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Ellora Industries Versus Banarsi Das Goela And Ors.

1979 (10) TMI 229 - DELHI HIGH COURT

Regular First Appeal No. 150 of 1967 and Civil Miscellaneous (Main) Appeal No. 79 of 1967 - Dated:- 19-10-1979 - A B Rohatgi, J. JUDGMENT Avadh Behari Rohatgi, (1) This is a defendants' appeal from the order of the Additional District Judge dated July 10, 1967. (2) The plaintiffs are a partnership firm carrying on business under the name and style of M/s. Banaras'i Dass and Brothers at Chandni Chowk, Delhi since the year 1949. They are the registered proprietors of the trade mark 'EL .....

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ecember 26, 1962 the plaintiffs called upon the defendants to desist from manufacturing, using, selling or offering for sale their goods under to mark 'ELLORA'. The defendants by their reply dated January 9, 1963, assured the plaintiffs that they were newcomers in the industry and did not want to quarrel over a name. They said they were prepared to stop using the name 'Ellora' and had chosen a new name for their time-pieces. (4) But the defendants continued using business name &q .....

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egations were made in the suit. Firstly, that the use of the trade mark 'Elora' as the key portion of the trading style "Ellora Industries" was an infringement of the registered trade mark 'Elora' which was exclusive property of the plaintiffs, and secondly, that the use of the trade mark as a trading style was chosen deliberately and fraudulently in order to trade upon the reputation of the plaintiffs and to pass off the goods manufactured by the defendants as the good .....

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se of the word "Ellora Industries" as their trading style 'did not amount to infringement of the plaintiffs' registered trade mark, that there had been no instance of deception or confusion in the mind of the public on account of the use of the words "Ellora Industries" in the course of trade, that the time-pieces manufactured by the defendants were being sold under the trade mark 'Gargon' which was a distinctive and conspicuous mark of the defendants' pro .....

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s registered trade mark is 'Eiora'. The defendants manufacture time-pieces with their distinctive mark 'Gargon'. 'Gargon' is printed on the dial of the time-pieces. But on the card board container in which the time-piece is sold the following is printed on two sides in bold letters : "ELLORAINDUSTRIES Gargon (PUNJAB)". On one side there is in addition, to these words a visual representation of a factoy with the words "Ellora Industries" written in smal .....

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nclusion that the infringement of the trade mark is established. On the question of passing off he was of the view that the plaintiffs were not able to substantiate their case. (11) In the appeal and cross-objections three questions arise for decision. These are : 1. Passing off; II. Infringement of trade mark; and III. Enquiry into accounts of profits. (12) 1. PASSING-OFF:The purpose of this tort is to protect commercial goodwill; to ensure that people's business reputations are not exploit .....

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ile registration of relevant mark itself gives title to the registered owner, the onus in a passing off action lies upon the plaintiff to establish the existence of the business reputation which he seeks to protect. The asset protected is the reputation the plaintiff's business has in the relevant market. This is a complex thing. It is manifested in the various indicia which lead the client or customer to associate the business with the plaintiff; such as the name of the business, whether re .....

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has attached to them under the name in question", and this can be done by showing that a substantial proportion of people who are likely to become purchasers of the goods of the kind in question associate the name with them. The weight of this burden must vary according to the facts. (14) Take the present case. The words "Ellora Industries" which is the trading name of the dependents is likely to mislead the public as to source of manufacture and to create a likelihood that custo .....

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any one was actually deceived, or that he actually suffered damage. The tort is thus like libel) actionable per se. Indeed the forms of passing off, like the forms of nuisances, are infinite. As Salmond puts it : "THEgist of the conception of passing off is that the goods are in effect telling a falsehood about themselves, are saying something about themselves which is calculated to mislead. The law on this matter is designed to protect traders against that form of unfair competition which .....

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nt's business is the plaintiff's or to cause confusion between the business activities of the two. Whether such a tendency to mislead or confuse is established can only be decided by consideration of all the circumstances. (16) Because the protection given is not for his reputation in general, but to the plaintiff's business goodwill, it must be established that the defendant's activities are likely to compete with the plaintiff's. Where the parties are engaged in common or & .....

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rt manufacturing and marketing time-pieces under their registered trade mark 'Elora' the use of the word 'Ellora' as a trading style by the defendants is bound to introduce confusion in the trade. (17) The element of confusion is essential. As Wynn-Parry J. said in Me Culloch v. May Ltd., (1947), 2 All E.R. 845 (3) (851) : "Iam satisfied that 'there is discoverable in all those cases in which the court has intervened the factor that there was a "common field of acti .....

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t the plaintiff has some connection with the defendant's goods or business. And it is accepted that a reference to the plaintiff as a trade source may be inferred in some circumstances where he is not known by the name, as for instance where it is his trade mark that is known. If the customer is misled into thinking about the trade origin or source of the goods it is a case of passing off. The second condition is fulfillled by showing that direct competition will damage the plaintiffs goodwi .....

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ed of in Australia : Flemings says: "TOdemand a 'common field of activity' would not only be incompatible with the growing trend towards diversification in business, but also foist an unwarranted limitation on a tort based simply on the prejudice to goodwill from practices that are actually calculated to confuse." (FLEMINGThe Law of torts 5th ed. p. 702-703). (20) On the question whether there can be passing off if the fields of activity are different, opinions differ. But ever .....

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to introduce time-pieces. In ("Kodak" for cycles), one reason given for protection was that the plaintiff company might want subsequently to extend their business into the defendant's field. Same is the case here. (22) The present case is one of 'cashing in' of the trade reputation of the plaintiffs. It is an attempt to climb on another's goodwill. Goodwill is the result of a person's own labour and merit. One trader should not be allowed to usurp the fruits of a co .....

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oil and investment to develop and gain the advantage of goodwill. It is the invasion of this property right of goodwill that constitutes passing off. The true basis of the action is that the passing off injures the right of property in the plaintiff and that right of property being his right to the goodwill of his business. (23) In recent times there have been extensions of passing off. It is an expanding business tort. The courts have developed the concept of misappropriation. Law has thrown pr .....

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operty rights. The unfairness arises from the fact that the purchasing public are likely to be misled. The protection is afforded not for the deceived customer but the rival trader. It is to prevent "dishonest trading", to use a phrase of Danckwerts J. The Australian court in Henderson's case recognised a form of wrongful appropriation of a "trade value". Evatt Cj and Myer J. said : "THEwrongful appropriation of another's professional or business reputation is an .....

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injunction. Such a description as "Spanish Champagne" could not be expected to deceive the connoisseurs or "lovers of wine" but it was found that there were many potential customers who were much vague about what champagne was, some knowing it only as "the wine with the great reputation". What they would want was the "real thing" without knowing whether that meant the produce of a particular trade source or one having particular qualities. Champagne proper .....

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njunction to restrain a competitive producer from making deceptive statements as to the place of origin or similar falsehood. (26) Danckwerts J.'s decision in Bollinger's case was applied in ("Sherry" case) and (Scotch Whisky). In the later "Sherry" case Cross J. said of the "champagne" case, "In truth the decision went beyond the well-trodden paths of passing off in the unmapped area of 'unfair trading' or 'unlawful competition' ". .....

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hat is likely to mislead the public as to the origin of the goods. It is a commercial benefit which is derived from usurpation of the fruits of a competitor's labour. The present case illustrates the misuse of business names. It is an action against an imitator who is "reaping without sowing". See the illuminating discussion in the article by W.R. Cornish "Unfair Competition, A Progress Report" Vol. Xii, 1972-73 Journal of the Society of Public Teachers of Law p. 126 (28) .....

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clocks. (29) Counsel for the defendants argued that there was no confusion amongst the dealers in the market as the evidence shows and, therefore, no case of passing off is made out. I do not agree. The mischief done by the misleading designation adopted by the defendants is not merely that it is calculated to deceive immediate purchasers from (he infringers, but that it puts "a weapon calculated to be fraudulently used by the middlemen" into their hands, by which they may, intentiona .....

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iness. This is passing off. The defendants have no right to represent their business as the business of the plaintiffs. (31) Lord Halsbury defined the tort of passing off in Reddaway v. Benham, 1896 A.C. 199(13). He said that the defendant shall not represent his goods or his business as the goods or business of the plaintiff. How do we apply this principle here ? The plaintiffs do not manufacture time-pieces though they are registered for them. This is an admitted case. How it is not always nec .....

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the law may cc-nfer to engage in some further activity associated with one's present activity, , but also the potential capacity which one may have, although as yet unrealised, to engage in the future activities sufficiently closely associated and connected with those at present carried on, Eastman Photographic. Alternatively these last mentioned cases may be viewed as cases in which the plaintiff's proprietory right to his name and trade reputation is invaded by conduct of the defendant .....

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k, a real tangible risk, of damage in the future." (33) The action of passing off is essentially a cause of action arising out of confusion. The plaintiff is identified by his personal name or some trade name or mark. If a person minded to obtain vendible goods which are identified in his mind with certain definite commercial source is led by the false statement to accept goods coming from a different commercial source the tort is established , Prof. Morison points out that the origin of pa .....

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tion. The plaintiffs' complaint in substance is that the supposition that the defendants are connected with the plaintiffs will injure the reputation of the plaintiffs in a way calculated to cause them financial loss. The purchasers are likely to think that the time-pieces come from the same source or through the same channel as docks and wrist watches. The purchasers are likely to be misled in thinking that the defendants' firm has an "intimate connection" with the plaintiffs .....

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arkadas v. Lalchand, Air 1932 Sind 222 (25), where it was held that the defendant represented his business as that of the plaintiff. (36) On passing off my conclusion is that the use of the word 'Ellora' by the defendants is indicative of a warm intimacy with the plaintiffs. There is trustworthy evidence that the registered trade mark 'Elora' of the plaintiffs is known to the trade and the word 'Elora' lurks and lingers in the mind of the customers minded to obtain goods .....

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n is povided to simplify and enhance common law protection against deception as to trade source. The registered proprietor has the "exclusive right" to use the trade mark in relation the goods in respect of which it is registered. (S. 28 of the Trade and Merchandise Marks Act 1958 (the Act). (38) It is unnecessary to prove an intention to deceive, at least to obtain an injunction. The representation must be calculated to deceive, though no deception need actually have taken place, beca .....

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in trade to be used to identify the goods of the owner of the mark, it is an infringement of the mark itself to use that word as the mark or part of the mark of another trader, for confusion is likely to result. (40) The most common cases are those in which the defendant uses or imitates a trade mark under which the plaintiff's goods have become known to the public. If the trade mark is registered for the goods concerned, any passing off is likely to involve infringement of the rights given .....

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oods' is defined in s. 2(2)(b). It includes the following types of cases: (1) use of the mark upon the goods, (2) use of the mark in other physical relation to the goods, such as, use on a container, tin or wrapper or ticket attached to the goods. (42) The defendants have caused a part of the plaintiffs reputation to be filched. They have annexed to their business name what is another men's property. The plaintiffs' trade mark 'Elora' is the core or the essential part of the .....

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of trade marks and such registration is conclusive as to priority of use. (44) The function of the trade marks is to identify the source of manufacture of goods. It is an indicia of origin. With the expansion of markets and the development of large scale advertising, trade marks began to perform the additional function of an advertising and selling device. In the market the chief value of the trade-mark is its power to stimulate sales. In law, the fundamental theory upon which the interest in th .....

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tage by confusing potential customers. "The tendency of the law, both legislative and common, has been in the direction of enforcing increasingly higher standards of fairness or commercial morality in trade." (45) The appropriation of the plaintiffs' trade mark by the defendants as their own badge is as much a violation of the "exclusive right" of the rival trader as the actual copy of his device. It is a misleading designation. It creates a confusion as to source in the .....

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ccounts Of Profits :Counsel for the plaintiffs relies on s. 106 of the Act and claims that at their option the plaintiffs have chosen to demand an enquiry into profits. I do not think I should grant this relief to the plaintiffs. My reasons are these. (48) In the first place the plaintiffs have not so far manufactured time-pieces. They have confined themselves to clocks and wrist watches. (49) Secondly, the defendants' time-pieces are manufactured under the mark 'Gurgon' which is dis .....

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