Carlton Shoes Ltd. & Anr. v. VIP Industries Ltd.

15. On 24.03.2004, VIP acquired the CARLTON marks along with the goodwill from Carlton International PLC and as per the Assignment Agreement dated 25.03.2004, goodwill of the predecessor including goodwill established in the brand CARLTON and also its formative marks stood assigned to VIP apart from intellectual property rights including trademark rights.

16. VIP incorporated a wholly owned subsidiary in London on 19.03.2004 called Carlton Travel Goods Limited for carrying on business in the goods under the trademark CARLTON and the goods also included goods which were manufactured by VIP in India and exported to UK. On 21.04.2006, VIP got its mark CARLTON registered in class 18 in India by Application No. 1445045, claiming use since 25.05.2004.

17. It is further averred that VIP and its predecessor have obtained registrations for the mark CARLTON in various jurisdictions of the world, including India in several classes in addition to class 18. In a nutshell, the averment is that the earliest trademark Application for the mark CARLTON in class 18 was applied by VIP’s predecessor in UK on 19.05.1988, while in India, the earliest trademark Application was filed on 26.07.1995 in class 18 and stands registered.

18. It is averred that products of VIP have been sold extensively in India and various other countries over a period close to 7 decades. The goodwill and reputation of VIP can be gauged by the year wise sale of its products. As in the year 2018-19, the annual sales figures of VIP were Rs. 1784.66 crores and sales figures have also been furnished in the plaint commencing from 1979 which show an increasing popularity of the brand. The export sales by VIP for goods under the mark CARLTON were worth Rs. 11.61 crores in the year 2019 and domestic sales were to the tune of Rs. 69.44 crores in the year 2019. VIP has invested and continues to invest huge amount of money, time and effort for promotion and advertisement of its products under the brand CARLTON and as an illustration, Rs. 47.88 crores have been expended between 2006 to 2019 on advertisements and promotions through different electronic and print media across the globe. VIP’s acquisition of CARLTON marks was extensively covered on various media platforms across India. British Olympic Association selected VIP’s predecessor and the brand CARLTON as the official supplier of travel goods for British Olympic Team for Atlanta Olympics in 1996. By 1994 itself, VIP’s predecessor had expanded the business to over 50 countries across 4 Continents. Products under the CARLTON marks had acquired transborder reputation in India by 1994 by virtue of the fact that travellers from various other countries including those in India learnt of the VIP’s predecessor’s products and their high quality.

19. Disputes between VIP and Carlton arose in October, 2019 when VIP learnt that Carlton had started using the trademark CARLTON in relation to handbags and was in the process of expanding its business into manufacture, marketing, distribution and/or sale of goods falling under class 18. VIP issued a cease and desist notice dated 10.10.2019 to Carlton informing about its prior rights in the CARLTON marks. VIP also came to know of Carlton Overseas Pvt. Ltd.’s registration for the mark CARLTON in class 18 and immediately filed a rectification against the wrongful registration, which is pending before the Trade Marks Registry. Carlton sent a detailed reply dated 25.11.2019 to VIP claiming proprietary rights in the trademark CARLTON LONDON and its variants. While VIP was chartering a further course of action, it was served with the summons in the suit filed by Carlton being CS(COMM) 730/2019, alleging infringement of its trademarks by VIP. At the time of filing the suit, Carlton was not engaged in the business of manufacturing, marketing, distribution and/or sale of goods falling under class 18, namely, travel bags, suitcases, duffel bags, laptop bags, etc. Attempts were made between the parties for arriving at an amicable settlement, which were unsuccessful.

CONTENTIONS ON BEHALF OF CARLTON

20. VIP’s adoption and use of trademarks CARLTON (word mark) and in relation to similar products by using identical/deceptively similar trademarks tantamounts to infringement of Carlton’s statutory rights vested in its registered and well-known trademarks/names/logos CARLTON/CARLTON LONDON and and their formatives as well as violation of common law rights. By virtue of registration, Carlton has secured rights under Section 28 of the Trade Marks Act, 1999 (hereinafter referred to as ‘1999 Act’) and is entitled to protection of the registered trademarks from infringement under Section 29 of the said Act. On the other hand, VIP’s claim of alleged infringement is misplaced even under Section 28(3) of 1999 Act as the registration of Carlton is prior to VIP, dating back to the year 1993/1994.

21. Use of identical/similar marks for similar products in class 18 is a calculated effort by VIP to ride upon Carlton’s immense goodwill and reputation, with a dishonest intent and to cause misrepresentation amongst the public that its goods emanate from Carlton or have a connection/association with it and this action amounts to passing off under common law.

22. Carlton’s trademarks were conceived and adopted after inspiration from the name of Mr. Carljit Virk, the legal successor of Carlton’s Founder. The mark CARLTON was adopted in 1992 when Carlton Shoes Limited was incorporated under laws of England and in India it was adopted in 1993. The earliest registration of the trademarks in respect of goods in class 18 in India was secured on 06.05.1994, while internationally the earliest registration of the mark CARLTON LONDON was obtained on 28.09.1998 in UK. Subsequent thereto, several registrations were obtained for the mark/device CARLTON in various classes such as 03, 08, 09, 12, 14, 16, 20, 30, 42 and 43, internationally and in India. Additionally, Carlton also adopted the mark CARLTON LONDON to denote the place of origin of the Company and designed an artistic logo to be used in conjunction with the marks CARLTON/CARLTON LONDON.

23. Carlton is a prime brand which forms part of the Company/trade name and is also the house mark and from the very inception Carlton has expanded business to include lifestyle and various ancillary goods under several classes. Carlton has 23 exclusive retail outlets in several countries including India with 35 shop-in-shop stores and products available in over 300 multi-brand retail stores across the world. The goodwill and reputation is further strengthened by the sales figures of products sold under its trademarks since 1993. Revenues earned in the year 2017-18 alone are to the tune of Rs.6753,87,202/- and large sums have been expended on advertisements and promotions on all media platforms including high-profile magazines.

24. VIP has miserably failed in establishing spillover and/or transborder reputation of the mark CARLTON in the name of its predecessor Carlton International PLC into the shores of India and it is a settled law that trademark law is territorial in nature. Reliance was placed on the judgment in Intercity Hotel GMBH v. Hotel Intercity Delhi and Others, 2019 SCC OnLine Del 7644; ROCA Sanitario S.A. v. Naresh Kumar Gupta & Anr., 2010 SCC OnLine Del 1135; and Roland Corporation v. Sandeep Jain and Others, 2021 SCC OnLine Del 3482.

25. Contrary to the claims of VIP in the cease and desist notice that it adopted the mark CARLTON in 1976 and the use of the mark dates back to 1970s, VIP has admitted to have allegedly commenced using the mark in relation to class 18 goods only from 2005, post the acquisition of a dormant Company Carlton International PLC. Assuming without admitting that the assertion is correct, even then the same is subsequent to Carlton’s use of the rival mark.

26. VIP has fraudulently attempted to justify and contend that the mark CARLTON was adopted prior to Carlton’s adoption, relying on trademark registration for the mark DIPLOMAT CARLTON in the name of Raxvale Limited in the year 1980 in UK, conveniently not disclosing the fact that UKIPO had granted registration to the said mark with a clear disclaimer against usage of the word ‘CARLTON’. In this context, reliance was placed on Cluett Peabody & Co. Inc. v. Arrow Apparals, 1997 SCC OnLine Bom 574; Veerumal Praveen Kumar v. Needle Industries (India) Ltd. and Anr., 2001 SCC OnLine Del 892; Toyota Jidosha Kabushiki Kaisha v. Prius Auto Industries Limited and Others, (2018) 2 SCC 1; and Midas Hygiene Industries (P) Ltd. and Another v. Sudhir Bhatia and Others, (2004) 3 SCC 90.

27. VIP’s suit suffers from delay, laches and acquiescence and it cannot rely on the date of knowledge allegedly received in October, 2019, since it was aware of Carlton’s market presence, goodwill and reputation and use of the marks/device CARLTON/CARLTON LONDON in respect of class 18 goods for several years. This is evident from Notice of Opposition filed by VIP in 2010 against Carlton’s Application bearing No. 1568508 filed for mark CARLTON LONDON on 14.06.2007, claiming use of the mark since 06.05.1994.

28. As an afterthought, VIP has placed reliance on Indian registration no. 674589 filed on 26.07.1995 as its earliest registration in India in order to claim statutory rights in the mark CARLTON. The said registration was in fact filed by its predecessor and was allegedly acquired by VIP only in 2004 and further the Deed of Assignment clearly states that the rights stand assigned from the date of execution i.e. 25.03.2004. In any event, even this registration is subsequent to Carlton’s earliest registration dating back to 06.05.1994 in class 18 in India. Furthermore, VIP’s own registration is much subsequent to that of Carlton, with the earliest registration in 2006 and every other subsequent application/registration dates back to 2017, which is indicative of not only VIP’s subsequent rights but also reflective of the fact that its use is not prior to that of Carlton.

29. On 18.06.2004, VIP made an unsuccessful attempt to acquire statutory rights in the mark CARLTON, however, its application for the said mark under No. 1291024 in class 18 was rendered ‘abandoned’ by the Trade Marks Registry’s order dated 16.12.2014.

30. VIP has time and again taken strength from its rights under the umbrella brand VIP to claim priority in the industry and the sales figures/revenue and advertisement expenses to establish goodwill are also with respect to expenditures/revenue under the brand VIP. Not a single document or any other material has been placed for showing sales/revenue pertaining to the brand CARLTON, perhaps for the reason that the figures would be nominal and for a much later period. There is no clarity at all as to the date of VIP’s own commencement of user of the brand CARLTON in India and the only intent is to encash on Carlton’s use and reputation.

31. Carlton has placed on record VAT Registration Certificates reflecting that the mark CARLTON was in use in relation to class 18 goods since 1993 and has also filed several consumer complaints originating in the year 2016 due to VIP’s use or launch of the products under the mark CARLTON, wherein the customers showed dissatisfaction on account of low quality of goods, which they had bought under the impression that VIP was associated or connected with Carlton. VIP’s claim to user is also belied by the interviews of its own Managing Director who claimed that the brand CARLTON was launched only in the year 2014. In fact, perusal of the invoices filed by VIP shows that there is no reference to the mark CARLTON as a brand or product name prior to the year 2015. Insofar as Carlton is concerned, import documents placed on record evidence sales and marketing of products i.e. luggage/travel bags in class 18 since

2011.

CONTENTIONS ON BEHALF OF VIP

32. The earliest trademark Application for the mark CARLTON in class 18 was filed by VIP’s predecessor Carlton International PLC in India in the year 1995 and the same stands registered. Registration of CARLTON marks gives statutory rights to VIP under Section 28 of the 1999 Act to their exclusive use and to protect the registered marks from infringement by an unauthorised person or entity under Section 29 of the 1999 Act. Carlton has adopted identical marks and is proposing to use or is using the same for identical goods and are guilty of infringement.

33. VIP’s predecessor adopted the trademark DIPLOMAT CARLTON in 1980 and the trademark CARLTON was adopted in the year 1986 and application for registration for goods under class 18 was made in 1988. VIP’s predecessor adopted the trademark CARLTON as a part of its Corporate name on 04.12.1989 and VIP has been using the trademark ever since. A catalogue/brochure has been placed on record for the year 1988 for Carlton bags to show VIP’s predecessor’s use with respect to bags/suitcases at least since the year 1988. By the year 1994, VIP’s predecessor had popularised the products bearing the CARLTON marks across the world by making sales in various countries and had generated trans-border reputation.

34. By virtue of the Agreement dated 25.03.2004, Carlton International PLC assigned the goodwill as well as rights in the trademark CARLTON and its variants to VIP and by virtue of the said assignment, VIP is the owner and registered proprietor of the mark and the use would date back to the date of adoption by its predecessor. Therefore, Carlton’s date of adoption of the mark CARLTON, which is admittedly 1992/1993/1994, is evidently subsequent to the date of adoption by VIP, through its predecessor and VIP is thus the prior user and prior adopter of the trademark CARLTON and has superior rights by applying the test laid down by the Supreme Court in S. Syed Mohideen v. P. Sulochana Bai, (2016) 2 SCC 683. The test for determining prior use is to see who is ‘first’ in the market as held in Milmet Oftho Industries and Others v. Allergan Inc., (2004) 12 SCC 624; Staples INC & Anr. v. Staples Paper Converters Pvt. Ltd., 2014 SCC OnLine Del 2092; Austin Nichols & Co. v. Arvind Behl, 2005 SCC OnLine Del 1276; M/s. Superflo Pvt. Ltd. v. M/s. Sandhyamani Associates (P) Ltd. & Anrs., 2015 SCC OnLine Del 14403; and Neon Laboratories Limited v. Medical Technologies Limited and Others,

35. Carlton has dishonestly adopted the trademark CARLTON with a view to ride on the reputation and goodwill of VIP’s CARLTON marks, which is evident from the fact that they chose to add suffix ‘LONDON’ to the said mark in order to draw an association with VIP’s predecessor. Carlton is presumed to know or at least ought to have known of the prior rights of VIP’s predecessor, especially since Carlton claims that its founder Mr. Baljit Virk was in UK. Clearly, the mark was neither adopted in India nor was first used in India by Carlton. Since the very adoption is dishonest and malafide, no subsequent use can rescue Carlton from being held guilty of infringement as laid down in Ansul Industries v. Shiva Tobacco Company, 2007 SCC OnLine Del 74 and Suzuki Motor v. Suzuki (India) Limited, 2019 SCC OnLine Del 9241. It is also settled that use of a trademark with full knowledge of rights of another owner and proprietor of the same mark is at one’s own peril and in such circumstances, as held in M/s. Hindustan Pencils Private Limited v. M/s. India Stationary Products Co. & Another, 1989 SCC OnLine Del 34, injunction ought to be granted. To the same effect are the observations of the Supreme Court in Midas Hygiene Industries (P) Ltd. (supra).

36. Carlton is not only guilty of infringement but also liable for the common law tort of passing off. All the three intrinsic requirements of passing off viz. goodwill/reputation, deception/misrepresentation and grave irreparable loss/damage are satisfied in the present case. Reliance was placed on the judgment of the Supreme Court in Laxmikant V. Patel v. Chetanbhai Shah and Another, (2002) 3 SCC

65.

37. VIP has through various documents placed on record clearly shown that it is a prior adopter at least since 1986 and prior user since 1988 with respect to bags under the mark CARLTON. Albeit Carlton has claimed adoption of the mark CARLTON in the year 1992, but has failed to file any documents in support thereof. Assuming the said date of adoption is to be accepted VIP is a prior adopter. Carlton’s claim of user of the mark CARLTON since 1993 for goods falling in class 18 is also unsubstantiated and is merely a bald, vague and false averment, without placing any material on record.

38. I have heard learned Senior Counsels for the parties and examined their contentions.

39. In the present case, rival parties have asserted both statutory rights and common law rights and alleged infringement and passing off against each other. I would first examine the respective claims in the context of infringement. On a historical analysis, VIP’s predecessor-in-title Carlton International PLC was incorporated in London on 12.11.1976 under the name Raxvale Limited. In the year 1980, Raxvale Limited adopted the mark DIPLOMAT CARLTON and the mark CARLTON with a circular logo was adopted in 1986 in relation to its business and products which included bags, travel bags and luggage, strolleys, suit cases, school bags, wallets etc. and related accessories.

40. Raxvale Limited applied for registration of the mark in U.K. on 23.12.1986 in class 25 and on 19.05.1988 in class 18. Raxvale Limited changed its name to Carlton International PLC on 04.12.1989 and after expanding its business in over 50 countries across four continents in 1994, applied for registration of the trademark CARLTON on 26.07.1995 in class 18 for goods namely, briefcases, luggage bags, suit cases etc. in India under application NO. 674589, which was registered. VIP acquired the CARLTON marks along with the goodwill from Carlton International PLC by and under an Assignment Agreement dated 25.03.2004 and obtained registration of CARLTON mark in class 18 on 21.04.2006 with user claim from 25.05.2004.

41. Carlton, on the other hand, traces its history back to the year 1989 when its Founder established a company in East End of London for ladies’ fashion shoes albeit the family of Mr. Virk was manufacturing and marketing footwear since 1971 in UK. The mark CARLTON was first adopted in 1992 when Carlton Shoes Limited was incorporated under the laws of England. In India, Carlton Overseas Pvt. Ltd. was incorporated in 1993. In addition to mark CARLTON, Carlton adopted inter alia the mark CARLTON LONDON to denote the place of origin of the company and also designed and used an artistic logo in conjunction with the word mark i.e.. Carlton applied for registration of the word mark CARLTON in India on 06.05.1994 in class 18 for goods i.e. leather/imitation of leather/animal skins/trunks and travelling bags etc. and the registration is stated to be valid. Internationally, the earliest registration of the mark CARLTON LONDON was obtained on 28.09.1998 in UK. Subsequently, registrations have been obtained in various other classes, but not being relevant to the present case are not alluded to herein. Before moving forward, it is important to look at a comparative of the rival marks and a pictorial representation is as follows:- Carlton VIP CARLTON (word mark) CARLTON (word mark)

42. On a comparison of the rival marks, there is no room for doubt that the marks are phonetically identical and structurally and visually similar and both VIP and Carlton have registrations for their respective trademarks in respect of bags and allied goods falling under class 18, which is the subject matter of the present suits. In view of these facts, the question that first begs an answer is whether between two registered proprietors of trademarks, which are identical or nearly resembling each other, one proprietor can claim exclusive right to use the trademark against the other where the registrations are in respect of identical or similar goods and thereby claim infringement of its registered trademark. The answer to this question lies in the provision of Section 28(3) of the 1999 Act, which was considered at length by the Supreme Court in S. Syed Mohideen (supra) and the Supreme Court held:-

43. Section 28(1) of the 1999 Act gives two valuable rights to the registered proprietor of the trademark: (a) exclusive right to use the trademark in relation to goods or services in respect of which the trademark is registered; and (b) to obtain relief in respect of infringement of the trademark, in the manner provided under the 1999 Act and subject to other provisions of the said Act. Sub-section (3) of Section 28 deals with a situation where two or more persons are registered proprietors of trademarks which are identical to or nearly resemble each other and in such an eventuality, the exclusive right to use these trademarks shall not be deemed to have been acquired by one of those persons against each other, merely on account of registration, subject to a caveat that the trademarks are registered for similar goods. In this scenario, neither of the two can sue each other for infringement. This position of law is luminously clear from the judgment of this Court in Rana Steels v. Ran India Steels Pvt. Ltd., 2008 SCC OnLine Del 399, where the Court has elucidated on this issue by illustrations, which in my view, would be apt in the present case. Relevant passages from the judgment are as follows:-

24. At this point, it would be appropriate to refer to Section 7 of the said Act which provides for classification of goods and services. Sub-Section (1) stipulates that the Registrar shall classify the goods and services, as far as may be, in accordance with the international classification of goods and services for the purposes of registration of trade marks. Rule 22 of the Trade Marks Rules, 2002 provides that for the purposes of registration of trade marks, goods and services shall be classified in the manner specified in the Fourth Schedule. Clearly, registration of trademarks is in relation to specified goods or services. Goods and services have been classified. It is obvious that, prima facie, goods falling under one class would be different from goods falling under another class. Ordinarily, when registration of a trade mark is granted under one class of goods, it does not cover goods of another class.

25. The plaintiff is the registered proprietor of the mark RANA w.e.f. 14.12.1994 in relation to “steel rolled products, CTD bars, angles, flats, rounds, channels and girders” falling under class 61 of the Fourth Schedule to the Trade Marks Rules, 2002. The defendant does not have a registered trade mark in respect of goods falling under class 6 of the said schedule. However, as things stand today[2], the defendant is the registetred proprietor of the mark “RANATOR” w.e.f. 26.04.2001 in respect of “Buliding materials (steels)” falling under class 193. Whether the registration is liable to be cancelled, as alleged by the plaintiff, or not, as contended by the defendant, is not a matter for consideration before this court. For the present, in view of section 31 of the said Act, the registration of the trade mark is prima facie evidence of its validity. So, considering the defendant's registration to be valid, for the time being, it must be kept in mind that the mark RANATOR is registered in class 19 and not class 6. The plaintiff has brought this suit claiming its exclusive right to the use of the trade mark RANA in relation to “steel rolled products, CTD bars, angles, flats, rounds, channels and girders” falling under class 6 of the Fourth Schedule to the Trade Marks Rules, 2002. The defendant, admittedly, does not have any registration in class 6 (its registration being under class 19). Therefore, the situation which presents itself in the case at hand is similar to the situation explained in Example 2 above. Consequently, neither is section 28(3) attracted nor can the defendant take refuge under section 30(2)(e).

26. In Ramdev Food Products (P) Ltd. v. ARvindbhai Rambhai Patel: (2006) 8 SCC 726 (at page 754), the Supreme Court observed that the purpose of a trade mark is to establish a connection between the goods and the source thereof which would suggest the quality of goods and that if the trade mark is registered, indisputably the user thereof by a person who is not otherwise authorised to do so would constitute infringement. It was further noted that a proprietor of a registered trade mark indisputably has a statutory right thereto. In the event of such use by any person other than the person in whose name the trade mark is registered, he will have a statutory remedy in terms of Section 29 of the 1958 Act. The registration of the trade mark RANA in relation to “steel rolled products, CTD bars, angles, flats, rounds, channels and girders” falling under class 6 has established a connection between such goods and the plaintiff who manufactures them. Whenever such goods are found in the market and they bear the mark RANA, the prospective consumer connects the goods with the source, that is, the plaintiff (RANA STEELS). If another person such as the defendant uses the same mark or a similar mark in relation to the very same goods (steel rolled products, CTD bars, angles, flats, rounds, channels and girders falling under class 6) then, that would be seen as an interference and an attempt at breaking the connection between the goods bearing the mark RANA and the source, the plaintiff. In such a situation, the plaintiff would have the statutory remedy of seeking injunction for preventing further infringement.

27. The plaintiff has certainly established a prima facie case in its favour. Because of registration and by virtue of section 28 (1) of the said Act, an exclusive right of using the trade mark RANA has been conferred upon the plaintiff in relation to steel rolled products, CTD bars, angles, flats, rounds, channels and girders falling under class 6. And, such right is absolute [see: Ramdev Food Products (supra) (para 83)]. As observed in Ramdev Food Products (supra) (para 82), what is needed by way of cause of action for filing a suit of infringement of trade mark is use of a deceptively similar mark which may not be identical. It was contended on behalf of the plaintiff that the marks RANA and RANATOR are identical inasmuch as TOR is merely descriptive of a kind of high strength steel. While this may be debatable, there cannot be any escape from the fact that RANATOR is deceptively similar to RANA. It is interesting to note that though the defendant's registration under class 19 is in respect of the trade mark RANATOR used as one word, the defendant has been using it in the form of two words RANA TOR. This clearly signifies the defendant's intention to break up the mark RANATOR into RANA and TOR. It is this separation of RANA and TOR which, in fact, lays emphasis on the mark RANA because the other word TOR, as is commonly understood, is merely descriptive of a type of steel. The moment this happens there is every possibility that the mark RANA TOR used by the defendant is confused by the public at large with the plaintiff's registered trade mark RANA which is used for the plaintiff's TOR steel products.”

44. This very issue was also the subject matter of consideration before another Bench of this Court in A. Kumar Milk Foods Pvt. Ltd. v. Vikas Tyagi & Anr., 2013 SCC OnLine Del 3439, wherein Plaintiff’s trademark SHRIDHAR was registered under class 29 in respect of ghee and other dairy products while Defendant’s trademark SHREEDHAR was registered under class 30 for atta, maida and besan. Relying on the judgment in Rana Steels (supra), the Court delineated the scope and ambit of Section 28(3) of the 1999 Act as follows:-

45. Coming back to the facts of the present case, it bears repetition to state that VIP alleges that its trademarks CARLTON (word and device) are infringed by Carlton with respect to bags and other allied goods falling under class 18 as it has statutory rights emanating from Section 28(1) of the 1999 Act, while Carlton accuses VIP of infringement of its registered trademarks CARLTON (word and device) for bags and allied goods falling under class 18. Applying the binding dictum of the Supreme Court in S. Syed Mohideen (supra), followed by this Court in several judgments, two of which have been referred to above, the answer to the question as to whether VIP and Carlton can allege infringement of their registered trademarks CARLTON against each other is an emphatic ‘No’.

46. The issue that now arises is if VIP and Carlton can sustain their claims for passing off invoking the provision of Section 27(2) of 1999 Act. This conundrum stands resolved by the Supreme Court in the case of S. Syed Mohideen (supra), where the Supreme Court observed that rights granted by registration in the form of exclusivity are not absolute but are subject to other provisions of the 1999 Act. Section 28(3) merely provides that there shall be no rights of one registered proprietor vis-à-vis another but only for the purpose of registration and the provision does not deal with rights of passing off which remain unaffected due to overriding effect of Section 27(2) and are undisturbed even by the enactment of Section 28(3). Relevant paragraphs of the judgment are as follows:-

30.2. Likewise, the registration of the mark shall give exclusive rights to the use of the trade mark subject to the other provisions of this Act. Thus, the rights granted by the registration in the form of exclusivity are not absolute but are subject to the provisions of the Act.

30.3. Section 28(3) of the Act provides that the rights of two registered proprietors of identical or nearly resembling trade marks shall not be enforced against each other. However, they shall be same against the third parties. Section 28(3) merely provides that there shall be no rights of one registered proprietor vis-à-vis another but only for the purpose of registration. The said provision 28(3) nowhere comments about the rights of passing off which shall remain unaffected due to overriding effect of Section 27(2) of the Act and thus the rights emanating from the common law shall remain undisturbed by the enactment of Section 28(3) which clearly states that the rights of one registered proprietor shall not be enforced against the another person.

31. Secondly, there are other additional reasonings as to why the passing off rights are considered to be superior than that of registration rights.

31.1. Traditionally, passing off in common law is considered to be a right for protection of goodwill in the business against misrepresentation caused in the course of trade and for prevention of resultant damage on account of the said misrepresentation. The three ingredients of passing off are goodwill, misrepresentation and damage. These ingredients are considered to be classical trinity under the law of passing off as per the speech of Lord Oliver laid down in Reckitt & Colman Products Ltd. v. Borden Inc. [Reckitt & Colman Products Ltd. v. Borden Inc., (1990) 1 WLR 491: (1990) 1 All ER 873 (HL)] which is more popularly known as “Jif Lemon” case wherein Lord Oliver reduced the five guidelines laid out by Lord Diplock in Erven Warnink Besloten Vennootschap v. J. Townend & Sons (Hull) Ltd. [Erven Warnink Besloten Vennootschap v. J. Townend & Sons (Hull) Ltd., 1979 AC 731 at p. 742: (1979) 3 WLR 68: (1979) 2 All ER 927 (HL)] (“the Advocaat case”) to three elements: (1) goodwill owned by a trader, (2) misrepresentation, and (3) damage to goodwill. Thus, the passing off action is essentially an action in deceit where the common law rule is that no person is entitled to carry on his or her business on pretext that the said business is of that of another. This Court has given its imprimatur to the above principle in Laxmikant V. Patel v. Chetanbhai Shah [Laxmikant V. Patel v. Chetanbhai Shah, (2002) 3 SCC 65].

31.2. The applicability of the said principle can be seen as to which proprietor has generated the goodwill by way of use of the mark/name in the business. The use of the mark/carrying on business under the name confers the rights in favour of the person and generates goodwill in the market. Accordingly, the latter user of the mark/name or in the business cannot misrepresent his business as that of business of the prior right holder. That is the reason why essentially the prior user is considered to be superior than that of any other rights. Consequently, the examination of rights in common law which are based on goodwill, misrepresentation and damage are independent to that of registered rights. The mere fact that both prior user and subsequent user are registered proprietors are irrelevant for the purposes of examining who generated the goodwill first in the market and whether the latter user is causing misrepresentation in the course of trade and damaging the goodwill and reputation of the prior right holder/former user. That is the additional reasoning that the statutory rights must pave the way for common law rights of passing off.

32. Thirdly, it is also recognised principle in common law jurisdiction that passing off right is broader remedy than that of infringement. This is due to the reason that the passing off doctrine operates on the general principle that no person is entitled to represent his or her business as business of other person. The said action in deceit is maintainable for diverse reasons other than that of registered rights which are allocated rights under the Act. The authorities of other common law jurisdictions like England more specifically Kerly's Law of Trade Marks and Trade Names, 14th Edn., Thomson, Sweet & Maxwell South Asian Edition recognises the principle that where trade mark action fails, passing off action may still succeed on the same evidence. This has been explained by the learned author by observing the following: “15-033. A claimant may fail to make out a case of infringement of a trade mark for various reasons and may yet show that by imitating the mark claimed as a trade mark, or otherwise, the defendant has done what is calculated to pass off his goods as those of the claimant. A claim in ‘passing off’ has generally been added as a second string to actions for infringement, and has on occasion succeeded where the claim for infringement has failed.”

32.1. The same author also recognises the principle that the Trade Marks Act affords no bar to the passing off action. This has been explained by the learned author as under: “15-034. Subject to possibly one qualification, nothing in the Trade Marks Act, 1994 affects a trader's right against another in an action for passing off. It is, therefore, no bar to an action for passing off that the trade name, get up or any other of the badges identified with the claimant's business, which are alleged to have been copies or imitated by the defendant, might have been, but are not registered as, trade marks, even though the evidence is wholly addressed to what may be a mark capable of registration. Again, it is no defence to passing off that the defendant's mark is registered. The Act offers advantages to those who register their trade marks, but imposes no penalty upon those who do not. It is equally no bar to an action for passing off that the false representation relied upon is an imitation of a trade mark that is incapable of registration. A passing off action can even lie against a registered proprietor of the mark sued upon. The fact that a claimant is using a mark registered by another party (or even the defendant) does not of itself prevent goodwill being generated by the use of the mark, or prevent such a claimant from relying on such goodwill in an action against the registered proprietor. Such unregistered marks are frequently referred to as ‘common law trade marks’.”

32.2. From the reading of the aforementioned excerpts from Kerly's Law of Trade Marks and Trade Names, it can be said that not merely it is recognised in India but in other jurisdictions also including England/UK (Provisions of the UK Trade Marks Act, 1994 are analogous to the Indian Trade Marks Act, 1999) that the registration is no defence to a passing off action and nor the Trade Marks Act, 1999 affords any bar to a passing off action. In such an event, the rights conferred by the Act under the provisions of Section 28 have to be subject to the provisions of Section 27(2) of the Act and thus the passing off action has to be considered independent “Iruttukadai Halwa” under the provisions of the Trade Marks Act, 1999.”

47. This position of law stands reaffirmed and reiterated by the Supreme Court in Toyota Jidosha Kabushiki Kaisha (supra), the raison d’etre that action for passing off is premised on rights of a prior user generating a goodwill, the essence and ethos of passing off being that nobody has a right to represent his goods as those of somebody and encash on the prior user’s formidable goodwill and reputation. The Supreme Court took note of a passage from Kerly’s ‘Law of Trade Marks and Trade Names’ which also finds reference in S. Syed Mohideen (supra) stating that “Again, it is no defence to passing off that Defendant’s mark is registered.” Passing off is a common law tort unlike infringement which is regulated by a statutory regime. In Kaviraj Pandit Durga Dutt Sharma v. Navratna Pharmaceutical Laboratories, AIR 1965 SC 980, the Supreme Court held that if the essential features of the trademark of the Plaintiff are adopted by the Defendant, the fact that get-up, packing etc. are different or indicate a trade origin different from that of the registered proprietor of the mark would be immaterial, whereas in the case of passing off, Defendant may escape liability if it can show that the added matter is sufficient to distinguish his goods.

48. Before embarking to examine whether either party has made out a prima facie case of passing off against the other, another crucial issue needs consideration, in the backdrop of the fact that both parties have predicated their rights on the principle of “transborder reputation”. In this context, I may first refer to the celebrated judgment of the Supreme Court in N.R. Dongre and Others v. Whirlpool Corporation and Another, (1996) 5 SCC 714, where Whirlpool Corporation had sued N.R. Dongre, the Appellant before the Supreme Court, for manufacturing and selling washing machines under the trademark WHIRLPOOL, alleging confusion amongst the buyers on the ground that they were being misled into believing that the washing machines were in fact sold by Whirlpool. The Supreme Court upheld the decision of the Division Bench of this Court injuncting N.R. Dongre on the ground that Whirlpool although located outside the territorial boundaries of India had the necessary transborder reputation which had spilled into India. Years later in 2004, the Supreme Court decided the case of Milmet Oftho Industries and Others (supra), where the competitor parties were selling identical products under identical marks. The Supreme Court applied the ‘first in the market’ test and upheld the decision of the Division Bench of the High Court which had granted injunction in favour of the Plaintiff in public interest since the product in question was a pharmaceutical product.

49. Thereafter in the year 2018, the Supreme Court authoritatively pronounced the judgment in Toyota Jidosha Kabushiki Kaisha (supra), which in my view, reflects a paradigm shift to the territoriality principle from the universality doctrine, which implies that the existence of goodwill and reputation has to be shown to exist in India and worldwide or global goodwill and reputation, sans any evidence of territorial goodwill and reputation will be insufficient to succeed in a claim of passing off and thus yardstick to judge the claim of passing off will be “prior user” in India. Relevant paragraphs of the judgment are as follows:-

31. A passing reference to a similar view of the Federal Court of Australia in Taco Bell v. Taco Co. of Australia [Taco Bell v. Taco Co. of Australia, (1981) 60 FLR 60 (Aust)] may also be made.

32. Prof. Cristopher Wadlow's view on the subject appears to be that the test of whether a foreign claimant may succeed in a passingoff action is whether his business has a goodwill in a particular jurisdiction, which criterion is broader than the “obsolete” test of whether a claimant has a business/place of business in that jurisdiction. If there are customers for the claimant's products in that jurisdiction, then the claimant stands in the same position as a domestic trader.

33. The overwhelming judicial and academic opinion all over the globe, therefore, seems to be in favour of the territoriality principle. We do not see why the same should not apply to this country.

34. To give effect to the territoriality principle, the courts must necessarily have to determine if there has been a spillover of the reputation and goodwill of the mark used by the claimant who has brought the passing-off action. In the course of such determination it may be necessary to seek and ascertain the existence of not necessarily a real market but the presence of the claimant through its mark within a particular territorial jurisdiction in a more subtle form which can best be manifested by the following illustrations, though they arise from decisions of courts which may not be final in that particular jurisdiction.

35. In LA Societe Anonyme Des Anciens Etablissements Panhard v. Panhard Levassor Motor Co. Ltd. [LA Societe Anonyme Des Anciens Etablissements Panhard v. Panhard Levassor Motor Co. Ltd., (1901) 2 Ch 513], the plaintiffs were French car manufacturers who had consciously decided to not launch their cars in England (apprehending patent infringement). Nevertheless, some individuals had got them imported to England. It was seen that England was one of the plaintiff's markets and thus, in this case, permanent injunction was granted. Similarly in Grant v. Levitt [Grant v. Levitt, (1901) 18 RPC 361], a Liverpool business concern trading as the Globe Furnishing Company, obtained an injunction against the use of the same name in Dublin as it was observed that advertisements by the plaintiff had reached Ireland and there were Irish customers.

36. C&A Modes v. C&A (Waterford) Ltd. [C&A Modes v. C&A (Waterford) Ltd., 1976 IR 198 (Irish)], was a case where the plaintiffs operated a chain of clothes stores throughout the UK and even in Northern Ireland but not in the Republic of Ireland where the defendants were trading. The Court held that, “a very substantial and regular custom from the Republic of Ireland was enjoyed by this store. Up to that time an excursion train travelled each Thursday from Dublin to Belfast, and so great was the influx of customers from the Republic as a result of that excursion that the store ordinarily employed extra parttime staff on Thursday on the same basis as it did on Saturday which were normally the busiest shopping days.” The said view has since been upheld by the Irish Supreme Court.

37. Whether the second principle evolved under the trinity test i.e. triple identity test laid down in Reckitt & Colman Ltd. [Reckitt & Colman Products Ltd. v. Borden Inc., (1990) 1 WLR 491: (1990) 1 All ER 873 (HL)] would stand established on the test of likelihood of confusion or real/actual confusion is another question that seems to have arisen in the present case as the Division Bench of the High Court has taken the view that the first test i.e. likelihood of confusion is required to be satisfied only in quia timet actions and actual confusion will have to be proved when the suit or claim is being adjudicated finally as by then a considerable period of time following the initiation of the action of passing-off might have elapsed. Once the claimant who has brought the action of passingoff establishes his goodwill in the jurisdiction in which he claims that the defendants are trying to pass off their goods under the brand name of the claimant's goods, the burden of establishing actual confusion as distinguished from possibility thereof ought not to be fastened on the claimant. The possibility or likelihood of confusion is capable of being demonstrated with reference to the particulars of the mark or marks, as may be, and the circumstances surrounding the manner of sale/marketing of the goods by the defendants and such other relevant facts. Proof of actual confusion, on the other hand, would require the claimant to bring before the Court evidence which may not be easily forthcoming and directly available to the claimant. In a given situation, there may be no complaints made to the claimant that goods marketed by the defendants under the impugned mark had been inadvertently purchased as that of the plaintiff claimant. The onus of bringing such proof, as an invariable requirement, would be to cast on the claimant an onerous burden which may not be justified. Commercial and business morality which is the foundation of the law of passing-off should not be allowed to be defeated by imposing such a requirement. In such a situation, likelihood of confusion would be a surer and better test of proving an action of passing-off by the defendants. Such a test would also be consistent with commercial and business morality which the law of passing-off seeks to achieve. In the last resort, therefore, it is preponderance of probabilities that must be left to judge the claim.

38. The next exercise would now be the application of the above principles to the facts of the present case for determination of the correctness of either of the views arrived at in the two-tier adjudication performed by the High Court of Delhi. Indeed, the trade mark “Prius” had undoubtedly acquired a great deal of goodwill in several other jurisdictions in the world and that too much earlier to the use and registration of the same by the defendants in India. But if the territoriality principle is to govern the matter, and we have already held it should, there must be adequate evidence to show that the plaintiff had acquired a substantial goodwill for its car under the brand name “Prius” in the Indian market also. The car itself was introduced in the Indian market in the year 2009-2010. The advertisements in automobile magazines, international business magazines; availability of data in information-disseminating portals like Wikipedia and online Britannica Dictionary and the information on the internet, even if accepted, will not be a safe basis to hold the existence of the necessary goodwill and reputation of the product in the Indian market at the relevant point of time, particularly having regard to the limited online exposure at that point of time i.e. in the year 2001. The news items relating to the launching of the product in Japan isolatedly and singularly in The Economic Times (issues dated 27-3-1997 and 15-12-1997) also do not firmly establish the acquisition and existence of goodwill and reputation of the brand name in the Indian market. Coupled with the above, the evidence of the plaintiff's witnesses themselves would be suggestive of a very limited sale of the product in the Indian market and virtually the absence of any advertisement of the product in India prior to April

2001. This, in turn, would show either lack of goodwill in the domestic market or lack of knowledge and information of the product amongst a significant section of the Indian population. While it may be correct that the population to whom such knowledge or information of the product should be available would be the section of the public dealing with the product as distinguished from the general population, even proof of such knowledge and information within the limited segment of the population is not prominent.

39. All these should lead to us to eventually agree with the conclusion of the Division Bench of the High Court that the brand name of the car Prius had not acquired the degree of goodwill, reputation and the market or popularity in the Indian market so as to vest in the plaintiff the necessary attributes of the right of a prior user so as to successfully maintain an action of passing-off even against the registered owner. In any event the core of the controversy between the parties is really one of appreciation of the evidence of the parties; an exercise that this Court would not undoubtedly repeat unless the view taken by the previous forum is wholly and palpably unacceptable which does not appear to be so in the present premises.”

50. Following the decision in Toyota Jidosha Kabushiki Kaisha (supra), a Co-ordinate Bench of this Court in BPI Sports LLC v. Saurabh Gulati and Another, 2023 SCC OnLine Del 2424, culled out the following principles:- “39. The following principles emerge:

(i) The territoriality principle applies; not the universality doctrine. Existence of goodwill and reputation has, therefore, to be shown to exist in India. Universal or worldwide goodwill and reputation, sans any evidence of territorial goodwill and reputation, is not sufficient.

(ii) Mere reputation is not enough. The claimant/plaintiff must show that it has significant goodwill.

(iii) The actual existence of an office of the plaintiff in the country of the defendant is not necessary

(iv) However, the claimant must have customers within the country of the defendant, as opposed to persons in the defendant's country who are customers elsewhere. Thus, where the claimant's business is carried on abroad, it is not enough for the claimant to show that there are people in the defendant's country who happen to be its customers when they are abroad.

(v) However, it would be enough if the claimant could show that there were people in the defendant's country who, by booking with, or purchasing from an entity in the defendant's country, obtained the right to receive the claimant's service abroad. The person from whom such booking or purchase took place could be the claimant, or its branch office, or someone acting for or on behalf of the claimant.

(vi) The claimant must be “present through its mark in the territorial jurisdiction” of the country of the defendant, though the existence of a “real market” was not necessary.

(vii) Such presence could, for instance, be shown by extensive advertisements which had been circulated and seen, or read, in the country of the defendant.

(viii) Once the existence of trans border reputation and goodwill was thus established, the claimant was not required, further, to prove the existence of actual confusion. The likelihood of the customer of average intelligence and imperfect recollection being confused, by the use of the impugned mark of the defendant, that the goods or services of the defendant were those of the claimant-plaintiff, was sufficient.”

51. In Roland Corporation (supra), the Court was ceased of the question as to which test was to be applied to determine passing off i.e. whether the appropriate test was that of first in the market, wheresoever in the world, which was the case set up by the Plaintiff therein or first in the market in India and/or even if not first in the market in India, having goodwill and reputation in India, which was the contention of the Defendant relying on Toyota Jidosha Kabushiki Kaisha (supra). The question was answered by the Court by holding that in view of the judgment in Toyota Jidosha Kabushiki Kaisha (supra), in an action for passing off, the factum of Plaintiff being first in the world is irrelevant, without the Plaintiff establishing goodwill and reputation in India. The Court found as a matter of fact that while the Plaintiff claimed having an exclusive distributorship in India since 1993, but the same was not proved and therefore as far as India was concerned, Defendants were the first user and that being the position, the action for passing off has to fail. Relevant paragraphs of the judgment are as follows:-

1 Arun Jain in examination-in-chief. The plaintiff, in its written arguments, has contended that there is no documentary evidence on record of use of the mark by the defendant, in 1979. Plaintiff, in its written arguments has further contended that evidence of first use of the mark by the defendant is of the year 1996. However, in the face of no challenge in cross-examination to the deposition of DW-1 Arun Jain, of use since 1979, the plaintiff is found to have admitted the same. The emphasis of the plaintiff, even otherwise has been on establishing that some international registrations of the mark in favour of the plaintiff are of prior to 1979, when the defendant claims first use of the mark in India. I may notice, that in Neon Laboratories Ltd. supra relied upon by the counsel for the plaintiff herein, the plaintiff Neon Laboratories Ltd. was the first user of the mark in the Indian market, despite earlier registration in favour of the defendant therein who was ultimately injuncted from using the mark subject matter of that case. Here, the defendant/counter claimant is the first user of the mark in the Indian market.

36. Supreme Court, in Toyota Jidosha Kabushiki Kaisha supra was concerned with a final decree in a suit for permanent injunction restraining passing off. The plaintiff therein claimed to be the first worldwide user of the mark ‘PRIUS’. However, the defendants therein were the first user of the mark in India. The Single Judge of this Court, relying on Milmet Oftho Industries supra, granted a decree for injunction in favour of the plaintiff therein, restraining the defendants from use of the mark ‘PRIUS’. In appeal, the Division Bench of this Court reversed the decree, holding (i) that the first use by the plaintiff outside India, of the mark, though widely reported and advertised, did not have much reportage in India; (ii) that the Territoriality Doctrine (a trade mark being recognized as having a separate existence in each sovereign state and hence the rights in the trade mark do not extend beyond the territory of the sovereign state which has granted the rights) holds the field; (iii) that prior use of the trade mark in one jurisdiction would not ipso facto entitle its owner or user to claim exclusive rights to the said mark in another dominion; (iv) that it is necessary for the plaintiff to establish that its reputation had spilled over to Indian market prior to commencement of the use of the mark by defendant in India; (v) that internet penetration in India in 1997 was lean and it could not be said that prior to April 2001, the plaintiff had established its goodwill and reputation in the Indian market, which the defendants had taken advantage of; and, (vi) that the test of possibility/likelihood of confusion would be valid at the stage of quia timet action and not at the stage of final adjudication of the suit, particularly when the defendants had used the impugned mark for a long period—the test would be one of actual confusion and no evidence with respect whereto was led by the plaintiff in that case. The Supreme Court, while affirming the order of the Division Bench of this Court, further held that, (a) to prove and establish an action of passing off, three ingredients are required to be proved by the plaintiff, i.e., his goodwill, misrepresentation by the defendant and damage; (b) the test, of whether a foreign claimant may succeed in a passing-off action, is whether his business has a goodwill in a particular jurisdiction, which criterion is broader than the “obsolete test” of whether a claimant has a business/place of business in that jurisdiction; if there are customers for the plaintiff's products in that jurisdiction, then the plaintiff stands in the same position as a domestic trader; (c) the overwhelming judicial and academic opinion all over the globe, therefore, seems to be in favour of the territoriality principle which should apply to this country also; (d) to give effect to the territoriality principle, the Courts must necessarily have to determine if there has been a spillover of the reputation and goodwill of the mark used by the claimant who has brought the passing off action; and, (e) if goodwill or reputation in the particular jurisdiction i.e. in India is not established by the plaintiff, no other issue really would need any further examination to determine the extent of the plaintiff's right in the action of passing off.

37. In my view, in the light of the aforesaid judgment, in an action for passing off, as the present suit is, the factum of the plaintiff being first in the world is irrelevant, without the plaintiff establishing goodwill and reputation in India and which the plaintiff has failed to prove. Though the plaintiff has claimed having an exclusive distributor in India since 1993 but the same also remained to be proved. Thus, as far as India is concerned, defendants are the first user and that being the position, the action for passing off has to fail.”

52. The said principle of territoriality was followed by the Coordinate Bench of this Court in Bolt Technology OU v. Ujoy Technology Private Limited and Another, 2023 SCC OnLine Del 1122, wherein the Court declined injunction to the Plaintiff in an action for alleged passing off against the Defendant, on the ground that Plaintiff had no market exposure whatsoever in India and no spillover or percolation of its transborder reputation into India was made out. Court observed that the Defendant was first in the Indian market in providing its product i.e. EV charging services and therefore applying the territoriality principle which had overtaken the universality doctrine, Defendant’s interest who was first and far ahead of others in its field, could not be jeopardised. The Court also observed as follows:- “55. Here again, where the plaintiff, though situated abroad, carries on business within the territory of India, or has some business exposure within India, the exercise of examining whether the plaintiff has the requisite goodwill or reputation in India is simplified. We are, however, faced with a situation in which, admittedly, the plaintiff carries on no commercial activity, whatsoever, within the territory of India. The activities in which the plaintiff is engaged are not, even to the most infinitesimal degree, carried out within Indian borders.

56. Even in such a situation, however, the possibility of the defendant, situated in India, passing off its goods and services as those of the plaintiff is not entirely ruled out, for the simple reason that the plaintiff, even if situated and carrying out its business activities abroad, may, at any time, decide to expand, or diversify, to India. A consumer of average intelligence and imperfect recollection, who comes across the defendant operating under the mark of the foreign plaintiff, or under a deceptively similar mark, may well presume that the defendant has decided to enter the Indian commercial firmament. Were this to be established, the defendant might still be found guilty of passing off its goods or services as those of the plaintiff, though the plaintiff is entirely situated abroad and has, till date, no commercial existence in India.

57. By plain logic, however, in such a case, the plaintiff would have to show that its goodwill and reputation, though garnered abroad, is so considerable that it has spilled over to India. In other words, the plaintiff would have to establish (i) that it has transborder reputation, i.e. reputation which extends beyond the regions in which it has commercial existence, (ii) that the trans border reputation has extended to India and (iii) that the “spillage” is so considerable as to confuse or deceive a customer of average intelligence and imperfect recollection into believing that the goods or services of the defendant are those of the plaintiff.

58. The task of identifying the indicia of trans border reputation and the extent of is percolation into India to maintain a passing off action against a defendant located in India is facilitated by a considerable body of case law that has, over the years, developed on the issue. I deem it appropriate to refer, in this context, to the decisions of the Supreme Court and of Division Benches of this Court on the issue, as they are of binding precedential value.”

53. After an in-depth analysis of the documents placed and relied upon by both sides in the form of articles, surveys etc. the Court held as follows:-

(iii) The Economic Times article, for its part, reported that

(a) the plaintiff was a rival of Uber's ride sharing and food delivery business, (b) Bolt also offered electric scooter rentals, car sharing and a 15-minute grocery delivery service,

(c) these services catered to 100 million customers in 45

(d) the plaintiff faced competition in food delivery from, inter alia, Just Eat, Takeaway.com and DoorDash, which had also largely entered Europe, and (e) to gain customers, platforms offered attractive discounts, leading to price wars, and the plaintiff claimed to be offering its services at lower prices than others.

(iv) Neither of these articles, therefore, made even an oblique reference to the plaintiff entering the EV charging business. Regarding EV charging as “allied” to electric scooter-sharing services would, in my view, stretching the concept of allied goods and services a notch too far. The import of these articles is clear and obvious. The plaintiff was, till then, engaged in providing taxi hailing services. It had, a year earlier, ventured into the electric scooter sharing field, in Paris. It was seeking to branch out into other cities in Europe and Africa. There is nothing to indicate that it was either engaged in providing EV charging services, or making EV charging points, or intending to do so any time in the foreseeable future. More significantly, these articles do not suggest, even obliquely, that the plaintiff was expanding its activities to India or, for that matter, even to Asia. It cannot, therefore, be held, on the basis of these articles, that an average customer in India, who would read them, would believe that the plaintiff was venturing into the Indian market with EV charging solutions.

(v) The defendant had not sought to contend, anywhere, that it was engaged, commercially, in the activity of EV charging stations, or in providing EV charging services. In fact, in para 12 of the plaint, as Mr. Chander Lall correctly points out, the plaintiff has acknowledged that “consumers have become accustomed to understanding that the trademark BOLT is a commercial sign of origin specifically for mobility, transportation and delivery goods and services”. There is no reference, here, to providing EV charging services.

(vi) The limited reference to EV charging stations installed by the plaintiff, is of charging docks installed by the plaintiff in Tallinn and Estonia, with plans to install further docks in Lithuania and Portugal, for charging the plaintiff's electric scooters. I am, prima facie, in agreement with Mr. Lall that the mere fact that the plaintiff, otherwise engaged in providing taxihailing services and intending to expand into the electric scooter sharing business, was installing charging docks to charge its scooters in Tallinn, Estonia, Lithuania and Portugal, could hardly make out a case even for inferring the existence of trans border reputation, in the plaintiff, in the commercial EV charging segment, much less of permeation of such trans border reputation into India.

(vii) The number of times the plaintiff's App has been downloaded in India, or its website accessed by drivers, cannot, in my prima facie view, make out a case of spillover of trans border reputation of the plaintiff, in the EV charging market, into India, even if, arguendo, EV charging were to be regarded as an activity allied to electric scooter sharing. Toyota is clear in requiring that, even if the plaintiff has no market in India, it would be required to show that its goods or services were purchased, or availed, by customers in India through the plaintiff, its branch, or its agents. The plaintiff's App cannot substitute as an agent of the plaintiff, especially as the App can be downloaded anywhere in the world.

(viii) Equally, Toyota also approves the view, in Starbucks, that the existence of customers in the defendant's country, who would avail the services of the plaintiff abroad, cannot make out a case of permeation of trans border reputation. Ms. Sukumar acknowledges that, even if persons in India were to download the plaintiff's App, no services of the plaintiff could be availed thereby in India, and that the purpose of such downloading would only be to avail the plaintiff's services abroad. The limited downloading of the plaintiff's App by persons who may be travelling abroad to countries where the plaintiff's services are available cannot, prima facie, be regarded as any sign of spillover of the plaintiff's reputation into India, much less in the EV charging arena.

(ix) The “driver survey”, to which Ms. Sukumar drew attention, tells us precious little. All that is presented is a tabular statement of drivers in five cities. This statement is supposed to reflect the number of times the plaintiff's website was accessed by the drivers. Whether it does, or not, is anybody's guess; at the very least, it is a matter which would have to suffer trial even for a prima facie view to be ventured thereon. Even if it does, the purpose of accessing the website is unknown. Nor can the Court hold that the mere accessing of the plaintiff's website in this fashion justifies a finding, even prima facie, of permeation of the reputation of the plaintiff into India, far less in the field of EV charging, which alone the defendant is engaged in.

(x) As in the case of Toyota, in the present case too, the evidence and material cited by Ms. Sukumar, even view cumulatively, do not constitute sufficient spillover, into India, of the trans border reputation, if any, possessed by the plaintiff with respect to the use of the mark as would justify injuncting the defendant from using the impugned mark for EV charging stations.

(xi) Though Ms. Sukumar, in rejoinder, ventured a submission that, even in the absence of spillover of trans border reputation, mere intent, on the part of the plaintiff, to enter the Indian market would be sufficient, the submission cannot, prima facie, merit acceptance. It would, moreover, fly directly in the face of the principles enunciated so authoritatively by the Supreme Court in Toyota. Passing off is, at all times, a tort the commission of which involves an element of confusion or deception, and the confusion or deception must be suffered by the mythical customer who chances on the defendant's mark. For this, the awareness, by such customer, of the reputation of the plaintiff, is an indispensable sine qua non. Intent of the plaintiff to venture into the Indian market space cannot, therefore, substitute the necessity of spillover of trans border reputation.

(xii) For the same reason, the fact that the plaintiff may have applied for obtaining trade mark registrations in India can have no impact on the issue in controversy. The customer in India is unaware of the number of applications submitted by the plaintiff for registration of its mark.

75. For that matter, I am unable to convince myself, even prima facie, that, even in the field of electric scooter sharing services, the plaintiff has any trans border reputation, much less a reputation that has spilled over into India. The plaintiff is, even internationally, a new player in the electric scooter sharing field, though it might be having considerable repute in the field of taxi-hailing. Quite apart from the fact that the viability of electric scooter sharing appears itself to be mired in controversy, it is only in 2020 that the plaintiff commenced providing such services in Paris. The existence of trans border reputation, in the plaintiff, in the electric scooter sharing arena too, is, therefore, extremely questionable. In any event, no spillover of such reputation to India can, prima facie, be said to exist.

76. The defendant, on the other hand, is the first in the Indian market in providing EV charging services. Toyota makes it clear that the “first in the market” principle has to be applied with respect to the Indian, and not the international, market. The territoriality principle has overtaken the universality doctrine. In the Indian market, the defendant is not only the first; the material cited by Mr. Lall, and noted hereinbefore, make out, prima facie, an enviable exposure of the defendant in the EV sharing space, far ahead of others in the field. The comparative analysis of the plaintiff's and defendant's exposures in this field in India, therefore, eminently call for application of the note of caution sounded in Milmet Oftho, of not allowing foreign Companies to throttle Indian entrepreneurs.

77. There is no justification, therefore, prima facie, for the Court to, by allowing the application of the petitioner, who has no market exposure whatsoever in India, and, prima facie, no spillover or percolation of its trans border reputation into India, to jeopardize the market, or the repute, that the defendant has earned by use of the impugned mark, for providing EV charging services.”

54. Pertinent would it be to refer to a recent judgment of this Court in Toyota Jidosha Kabushiki Kaisha v. Tech Square Engineering Pvt. Ltd. and Another, 2023 SCC OnLine Del 583, wherein relying on the principles elucidated in Toyota Jidosha Kabushiki Kaisha (supra), the Court posed to itself the question as to whether in the said case Petitioner had produced sufficient evidence on record in support of its contention that trademark ALPHARD carried a transborder reputation that had spilled over in India and answered it by holding that merely the international usage of the trademark was not sufficient to prove the spillover in India and since Petitioner had failed to place on record even a single invoice to show that it had sold any car under the brand ALPHARD in India and all the documents only reflected the goodwill and reputation in several other jurisdictions, it could not be stated that substantial number of consumers knew about its existence in India. Accordingly, the rectification petition was dismissed.

55. From a conjoint reading of the aforesaid judgments, the singular principle that emerges for deciding the claim of passing off will be to assess the existence of goodwill and reputation ‘in India’. As a corollary, worldwide or global goodwill and reputation will not suffice albeit actual or physical existence of brick and mortar stores may not be necessary in the country. In other words, Plaintiff would have to establish its ‘presence’ within the jurisdiction of Defendant’s country and this presence can be through advertisements and promotion and not necessarily by real market but with a rider that that the “spillage” is so considerable as to confuse or deceive a customer of average intelligence and imperfect recollection into believing that the goods or services of the Defendant are those of the Plaintiff.

56. Tested on the anvil of the observations of the Supreme Court in Toyota Jidosha Kabushiki Kaisha (supra) and the aforementioned judgments, in order to succeed in the claim for passing off, both VIP and Carlton in their respective rights would have to establish their existence through their marks in India and their goodwill and reputation abroad alone would not suffice, applying the territoriality principle.

57. VIP has placed on record promotional and advertisement material in support of its claim of transborder reputation of its predecessor-in-title Carlton International PLC. As an illustration, one of the said document is extracted hereunder, for ready reference:-

58. It is palpably clear that these documents shed no light on whether the purported promotion material was extensively and widely published and/or circulated in India and customers here had seen and read them such that the goodwill and reputation of VIP’s predecessor percolated and spilled into India, since universal or worldwide goodwill and reputation, sans any evidence of territorial goodwill and reputation, is no longer the yardstick. As held by the Co-ordinate Bench, Plaintiff must have customers within the country of the Defendant, as opposed to persons in the Defendant’s country who are customers elsewhere. Thus, where Plaintiff’s business is carried on abroad, it is not enough to show that there are people in the Defendant’s country who happen to be its customers when they are abroad. None of the promotional material or articles placed on record by VIP even obliquely reflect VIP’s predecessor’s existence in the Indian market till 2004, when VIP acquired the trademarks and consequential rights and goodwill, by way of an Assignment Agreement. Some documents, purportedly advertisements/price lists, reflect their origin dating back to the 1980s and 1990s, but there is no supporting material to show their awareness amongst customers in India. It must be kept in mind that in that era, knowledge and awareness of brands was mostly through travel of people off shores or through electronic/print media as the online exposure was limited. No documents are found on record which would evidence sales in India by VIP’s predecessor, in the form of invoices, bills, delivery documents, photographs of stores displaying the products, etc. under the trademark CARLTON. VIP has laboured to piggy back on the advertisements and sales figures of its umbrella brand VIP in a misdirected effort to generate goodwill, however, that cannot aid VIP as the test here would be goodwill and reputation generated under the trademark CARLTON and not VIP.

59. Applying the aforesaid principles culled out by the Court in BPI Sports LLC (supra), VIP is required to show prima facie at this stage that it had customers/sales in India for its goods i.e. bags and other allied goods falling under class 18 under the trademark CARLTON, prior to Carlton, as opposed to customers outside the territorial boundaries of India. It is not enough to show that people in India were customers of Carlton International PLC, when they travelled abroad, going by the recent judicial precedents on this aspect. In a nutshell, VIP is required to prima facie demonstrate the presence of its mark within Indian boundaries, which, in my opinion, it has failed to do, at this stage.

60. To substantiate its case, VIP has also placed reliance on certain articles, advertisements and sales invoices of goods under the mark CARLTON, post-acquisition of Carlton International PLC by VIP. However, all that can be said at this stage is that none of these documents evidence user of the mark CARLTON prior to the user by Carlton. The earliest sales invoice placed on record by VIP is dated 11.08.2006, followed by invoices dated 26.10.2006, 31.10.2006, 29.01.2007 and 30.01.2007 and thereafter from 05.11.2012 onwards. Significantly, invoices for the years 2006 and 2007 have no reference to CARLTON. To overcome this lacuna, pointed out by Carlton during the course of hearing, VIP filed additional documents vide Index dated 20.05.2022, containing a list of invoices allegedly reflecting sale of bags and learned Senior Counsel laboured hard to co-relate the sales, price lists and the promotional brochures. As an illustration, invoice dated 22.12.2006 annexed at Page No. 1 of the Index dated 20.05.2022, reflects the category of bag as ‘Airtec’ which finds mention in a price list annexed at Page 3 and promotional brochures are at Pages 4 to 6. However, despite this exercise and assuming the stand of VIP to be correct on its face value that bags were sold under the said invoices, no mileage can be drawn by VIP from these invoices, since the earliest invoice even in the additional set of documents dates back to 22.12.2006, which is well after the earliest sales of Carlton in India, which according to Carlton goes back to the year 1992/1993. In a nutshell, the documents filed by VIP i.e. promotional material, articles, sales/tax/import invoices etc. even cumulatively, do not constitute sufficient spillover into India of the transborder reputation, so as to defeat the claim of Carlton.

61. Passing off is a tort premised on deceit and involves an element of confusion among and deception of a mythical customer who chances on the Defendant’s mark and it goes without saying that for this, Plaintiff’s reputation is an indispensable element. Absence or negligible presence of VIP’s goods in question under the trademark CARLTON in the Indian market space when Carlton started to occupy the space, defeats VIP’s claim of passing off against Carlton.

62. Carlton, on the other hand, is ‘first in the Indian market’ in respect of bags and allied goods falling under class 18 sold under the trademark CARLTON, territoriality principle having overtaken the universality doctrine. In the Indian market, prima facie Carlton has made out a case of prior user and enviable exposure of bags under the mark CARLTON, which is demonstrable from the following documents:- (a) Invoices of sales from the year 2003 from various shops in different malls in Punjab, Haryana and Rajasthan as also list of 24 outlets across Delhi, Gurgaon, Noida, Chandigarh etc. where some sales invoices pertain to the years 2003 to 2005. (b) Certificate of Sales figures/revenues under the mark CARLTON in India for the years 1993-2018.

(c) Articles extensively figuring on various high-profile magazines and newspapers widely published and circulated in India such as Cosmopolitan, Femina, Fashion Bloom, Apparel, Society, Outlook, The Tribune, The Pioneer, HT City, Business Standard, The Hindu etc. The earliest promotional material for bags dates back to March, 2004.

(d) Presence on e-commerce platforms available in India like

Myntra, Flipkart, Amazon, etc. (e) VAT registrations from the year 1993 onwards. (f) Master data of production under the CARLTON marks from the year 2003 onwards. (g) Consumer complaints from the year 2016 onwards showing actual confusion amongst consumers mistaking VIP’s products for Carlton’s products.

63. Passing off is a common law remedy based on the ethos and principles that goodwill in the business must be protected against misrepresentation by third parties in the course of trade and in several judgments, Courts have echoed that assertion of the right in passing off is premised on the ground that no one has a right to represent his goods or services as that of someone else and even if misrepresentation is not fraudulent or deliberate but innocent, Courts would come to the aid and grant injunction to protect the goodwill. The essential characteristics/elements of the action of passing off have been succinctly brought out by Lord Diplock in Erven Warnink BV v.

64. VIP has prima facie failed to establish spillover of transborder reputation in India and/or prior user while Carlton is first in the Indian market and has shown formidable goodwill and reputation under the trademark CARLTON and its formative marks. VIP stepped into the market under the mark CARLTON well after Carlton and knowing the presence and existence of Carlton in bags in India, adopted phonetically identical and visually similar trademarks for similar goods, which needless to say would lead to likelihood of confusion with an unwary purchaser believing that the bags are sold by Carlton. In fact, in this case, Carlton has also placed on record material to show that VIP itself claims launch of its products under CARLTON in 2014 and complaints from customers from 2016 of actual confusion alleging inferior quality, which though is a matter of trial but does dent the case of VIP for passing off. No documents supporting passing off by Carlton have been filed by VIP, per contra. Therefore, Carlton has made out a prima facie case for grant of injunction and irreparable loss shall be caused if VIP is not restrained from selling similar goods under the trademark CARLTON (word and device). Balance of convenience also lies in favour of Carlton.

65. VIP relied on judgments on the proposition of ‘first in the market principle/prior user’. In my view, judgments in S. Syed Mohideen (supra), Milmet Oftho Industries (supra) and Neon Laboratories Limited (supra), aid the case of Carlton which has been successful in establishing prior user by way of sales and various other documents. VIP has also placed reliance on the judgments in Ansul Industries (supra) and Suzuki Motor (supra) for dishonest adoption, but these would also not help, as VIP has failed to make out a case of dishonest adoption by Carlton. The remaining judgments are on well settled proposition of law which can hardly be disputed but do not further the case of VIP in the facts of the present case.

66. For all the aforesaid reasons, this Court comes to a prima facie conclusion that Carlton has made out a case for grant of injunction against VIP. Accordingly, I.A. 18443/2019 in CS(COMM) 730/2019 filed by Carlton is allowed to the extent of restraining VIP, its assigns, affiliates, relatives, successors-in-interest, licensees, franchisees, partners, representatives, servants, distributors, employees, agents and all other persons from marketing, selling or offering to sell bags and other allied goods falling in class 18 under its trademarks CARLTON (word mark) and and/or any other trade mark identical/ deceptively similar to Carlton’s trademarks CARLTON/CARLTON LONDON/ or any variants thereof singularly or in conjunction with any other word or monogram/logo or label or in any other manner, amounting to passing off. I.A. 1369/2020 in CS(COMM) 52/2020 filed by VIP against Carlton is dismissed.

67. It is however directed that Carlton shall maintain accounts of manufacture and sales of the impugned products under the marks CARLTON/CARLTON LONDON/ and shall file the same on affidavit on half-yearly basis in this Court.

68. Both IAs stand disposed of making it clear that the observations and opinion of the Court expressed in the present judgment are only tentative and prima facie and will have no bearing on the final adjudication of the suits on merits. CS(COMM) 730/2019 & CS(COMM) 52/2020 List these matters before the Roster Bench on 09.08.2023, subject to orders of the Hon’ble Judge In-charge (Original Side). JYOTI SINGH, J JULY 17, 2023/Shivam/kks