Sheel International Ltd. vs Shree Anu Milk Products Ltd.

Manmohan Singh, J.

I.A. No. 9908/2013 (exemption)

Exemption allowed, subject to just exceptions.

The application is disposed of.

OMP No. 591/2013

The petitioner has filed the abovementioned petition u/s 9 of the Arbitration and Conciliation Act, 1996 seeking certain interim orders against the respondent. Issue notice to the respondent, returnable on 9th July, 2013. Mr. Shailen Bhatia, learned counsel appearing on behalf of the respondent accepts notice.

Mr. Sanjeev Puri, learned Senior counsel appearing on behalf of the petitioner is pressing for interim order in view of the facts mentioned in the petition and the documents placed on the record. The said request is opposed by the learned counsel for the respondent. Both the parties have made their submissions for some time.

Brief facts of the case as mentioned in the petition are that the petitioner is a company, incorporated under the Companies Act, 1956, with its registered office in New Delhi. The petitioner is the registered proprietor of the mark BILONA in respect of various dairy products. It has been marketing ghee and dairy whitener since 1992 under the said mark and has been manufacturing the products till 1998 under the name BILONA. The respondent Company was a licensee of the petitioner and has been involved in manufacturing and marketing ghee. The trademark is valid and subsisting, for, the petitioner had applied for its renewal before the expiry of the marks.

It is further submitted that the petitioner and the respondent entered into a License Agreement in 2002 for the use of the mark BILONA in respect of Desi Ghee as per the terms mentioned in the agreement. This license is to subsist from 1st April, 2006 to 31st March, 2007. Upon its expiry, the license was renewed by another agreement between the parties till 31st March, 2012. The petitioner submits that the respondent has been acting in accordance with the agreement insofar as due acknowledgement was given to the petitioner, as well as royalty was paid.

The case of the petitioner against the respondent is that the respondent has continued to use the mark in respect of products manufactured after the expiry of the renewed agreement. In March, 2013, the petitioner found out that the respondent continued to market Ghee under the mark of the petitioner, and further, named the Directors of the respondent Company as the true proprietors of the mark. The respondent then conducted a search in the Trade Mark Registry, and found that the mark was, in fact, registered in Class 29, under the name of Mr. Pradeep Kumar Jain, who is the Director of the respondent Company. This mark was registered on a ''Proposed to be Used'' basis. In the third week of March, the petitioner received a rectification petition, filed by Pradeep Kumar Jain, stating that the respondent is prior adopter of the mark, since 1979. The petitioner is in the process of filing replies to these petitions.

The first submission of Mr. Shailen Bhatia, Advocate who is appearing on behalf of the respondent, is that the respondent is using the mark BILONA since 1979 which is earlier than the petitioner. He further submits that various applications have been filed by the respondent for registration of the trademarks and one of the trademarks is duly registered. Therefore, the petitioner is not entitled for the relief claimed at this stage. It is also stated by the learned counsel that Kamal Kumar Jain is the prior adopter of the trade mark BILONA in respect of Desi Ghee since 1979 and the respondent has also filed the application for rectification of the petitioner''s trademark BILONA before the Tribunal.

On the other hand, learned Senior counsel appearing on behalf of the petitioner has argued that the respondent has never been a prior owner of the mark, as otherwise it would have never entered into a License Agreement with the petitioner. For the same reason, the respondent is estopped from claiming any rights over the product. The trademark BILONA has been exclusively associated with the petitioner, and unauthorized usage of the same will lead consumers to believe that there is a connection between the business of the petitioner and respondent, after the expiry of the License Agreement. He further submits that the respondent has unfairly used the mark, thus, giving it an unfair advantage in the market who has indulged in passing off its goods as that of the petitioner. It was only in the month of June, it came to the notice of the petitioner that the respondent is trying to sell infringing material. Therefore, the present petition u/s 9 of the Act has been filed seeking certain interim orders.

Therefore, the petitioner has a strong case for the grant of an injunction u/s 9 of the Act, pursuant to the arbitration clause contained in the license agreement which is reproduced as under:-

That any dispute arising in connection with this agreement shall be settled through arbitration, in accordance with the Rules and conciliation of the Arbitration Act as provided under the law without reference to any other procedure of law. The arbitration panel shall consist of either sole arbitrator appointed with mutual consent and in case of disagreement the case shall consists of three arbitrator in accordance with law of arbitration applicable thereto. The arbitration shall take place in Delhi and shall be conducted in Delhi.

Learned Senior counsel further submits that there exists a clear prima facie case against the respondents. The balance of convenience also rests in favour of the petitioner inasmuch as the respondent can continue to manufacture its products under any other name, but the petitioner would have lost goodwill associated with the product, as it has been associated with the same for a long time. Thus, an interim injunction may be passed against the respondent and its representatives, preventing them from dealing with any product that bears the mark BILONA or any other trademark which is deceptively similar thereto.

It is not in dispute that there was a subsisting valid License Agreement between the parties from the year 2002 to March, 2012 (copies of License Agreements dated 27th March, 2006 and 2nd March, 2007 are placed on record), whereby the petitioner has allowed the respondent to use the trademark BILONA in respect of Desi Ghee. As the petitioner and its predecessor-in-interest had been using the trademark BILONA in relation to various goods from the year 1992, the said trademark is duly registered in Class 29. The date of registration itself is in the year 1992. Pradeep Kumar Jain was earlier the Director of the respondent Company. Similar is the position of Kamal Kumar Jain, who was inducted as Director with effect from 22nd September, 2004. Both the Directors have admittedly filed various applications for registration bearing Nos. 2157311, 2070677, 1897625 and 2154840 when they were the Directors of the respondent Company, under the same trademark BILONA in order to get the ownership when their Company was admittedly using the mark under permission being license granted by the petitioner. They filed the abovementioned applications in the Trade Mark Registry from the year 2009 to 2011, the details of the same are mentioned in para-17 of the petition. The said applications for registration are filed during the period of existence of the License Agreement between the petitioner and the respondent.

In Clause 14 of the Agreement dated 2nd March, 2007 between the parties, it is specifically stipulated that on expiry of the term of license granted to the respondent or its termination, the licensee will discontinue the use of the said trademark.

Similar is the stipulation mentioned in the agreement dated 27th March, 2006 in Clause 14, which is reproduced here as under:-

That on expiry of the terms of the license herein granted are any extended were are earlier termination of the agreement the license will discontinue the use of the said Trade Mark and Trade name. The license will either resale to the Licensor at cost or destroy the advertising packing material and stationery etc. bearing the said Trade Mark and Trade name, as desired by the Licensor.

It is settled law that filing of application(s) by the licensee to claim the ownership of the same mark without the knowledge of the licensor amounts to fraud. In some of applications, they claimed the user prior to the user of the petitioner. There is no verification of the actual user by the Trade Mark Office at the time of filing of any application. The said claim of user, if made wrongly or rightly, is to be examined when the objections are filed by the original owner of the trademark at the time of notice of opposition.

It is also a well settled law that once the licence is revoked or period thereof expired, any use by the licensee of the trademark would amount to infringement of the trade mark and the rights of the proprietor. The following decisions are referred to on this aspect:-

(a) In Fedders North American vs. Show Line & Others, reported in 2006(32) PTC 573 (DEL), it has been held that after termination of the agreement dated 21st May, 1956, plaintiff had given right to defendant No. 18 to use the trade mark "Fedders" for a period of five years, by virtue of the agreement dated 11th October, 1963. It was held that after this period came to an end in the year 1968, use of trade mark "Fedders" by defendant No. 18 from 1968 onwards was not in line with the rights available to the plaintiff as a registered proprietor of trademark "Fedders".

(b) In Velcro Industries B.V. & Anr. vs. Velcro India Ltd., reported in 1993 (1) Arb. LR 465, the facts involved were, more or less, similar to the present case. In the said case, Velcro Industries (plaintiff) had entered into collaboration agreement with the Indian Directors and pursuant thereof Velcro India Ltd. (Defendant) came in existence. Defendant was granted trademark license vide a License Agreement which was renewed and subsequently, defendant was permitted to use the word "Velcro" as part of its trade name. Renewed agreement also expired on 30th September, 1986, thereafter plaintiff called upon defendant to stop using the mark of the plaintiff which was not complied with. Accordingly, plaintiff approached the Bombay High Court wherein defendant was restrained from using the mark "Velcro" as their trade name in India. It was held that after the license expired, defendants had no right to use the same as that of their corporate name/trade name.

(c) In Rob Mathys India Pvt. Ltd. Vs. Synthes Ag Chur this Court echoed the view expressed by the Supreme Court in Power Control Appliances and Others Vs. Sumeet Machines Pvt. Ltd., to the effect that it is a settled principle of law relating to trademarks that there can be only one mark, one source and one proprietor. A trademark cannot have two origins. It was held that after termination of the collaboration agreement between the parties to that litigation, the appellant therein, not the owner of the trademark, could not use the word "Synthes" or the trademark "AO/ASIF" after revocation of the collaboration agreement.

(d) The Division Bench in the case of J.K. Jain and Others Vs. Ziff-Davies Inc., held that an ex licensee, having taken the benefit of an agreement with the licensor is estopped from resisting an application for an injunction by the licensor after termination of the agreement between the parties.

In the present case, no doubt, there is no dispute about the fact that the petitioner is the registered proprietor of the trademark BILONA in question and the respondent is using the identical trademark in respect of the same goods. It is obvious that a case of passing off of trademark is made out by the petitioner. After the termination of the Trade Mark Agreement, as per settled law, the respondent by no means can be considered as permitted user. The respondent, after termination, is using the identical trademark. Under those circumstances, any such use by it if permitted, it would likely to cause confusion to the public or which is likely to have an association with the petitioner.

In view of the above said facts, it is clear that the petitioner has been able to prove a prima-facie case in its favour. The balance of convenience also lies in favour of the petitioner and against the respondent. In case, the respondent is not restrained, the petitioner would definitely suffer an irreparable loss and injury.

Hence, it is directed that till the final disposal of the present petition, the respondent, its Directors, Representatives, Agents, Servants, Assignees etc. and anyone claiming and/or acting on its behalf are restrained from manufacturing, selling, offering for sale, advertising, displaying, directly or indirectly dealing in the infringing goods, i.e. Ghee and other cognate goods under the trademark BILONA and/or any other trademark identical or deceptively similar thereto and also from creating any third party rights in the said brand.

List on 9th July, 2013 before the roster Bench. Copies of this order be given dasti to the counsel for the parties.