In a welcome development in the trademark regime, a whopping INR 1.85 crores (USD 26500 approximately) have been granted as punitive damages to a UK based firm, Whatman International Limited for infringement of its trademark, its trade dress and get up in the form of providing similar packaging, apart from counterfeit production of similar goods, by the Delhi High Court on February 1, 2019, in the case ‘Whatman International Limited vs. P Mehta & Ors.’[1]. The firm deals in the business of Filter papers and has been a registered holder of the trademark ‘WHATMAN’ in India under Classes 1, 9 and 16.
Facts:
The plaintiff claimed that they were founded in the year 1740 and that despite WHATMAN being a surname, the plaintiff had acquired the requisite distinctiveness due to continuous use of the trade name and get up for 250 years. The plaintiff claimed that they used a distinctive color combination, script, get up and layout, consisting of a blue script in white background. The plaintiff argued that the defendant used the WHATMAN filter paper along with an identical color combination and get up or trade dress in an unauthorized manner, although with a different trade name. The plaintiff further alleged that the defendants were habitual offenders and had been continuously been delving into counterfeiting of the plaintiff’s products since 1992, with an instance even in 2005 brought to record. An interim injunction was passed by the court in 2014, yet the defendants had been continuously selling infringing counterfeiting goods and therefore, seizures upon execution of the FIR was levied, during which large amounts of counterfeit filter paper was seized. The defendants claimed that those goods had not been sold since the interim injunction passed in 2014, and they further stated that they were willing to suffer a permanent injunction. The plaintiff further submitted that the defendants not only manufactured and sold counterfeit WHATMAN filter papers, but also adopted an identical color combination, layout and get up of the product and packaging, under different trade names like HIRAL, SUN, LABSMAN, U-CHEM and ACHME. The plaintiff thus pleaded for not merely a permanent injunction but for punitive damages as well.
Decision:
Hon’ble Justice Pratibha Singh held that there was no opposition to the claim of permanent injunction in this instance. The major question before the court was the question of punitive damages and the application of Contempt under Order XXXIX Rule 2A of the CPC.
It was held that the packaging used for filter paper was a substantial reproduction of the WHATMAN filter paper’s packaging, in color combination, layout and get up. Further, it was specifically mentioned on the website of one of the defendants, which uses the trade name ACHME FILTERS that, “Our filter paper is equivalent to WHATMAN at the best rate.” This proved the intention of the defendants to pass off the goods as those of the plaintiffs or comparable to that of the plaintiffs. Further, the local commissioner seized filter papers which were a substantial imitation of the plaintiff’s product. The court further acknowledged the claim of the plaintiffs that the defendants had continuously made false statements before the court on oath by stating that “the defendants claim that the seizure was of old stock was a false claim by the defendants as the search conducted by the police in 2018 was not the same as the local commissioners in 2014.”
The court concluded that “Defendants have acted in concert with each other. Their pleadings and oral statements are contrary to the records. The Local Commissioners reports are liable to be read in evidence in the suit as per the provisions of Order XXVI Rule 13.” In its reasoning for levying punitive damages, the court stated that “Mr. Paresh Mehta and his family have clearly incorporated a new entity only to circumvent the undertaking given before the criminal court. The new company M/s Maruti Chem Enterprise private Limited is run by Mr. Paresh Mehta’s son and wife. This fact is not disputed. The defendants are continuing to indulge in illegal conduct of infringement and to the orders passed by the court. Even the repeated criminal complaints filed against them and the seizures made pursuant to the said complaints do not appear to have had a deterrent effect. The disobedience or breach of an injunction has to have consequences in law. If strict action is not taken, orders of courts would not be complied with by litigants, as is evident in the present case. Such disobedience not only constitutes violation of the provisions of Order XXXIX Rule 2A of the CPC but also constitutes Contempt under the Contempt of Courts Act, 1971.”
The court held that the defendants were guilty of infringement and passing off and also liable for making false statements before the court, by stating that deliberate and conscious acts of the defendants to pass off and earn monetary gain and the modus operandi taken was indicative of an intention to “hoodwink the authorities and overreach the court process” and this deserved no compassion.
On the issue of exemplary damages, the court relied on the categorical test of ‘Rookes vs. Bernard’[2], a House of Lords decision declared as law of the land by the Supreme Court and cited as an authority in the case ‘Hindustan Unilever vs. Reckitt Benckiser India Limited’.[3]The test prescribed includes only three circumstances wherein the court can proceed to award punitive damages, which are,
Oppressive, arbitrary or unconstitutional action by any of the servants of the government;Wrongful conduct by the defendant which has been calculated by him for himself, which may well exceed the compensation payable to the claimant; andAny case where exemplary damages are authorized by the statute.
In the present case, the court stated that “the conduct of the defendants is wrongful to say the least. The defendants have committed infringement of the plaintiff’s mark and impinged on their rights deliberately, consciously and willfully for a period spanning over 25 years. Repeated legal action has not deterred them. They show no remorse in the statements recorded.”
A determination of the punishment on account of contempt is yet to be done, although contempt has been held affirmatively.
[1] CS (COMM) 351/2016 & I.A. 5235/2018
[2] ALL E. R. 367
[3] FAO (OS) (COMM) 62/2018 & C.M. 13949/2018