising is illegal. While some jurisdictions like Australia are more amenable to protect

characters, in UK, the tests of passing off have to be satisfied in order to prevent use of a well known character.Â

Insofar as India is concerned, the fact that characters can be merchandised for commercial value, has been recognized in the above judgments,

though in some cases, injunctions have been granted and in some, due to the lack of evidence, no injunction has been granted. The importance of

preventing well known characters from being misused for commercial products lies in the fact that the creation of fictional characters requires a great

amount of creativity and an innovative mind. Characters such as “Lightning McQueen†have transcended the movie in which they are featured,

as children recognize the said characters and treat them like living humans. It is not uncommon for children wanting to own toy cars which look like

“Lightning McQueenâ€, bags and stationery products which have “Lightning McQueen†images printed on them, talking to “Lightning

McQueen†cars etc., India has its own tradition of having a large number of home-grown characters which are liked and wanted, and such

characters have immense commercial value. While fair use of the characters is permissible, within the legally prescribed norms, unlicensed use of the

image of a known character on chocolates, which the Plaintiff also licenses for legitimate use on chocolates/ wrappers, would be unlawful and illegal.

A perusal of the packaging of the Defendant shows that there is no other Disney character which has been used on these packaging. The

character “Lightning McQueen†of the Plaintiff is one of the well-known characters from the Plaintiffs’ movie “Cars†and has acquired

enormous reputation and goodwill. He has several distinctive elements which differentiate him in appearance from any other toy car. Some such

characteristic elements include:

• A distinctive build in red color along with red, orange and yellow colored lightning bolts on the sides.Â

• Distinctive stickers (of his sponsors “Rust-ezeâ€​, his racing number 95â€​, his name, chrome lightning bolts, etc) all over his body.Â

• Blue colored eyes in place of his windshield and a mouth in place of his front bumper.Â

The use of the image of the character on chocolates without the consent, license or permission of the Plaintiffs would be unlawful and illegal. The

same would also constitute infringement of copyright and would also result in passing off the defendants’ goods as those affiliated with the

Plaintiffs or sponsored by the Plaintiffs.

“Lightning McQueen†is a copyrighted character. Under the Copyright Act, 1957, any copyrighted work protected internationally is liable to

be protected in India, in view of the international copyright order as also India being a party to the Berne Convention for the Protection of Literary and

Artistic Works and the Universal Copyright Convention.Â

Registration of copyright is not required for protection of an artistic work. Â

In the present case, the film “Cars†of Disney was released in the year 2006. As per the United States Copyright Certificate (EX-PW-1/3),

the style guide for the said movie which is registered as an artistic work shows that the work was created sometime prior to the release of the movie

in the year 2005. The copyright certificate dated 28th February, 2005 clearly shows that it is based on and incorporates pre-existing Disney pictures

artwork. Thus as of 2005, the character “Lightning McQueenâ€, the artistic work and the character comprising thereof deserves to be protected

both under copyright law as also trademark law.

The Defendants did not put in appearance and they were finally served by way of publication. The Defendants were then proceeded ex-parte on

21st December, 2016. The fact that the Commission was executed on the Defendants’ premises and seizure was made itself shows that they had

the knowledge of the litigation and they deliberately avoided the Court proceedings. The evidence of Mr. Vishal Ahuja, authorized representative of

the Plaintiffs, has been placed on record. He appeared and tendered his evidence as PW-1. He has exhibited inter alia the United States copyright

registration certificate, the products of the Defendants and the Local Commissioner’s report (EX.PW-1/5). He has also exhibited a price list of

chocolate wrappers bearing the licensed DEI characters as appearing online to substantiate the claim for damages.

“Lightning McQueen†being a recognized device and copyright work of the Plaintiff, the Defendants are not entitled to use the same in any

manner whatsoever. The use of the said device and work on chocolates, which are meant for children, is in violation of the Plaintiffs’ rights.Â

The said device has acquired the character of a well known device associated with the Plaintiffs. Â

Considering the evidence on record, it is clear that the use of the “Lightning McQueen†character violates the copyrights of the Plaintiff as

also the rights in the character. It is likely for any consumer to presume that the chocolates from the Defendants originate under a license from the

Plaintiff, as the Plaintiff has placed on record various chocolate wrappers which are licensed users of the Plaintiff’s characters and works.

Plaintiffs pray that a decree in terms of paragraph 25(a) be passed as prayed for in the plaint. However, paragraph 25(a) of the plaint prays for an

injunction in respect of character devices/trademarks not just limited to “Lightning McQueen†but extending to all such character

devices/trademarks owned by the Plaintiffs. Since the present suit deals only with the infringement and passing off of the character device

“Lightning McQueenâ€​, a decree is passed in respect of the same.Â

The seized products lying in superdari shall be delivered up by the Defendants to the Plaintiffs. The Plaintiff’s representative is permitted to

visit the Defendants’ premises on 25th July, 2018 in order to collect the infringing packaging material/cartons and products bearing the

“Lightning McQueenâ€​ device and the same shall be destroyed.

Considering that the Local Commissioner had seized a large quantity of infringing products, the Defendants are directed to pay legal costs to the

tune of Rs.1 lakh to the Plaintiff. The Plaintiff has also prayed for rendition of accounts of profits. The Plaintiff’s witness has claimed loss to

the tune of Rs.10 lakhs. The accounts of the Defendants not being available, the only evidence on record is the Local Commissioner’s report,

which shows that 16,200 boxes of small cartons and 700 boxes of big cartons were seized at the Defendants premises. Considering the huge amount

of inventory which the Defendants had at the time of the execution of the Local Commission, which consisted of both chocolates and packaging rolls

that would translate into thousands of chocolates, the suit is decreed in favour of the Plaintiff against the Defendants for a sum of Rs.5 lakhs as

damages.

A decree of permanent injunction is accordingly granted in favour of the Plaintiff against the Defendants from manufacturing, selling, offering for

sale, advertising, marketing chocolates or any other products bearing the image or character of the device/work “Lightning McQueenâ€. A decree

of damages to the tune of Rs. 5 lakhs is also passed. Costs are quantified at Rs.1 lakh. Decree sheet be drawn.

Suit is disposed of. All pending I.A.s are also disposed of.