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Judgment
S.J. Vazifdar, J.—This is an action for infringement and passing of in respect of the Plaintiffs'' trade mark "ALGINOL" used in respect of fungicides and algicides. The mark has been registered for goods under Class V with the Registrar of Trade Marks, Bombay. In addition to the usual reliefs to protect the mark and to prevent the infringement and passing off thereof the Plaintiffs have also sought a decree in the sum of Rs. 10,00,000/-by way of damages and in the alternative for an order directing the Defendants to submit the accounts of their dealings in respect of the goods of the above description under the trade mark "ALGINOL" or in any other name to show the profits earned by them in their dealings in such goods. The Plaintiffs have also sought an order for the accounts and for a decree for such amounts as may be found due on taking accounts for such profits earned by the Defendants.
PLAINTIFFS'' CASE:
The Plaintiffs have settled the suit with Defendant No. 1 in terms of the consent terms dated 1.9.2004 which were marked in evidence as P-3. The reference in this judgment to the Defendants therefore is restricted to Defendant Nos. 2 and 3 viz. Envirochem Systems and one Satish Bhadri, unless otherwise specified.
The Plaintiffs are manufacturers inter-alia of fungicides and algicides. Prior to September, 1974, the Plaintiffs developed the chemical formulation which is an effective industrial microbicide for cooling the water which the Plaintiffs commenced marketing under the trade mark "ALGINOL" . The containers of the said product manufactured by the Plaintiffs are marked with the trade mark "Alginol-L" or "Alginol-S" for liquid and solid form.
On 14.4.1975, the Plaintiffs made an application for registration of the trade mark "ALGINOL" in class V. On 30.5.1980 the Registrar of the Trade Marks, registered the said trade mark "ALGINOL" in class V in respect of fungicides and algicides.
The Plaintiffs had been regularly supplying the said product to the various establishments from 1974. The Plaintiffs claim to have developed a high reputation in the market in respect of the said products and the said trade mark.
The Defendants also carried on business as manufacturers, traderers or merchants of similar products.
Paragraphs 7 to 22, 31 and 32 of the plaint deal with the case against Defendant No. 1. The plaint thereafter deals with the case against Defendant Nos. 2 and 3. There are also certain averments which are common to all the Defendants.
As against Defendant Nos. 2 and 3, the Plaintiffs'' case is this. On 9.7.1984 Hindustan Organic Chemicals Limited (HOCL) published a notice inviting tenders and quotations for ''Alginol liquid''. The Plaintiffs submitted their quotation offering to supply the same at the rate of Rs. 37.50 per Kg. The Plaintiffs were surprised to learn that on the same day, Defendant No. 2 also submitted the quotation to HOCL for Alginol, offering to supply the same at the rate of Rs. 32.00 per Kg. This quotation of Defendant No. 2 was sent by Defendant No. 3 under his signature stating that Defendant No. 2 are also manufacturers of Alginol liquid. This, according to the Plaintiffs, constituted infringement of their trade mark. The Plaintiffs brought the same to the notice of HOCL which thereafter accepted the Plaintiffs'' quotation. The Plaintiffs'' grievance however is that as a result thereof, they had to reduce their quotation from Rs. 37.50 per Kg. to Rs. 35.00 per Kg. The Plaintiffs further stated that on 27.8.1984 and 28.12.1984, Defendant No. 2 sold and delivered intentionally and fraudulently the said products under the said mark as evidenced by their invoices.
Accordingly, the Plaintiffs'' case is that the Defendants have been jointly, severally and independently infringing and passing of their products as those of the Plaintiffs. The Plaintiffs further alleged that Defendant Nos. 2 and 3 have printed and published promotional literature of their products under the mark "ALGINEX" which is deceptively similar to the Plaintiffs'' mark "ALGINOL". The Defendants have thereby damaged the Plaintiffs'' reputation. The Defendants did so knowingly and deceptively.
The Plaintiffs have also alleged collusion between Defendant No. 1 on the one hand and Defendant Nos. 2 and 3 on the other. I will deal with the averments regarding damages allegedly suffered by them while considering the issues. The Plaintiffs have referred to the invoices issued by the Defendants to third parties for the sale of the similar products under the name "ALGINOL" and "ALGINEX". CASE OF DEFENDANT Nos. 2 AND 3:
As stated above, the dispute between the Plaintiff and Defendant No. 1 is settled. Defendant Nos. 2 and 3 filed a common written statement. They denied the averments and submissions in the plaint. They submitted that they are manufacturing and marketing similar products and selling them under the trade name "ALGINEX" since November, 1978 and denied the use of the Plaintiffs mark "ALGINOL". The use of the mark "ALGINEX" continuously since then was to the knowledge of the Plaintiffs. The trade mark "ALGINOL" is a generic and expressive term of the described products and its functioning namely making Algae-nil from the produce. The term therefore, never became the exclusive property of any person.
I will deal with the Defendants'' explanation for their response to the tender invited by HOCL later.
The Defendants have also denied the Plaintiff''s reputation in the said trade mark.
By an order dated 14.6.2004, the following issues were framed :
ISSUES:
(1) Whether or not the plaintiffs are the registered proprietors of the trade mark "ALGINOL" and whether the registration of the mark is still valid and subsisting under the Trade Marks Act, 1999 ?
(2) Whether or not the plaintiffs prove and establish that they were the developers of the market in respect of the products sold under the Trade Mark "ALGINOL" ?
(3) Whether or not the plaintiffs prove that the first defendant had knowledge of the registration of plaintiffs'' trade mark "ALGINOL" ?
(4) Whether or not the plaintiffs prove that the first defendants were not entitled to hold the stocks of the products under the Agreement between the plaintiffs and he defendants ?
(5) Whether or not the plaintiffs prove that under the agreement only the plaintiffs were entitled to sell and deliver the products, except in case of the deliveries of small quantities of the products which the first defendants were allowed to deliver themselves ?
(6) Whether or not the plaintiffs prove and establish that the alleged fake and spurious goods were supplied by the first defendant ?
(7) Whether or not the plaintiffs'' trade mark has come to be associated solely and exclusively with the plaintiffs and acquired a reputation and goodwill ?
(8) Whether or not the plaintiffs prove that the acts of the first defendants amount to passing off ?
(9) Whether or not the plaintiffs prove that the acts of the defendants amount to acts of infringement ?
(10) Whether or not stock of the goods were maintained at Sewri godown of the first defendant with the knowledge or consent or acquiescence of the plaintiff ?
(11) Whether or not any wrongful loss has been caused to the plaintiffs by the first defendant''s action and whether the plaintiffs are entitled to any damages from the first defendant ?
The evidence was recorded on commission. The Plaintiffs examined two witnesses namely their partner one Yashwant Jhaveri and one Pradeep Himmatlal Joshi. The Defendants led no evidence.
RE. : ISSUE No. 1:
At the hearing before me it was not disputed that the Plaintiffs are the registered proprietors of the trade mark "ALGINOL" and that the registration obtained by them is still valid and subsisting. The Plaintiffs'' produced the registration certificate which was marked in evidence as Exhibit P-2.
Issue No. 1 is therefore answered in the affirmative.
RE. : ISSUE No. 2 :
Issue No. 2 must also be answered in favour of the Plaintiffs for it is in fact the case of Defendant Nos. 2 and 3 that they never used the mark "ALGINOL". The Plaintiffs examined their partner one Yashvant Jhaveri (hereinafter referred to as PW-1) and one Pradeep Himmatlal Joshi (hereinafter referred to as PW-2). PW-1 has in his affidavit in lieu of examination in chief established the Plaintiffs'' case in respect of this issue. He has for instance deposed that the Plaintiffs had developed the products prior to 1974 ; that the Plaintiffs had thereafter been regularly supplying the same to various industries, institutions and establishments including Mahendra and Mahendra and International Airport Authority of India. There is nothing in the cross-examination of this witness that disputes the same.
Issue No. 2 is therefore answered in the affirmative.
RE. ISSUE Nos. 3, 4, 5, 6 AND 10:
Issue Nos. 3 to 6 and 10 deal with the case against Defendant No. 1. The suit between the Plaintiff and Defendant No. 1 having been settled, it is not necessary to consider the same.
RE. ISSUE No. 7:
As stated above, PW-1 in his affidavit in lieu of examination in chief stated that the Plaintiffs had developed the said product prior to 1974 and had been regularly supplying the same to various industries, institutions and establishments since then. It is further stated in his evidence that by reason of the high quality of the products manufactured by the Plaintiffs and sold under the trade mark "ALGINOL", they had established a large market and goodwill in respect of the said products under the registered trade mark "ALGINOL". He has also stated that the product was in fact in demand in the trade and industry.
The witness was cross-examined. This witnesses evidence however, was not effectively challenged. The case to the contrary was not even put to the witness in the cross-examination. I see no reason then to discard the evidence of this witness in this regard.
Issue No. 7 is therefore answered in the affirmative.
RE. ISSUE Nos. 8 AND 9:
It was contended on behalf of the Defendants that the word "ALGINOL" is a generic term. I do not agree.
That the word "ALGINOL" is not a generic term per-se is admitted. It is however, contended that it is descriptive of the product. As contended in the written statement according to the Defendants, the word "ALGINOL" describes the function of the product namely "making Algae-nil".
The Plaintiffs'' trade mark is registered. The registration is valid and subsisting. The Defendants have led no evidence to establish their contention that the mark ought not to have been registered. Whether it would have made any difference as a question of law in view of the registration of the mark is another matter. The Defendants have not led any evidence even to indicate that the said mark would be so construed in the trade.
Faced with this, the Defendants relied upon the cross-examination of PW-1. I had earlier referred to the tender invited by HOCL dated 27.7.1984 (part of Ex.P-8 collectively). The Defendants relied upon the fact that the tender stated as under:
It was contended that HOCL had thereby considered the mark to be a generic term and not a trade mark. To support this contention, the Defendants also relied upon the following cross-examination:
(Witness is shown Document at Sr. No. 8 at page No. 13 of the compilation of the documents of the Plaintiff)
Q.15. Is it correct to say that the tender was for the product ANGINOL LIQUID ?
A.15. Yes.
(Witness is shown document at Sr. No. 8 at page No. 14 of compilation of documents of the Plaintiff.)
Q.16. Is the description mentioned in the said letter correct "Alginol Liquid, a chemical for dosing in cooling tower water. It should be non-acidic, non-corrosive and non-pherolic."
A.16. The contents are correct.
Q.17. In the context of the description given in the said letter, would it be right to say that whether "Alginol liquid" is the description of the product ?
A.17. Yes.
The submission is not well founded. Firstly, there is nothing to indicate that HOCL intended inviting a tender only for a product by its generic term. The description in the tender could also refer to the product sold under the trade mark Alginol. Indeed Alginol by itself is not a generic term. The Defendants have not led evidence of the concerned officer of HOCL to establish that HOCL was of the view that ALGINOL was merely a generic term.
Nor do I consider the above cross-examination as having established the Defendant''s case. Indeed the tender was for the product Alginol liquid. PW-1 having answered question Nos. 15 and 16 in the affirmative, is not conclusive of the matter and certainly not indicative of the word ALGINOL being a generic term. It is common ground that Alginol liquid is a chemical for dosing for cooling tower water. In answer to question No. 17, the witness merely confirms that the description in the notice inviting tenders is correct. There is nothing inconsistent about describing the Plaintiffs'' product sold under the Plaintiffs'' mark as being a chemical for dosing in cooling tower water. Accordingly the answer to question No. 17 also does not support the Defendants. Alginol liquid is obviously the description of the product which HOCL desired to acquire.
It is important to note question Nos. 1 and 2 and the answers thereto which are as under:
Q. 1. What is the product manufactured by your company ?
A.1. We manufacture the product ALGINOL along with other products.
Q.2. It is correct that the use of the product ALGINOL is for removing algi ?
A.2. This product removes the bacteria and fungi along with algi.
It is important to note that the cross-examiner did not go a step further and put it to the witness that the mark ALGINOL is a generic term for all products that perform the said function. The witness in general terms does consider ALGINOL to be the product that removes bacteria and fungi and that he also concedes that the goods manufactured by the Plaintiffs to be products in equally general terms. It would be unfair to the witness to read his answers out of context and to attribute to him an admission to the effect that the mark ALGINOL is a generic term.
This is further clear from the answers to question Nos. 40 and 41 which read as under:
Q.40. I put it to you that your mark ALGINOL is descriptive and not liable to protection under the Trade Marks Act and your are not entitled to any relief in the suit ?
A.40. The product ALGINOL is a registered trade mark and it is coined by my company.
Witness Volunteers : It is like two soaps, Lux and Cinthol. Lux is Lux and Cinthol is Cinthol. So if tender for Lux is called for then the Cinthol cannot fill in the tender by writing Lux because the tender is called for Lux. Both are soaps however both differ.
Q.41. Whether ALGINOL is proper description of goods ?
A.41. ALGINOL is the product which Hindustan Organics Chemicals Limited or any other company who has used it has approved and they are buying it. If they were not in need of ALGINOL they would not have put the word ALGINOL in the tender.
The fact that HOCL issued a tender inviting bids as aforesaid does not necessarily lead to the conclusion that it considered the mark ALGINOL to be a generic term. It is also consistent with HOCL desiring to purchase the Plaintiffs'' product distinguished by the Plaintiffs'' registered word mark ALGINOL. It is not necessary that the Plaintiffs'' product ALGINOL can or may be sold/supplied only by the Plaintiff. Take for example, the case when a manufacturer sells its goods itself as well as through distributors. The manufacturer may even sell its goods on a principal to principal basis to any other person, establishment or business who in turn cold sell the same to others. Such entities could also have submitted their bids in response to HOCL''s tender. There is nothing that prevents such persons or distributors from submitting their quotation. Nor is there anything to indicate that HOCL itself did not think so. The Defendants have not produced any evidence to indicate anything to the contrary namely that the Plaintiffs sold their goods only directly and/or that purchasers from the Plaintiffs were not entitled to resell the same to others.
In the circumstances, the use of the mark ALGINOL by any person other that the Plaintiffs would constitute an infringement of the Plaintiffs'' registered trade mark.
Defendant Nos. 2 and 3 admitted having responded to HOCL''s tender. There is nothing on record that suggests that in response to HOCL''s tender, the Defendants were not going to supply the goods bearing the mark ALGINOL. In other words, the Defendants have not established that they were going to supply the goods under their own mark ALGINEX or any other mark. They have not led any evidence. Their response to HOCL''s tender and their refusal to examine themselves, justifies an inference that they intended infringing the Plaintiffs'' trade mark and passing off their goods as those of the Plaintiffs. Their failure to examine themselves would also justify an adverse inference against them in this regard.
In addition thereto, there is the evidence of PW-2. PW-2 - Pradeep Himmatlal Joshi, deposed to the effect that he traded in the said products and that he purchased the same generally from the Plaintiffs who sold the same under the said mark ALGINOL. He stated that in 1984, as there was a shortage of the said products, he placed orders for the same with Defendant Nos. 2 and 3 who he knew in the course of his business to be dealers in such products. Defendant No. 2 supplied the product to PW-2 under the name of ALGINOL for which he paid Rs. 1212.75. ALGINOL was the registered trade mark of the Plaintiffs. He therefore contacted PW-1, a partner of the Plaintiffs who confirmed that the Defendants were passing off their goods as that of the Plaintiffs. He stated that the Defendants'' product was also poor and that thereafter he did not purchase the same. He tendered the invoices and the delivery challans which by a separate order, I have held were not admissible in evidence as the originals had not been produced and therefore marked the same for identification.
Although I have not admitted in evidence the documents produced by him, I find no reason to disregard his oral evidence. His cross- examination indicates that he gave the evidence freely and naturally. He did not even attempt to conceal anything including the fact that he was giving evidence at the request of the Plaintiffs ; that he knew the Plaintiffs ; that he has business dealings with the Plaintiffs and that he had filed the affidavit also at the request of the Plaintiffs. What is of vital importance to note is that the Defendants have not only not been able to contradict the evidence that they sold the said products to the witness bearing the mark ALGINOL, but they did not even put a case to the contrary to the said witness. This therefore establishes that the Defendants did sell the said products under the Plaintiffs'' mark ALGINOL.
In the circumstances, issue Nos. 8 and 9 are answered in the affirmative.
RE. ISSUE No. 11:
What I have stated above establishes that the Defendants did pass off and attempt to pass off their goods as those of the Plaintiffs and that the Defendants infringed the Plaintiffs'' trade mark. To a decree for an account of profits, the Plaintiffs are undoubtedly entitled to. The question however, is whether the Plaintiffs are entitled to damages as that is what was pressed on behalf of the Plaintiffs in the first instance.
It was submitted on behalf of the Defendants that the Plaintiffs had not established the damages and were therefore entitled only to nominal damages. In paragraph 33 of the plaint, it is averred that the Plaintiffs have suffered and have been suffering from day to day the damages on account of the loss of business reputation and in respect of the sale of the said products under the registered trade mark ALGINOL caused by the willful and fraudulent passing off and fake goods by the Defendants. In paragraph 34, the Plaintiffs assessed the damages at Rs. 10,00,000/-on the basis of the aforesaid loss of reputation and set back to their business in respect of the said product calculated over a period of ten years. In paragraph 35, the Plaintiffs averred that the Defendants are bound and liable to furnish the accounts for all the profits made by them by unlawful sale and fraudulently passing off their fake goods under the Plaintiffs mark. The Plaintiffs claimed that the Defendants are liable jointly and severally to pay such amount to them as may be due and payable after taking such accounts.
One of the items of damages averred by the Plaintiffs is loss of business suffered by them on account of the Defendants'' wrongful acts. For instance, had the Defendants succeed in their attempt at selling their goods under the Plaintiffs'' mark to HOCL, the Plaintiffs would have lost the order. The Plaintiffs would have been entitled to damages on this count. The Defendants also sought to sell their goods to PW-2 under the Plaintiffs'' trade mark. That the Defendants failed in their attempts to do so is another matter. What is relevant and important is that the Defendants refused to examine themselves or any one on their behalf. I would therefore readily draw an adverse inference against the Defendants for their having failed to do so. Had the Defendants examined themselves, the Plaintiffs may well have been able to establish that the Defendants had sold their goods under the Plaintiffs'' mark which would also represent the loss of business to the Plaintiffs - to use the expression in the plaint "...set back to their business in respect of the said product....".
It is submitted on behalf of the Defendants that the Plaintiffs ought to have summoned the Defendants and through them their books of account to prove the same. Not having done so, an adverse inference is not justified.
The submission is not well founded. It was no part of the Plaintiffs'' duty to have examined the Defendants as their witnesses. The Defendants were in possession of the best evidence in this regard. Indeed in this regard, they were in possession of the only evidence. Their having failed to produce the same, would justify an adverse inference against them to the effect that had they produced their accounts the Plaintiffs would have established the extent of sales of the offending material. In the case of Hiralal and Others Vs. Badkulal and Others, the Supreme Court held as under:
The fact that the entry was signed by both the defendants who represented their family was not denied. Hiralal, defendant, in the witness box admitted that the defendants deal in gold, silver and kirana and maintain regular books of account. It was also admitted that two or three muneems are in their employ for maintaining regular books of the business dealings. Hiralal was questioned "How much money was due from the defendants'' firm to the plaintiffs'' firm?" The answer was evasive viz. "He could not say how much was due". When questioned about his accounts, he replied that he had not filed them as he was ill. He further deposed that he had looked into his accounts and Rs 10,000 to Rs 15,000 as principal and interest were due but he could not say what was the correct amount. When asked whether on the date of signing the acknowledgment he looked into the books to see what amount was due from him, his answer was in the negative. He further said that even after receiving notice he did not look into his own accounts to check as to what the correct balance was. A leading question was put to him whether on Bhadon Sudi 11 Samvat 2006 there was an entry of Rs 34,000 in the defendants'' khata as being the balance due from them to the plaintiffs. The answer was again evasive. He said "I could not say whether there was any such entry in his books." In these circumstances there was no justification for throwing out the plaintiffs'' suit on the ground that the accounts were not explained to the defendants by the plaintiffs. The defendants had written the accounts in their own books from which the true balance could be ascertained. An inference from the statement of Hiralal can easily be raised that the balance entry of Rs 34,000 also existed in his own books. Mr. Bindra tried to get out of this situation by urging that it was no part of the defendants'' duty to produce the books unless they were called upon to do so and the onus rested on the plaintiffs to prove their case. This argument has to be negatived in view of the observations of Their Lordships of the Privy Council in Murugesam Pillai v. Manickavasaka Pandara 44 IA 99 which appositely apply here. This is what Their Lordships observed:
A practice has grown up in Indian procedure of those inpossession of important documents or information lying by, trusting to the abstract doctrine of the onus of proof, and failing, accordingly, to furnish to the courts the best material for its decision. With regard to third parties this may be right enough - they have no responsibility for the conduct of the suit; but with regard to the parties to the suit it is in Their Lordships'' opinion, an inversion of sound practice for those desiring to rely upon a certain state of facts to withhold from the court the written evidence in their possession which would throw light upon the proposition.
The conclusion that I have reached regarding the infringement and passing of against the Defendants and the Defendants'' refusal to examine themselves persuaded me to accept the Plaintiffs'' estimate of damages in the sum of Rs. 10,00,000/-. It is also important to note that there is no effective cross-examination on the quantum of damages claimed by the Plaintiffs.
However, the Plaintiffs have claimed a sum of Rs. 10,00,000/-from all three Defendants. I am inclined to apportion the same equally. In the circumstances, I would decree the suit for damages in the sum of Rs. 3,00,000/-each against Defendant Nos. 2 and 3.
In the circumstances, the suit is decreed in terms of prayers (a), (b), (c) and (d). In respect of prayer (e), Defendant Nos. 2and 3 are ordered and decreed to pay to the Plaintiffs a sum of Rs. 3,00,000/-each by way of damages in respect of the infringement of the Plaintiffs'' registered trade mark ALGINOL. The amounts shall be paid on or before 31.10.2009, failing which Defendant Nos. 2 and 3 shall be liable to pay interest at 12% p.a. from the date hereof till payment and/or realization. In view thereof, it is not necessary to consider prayer (f) for accounts. Defendants No. 2 and 3 shall also pay the costs of the suit to be quantified as per rules.