ITC has acquiesced in the registration of the mark 141437 and the
use of the mark “NATIONAL GOLD FLAKE”.
16. First, Section 33 of Trade mark Act:
Section 33 — Effect of acquiescence
(1) Where the proprietor of an earlier
trade mark has acquiesced for a continuous
period of five years in the use of a
registered trade mark, being aware of that
use, he shall no longer be entitled on the
basis of that earlier trade mark—
(a) to apply for a declaration that
the registration of the later trade
mark is invalid, or
(b) to oppose the use of the later
trade mark in relation to the goods or
services in relation to which it has
been so used,
unless the registration of the later trade
mark was not applied in good faith.
(2) Where sub-section (1) applies, the
proprietor of the later trade mark is not
entitled to oppose the use of the earlier
trade mark, or as the case may be, the
exploitation of the earlier right,
notwithstanding that the earlier trade mark
may no longer be invoked against his later
trade mark.
2) To invoke this defence, several matters must be pleaded and
proved. Of these, four appear to me to be critical: (1) the necessity
of adoption by the defendant; (2) a plaintiff’s knowledge of the
defendant’s use of the trade mark in a manner hostile to the
plaintiff’s rights; (3) conduct by the plaintiff that encourages the
defendant’s use of the rival mark; and (4) proof of the defendant
having acted on the plaintiff’s go-ahead. Willmott v Barber, (1880) 15 Ch.D. 96 The principle has been
restated by the Delhi High Court in Hindustan Pencils Pvt Ltd v
India Stationery Products Co & Anr.,1989 (9) PTC 61 (Del)
one that has been consistently
followed and applied.Schering Corporation & Ors. v Kilitch Co. (Pharma) Pvt. Ltd. PTC (suppl) The Supreme Court’s decision on this, in
(2) 22 (Bom) (DB); Jagdish Gopal Kamath and Ors. v Lime & Chilli
Hospitality Services, 2015 (62) PTC 23 (Bom); Emcure Pharmaceuticals
Ltd. v Corona Remedies Pvt. Ltd., 2014 (60) PTC 332 (Bom); D.R.
Cosmetics Pvt. Ltd. & Anr. v J. R. Industries, 2008 (2) Bom.C.R. 28, per
3)Dr. D.Y. Chandrachud J, as he then was.
Power Control Appliances v Sumeet Machines Pvt Ltd.
reads, with
emphasis added:
26. Acquiescence is sitting by, when
another is invading the rights and spending
money on it. It is a course of conduct
inconsistent with the claim for exclusive
rights in a trade mark, trade name etc. It
implies positive acts; not merely silence
or inaction such as is involved in laches.
In Harcourt v. White 28 Beav 303 Sr. John
Romilly said: “It is important to
distinguish mere negligence and
acquiescence.” Therefore, acquiescence is
one facet of delay. If the plaintiff stood
by knowingly and let the defendants build
up an important trade until it had become
necessary to crush it, then the plaintiffs
would be stopped by their acquiescence. If
the acquiescence in the infringement
amounts to consent, it will be a complete
defence as was laid down in Mouson & Co.
v. Boehm (1884) 26 Ch D 406. The
acquiescence must be such as to lead to the
inference of a licence sufficient to create
a new right in the defendant as was laid
down in Rodgers v. Nowill (1847) 2 De GM &
G 614 : 22 LJ kCh 404.
4) In Power Controls, the Supreme Court cited the decision in
Electrolux LD. v. Electrix,
24 in turn approving the decision of Fry J in
Willmott v Barber as to the very many ingredients required to
constitute acquiesence, in addition to those that I have set out
earlier. The defendant must be shown to have made a mistake as to
his legal rights. He must have acted in some discernible and
identifiable manner on the basis of that mistaken belief. The plaintiff
must be shown to be aware of his legal rights inconsistent with the
right claimed by the defendant. The plaintiff must be aware of the
defendant’s mistaken belief. The plaintiff must have encouraged the
defendant in spending money or acting as he did, and this
encouragement may be either direct or by a demonstrated abstention
by the plaintiff in asserting his rights. Two of these requirements are
critical: first, the plaintiff’s knowledge of his own rights being
inconsistent with or contrary to the rights of the defendant; for the
foundation of the doctrine of acquiesence is the plaintiff’s conduct
with knowledge of his legal rights; and second, that the plaintiff is
aware of the defendant’s mistaken belief. If the plaintiff is simply
unaware of those competing rights, he has no call to assert his own.
The principle seems to me to be this: a man cannot sit
indolent and idle, aware of the invasion of his rights by another, and
then complain of that invasion. Acquiescence is a species of
estoppel, a rule in equity and a rule of evidence. Being that, it must
be pleaded and proved. Essential to the acquiescence doctrine is
encouragement or inducement: the plaintiff, possessing a juridical
right, must be shown to have encouraged the defendant and induced
him to act to his detriment; and the defendant must know of the
plaintiff’s rights and the fact that he has not and is not in pursuit of
As the Electrolux decision carefully notes, the relative positions of the
plaintiff and the defendant in Willmott v Barber were the reverse of the
usual type of case where such a defence is taken.
their enforcement. Though acquiescence is a conduct incompatible
with a claim of exclusivity, it requires positive acts, not mere silence
or inaction as we know of it in laches. Negligence and oversight are
not acquiescence. That demands proof of an abandonment of the
right to exclusivity, and this must necessarily be both pleaded and
proved. It is not something to be drawn by convoluted or circuitious
inference, supposition or extrapolation.
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
NOTICE OF MOTION NO. 662 OF 2014
IN
SUIT NO. 431 OF 2014
ITC LIMITED Vs NTC INDUSTRIES LTD.
CORAM : G.S.Patel, J.
JUDGMENT PRONOUNCED ON : 29th September 2015
Citation;AIR 2016(NOC)165BOM
1. First, mea culpa: I heard Counsel on both sides at some length
almost a year ago. I reserved judgment. Other matters intervened
since, and I somehow lost sight of this case. That is no excuse, nor
do I seek to make it one. I can only request parties and their
advocates to forgive me this lapse.
A. BACKGROUND
2. The suit is an action in trade mark and copyright infringement
combined with a cause of action in passing off. The Plaintiff
(“ITC”) took an ex parte ad-interim order on 7th May 2014. That
order included reliefs in passing off. ITC filed an application for
leave under Clause XIV of the Letters Patent only thereafter. This
was opposed. For reasons not immediately germane, the ad-interim
order was, by consent, vacated on 17th July 2014. The present
application is therefore limited to the cause of action in infringement
of both trade mark and copyright.
3. ITC claims copyright in an artistic work being a label “GOLD
FLAKE KINGS RED”, a reproduction of which is provided.1
It
says that this copyright has been infringed by the Defendant
1
Plaint, Ex. G, p. 192
NMS-662-14-ITC V NTC-F2.DOC
(“NTC”) in its use of a rival mark “GOLD FLAKE”.2
In addition,
ITC says it is the registered owner of the trade marks “GOLD
FLAKE”, “HONEY DEW” and “HONEY DEW SMOOTH”.
Copies of the registrations of each are annexed.3
These, ITC claims,
have been infringed by NTC inter alia by using rival marks “GOLD
FLAKE” and “HONEY DROP”. All of this is of course in the
context of cigarettes and tobacco products.
4. I heard Mr. Kadam for ITC and Mr. Dwarkadas for NTC
extensively and, with their assistance, considered the material on
record. Both sides presented detailed notes of arguments, which I
took on record. Mr. Dwarkadas’s submissions, which I will consider
in detail later in this judgment, were that ITC is guilty of material
suppression, especially in relation to prior user by other
manufacturers and traders; that ITC’s conduct lacks all bona fides;
that there is delay amounting to laches and acquiesence on ITC’s
part; and that in any case the so-called mark “HONEY DROP” is
purely descriptive and no question of infringement arises. Mr.
Dwarkadas was at some pains to point to the prior history of
registrations by others of the “GOLD FLAKE” mark. He also said
that the rival label was not a sufficiently substantial reproduction of
ITC’s label to warrant an injunction in copyright infringement. It is
true that there is something of a history to at least one of these
marks (“GOLD FLAKE”), one that goes back several decades, but
2
Plaint, Ex. K, p. 222
3
Plaint, Exs.C-1 to C-93, pp. 54-179 for GOLD FLAKE; Plaint, Exs. D
and E, pp. 180 for HONEY DEW and HONEY DEW SMOOTH.
Legal proceedings certificates have been separately submitted. I have
omitted reference to the registration numbers except where absolutely
necessary.
I am unable to agree with Mr. Dwarkadas that the defence is enough
to defeat ITC’s claim. There is, I find, material on record that points
to a persistent course of conduct by NTC in too closely adopting
marks of others, not just ITC, and that shows that NTC has done
this not once, which might have been merely happenstance, but far
too often to be either that or coincidence. For the reasons that
follow, I have granted the injunctions sought.
B. ITC’S REGISTRATIONS AND USE OF THE TRADE
MARKS
5. ITC itself has been in the tobacco business for over a century.
It claims that its predecessors-in-title conceived and adopted a
distinctive mark, “GOLD FLAKE”, in relation to cigarettes some
time in 1910. This is now registered as a word mark. It has also been
using the mark “HONEY DEW” since about that time. ITC says
its earliest registration of the “GOLD FLAKE” mark dates back to
11th November 1942.4
It is not only the mark but also other essential
features to which ITC lays claim: the device of a star in red; the
gold, black and red colour scheme and so on.5
The Plaintiff is also
the registered proprietor of the trade marks “HONEY DEW” and
“HONEY DEW SMOOTH”. Both are word marks. The former is
registered since 10th October 1991;6
the latter since 2nd July 2010.7
4
Plaint, Ex.C-4, p. 57; Compilation, pp. 11-14
5 Compilation, Exs. C-37, p. 114; C-44, p. 135; C-49, p. 144; C-54, p. 157;
C-58, p. 172; C-80, p. 234.
6
Plaint, Ex.D, p. 180.
7
Plaint, Ex. E, p. 181.
6. In 1999, ITC began using a dewdrop pictorial as a design
element in its promotional and marketing material and in 2010 it
started using the trade mark label and trade dress in which this
dewdrop was positioned alongside the mark “HONEY DEW
SMOOTH”.
7. ITC’s marks and label have several distinctive elements: an
oval or roundel, a star device, the device of a dew drop, the words
“HONEY DEW” (or “HONEY DEW SMOOTH”) among them.
There is no limitation in the registrations as to colour and Mr.
Kadam says, and I think quite correctly, that this get-up must then
extend to all colours. These key elements of the star, the roundel
and the words “HONEY DEW” have featured in various design
evolutions over time.8
ITC’s sales figures are, by any measure,
enormous: over Rs.16,000 crores in 2013-14 and not much less in
the preceding years — very likely the GDP of a small country.9
8. ITC says it learnt of NTC’s use of the rival marks in April
2014, shortly before it brought this suit. In paragraph 17 of the
Plaint, there is a tabulated comparison of the rival marks and labels.
Leaving aside the differences in the products themselves, there are
at least these commonalities:
(a) NTC too uses an all-gold colour pack with lettering and
designs in gold, black and red;
8
For example, the 1999-2003 changes at pages 182 to 191 of the plaint.
9
Plaint, p. 220.
(b) The words “GOLD FLAKE” are in bold capital
letters in the center of the packet in both;
(c) NTC uses “HONEY DROP” where ITC uses
“HONEY DEW” or “HONEY DEW SMOOTH”;
(d) NTC sites the dew (or honey) drop device close to the
word, and all of this features on the lower half of the
pack, as does ITC;
(e) NTC uses a star device, one that has always featured
on ITC’s Gold Flake product packaging and labels;
(f ) There is a line of text on the face of both packets;
(g) On the vertical sides, the words “GOLD FLAKE”
appear with other text on both packets;
(h) The words “GOLD FLAKE” appear prominently on
the tops of both packets.
9. None of this, Mr. Kadam says, can possibly be accident. To
the extent that the defence is based on Section 34 of the Trade
Marks Act, 1999, NTC must show that its use of the rival marks is
prior to ITC’s use or registration, whichever is earlier. ITC claims
user from 1905 and registration from 1941. Unless, therefore, NTC
can show that its use precedes ITC’s use or registration, the Section
34 defence is unavailable to it. As to the defence of ITC’s
acquiesence, this is an argument based on Section 33 of the Act, and
that requires, apart from the statutorily-mandated five-year period,
that NTC’s mark is duly registered. That, Mr. Kadam says, is not
shown. The final argument is founded on Section 35, and it relates
to the use of “HONEY DROP”. If this is supposedly descriptive,
then it must be demonstrated to be a bona fide description of the
quality, or character of the goods. Even this is not shown.
10. I will turn first to NTC’s factual claim as to prior user. The
reason I address this first is, of course, because of the nature of the
defences taken. The question of infringement of both trade mark
and copyright will arise only if those defences fail.
C. NTC’S HISTORY OF THE “GOLD FLAKE” TRADE MARK
11. A very large part of Mr. Dwarkadas’s address focussed on the
prior history of the trade marks and previous registrations. It is best,
therefore, to start the discussion here. Apart from anything else, this
tracing of the origins of at least one of the marks, “GOLD
FLAKE”, is central to Mr. Dwarkadas’s submission on acquiesence
and suppression. In the following narrative I have included, for
consistency, the responses from Mr. Kadam.
(a) NTC says that the mark “GOLD FLAKE” under
registration number 141437 was registered in Class 34
as far back as in 1951 to one Montana Sports (India)
Private Limited. This is said to have been an associate
of NTC, both sharing a common proprietor, one B. N.
Elias. Montana Sports was the original applicant. Even
this is not entirely accepted by ITC, which says that the
mark registered was a label or device mark with the
words “SUPERIOR GOLD FLAKE”.
(b) NTC claims that it adopted the mark “NATIONAL
GOLD FLAKE” in 1965. This is not registered. NTC
claims that this mark encompasses the previous
registered mark “GOLD FLAKE”.
(c) In 1975, the Duncan Group acquired a controlling
interest in National Tobacco Company of India Ltd.
Two years later, on 28th January 1977, a scheme of
merger between National Tobacco Company of India
Ltd. and Duncans Agro Industries Ltd. was sanctioned
by the High Court.
(d) The mark was then transferred in 1982 to Duncans
Agro Industries Ltd.10 In 1984, Duncans Agro hived off
its tobacco unit by incorporating New Tobacco
Company. Mr. Kadam points out that there is no
material to show that the mark was transferred to New
Tobacco Company, NTC’s more immediate
predecessor-in-title. There is no such entry in the
register. The list of trade marks registered to New
Tobacco Company does not include this mark.11
10 Motion paperbook, p. 128
11 Motion paperbook, p. 151.
(e) In 1989, NTC’s predecessor applied for registration of
the trade mark “NATIONAL GOLD FLAKE”.
Admittedly this was abandoned. The reasons are
immaterial.
(f ) On 25th November 1991, New Tobacco Company Ltd
was ordered to be wound up by the Calcutta High
Court. NTC says that on 23rd February 1994, all the
assets, including all licenses, were leased to RD
Builders Pvt Ltd, later RDB Industries Ltd. A list of
brand names is appended.12 The mark registered under
no. 141437 is not on that list; yet NTC insists that the
lease of ‘all’ trade marks must be held to include this
mark as well. In 1994, RDB Industries Ltd applied for
registration of the mark “NATIONAL GOLD
FLAKE”. This too was abandoned. On 31st March
2011, RDB Industries Ltd changed its name to that of
the Defendant in this action, NTC Industries Ltd.
(g) It is not disputed even by NTC that the mark was
removed from the register for non-renewal. This was
notified in the Trade Mark Journal 1498, published in
2011.13 NTC claims to have been “unaware” of this
removal or non-renewal. It cites a variety of reasons for
this and claims that it is in the process of taking steps to
revive or restore the mark.
12 Motion paperbook, pp. 134, 153, 155 and 158.
13 Motion paperbook, p. 128.
(h) In March 2014, NTC sought registration of the mark
vide Application Nos. 2695312, 2695313 and 2695314.
In these, NTC claimed user since 1965 and January
2014.
12. This charting of NTC’s claims is of particular interest for
several reasons. To begin with, as Mr. Kadam points out, NTC
twice sought registration of a rival mark, in 1989 and again in 1994.
The latter registration is especially curious, for it showed a
‘proposed user’. Further, NTC’s 2014 applications claim a tracing
back to its 1965 adoption and no earlier; i.e., NTC does not even in
these applications make a connection with the mark No. 141437 said
to have been registered in 1951. Also, while saying that Duncans
hived off its tobacco unit, there is nothing to show that the previous
mark under No.141437 ever came to be transferred to the New
Tobacco Company. The list of 91 trade marks said to belong to the
New Tobacco Company does not include this mark, and there
seems to be no reason to assume its inclusion given the length of this
listing. It is also not clear at all, at least at this prima facie stage, that
ITC has admitted the flow or devolution of title in the rival mark
claimed by NTC. That burden lies on NTC, the Defendant.14 In any
case, as we have seen, the statement in paragraph 35 of the Plaint
that when ITC took search in the registry, as it was bound to do, it
found that the “Defendant (or their predecessors) had made
attempts in 1989 and 1994 to register the trade mark NATIONAL
GOLD FLAKE by filing two applications for registration” can
hardly constitute a sufficient ‘admission’ for these purposes. After
all, those two applications were abandoned. This also does not mean
14 T. G. Balaji Chettiar v Hindustan Lever Ltd., AIR 1967 Mad 148
that ITC has accepted the validity of the old registration number
141437. That application, interestingly, was for COLD FLAKE.
D. NTC’S CAVEATS
13. There is then something of a side-show in relation to caveats
said to have been filed by NTC in Calcutta and Alipore on 6th
February 2014. NTC claims it test-marketed its rival product in
January 2014, and that ITC knew of this, and its representatives
threatened NTC’s; and that this prompted NTC to file those
caveats. All this is narrated in debilitating detail to contend only that
there was no ‘urgency’ when ITC first moved this Court in May
2014 and obtained an ex parte ad-interim order. ITC’s conduct in
not disclosing these caveats has Mr. Dwarkadas fuming (so to
speak), but Mr. Kadam quickly stubs this out (so to speak): he points
out that there was nothing in those caveats to indicate that they
related to these marks. ITC in fact assumed that the caveats related
to another infringement, relating to its mark “CAPSTAN”, also said
to have been infringed by NTC by introducing a rival mark
“REGENT” in a near-identical get-up.15 NTC claims
“REGENT” to be a registered trade mark, and says no question of
infringement arises, and therefore the caveats could only have
related to the present marks. If this be so, then I should imagine that
the very filing of the caveats works to NTC’s detriment rather than
the non-disclosure operating against ITC. The two labels for
“CAPSTAN” and “REGENT” bear an undeniable deceptive
similarity. There is no explanation for this at all. With considerable
justification, Mr. Kadam points to NTC being something of a
15 Motion paperbook, pp. 280-281.
recidivist in these matters: Exhibit M to the Plaint16 shows very
many products introduced by NTC that are, on the face of it, blatant
rip-offs of competing products. Marlboro, Salem and other well
known brands are all copied willy-nilly. ITC’s assumption that the
caveats related to the “CAPSTAN” v “REGENT” dispute is not
wholly untenable. In any case, all this must be viewed in the context
of NTC’s emphatic assertion that it launched its product in January
2014. Of this there is not just no evidence: there is evidence to the
contrary. NTC has produced a certified statement of its alleged
sales and advertisement expenses for “NATIONAL GOLD
FLAKE”.17 This has figures for 2012-13 and 2014-2015, but none at
all for the period 2013-14, a period that would cover January 2014.
In any case, caveats have a limited shelf-life of 90 days. The suit was
brought only a few days short of the expiry of that term. In itself,
this lends credence to Mr. Kadam’s submission. I also do not see
how ITC could possibly have connected those caveats to this or that
dispute, given that the present one is not the only dispute between
the parties. A caveat needs some precision and details so that the
caveatee may know what it is that is sought to be caveated.18
14. Mr. Dwarkadas also submits that relief should be denied to
ITC because it has come with unclean hands. This is on the basis
that it did not disclose the caveats and sought a wide-ranging ex
parte ad-interim order including on the cause of action in passing off,
one that was without justification. The poison in that application, he
says, has entered the blood stream of this law suit, and is so toxic
16 Pp. 225-229
17 Motion paperbook, p. 215
18 See: H. G. Shanker Narayan v State of Rajasthan, AIR 1985 Raj 186
that if not the suit at least this Notice of Motion must fail.19 I
disagree. The issue of the caveats is something of distraction and
little more; and, as for the ad-interim order, that has been vacated by
consent, and I do not think it would be correct to reopen those
circumstances now.
E. ACQUIESENCE
15. This brings me to the acquiesence defence. NTC claims that
ITC has acquiesced in the registration of the mark 141437 and the
use of the mark “NATIONAL GOLD FLAKE”.
16. First, Section 33 of the Act:
Section 33 — Effect of acquiescence
(1) Where the proprietor of an earlier
trade mark has acquiesced for a continuous
period of five years in the use of a
registered trade mark, being aware of that
use, he shall no longer be entitled on the
basis of that earlier trade mark—
(a) to apply for a declaration that
the registration of the later trade
mark is invalid, or
(b) to oppose the use of the later
trade mark in relation to the goods or
19 Maganlal Kuberdas Kapadia v Themis Chemicals Ltd., Appeal No. 332 of
1991, decided on 22nd April 1991; S. P. Chengalvaraya Naidu v
Jagannath & Ors., (1994) 1 SCC 1; A. Shanmugam v Ariya Kshatriya
Rajakula Vamasathu Madalaya Nandhavana Paripalanai Sangam & Ors.,
(2012) 6 SCC 430
services in relation to which it has
been so used,
unless the registration of the later trade
mark was not applied in good faith.
(2) Where sub-section (1) applies, the
proprietor of the later trade mark is not
entitled to oppose the use of the earlier
trade mark, or as the case may be, the
exploitation of the earlier right,
notwithstanding that the earlier trade mark
may no longer be invoked against his later
trade mark.
17. To invoke this defence, several matters must be pleaded and
proved. Of these, four appear to me to be critical: (1) the necessity
of adoption by the defendant; (2) a plaintiff’s knowledge of the
defendant’s use of the trade mark in a manner hostile to the
plaintiff’s rights; (3) conduct by the plaintiff that encourages the
defendant’s use of the rival mark; and (4) proof of the defendant
having acted on the plaintiff’s go-ahead.20 The principle has been
restated by the Delhi High Court in Hindustan Pencils Pvt Ltd v
India Stationery Products Co & Anr.,
21 one that has been consistently
followed and applied.22 The Supreme Court’s decision on this, in
20 Willmott v Barber, (1880) 15 Ch.D. 96
21 1989 (9) PTC 61 (Del)
22 Schering Corporation & Ors. v Kilitch Co. (Pharma) Pvt. Ltd. PTC (suppl)
(2) 22 (Bom) (DB); Jagdish Gopal Kamath and Ors. v Lime & Chilli
Hospitality Services, 2015 (62) PTC 23 (Bom); Emcure Pharmaceuticals
Ltd. v Corona Remedies Pvt. Ltd., 2014 (60) PTC 332 (Bom); D.R.
Cosmetics Pvt. Ltd. & Anr. v J. R. Industries, 2008 (2) Bom.C.R. 28, per
Dr. D.Y. Chandrachud J, as he then was.
Power Control Appliances v Sumeet Machines Pvt Ltd.
23 reads, with
emphasis added:
26. Acquiescence is sitting by, when
another is invading the rights and spending
money on it. It is a course of conduct
inconsistent with the claim for exclusive
rights in a trade mark, trade name etc. It
implies positive acts; not merely silence
or inaction such as is involved in laches.
In Harcourt v. White 28 Beav 303 Sr. John
Romilly said: “It is important to
distinguish mere negligence and
acquiescence.” Therefore, acquiescence is
one facet of delay. If the plaintiff stood
by knowingly and let the defendants build
up an important trade until it had become
necessary to crush it, then the plaintiffs
would be stopped by their acquiescence. If
the acquiescence in the infringement
amounts to consent, it will be a complete
defence as was laid down in Mouson & Co.
v. Boehm (1884) 26 Ch D 406. The
acquiescence must be such as to lead to the
inference of a licence sufficient to create
a new right in the defendant as was laid
down in Rodgers v. Nowill (1847) 2 De GM &
G 614 : 22 LJ kCh 404.
18. In Power Controls, the Supreme Court cited the decision in
Electrolux LD. v. Electrix,
24 in turn approving the decision of Fry J in
Willmott v Barber as to the very many ingredients required to
23 (1994) 2 SCC 448
24 (1954) 71 RPC 23
constitute acquiesence, in addition to those that I have set out
earlier. The defendant must be shown to have made a mistake as to
his legal rights. He must have acted in some discernible and
identifiable manner on the basis of that mistaken belief. The plaintiff
must be shown to be aware of his legal rights inconsistent with the
right claimed by the defendant. The plaintiff must be aware of the
defendant’s mistaken belief. The plaintiff must have encouraged the
defendant in spending money or acting as he did, and this
encouragement may be either direct or by a demonstrated abstention
by the plaintiff in asserting his rights. Two of these requirements are
critical: first, the plaintiff’s knowledge of his own rights being
inconsistent with or contrary to the rights of the defendant; for the
foundation of the doctrine of acquiesence is the plaintiff’s conduct
with knowledge of his legal rights; and second, that the plaintiff is
aware of the defendant’s mistaken belief. If the plaintiff is simply
unaware of those competing rights, he has no call to assert his own.
19. The principle seems to me to be this: a man cannot sit
indolent and idle, aware of the invasion of his rights by another, and
then complain of that invasion. Acquiescence is a species of
estoppel, a rule in equity and a rule of evidence. Being that, it must
be pleaded and proved. Essential to the acquiescence doctrine is
encouragement or inducement: the plaintiff, possessing a juridical
right, must be shown to have encouraged the defendant and induced
him to act to his detriment; and the defendant must know of the
plaintiff’s rights and the fact that he has not and is not in pursuit of
25 As the Electrolux decision carefully notes, the relative positions of the
plaintiff and the defendant in Willmott v Barber were the reverse of the
usual type of case where such a defence is taken.
their enforcement. Though acquiescence is a conduct incompatible
with a claim of exclusivity, it requires positive acts, not mere silence
or inaction as we know of it in laches. Negligence and oversight are
not acquiescence. That demands proof of an abandonment of the
right to exclusivity, and this must necessarily be both pleaded and
proved. It is not something to be drawn by convoluted or circuitious
inference, supposition or extrapolation.
20. I find no trace of the necessary pleading in this regard. NTC
does not explain why it adopted the mark “NATIONAL GOLD
FLAKE”, one that encompasses ITC’s mark. There is no statement
of it being under any mistaken belief or being encouraged by ITC in
using the mark, even assuming such user is established. On the
question of user, there is no material to show that the original mark
under registration number 141437 “SUPERIOR GOLD FLAKE”
was ever used by NTC or its so-called predecessors. Mr. Dwarkadas
claims that the mark “NATIONAL GOLD FLAKE” has been
used, and points to some documents in this behalf. But that is not a
registered mark at all; and now that NTC’s mark no longer exists on
the register, the attempt at a recent use of an unregistered mark is
one against which ITC can certainly move.
21. As we have seen, there is no material to evidence use of
“SUPERIOR GOLD FLAKE”, the mark registered under number
141437. Mr. Dwarkadas says this mark was noticed in Golden Tobacco
Company Ltd v ITC Ltd.,
26 but that discussion indicates that there
was no evidence of actual use of that mark. To constitute
acquiesence, there must be use; that, I imagine, is fundamental.
26 (1992) 12 PTC 73
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22. As to the other mark, “NATIONAL GOLD FLAKE”, the
one that NTC claims is the one in consideration, Mr. Kadam says
the evidence of its use is paltry: a movie poster,27 Central Excise
documents and some invoices. But in this behalf, there is a very
great deal of ambiguity about the actual devolution of the title, if
any, in the mark to NTC. We do not know for certain whether on
the Duncans hiving-off in 1984 to New Tobacco Company, this
mark also migrated. NTC itself says that Duncans then stopped
using this mark. Two applications for registration were filed and
abandoned, in 1989 and 1994. These seem to be the only
applications it abandoned: with others, NTC was diligent in seeing
them through to registration. If indeed there was a transfer on the
hiving-off in 1984, why Duncans thought to ‘apply’ for a registration
five years later in 1989 is never explained. Then New Tobacco
Company was wound up in 1991. Its assets were later leased to RD
Builders Pvt Ltd (later RDB Industries Ltd; later, the present
Defendant). The list of marks transferred includes the mark applied
for in 1989 (and later abandoned). In 1994, New Tobacco Company,
through its lessee, again applied for registration of this mark. This
application too was abandoned. Later, in 1996, National Tobacco
Company’s assets were sold to RDB Industries Ltd under a courtordered
sale. The sale deeds produced show that one Nalanda
Tobacco claimed rights over certain marks and these were excluded
from the sale. This convoluted history hardly demonstrates use.
23. What of the actual use of the mark? It is settled law that for a
defence of acquiesence to succeed, the rival’s use must be open,
continuous and extensive: in a word, notorious, such that it could not
27 Motion paperbook, pp. 200-203
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possibly escape a plaintiff’s attention. ITC can hardly be expected to
sue everyone who lays claim to a rival mark without actually using it.
Trivial or insignificant, relatively benign, uses may be overlooked
without consequence: a top-end hotel chain is not expected to sue
every roadside dhaba.
28 Mere neglect to proceed does not always
constitute abandonment if it relates to insignificant or trival
infringements insufficient to affect the mark’s distinctiveness, even
if the proprietor is aware of these infringements.29 The Central
Excise documents do not seem to me to be indicative of actual use.
The price approvals and surveys refer to “NG Flake”, not
“NATIONAL GOLD FLAKE”. Correspondence from the Central
Excise to the Central Tobacco Research Institute30 does not show
sales. The form maintained under the Central Excise Act31 shows no
sales either: the opening and balance stocks are the same. The
invoices produced32 are stock transfers, not sales. The Chartered
Accountant’s certification for 2002-201533 (missing the crucial
period of 2014 as I have previously noted) is curious: the highest
sales shown are for 2003-2004 and these are for a little over Rs.1
crore. That is, Mr. Kadam says, less than the value of half a regular
truckload of cigarette packets; an amount that is, therefore, utterly
trivial. Again, the missing period of 2013-2014 is crucial, and is
crucially unexplained.
28 Dr Reddy’s Laboratories Ltd v Reddy Pharmaceuticals Ltd., [2005] 128
Comp Cas 42 (Del);
29 National Bell Co. & Anr. v Metal Goods Mfg Co (P) Ltd & Anr, (1970) 3
SCC 665
30 Motion paperbook, p. 192
31 Motion paperbook, p. 193
32 Motion paperbook, pp. 204-214
33 Motion paperbook, p. 215
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24. On file are print-outs from NTC’s website,34 its Annual
Reports for 2011-201235 and 2012-2013.36 None of these show the
rival mark “NATIONAL GOLD FLAKE”. The Annual Reports
indicate that in 2009-2010, the total sales of all NTC products was
Rs.332.64 lakhs. According to the Chartered Accountant’s
certificate, sales under the impugned mark for this year were Rs.54
lakhs, i.e., roughly a sixth of the total sales. Yet the impugned mark
is not shown on NTC’s website or in its Annual Reports.
25. This material discloses only two possibilities: either NTC’s
so-called use of “NATIONAL GOLD FLAKE” was insufficient or
even non-existent, or, alternatively, it was kept clandestine to fly
below ITC’s radar. There can be no third possibility, and the
essential requirement of an open and notorious user is not
established. ITC cannot possibly be deemed to have known of
NTC’s so-called use. There are nearly 20 cigarette manufacturers in
the country, and between them, they host a large number of brands.
It is unreasonable, I think, to expect ITC to keep a track of each one.
For this reason too, Mr. Dwarkadas’s submission that ITC must be
deemed to have had either notice or knowledge or both, and that its
consequent failure to act on that notice constitues acquiescence37 is
not one that commends itself.
26. I do not think it is possible to accept Mr. Dwarkadas’s
submission that there is a difference between acquiescence in
34 Motion paperbook, p. 284.
35 Motion paperbook, pp. 286-345.
36 Motion paperbook, pp. 346-412.
37 Claridges Infotech Pvt Ltd v Surendra Kapur & Ors., 2008 (5) AIR Bom R
366.
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passing off and acquiescence in infringement. He says that in the
latter, knowledge of use is irrelevant, and that mere knowledge of
existence of the rival mark is sufficient. Therefore, according to him,
it matters little that NTC did not use the mark; just the fact that it
remained on the register is enough. I am unable to accept this
submission. The tests for acquiescence in the two actions, of honest
and concurrent user, have to be the same. The essential
requirements are identical: honesty in adoption, mistaken belief,
knowledge of use, encouragement by the plaintiff and so on. In both
passing off and infringement the threshold test of deceptive
similarity is to be met.38 In a passing off action, it is necessary to
establish reputation and goodwill. This is unnecessary where a mark
is registered, for it is axiomatically distinctive, and an action in
infringement therefore lies. But for both causes of action, there is
simply no cause of action without deceptive similarity; and in both
causes of action the defence of acquiescence has the same legal
determinants.
F. INFRINGEMENT & DECEPTIVE SIMILARITY
27. As to the visual, structural and phonetic similarity, there can
be little doubt. The usual tests apply: the probable view of the
prospective purchaser, and his inability to readily tell one from the
other. The words “GOLD FLAKE” and “HONEY DEW” seem
to me to typify ITC’s products, and having regard to the various
elements in the label mark, and to the manner in which the “GOLD
FLAKE” mark is subsumed in NTC’s “NATIONAL GOLD
FLAKE”, I have no manner of doubt as to the deceptive similarity
38 Ruston & Hornsby Ltd v The Zamindara Engg. Co., (1969) 2 SCC 727
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between the two marks. Mr. Dwarkadas’s attempt to put some
distance between the two by relying on the word “NATIONAL” as
a point of meaningful distinction is, I think, not just casuistry but
too disingenuous to admit of acceptance. There is every likelihood
of confusion and deception, of the unsuspecting purchaser
mistaking one for the other. Neither of these is a premier brand of
product (hence perhaps the extraordinary sales figures by ITC), and
I am conscious that in this country at least the typical purchaser
demographic is unlikely to be well-heeled or of the jet-set. These
cigarettes, and others, including premier brands, are sold not in
swish boutiques but by vendors in makeshift road-side stalls with
nothing more than a couple of wooden crates or boxes and a portable
open rack, often selling paan, boiled sweets and other such items as
well. The typical purchaser is more than apt to ask for, simply, Gold
Flake, and I doubt that his vendor will trouble himself to enquire
whether he wants just Gold Flake or National Gold Flake or to invite
the purchaser to browse, sniff the tobacco aroma and extol the
virtues, such as they are, of the rival products. I am also aware that
these products are not always sold in entire packets: purchasers ask
for a ‘single’, or just a few, and the vendor, wiping paan-stained
fingers on a discoloured cloth of dubious hygiene, will flip open a
box and flick out two sticks, and then nod to a lighter, match box or
oil lamp placed there for convenience.
28. There are just too many coincidences here. NTC’s apparent
adoption of very many marks too closely resembling other brands is
the least of them, but it points to a pattern of conduct. There is the
adoption of the same colour scheme, the same words, the same
devices of the star and the dewdrop, and so on down the line.
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Without proof of honest, concurrent user, or use pre-dating the
earlier of ITC’s use or registration, or a valid and subsisting
registration, I do not see why NTC should be allowed to continue
with its marks. The standard tests are all satisfied.39 The essential
features of ITC’s marks are all lifted in essence into NTC’s marks.40
The adoption is dishonest, and I am inclined and, I think, entitled in
law, to disregard the matters of dissimilarity, ones that seem in any
case to me to be very inconsequential indeed.41 The test is of overall
similarity, of considering broadly the essential features, and seeing if
the rival mark so nearly resembles the other as might mislead a
person into mistaking the rival product for the registered mark.42
29. More to point: what is the explanation? Why did NTC feel
the need to take ITC’s mark, its essential features, its get-up and
placement and to adopt as its own one that so closely resembles it?
Was this just a lucky strike (so to speak)? There is no answer at all
and I think that lack of answer is, as so often happens, more
eloquent than anything articulated: it speaks, prima facie, to an initial
dishonesty in adoption.43
39 De Cordova & Ors. v Vick Chemical Coy, 1951 (58) RPC 103; Taw
Manufacturing Coy Ltd v Notek Engineering Coy Ld. & Anr., 1951 (58)
RPC 271.
40 Shaw Wallace & Co v Mohan Rocky Spring Water, 2006 (3) Bom.C.R.
252; Spillers Ltd. & Anr. v Quaker Oats Ltd., (1969) FSR 510.
41 Munday v Carey, 1905 (22) RPC 273.
42 Parle Products v JP & Co., (1972) 1 SCC 618
43 Midas Hygiene Industries P. Ltd. & Anr. v Sudhir Bhatia & Ors., (2004) 3
SCC 90; N. R. Dongre & Ors. v Whirlpool Corporation & Anr., (1996) 5
SCC 714
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30. I cannot accept the proposition that NTC must be placed
differently because it can claim some distant and decidedly tenuous
link to the 1951 unused registration number 141437. If the defence
pleaded is not within the frame of the Trade Marks Act, 1999 and
not within the ambit of the common law defence, I do not see from
where else it can spring. The 1951 mark is no longer on the Register.
I cannot countenance a defence based on the possibility of a
restoration application being made. The defence under Section
28(3) is also unavailable to NTC. That section merely contemplates
multiple registrations, and says that where such registrations exist in
the hands of different proprietors and they are found to be identical
or deceptively similar, one cannot restrain the other’s use of the
mark in an action in infringement. That does not mean that the
infringement action does not itself lie. But this proceeds on the basis
that NTC is in fact today the registered proprietor of the rival mark.
As we have seen, it is not. With the 1951 mark removed from the
Register, no matter for what reason, the Section 28(3) defence is
simply unavailable.
G. DOES NTC USE “HONEY DROP” IN A DESCRIPTIVE
SENSE?
31. Mr. Dwarkadas says that the words “HONEY DROP” are
not used by NTC in what he calls the ‘trade-marky’ sense, but in a
purely descriptive way to describe the character and quality of
NTC’s sticks. That is hardly credible. There is nothing to suggest
that there is a single drop of honey in NTC’s cigarettes, or that they
have that flavour. The argument also does not explain why NTC has
abruptly started using this so-called descriptor, given that there is no
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evidence of any change in its formulation of the product. The
manner in which the words are used and their placement also do not
commend acceptance of this submission. Mr. Dwarkadas’s reliance
on Reed Executive Plc v Reed Business Information Ltd.
44 is
misdirected: that decision turned narrowly on its facts, and
specifically whether “Reed Business Information” could be equated
with “Reed”.
32. The way ITC uses its “HONEY DEW” and “HONEY
DEW SMOOTH” marks is distinctive; so, too, is the pictorial of
the dewdrop. If NTC is correct, then it must show that its use of the
words “HONEY DROP” is a bona fide description of the product.
On the face of it, and with just one look at the rival marks, it is
apparent that this is not so.45
H. COPYRIGHT INFRINGEMENT
33. ITC claims copyright in the label46 on its cigarette packs.47 In
2009, ITC commissioned one Meet Jain of Graphic Pvt. Ltd. to
design the label. The work was registered to ITC under Registration
No.A-99121/2013. NTC’s pack is shown at Exhibit K to the Plaint.48
Both are gold in colour; both have the same colour combination of
gold, red and black. The words “GOLD FLAKE” are prominent
on each, and are centred on the pack face. Where ITC says
44 [2004] RPC 40
45 Newton Chambers v Neptune Waterproof Paper Co Ltd., 1935 (52) RPC 339
46 Plaint, Ex.G, pp. 192-193.
47 Plaint, Ex. J, p. 221; as part of the Additional Representations to its trade
marks at Ex. C-92, p. 178.
48 Plaint, p. 222.
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“KINGS” at the top, NTC shows a royal crest or coat of arms with
two rampant leonine creatures (for some reason they seem to be
coughing) on either side of a shield-shaped device bearing the letters
“NGF”. But both packs show a red star, NTC’s being considerably
cruder than ITC’s. At the bottom quarter of each pack face appear,
respectively, the words “HONEYDEW SMOOTH” and
“HONEY DROP” with a pictorial of a droplet or dewdrop. The
placement of these elements is almost identical.
34. Is NTC’s label a slavish imitation of ITC’s? There is only one
possible answer: yes. Is there an explanation for it? Again, in a word:
no. Is NTC’s label on a crude copy and does that make a difference?
Possibly, and no it does not. The test is again of an overall similarity,
of copying so much of the original as leads anyone to conclude that
the rival can be nothing but a copy, lacking all originality in and of
itself.49 The test is still substantial similarity,50 not whether the copy
is exact in every microscopic detail,51 and whether to the lay
observer the rival appears to be a reproduction of the other work.52
35. Mr. Dwarkadas’s argument that ITC has only complained of a
similarity in trade dress and not of copyright violation per se seems
to be clutching at straws. ITC has a copyright in the artistic work.
That artistic work is for a label. That label is attached to ITC’s
49 Tavener Rutledge v Specters Ltd., 1959 RPC 83; The Daily Calendar
Supplying Bureau v the United Concern, AIR 1967 Mad 381; King Features
Syndicate Inc & Anr. v O & M. Kleeman Ltd., (LVIII) RPC 207.
50 Burroughs Wellcome (India) Ltd v Uni-Sole Pvt Ltd., 1999 (19) PTC 188
51 C. Cunniah & Co v Balraj & Co., AIR 1961 Mad 111
52 Associated Electronics & Electrical Industries v M/s Sharp Tools, AIR 1991
Kant 406
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cigarette packs. It is therefore both an artistic work and part of its
trade dress. The distinction that Mr. Dwarkadas seeks to draw is
one, alas, without a difference. One can hardly expect ITC to tout
its artistic work as a stand-alone thing, and it cannot also be
expected to be found on the individual cigarettes. The only place it
can appear is on the packet face. The fact that it there assumes a
trade dress is entirely immaterial.
I. CONCLUSION & ORDER
36. The result of this discussion is that ITC succeeds. A prima
facie case is made out. As to the balance of convenience, the well
established principles must apply: I do not think it is possible to
suggest that NTC should be allowed now to flood the market with
its rival products. That would undoubtedly result in a significant
dilution of ITC’s brand, and the resultant loss would be difficult to
quantify.53
37. The Motion is made absolute in terms of prayers (a), (b) and
(c). There will be no order as to costs.
(G.S. PATEL, J.)
CERTIFICATE
“Certified to be a true and correct copy of the original signed Judgment/Order.”
53 William Grant & Sons Ltd. v McDowell & Company Ltd., 1997 PTC (17)
134 (Del)
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