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B.K. Engineering Co. Versus Ubhi Enterprises (Registered) and Anr.

1984 (11) TMI 352 - DELHI HIGH COURT

First Appeal No. 99 of 1984 - Dated:- 12-11-1984 - A.B. Rohtagi and Gian Chand Jain, JJ. N.K. Anand, Amarjit Singh, Parveen Anand, Anoop Singh, H.P. Singh and Manmohan Singh, Advs JUDGMENT A.B. Rohtagi, (1) "IN the interests of fair trying and in the interests of all who may wish to buy and sell goods. the law recognises that certain limitations upon freedom of action are necessary and desirable. In some situations the law has had to resolve what might at first appear to be conflicts betwee .....

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t appellants, B. K. Engineer ing Co. of Delhi, have brought a passing-off action against the defendants, the present respondents, Ubhi Enterprises of Ludhiana. The plaintiffs claim permanent injunction, accounts and damages. The plaintiffs and the defendants are in the same line of business. Both firms are engaged in the manufacture of cycle bells. The plaintiffs started manufacturing bells as early as 1971. They adopted "B.K." as their house mark they, manufacture cycle bells under th .....

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ell as on the push handle. "UBHI Enterprises Regd " is engraved on the dome-shaped cover alone; with words ''B.K. 81". On the stand of the bell and carton their manufacturing name Ubhi appears. (5) Now the plaintiffs' case is that the defendants 'mark ''B.K.-81 is deceptively similar to the house mark "B.K'' of the plaintiffs and is bound to cause confusion and deception in the course of trade. (6) The plaintiffs attach cardinal importance to t .....

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he plaintiff appeal to this Court. (8) The learned judge recorded the statement of Manmohan Singh, a partner of the defendant firm. He admitted that the plaintiffs have been selling cycle bells under the trade marks Crown and Venus. Immediately the judge appointed a local commissioner who, accompanied by the parties, went to the market on that very day. The commissioner found that the Crown and "B.K." bells of the plaintiffs were on sale in the market. He collected plaintiffs' cart .....

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facturing and selling bells bearing "B.K.-81". He Therefore refused injunction but directed the defendants' to maintain accounts. (10) Whether the learned Judge was right in refusing injunction on the admitted facts that the plaintiffs' manufacturing name and house mark is "B.K." and the defendants' trade mark is "B.K.-81" is the question for decision. Nor is this in dispute that the defendants started manufacturing bells in November 1981 and the plainti .....

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Lord Halsbury). In other words, a man is not to sell his goods or his services under the pretence that they are those of another man (Perry v. Truefitt per Lord Langdale (M.R.) This is the classic form of passing-off. Now this tort has been extended in the leading case of Erven Warnik vs Townend and Sons .Lord Diplok said that "what the law protects by a passing-off action is a trader's property in his business or goodwill" (p. 932). Following Lord Parker in A.G. Spalding v. AW Ga .....

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to prospective customers of his or ultimate consumers of goods or services supplied by him, (4) which is calculated to injure the business or goodwill of another trader (in the sense that this is a reasonably foreseeable consequence) and (5) which crises actual damage to a business or goodwill of the trader by whom the action is brought. (Erwen Warnik supra at 932- 933 per Lord Diplok). (13) The law on this matter is designed to protect traders against that form of unfair competition which cons .....

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ls. On the bells they give the name of the manufacturer as "B.K. Engineering Co." If "B.K." is the distinctive indicial of the plaintiffs' product, will not the buying public be misled by the defendants' product "B.K.-81" ? This. is the real question in this appeal. (15) "B.K." is the plaintiffs' house name. Under this banner they carry on business. These two letters have become associated with their goods. They have been in the manufacturing l .....

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each case is whether the name or description given by the defendant to his goods is such as to create a likelihood that a substantial section of the purchasing public will be misled into believing that his goods are the goods of the plaintiff. (Parkar Knoll Ltd. v. Knoll International Ltd. The defendants say that they are entitled to use "B.K.-81" as B.K. is an abbreviation of their deceased mother's name. Balwant. Kaur. I cannot accept this argument. That the defendants use their .....

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ll deceive people into thinking that their goods .are the goods of the plaintiffs. Unfair competition (18) The setting of the law of passing'-off is competition between traders. There is a real risk of injury to the reputation of the plaintiffs if the defendants are nut prevented from selling cycle bells under the name "B.K.-81". This is a misappropriation of plaintiffs' name. "B.K.-81" is strongly suggestive of association with the plaintiffs, or some license or endo .....

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'intangible property right' in his product by misappropriating descriptions which have become recognised by the market as distinctive of the product that the law will permit competition to be restricted. Any other approach would encourage monopoly. The new small man would increasingly. find his entry into an existing market obstructed by the large traders already well known as operating in it." (Cadbury Schweppes Ply, Ltd. v. Pub Squash Ply, Ltd Use of name without consent (20) As .....

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t in Norwich under the same name. (22) In Parker-Knoll Ltd. v. Knoll Intel-national Ltd. (supra) both parties were manufacturers of furniture, the plaintiff being a company well-known in the United Kingdom and the defendant an American Company which had only recently begun to trade in England. Notwithstanding that the defendant company did no more than use its own name on its furniture, the House of Lords, by majority, granted an injunction to restrain it from continuing to do so without disting .....

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passing off will spring up. Radio, television and newspaper advertisement have added a new dimension to this tort. The crux of the matter is not the intention of the defendant in taking a certain name, but the probable affect of such action on the minds of the public. However innocent may be his intentions, he will be restrained from trading under name so much like that under which the plaintiff who was first in the field trades, that the public are very likely to be deceived into systematic, a .....

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ot;A false impression, has something of a faculty ring about it.-, it is not sterling coin; it has no right to the genuine, stamp and impress of truth." (Reddaway v. Banham (supra) per Lord Macnaghten. (25) In principle and in substance I can see no difference between the present case and the cases of unauthorised use of name I have just referred to. Only the badge is different. The instrument of fraud is the same, namely, a misleading symbol. As Lord Macnaghten said: "FRAUD is infinit .....

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ht of property being his right to the goodwill of his business (Cadbury (supra) at p. 221)]. The plaintiff is entitled to protect the goodwill in his business. Equity will intervene to protect the goodwill. Injunction is an equitable remedy. This doctrine now has the blessing of the House of Lords in Erwen Warnik v. Town end (supra) and of the Privy Council in Cadbury Schweppes v. Pub. Squash Co. (supra) and Star Industrial Co. Ltd. v. Yap Kwee Kor. The right the invasion of which is the subject .....

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arable injury to the plaintiff's property. (27) What the judge has to decide in a passing off action is whether the public at large is likely to be deceived. What would be the effect of the representation upon the prospective purchaser ? Instances of actual deception may be useful as examples, and evidence of persons experienced in the ways of purchasers of a particular class of goods will assist the judge. But his decision does not depend solely or even primarily on the evaluation of such e .....

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e manufacturing bells under the trade mark "B.K" Whether they are or they are not, is a matter which remains to be established at the trial. But one thing is certain. The defendants have pre-empted commercial exploitation of plaintiffs personality. They have pre-empted plaintiffs' capacity to extend their business under their name "B.K." (See Sheraton Corp. of America v. Sheraton Motels Ltd. (1964) Rpc 202x16). The question whether the plaintiffs manufacture, cycle bells .....

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s neither here nor there. The central question is whether there is misappropriation of a name or not. (29) Both firms are engaged in a "common field of activity". There is a real possibility that the public to which the defendants address their wares would draw the association with the plaintiffs of which they complain. The frontiers of passing off (30) This branch of the law of tort is still developing and expanding. English, American, Australian and Canadian cases have evened a new v .....

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the public which may be caused by the defendant's conduct. "The right of action known as a passing off action is not an action brought by the member of the public who is deceived but by the trader whose trade is likely to suffer from the deception practiced on the public but who is not himself deceived at all." Wine cases were approved by the House of Lords in Warnik v. Townend (supra). Privy Council in Cadbury (supra) referred to American and Australian decisions and propounded t .....

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current when it serves, or lose our ventures": Julius Ceaser, Act Iv, Sc III. (31) In some Canadian cases the courts spoke not of passing off but of "wrongful appropriation of the plaintiff's personality", he having a "proprietary right in the exclusive marketing for gain of his personality" (See Alhens v. Canadian Adventure Camps Ltd. and Frazer "Appropriation of Personality" in (1983) 99 Law Quarterly Review 281).Salmends editor has opined that "it .....

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ve misappropriated this indicium which is distinctive of the goods manufactured by the plaintiffs. It is not essential that the plain- tiff be identified by name, provided the mark is recognised as indicating the origin of the goods or services and the plaintiff is in fact that source. (Powell v. Birmingham Vinegar Brewery Co. Ltd. . A message is conveyed by a memorable word or name to the purchasing public that the goods are of the plaintiff. So the potential purchaser is misled and deceived if .....

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In this form the tort is less passing off than "injurious association" (See Winfield and Jolowicz on tort (12th) (1984) ed. p. 549. (34) "B.K." is the manufacturer's mark of the plaintiffs, This is seen by the public. In a "common field of activity" it is likely to deceive prospective purchaser if the defendants are allowed to market their product under the mark "B.K.-81" There is likelihood of diversion of trade from the plaintiffs to the defendants. .....

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false suggestion by one competing trader in the same line of business that his business is connected with that of the other. This, I apprehend, would damage the reputation and thus the goodwill of the plaintiffs' business. (35) The types of injury to goodwill may take such forms as where there is an apprehension of (a) diversion of sales and (b) "injurious association", (c) misappropriation of business reputation, (d) misappropriation of personality. They are all species of one ge .....

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. Evatt Cj and Myers J. put it as follows: "THE wrongful appropriation of another's professional or business reputation is an injury in itself, no less, in our opinion, than the appropriation of his goods or money." Defendants' Case (37) It was argued that the plaintiffs are guilty of delay and acquiescence . I cannot accept the argument. There is nothing to show that the plaintiffs encouraged the defendants to go ahead with "B.K.-81" bells. They sued as soon as they .....

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ll does not necessarily stop at a frontier" (C & Modes vs C & A Waterford Ltd. (39) We were referred to telephone directory to show that "B.K." is a business name used by hundreds of people. I am not impressed by this argument. It must be remembered that here we are concerned with a case where both firms are engaged in a "common field of activity". The question arises whether the defendants are misleading the public into buying their goods in the belief that they .....

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t the defendants have taken their rival trader's name and made it their trade mark. B.K. is the striking and significant feature of the plaintiffs' name. This trade name and reputation the defendants have appropriated to their use. The old mischief was in the imitation of get-up or appearance of the plaintiff's goods. The new mischief is in injury to goodwill. The liability is now wider than before. [See Winfield and Jolowicz on tort ( 12th) 1984 ed. p. 5461. The main concern of the .....

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lator of the plaintiff's rights if the defendant can be compensated in damages. It is the defendants' own case here that their first sale was made in November 1981 while the plaintiffs started their business in 1971. We were shown advertisement in trade journal of 1974 and 1979. It is true that evidence remains to be led by both parties. Of actual damage to the plaintiffs there may or may not be much evidence. The improbability of their proving much is not the same thing as the legal cer .....

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said in Spalding v. Gamage (supra) at 286, 287. There may, of course be cases of so doubtful a nature that a judge cannot properly come to a conclusion without evidence being led on the point; but in a passing off action the matter complained of is calculated to deceive, in other words, whether it amounts to misrepresentation is a matter for the judge who, looking at the documents and evidence before him, comes to his own conclusion, and to use the words of Lord Macnaghten in Payton & Co. L .....

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icient to say that the misrepresentation being prime fade established, being in its nature calculated to deceive, the plaintiffs are entitled to a temporary injunction. The gist of the plaintiffs' complaint is that their trade name, their house mark are being invaded. On the invasion of their right to property in the goodwill and business reputation they found their claim. In my opinion, nothing in arguments has been shown to me to displace the plaintiffs' prima facie right to relief. (4 .....

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uring company is also given as B.K. Engineering Co Ltd. Now if the defendants market their product as "B.K.-81" the conduct is calculated to injure plaintiffs' goodwill. It is not essential that the person deceived should know the name of the plaintiff; it is enough "if a person minded to obtain goods which are identified in his mind with a certain definite commercial source is led by the false statements to accept goods coming from a different commercial source" (Plomein .....

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plaint of misrepresentation to say that an observant person who made a careful examination would not be misled. The test is the impression likely to be produced on the casual and unwary customer, (per Lord Selborne in Senger Manufacturing Co. v. Loog (46) It is not necessary to prove that any members of the public were deceived. An action will lie where it is to be expected that in due course the act of the defendant would be calculated to cause confusion in the minds of the purchasing public (D .....

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ty is not in the mark, name or get up improperly used by the defendant. But the property is in business or goodwill likely to be injured by misrepresentation. The foundation of the modern tort of passing off is the infringement of right to, property. A plaintiff can say that the defendant is infringing his name which is distinctive of his goods. A misuse of that name is hardly consistent with fair or honest trading, as Lord Parker said. The same emphasis was laid by Lord Diplosk when he spoke of .....

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in the course of his business." [Warnink v. Townend (supra) at 943] (49) It would be impossible to enumerate or classify all the possible ways in which a man may make the false representation relied on. [A.G. Spalding (supra) p. 284]. In Warnink Lord Diplock said the same thing: "THE forms that unfair trading takes will after with the ways in which trade is carried on, the business reputation and goodwill acquired" (p. 931). (50) A fair and honest trader will not give misleading .....

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9;s name as Ubhi along with "B.K.-81". The risk of confusion in the minds of the public cannot be ruled out. (51) In Warmink v. Townend (supra) passing off was extended by Lord Diplock beyond classic form because the facts in that case disclosed, as in the present one, "a case of unfair not to say dishonest trading, of a king for which a rational system of law ought to provide a remedy to other traders whose business or goodwill is injured by it".(Warnink p. 931). Lord fraser .....

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u cannot make use of the plaintiff's expensive labour and effort. You cannot deliberately reap where you have not sown. You cannot filch a rival's trade. Passing off is thus a remedy for injury to goodwill. (53) The question at issue is whether in selling wares the defendants so to refuse and deceive the market that they pass their products as the product of the plaintiffs. The association of the defendants' goods sold under the name of "B.K.-81" bells with the plaintiffs&# .....

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paper advertising campaigns can lead the market to associate with the plaintiff's product, provided always such descriptive material has become part of the goodwill of the product. And the test is whether the product has derived from the advertising a distinctive character which the market recognizes " (54) Applying this recent reformulation to this case what do we find ? The manufacturers' name B.K. Engineering Co. and the house mark "B.K." in the circular device are a pa .....

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4 and 1979 in the cycle trade journals clearly show that B.K. Engineering Co. and house mark "B.K." have acquired a distinctive character and became a substantial part of the goodwill of the plaintiffs. The statement of their sales from 1971 to 1979 show that their sales rose from ₹ 20,940 to ₹ 5,06838. During this period their advertisement expenses increased from ₹ 59 in 1972-73 to ₹ 3,480 in 1978-79. These figures show the volume of their sales, advertising e .....

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s' soap is the stock example of this. A man name William Joban Pears cannot set up a soap business and call his soap "Pears Soap" He is not entitled to abbreviate his own name so as to lead to deception. [Parker Knoll (supra) at p. 276 per Lord Denning]. Another example I gave in the course of arguments was of Haman soap. On the cake it is stamped "A Tata Product". Is it open to a rival trader to call his soap. "Tata Soap" simply because Tatas do not make " .....

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Reddaway v. Banham. It is true after 1915 when the leading cases of Parker-Knoll and Warnink were decided. The roots of passing off tort lay in deceit, yet the fraud was practiced not upon the plaintiff but upon the customers of the defendant who purchased the goods believing them to be of the plaintiff's manufacture. (56) If there is a real prospect of injury to the plaintiff's goodwill he is entitled to injunction. Applying this principle it seems to me that "B.K." is the mos .....

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