Calvin Klein Trademark Trust & Anr. v. M/S Guru Nanak International & Ors.

Delhi High Court · 08 Dec 2023 · 2023:DHC:8868

Prathiba M. Singh

CS(COMM) 75/2020

2023:DHC:8868

civil appeal_allowed Significant

AI Summary

The Delhi High Court granted permanent injunction and awarded damages against a defendant manufacturing counterfeit Calvin Klein and Tommy Hilfiger products, relying on an unchallenged local commissioner’s report as evidence.

Full Text

CS(COMM) 75/2020
HIGH COURT OF DELHI
Date of Decision: 8th December, 2023

CS(COMM) 75/2020 & I.A. 1318/2023
CALVIN KLEIN TRADEMARK TRUST & ANR...... Plaintiffs
Through: Mr. Saif Khan, Mr. Prajjwal Kushwaha and Mr. Sobhit Agarwal, Advs.

VERSUS

M/S GURU NANAK INTERNATIONAL & ORS...... Defendants
Through: None.

CORAM:

JUSTICE PRATHIBA M. SINGH Prathiba M. Singh, J. (Oral)

JUDGMENT

1. This hearing has been done through hybrid mode.

2. The present suit has been filed by two Plaintiffs, namely, (i) Calvin Klein Trademark Trust; and, (ii) Tommy Hilfiger Europe B.V. seeking permanent injunction restraining infringement of trade mark and copyright, passing off, tarnishment, unfair competition, delivery up, rendition of accounts, damages, etc.

3. The present case relates to the Plaintiffs’ trademark ‘Calvin Klein’, CK, ‘TOMMY HILFIGER’, ‘TOMMY’, ‘TOMMY SPORT’, TOMMY GIRL and the labels thereof.

4. The Plaintiff No.1 was launched by the renowned fashion designer Calvin Klein in the year 1968 in USA. It is engaged in the business of manufacture, distribution and sale of a wide range of clothing, fragrances, cosmetics, eyewear, watches, home furnishings and other allied/ related products. Ever since its establishment, the Plaintiff No. 1 has been using the word marks/ logo marks ‘CALVIN KLEIN’ and ‘CK’ as trademarks as also as an essential part of its trade name in relation to its goods and business. The Plaintiff No. 1 has built a worldwide trade, goodwill and reputation thereunder and acquired proprietary rights therein. In India, the goodwill of the Plaintiff No.l's business is reflected, inter alia, in the consolidated sales turnover by the Plaintiff which was about $31 million in year 2017 alone.

5. The Plaintiff No. 1 has taken efforts to secure legal protection over its marks and several of its marks are duly registered in India under the Trade Mark Act, 1999. The particulars of the same are mentioned in the table below: S.No. Trade Mark Registration No. Class

1. 566080 3

2. CALVIN KLEIN (word mark) 603420 9

3. (CK logo Device mark) 692775 9

4. 566078 18

5. CALVIN KLEIN (word mark) 603423 25

6. 678782 25

7. 678783 25

8. 698979 25

6. The Plaintiff No. 2 was established by Mr. Tommy Hilfiger, who is one of the world's leading designers for lifestyle brands and is internationally recognized. The Plaintiff No. 2 uses the mark 'TOMMY HILFIGER', the flag device and other ‘TOMMY’ marks for sale of a wide range of clothing, fragrances, cosmetics, eyewear, watches, home furnishings and other allied/ related products. The Plaintiff No. 2 has huge sales of its products all over the world. In 2017 the global sales of the Plaintiff No. 2 were over $7.[4] billion.

7. The Plaintiff No. 2 has various registered trademarks in India which include the trademarks 'TOMMY HILFIGER', 'TOMMY', 'TOMMY SPORT' and the Flag Logo. The below table provides the details of all the relevant trademark registrations of the Plaintiff No. 2 in India: S.No. Trade Mark Registration No. Class

18,447 characters total

1. TOMMY HILFIGER 725528 9

2. TOMMY HILFIGER 465059 18

3. TOMMY HILFIGER 1275397 35

4. TOMMY 964905 14

5. TOMMY 964904 9

6. TOMMY 1195244 3

7. TOMMY 1275396 25

8. TOMMY SPORT 1114705 25

9. TOMMY GIRL 725529 3

10. 528964 3

11. 528965 14

12. 528966 18

13. 528968 24

14. 528969 25

15. 661684 3

16. 2208025 3,9, 14, 18, 24 and 25

8. The allegation, in the present suit, was that the Defendants were selling counterfeit products and were engaged in piracy of the said marks.

9. In this case, an ex parte ad interim injunction was granted on 17th February, 2020 in the following terms: “8. The defendants, till further orders, are restrained from dealing with the trade marks ‘Calvin Klein’, ‘CK’ (word/logo) ‘CK logo device mark’ ‘TOMMY HILFIGER’, ‘TOMMY’, ‘TOMMY SPORT’, (the flog logo)

10. Vide the said order, local commissioners were also appointed to visit the premises of the Defendants.

11. Thereafter, as recorded in order dated 31st July, 2023, the suit stands settled with all the Defendants except Defendant No.5 - M/s. Sazia Garments, a partnership firm. Vide the said order court notice was issued and the Plaintiff was also permitted to service the Defendant No.5 through email.

12. Today, none appears for Defendant No. 5. The service report shows that the factory of the Defendant No. 5 is locked.

13. The court has perused the report of the Local Commissioner appointed to visit the premises of the Defendant No.5. As per the said report the substantial amount of ‘TOMMY HILFIGER’ and ‘CALVIN KLEIN’ counterfeit products were seized from the Defendant No.5’s premises. Large amount of packaging material has also been found. Images of the said Local Commissioner’s report are set out hereinbelow:

14. The extracts of the said local commissioner’s report are also set out below:

“7. That the premises was found to be comprised of four floors with the Ground Floor housing a gym (Scorpio Gym), First and Second Floors being used to run the operation of M/s Sazia Garments and Third Floor (terrace) used as residence by some workers. The First Floor of the premises was found to consist of an office space, two big halls and one small room. The Second Floor was found to have five small rooms and 2 halls of varying size. The entire premises were informed to be ad measuring 150 sq. yds. with the First Floor and Second Floor only being used for operations of Sazia Garments. Mr. Mustafa upon enquiring informed that the said two floors are not owned by him/Defendant No.5 but are tenanted premises. The Lease Deed pertaining to the premises was shown to the undersigned. Around 10-15 workers were informed to be employed at the premises for operations of defendant No.5 Shazia Garments/Shazia Fashion House/Shazia Fashion Wear. 8. That numerous rolls of running fabric and about 25- 30 sewing machines and other paraphernalia for manufacture of and packaging of Gents' shirts was found at the premises. Upon enquiry also, it was also confirmed that the Defendant no.5 engaged in tailoring men's shirts. Shirts with labels of different brands inter alia Tommy Hilfiger and Calvin Klein were found at the premises. It was informed that labels and tags are supplied by different vendors to be attached to the shirts manufactured by Defendant no.5. Boxes for packaging of the apparel aforementioned with labels of Tommy Hilfiger and Calvin Klein were also found and were inventoried and symbolically seized along with the infringing material as detailed in the Inventory Sheets annexed with the On-the-Spot Proceedings Report. Upon asking it was stated that no books of records, accounts are maintained by Defendant no.5.”

15. The inventory as per the local commissioner’s report is as under: TOMMY HILFIGER

S. No Item Type Quantity Nature of infringement

1. Packed Shirts 491 Label/tags of Tommy Hilfiger Flag device

2. Unpacked Shirts 95 --Similar--

3. Unfinished / Unstitched Shirt 354 Label/ tags

4. Pants/ Trousers 24 Label/ tags

5. Empty Packaging Boxes 176 Flag Device

6. Shirt Packed in boxes 4

7. Labels/tags 696 CALVIN KLEIN

S. No. Item Type Quantity Nature of infringement

1. Packed shirts 32 CK/Calvin Klein/Device/Label

2. Empty Packaging boxes 55 Device

3. Labels/Tags 342

16. The present is a case where the Defendant No.5 is clearly engaged in the manufacturing and sale of counterfeit products as is evident from the record of the case as also the report of the Local Commissioner. A perusal of the inventory prepared by the Local Commissioner would show that the quantum is substantial and the Defendant No.5 is actually running a fullscale manufacturing operation in respect of counterfeit ‘Calvin Klein’ and ‘TOMMY HILFIGER’ products.

17. In the present case, the photographs of the counterfeit products which are placed on record and the inventory which has been prepared is also not denied by the Defendant No.5 either in the pleadings or in its reply.

18. It is the settled position in law that a local commissioner’s report can be read in evidence where it is not challenged by any party. This is in terms of the provisions of Order XXVI Rule 10 (2) CPC, 1908. The same has been held in the case of M L Brother LLP v. Mahesh Kumar Bhuralal Tanna, 2022: DHC: 1879. The relevant part of the same is as under:

“10. Order 26 Rule 10(2) CPC stipulates that the report of the Commissioner and the evidence taken by the Commissioner shall be evidence in the suit and shall form part of the record. The said provision reads as under: 10. Procedure of Commissioner. (1) The Commissioner, after such local inspection as he deems necessary and after reducing to writing the evidence taken by him, shall return such evidence, together with his report in writing signed by him, to the Court. (2) Report and depositions to be evidence in suit. Commissioner may be examined in person.—The report of the Commissioner and the evidence taken by him (but not the evidence without the report) shall be evidence in the suit and shall form part of the record; but the Court or, with the permission of the Court, any of the parties to the suit may examine the Commissioner personally in open Court touching any of the matters referred to him or mentioned in his report, or as to his report, or as to the manner in which he has made the investigation. 11. In Levi Strauss & Co. v. Rajesh Agarwal 2018 IAD (Delhi) 622, this Court examined the said provision and held that once the Commissioner has filed the evidence along with his report, it becomes evidence in the suit itself. Under Order 26 Rule 10(2) CPC it is not mandatory to examine the Commissioner to admit the report of the Commissioner as evidence in the suit. The relevant observations are as under: 8. The Local Commissioner is in fact a representative of the Court itself and it is for this reason that Order 26 Rule 10 (2) of CPC clearly provides that once the Commissioner has filed the evidence along with his report the same shall be treated as evidence in the suit

and shall form part of the record.

XXX XXX XXX

10. The rationale behind Order 26 Rule 10 (2) of CPC is clear i.e., the Commissioner is appointed as a representative of the Court and evidence collected by the Commissioner along with the report of the Commissioner would be evidence in the suit, subject to any objection raised by any party. If any party has any objection to Commissioner's report or to the evidence, such party has an option to examine the Commissioner personally in open Court. Such examination is however, neither compulsory nor required especially in cases where the party does not challenge the report. In the present case, a perusal of the written statement filed by the Defendant clearly reveals that the Defendant does not challenge the Commissioner's report. Para of the written statement is set out below…”

12. This position of law has been reiterated by this Court in Vinod Goel v. Mahesh Yadav [RFA 2022/DHC/004806 CS (COMM) 413/2021 598/2016 decided on 23rd May, 2018] wherein the Court observed as under:

“7. It is the settled proposition in law that when a

Commissioner is appointed, he acts as the officer of the

Court and it is not necessary for the Commissioner to be

examined. This is clearly laid down by the Supreme

Court in Misrilal Ramratan & Ors. Mansukhlal & Ors.

v. A. S. Shaik Fathimal & Ors., 1995 Supp (4) SCC 600, wherein the Court held as under: “It is now settled law that the report of the Commissioner is part of the record and that therefore the report cannot be overlooked or rejected on spacious plea of non-examination of the Commissioner as a witness since it is part of the record of the case.” 8. Even this Court, recently in Levis Strauss v. Rajesh Agarwal [RFA 127/2007 decision dated 3rd January, 2018], held as under: “11. The rationale behind Order 26 Rule 10 (2) of CPC is clear i.e. the Commissioner is

appointed as a representative of the Court and evidence collected by the Commissioner along with the report of the Commissioner would be evidence in the suit, subject to any objection raised by any party. If any party has any objection to Commissioner’s report or to the evidence, such party has an option to examine the Commissioner personally in open Court. Such examination is however, neither compulsory nor required especially in cases where the party does not challenge the report….”

19. Accordingly, in the present case the report of the Local Commissioner and the contents therein can be read in evidence, as the same stands unchallenged.

20. Further, none is appearing for the Defendant No.5. In Disney Enterprises Inc. & Anr. V. Balraj Muttneja & Ors.,2014: DHC:964, it has been held by the Court that leading formal evidence would not be required where the Defendant has not appeared in matter or filed a written statement. The relevant portion of the judgment is set out below:

“5. The plaintiffs, despite having been granted sufficient time and several opportunities, have failed to get their affidavits for leading ex parte evidence on record. However, it is not deemed expedient to further await the same and allow this matter to languish, for the reason that I have in Indian Performing Rights Society Ltd. Vs. Gauhati Town Club MANU/DE/0582/2013 held that where the defendant is ex parte and the material before the Court is sufficient to allow the claim of the plaintiff, the time of the Court should not be wasted in directing ex parte evidence to be recorded and which mostly is nothing but a repetition of the contents of the plaint.”

21. In the present case, Defendant No.5 is already aware of the filing of the suit and the injunction granted vide order dated 17th February, 2020 which is operating. The owner of the Defendant No.5 i.e. Mr. Mustafa was present at the time when the local commission was executed. In view thereof, no ex parte evidence would be required in the present case.

22. Under such circumstances, the Court is of the opinion that the decree of injunction as prayed in paragraph 80(i) to 80(iv) of plaint would be liable to be granted. Damages

23. In the opinion of this Court, the Defendant has deliberately chosen to stay away from the proceedings merely to ensure that it is not required to produce its accounts.

24. A large quantum of counterfeit goods that were found in the Defendant No.5’s premises. The Local Commissioner also found a substantial amount of legers, files, running fabric and a total of 25 to 30 sewing machines. Insofar as the seized material is concerned, the factory itself is locked as per the last service record. In view of the entire operations undertaken by Defendant No.5, this is a fit case for grant of damages as also costs.

25. Thus, the Plaintiff is entitled to be monetarily compensated for the infringement committed by the Defendant. Accordingly, this Court is of the opinion that on an assessment of the evidence on record, damages deserves to be awarded.

26. No evidence has been led by the Plaintiff in this matter. In any event, the nature of the Defendant No.5’s operation leaves no doubt in the mind of the Court that proper assessment of the sale and profit earned may also not be determinable. The Defendant No.5 is obviously aware of the brand equity enjoyed by the Plaintiffs’ mark and has deliberately chosen to manufacture and sell counterfeit products under the said mark and ride piggy-back on the Plaintiff’s goodwill and reputation.

27. Rule 20 of the Delhi High Court Intellectual Property Rights Division Rules, 2022 provides guidance on the manner in which the damages could be calculated in such cases.

28. On the issue of damages, the settled legal position has been laid down in Hindustan Unilever Limited v. Reckitt Benckiser India Ltd. (2014) 57 PTC 495 (DB), by the ld. Division Bench. In the said decision, the ld. Division Bench has clearly held that unless there are extenuating circumstances and overwhelming evidence of wrong doing, punitive damages cannot be awarded. Usually, the Court grants either notional damages or the compensatory damages.

29. In Koninlijke Philips and Ors. v. Amazestore and Ors., 2019:DHC:2185, the Court laid down certain standards for grant of damages in the following terms:

“39. Accordingly, the question which was left open in Rookes (supra) was closed in Cassell (supra) as regards the manner in which aggravated or punitive damages are to be awarded. 40. Consequently, though in assessing the aggravated damages which the Defendants should pay, the total figure awarded should be in substitution for and not in addition to the smaller figure, yet the rounded total sum shall have to be calculated by adding an additional amount to the compensatory damages. 41. Keeping in view the aforesaid, this Court is of the view that the rule of thumb that should be followed while granting damages can be summarised in a chart as under:—

# Degree of mala fide Conduct Proportionate award

(i) First-time innocent infringer Injunction

(ii) First-time knowing infringer Injunction +

(iii) Repeated knowing infringer which causes minor impact to the Plaintiff

(iv) Repeated knowing infringer which causes major impact to the Plaintiff

(v) Infringement which was deliberate and calculated

42. It is clarified that the above chart is illustrative and is not to be read as a statutory provision. The Courts are free to deviate from the same for good reason.”

30. Considering the above judgments, it is clear that the Plaintiff is liable to be awarded damages. The infringement indulged in by the Defendant by imitating Plaintiffs’ marks has been deliberate and calculated. Thus, the Defendant No.5 falls within the categories laid down above against which damages ought to be awarded by the Court.

31. If the stock which was found at the Defendant No.5’s premises is taken to be average stock of one week, the annual sales of the Defendant No.5 would be substantial. Under such circumstances, the suit is decreed for the sum of Rs.10 lakhs as damages and Rs.[1] lakh is awarded as costs.

32. The Plaintiffs shall visit the premises of Defendant No.5 to seize the infringing products for the purpose of destruction. If the Plaintiffs so wishes the garments could also be donated to charity after removing the labels/ marks.

33. The local police shall give assistance to the Plaintiffs for taking custody of the seized products.

34. Damages and costs awarded by the Court shall be paid by the Defendant within eight weeks, failing which the Plaintiff is free to seek execution and avail other remedies in accordance with law.

35. The suit is decreed in the above terms. Decree sheet be drawn up accordingly.

36. All pending applications are disposed of.

PRATHIBA M. SINGH JUDGE DECEMBER 08, 2023 dj/kt

Calvin Klein Trademark Trust & Anr. v. M/S Guru Nanak International & Ors.

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