R.N. Bhagat & Ors. v. Bhagat Marketing Corp. & Anr.

In this case related to IPR law, you will learn that as the plaintiff's trade name had acquired distinctiveness in the market, the High Court stopped the defendant from en-cashing on the former's goodwill and market name.
CITATION(2007) 1 GLR 686
COURTGujarat High Court
JUDGES/CORAMJustice P.B. Majmudar
DATE OF JUDGEMENT05.02.2007

Introduction

Intellectual Property Rights have gained a lot of importance in the past three decades or so. People have become aware of their allied rights and the remedies in law for their infringement. One of the more infringements is by the way of passing off. Passing off is done by a person who exploits a similarity between his products and that of a well-established product to en-cash on the latter’s reputation and goodwill. The present case is also concerned with the offence of passing off by two businesses with a common originator.

Facts

The facts of the case are as follows: Grandfather of the plaintiffs, Mr Somabhai Patel, had started the business of manufacturing and selling ‘Dhana ni Dal’ in Gujarat, in 1940. Mr Somabhai had four sons: Natawarlal Bhagat, Premanand Bhagat, Navinbhai Bhagat and Dahyabhai Bhagat. Out of them, Navinbhai Bhagat retired from the family business, in the year 1963. Plaintiffs were a partnership firm established in 1990 and the partners thereof, i.e, Natwarlal, Premanand and Dahyabhai. The partnership firm was still engaged in the business of manufacturing, marketing and selling ‘Dhana ni Dal’ along with other mouth refreshing products. The plaintiffs sold their products under the registered trademark and trade name ‘BHAGAT’. The registration was done in 1990 itself.

On the other hand, defendants, i.e., Navinbhai and his son, were a proprietorship concern. The present case arose when the defendants, in 2006, started manufacturing sachet products of ‘Dhana ni Dal’ adopting a similar trademark and label as that of the plaintiffs. The matter was brought before the Trial Court by the plaintiffs. On an appeal by the defendants-appellants, the High Court of Gujarat, at Ahmedabad, finally held that the Trial Court had given the correct judgement, without there being any error of law and passed a judgement in favour of the plaintiffs-respondents.

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Issues

The main issue in the case was: Whether or not the order passed by the Trial Court suffered from any infirmity and if there was an error of law in passing the impugned order.

Contentions from both sides

It was the case of the plaintiffs-respondents that:

  1. ‘BHAGAT’ had acquired distinctiveness in relation to their products;
  2. Over the years, they had attained tremendous goodwill and reputation in relation to the products manufactured by them;
  3. Products of plaintiffs were considered to be of the highest quality which led to progressive growth in their business;
  4. Sachets of ‘Dhana ni Dal’ manufactured by the defendants were identical in get up, colour scheme, design as well as outer packing, in comparison to the sachets of plaintiffs. The plaintiffs had registered their outer packing as a trademark, as well;
  5. Defendants deliberately adopted and mala fidely used the registered trademark of the plaintiffs and therefore, infringed the plaintiffs’ trademark;
  6. Adoption of name ‘BHAGAT’ by the defendants, which forms an essential feature of the plaintiffs trademarks and trading style tantamount to an act of infringement and passing off by the defendants under the provisions of the Trade Marks Act, 1999; and,
  7. Navinbhai Bhagat had since long retired from family business and, therefore, he and his sons had relinquished their rights in family business.

As per the defendants-appellants:

  1. Navinchandra Bhagat started the business of grinding and marketing ‘Dhana ni Dal’ under the brand name ‘SUPREME BHAGAT’ in 1976;
  2. Brand ‘Supreme Bhagat’ was continuously used since 1976 by the defendants and that the word ‘BHAGAT’ was continuously, honestly and bona fidely used since 1976 in open market within the knowledge of the plaintiffs;
  3. Defendants had built up tremendous reputation in trade before public, consumers and that the defendants had spent lacs of rupees in factory and advertisement, publicity of the suit trademark/ label. The sales of the said products had increased year by year and that the suit product has acquired its popularity due to the defendants;
  4. The plaintiffs were guilty of acquiescence and they were not entitled to injunction on the ground of delays and laches;
  5. They were using the suit label, trade mark since 1993 within the knowledge of the plaintiffs and suit was filed after a long period and the plaintiffs had obtained ex-parte injunction at the time of Diwali festival, which affected the business of defendants and their reputation; and,
  6. Defendants were registered proprietors of the suit label trade mark pouch under the Trade Marks Act, 1999 and, therefore, no infringement action would lie against registered proprietors.
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Summary of court decision and judgment

The plaintiffs filed a suit in the Trial Court, applying for an interim injunction with the following prayers: defendants be restrained from adopting trademarks of plaintiff or using it in relation to any of its business/services/goods/product; defendants be restrained from using name ‘BHAGAT’, ‘R.N.BHAGAT’ or ‘N.S.BHAGAT’ or any other deceptively similar name containing word ‘BHAGAT’; during the pendency of the suit the defendants may be restrained by way of temporary injunction from adopting or using, in relation to any of its business, service, goods, products including all types of ‘Dhana ni Dal’ and allied products and/or deceptively similar marks, names, words, which would pass off or enable others to pass off the defendants’ goods or products and/or business and/or services as that of goods, products, business or services of plaintiff firm; and, that the defendants may be directed to hand over the infringed material to the plaintiffs.

The learned Trial Judge granted the ad-interim injunction. However, defendants preferred an appeal against the same, before the Gujarat High Court. The learned single judge of the Court upheld the Trial Court’s verdict and allowed the defendants to very well continue the business in any other manner, except using the word ‘BHAGAT’.

Analysis

As is clear from the bare facts ‘BHAGAT’ acquired distinctiveness due to the continued use of it by the plaintiffs. The plaintiffs commenced their business in 1990 whereas the defendants came into business only in 1993-94. Hence, it is clear that the plaintiffs were the prior users, even though both the parties to suit registered their trademarks.

As to the contention of defendants regarding, acquiescence of the plaintiff, a letter dated 25.04.1982, prima facie, suggested that the plaintiffs had objected by writing that letter to the defendants that the defendant should not use the word ‘Bhagat’ as it is likely to create confusion. Therefore, this was not a case in which the plaintiffs had agreed or permitted the defendants to continue their business by using the word ‘Bhagat’ in connection with their product.

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Thus, clearly the defendants passed off the goods of the plaintiff, with a view to en-cash on their reputation and goodwill. In the case proceedings as well, the plaintiffs established that they were prior users of the trademark; the defendants were committing a recurring wrong of passing off the plaintiffs business; and, there was a likelihood of deception in the minds of customers on seeing ‘BHAGAT’ on two similarly packaged and marked goods.

The Trial Court considered all aspects and same was held by the High Court. The High Court said that no error of law or facts was committed. The High Court also laid that “delay itself may not be a sole ground for refusing injunction, if it is found that the plaintiffs have achieved distinctive goodwill and they are prior in market”.

Conclusion

The High Court’s judgment to not interfere with the Trial Court’s decision was correct and appropriate in view of the facts and circumstances of the case.