RACHNA SAGAR PVT LTD vs SOVEREIGN MERCANTILE PVT LTD & ORS.
$~72
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Decision: 09th April, 2024
+ CS(COMM) 304/2023
RACHNA SAGAR PVT LTD ….. Plaintiff
Through: Mr. Neeraj Grover, Mr. Amarjeet Kumar, Ms. Meenakshi Ogra,
Mr. Rishi Vohra, Mr. Samrat Kank and Mr. Hemant Kataria, Advocates.
versus
SOVEREIGN MERCANTILE PVT LTD & ORS. ….. Defendants
Through: Mr. Kunal Khanna and Ms. Vridhi Pashricha, Advocates for D-1 to 3.
Mr. Arjun Aggarwal, Advocate for D-4.
CORAM:
HON’BLE MR. JUSTICE SANJEEV NARULA
JUDGMENT
SANJEEV NARULA, J. (Oral):
I.A. 24477/2023 (for placing additional documents on record)
1. The Plaintiff, through this application, seeks to place on record additional documents which were filed on 04th December, 2023. These documents, according to the Plaintiff, are necessary to answer the allegations made by Defendants No.1-3 in their application under Order XXXIX Rule 4 of the Code of Civil Procedure, 1908.
2. Mr. Kunal Khanna, counsel for the Defendant Nos.1-3, without prejudice to his rights and contentions to object to the relevancy and the authenticity of these documents, states that he has no objection to the application being allowed.
3. Accordingly, the application is allowed and the additional documents filed under index dated 04th December, 2023 are allowed to be taken on record.
4. All rights and contentions of the Defendants regarding the relevance and admissibility of the documents are left open.
I.A. 9200/2023 (seeking ex-parte ad interim and interim injunction against the defendant) and I.A. 17021/2023 (on behalf of Defendants for vacation of ad-interim injunction order dated 12th May, 2023)
5. The present suit has been filed by the Plaintiff seeking inter-alia permanent injunction restraining the Defendant Nos. 1-3 from passing off the trademark RACHNA SAGAR and their device mark . In I.A 9200/2023, upon finding a prima facie case, the court vide order dated 12th May, 2023, granted an ex-parte ad-interim injunction in favour of the Plaintiff restraining Defendants No.1 and their directors (including Defendants No.2-3) from using the marks RACHNA SAGAR/. Defendants No1-3 have filed I.A. 17021/2023 seeking vacation of the said ad-interim ex-parte injunction order.
6. Mr. Neeraj Grover, counsel for Plaintiff, submits as follows:
6.1. The Plaintiff was incorporated as a company on 1st January, 1996 and is engaged in the business of publishing school textbooks. Plaintiff conceived and adopted the tradename/ mark RACHNA SAGAR and device mark (Plaintiffs Marks) in 1996, as an essential feature to be used in connection with their business of publication of books. With 27 years of extensive use of the said trademarks, through widespread advertisements, the Plaintiffs marks have gained formidable reputation in the market. Both RACHNA SAGAR and are house marks of the Plaintiff. Plaintiff also has an online presence and operates through their website- www.rachnasagar.in, which provides information about the Plaintiffs business activities and has the Plaintiffs marks displayed on it. In addition, Plaintiff also asserts a large presence on the social media platforms such as YouTube, Twitter, Facebook, Instagram and others.
6.2 Plaintiffs revenue earned over the financial year 2021-22 is Rs. 82,91,58,549/-. That apart, documents evidencing promotional activities undertaken by them has also been placed on record.
6.3. The Plaintiff applied for registration of the device mark on 29th November, 2021, bearing application no. 5226218, in class 16 and the same is pending registration. Nonetheless, the Plaintiff is the registered proprietor of the trademark registered on 27th November, 2007, bearing registration no. 1624801 in class 16. This registration includes the mark as an essential part of the mark . The user claimed in the said application since 2004 is with respect to composite trademark as a whole. However, the Plaintiff has independent common law right with respect to the trademark , as the same has been used by the Plaintiff since the year 1996.
6.4. Defendant No.1 is an incorporated company involved in similar business as that of the Plaintiff. Defendants No. 2 and 3 are directors in Defendant No.1 company. Defendant No. 4 Trade India (Infocom Network Pvt. Ltd), is a proforma Defendant on whose website/ online platform, Defendant No. 1 is intending to sell its books.
6.5 The Plaintiffs grievance arises from Defendants No.1-3s use of the mark (Impugned mark), which is registered in Defendant No. 1s name under no. 4058431 in class 16 with a user claim from 1995. The Plaintiff, while scrutinising the said application, as available on the official website of the Trademark Registry, discerned that there is no authentic document whatsoever along with the application demonstrating the use of the trademark from the claimed year of 1995. Further, the documents submitted by Defendant No.1 with the Registry are on the face of it forged and fabricated with a sole intent to secure registration. The Plaintiff has filed a rectification petition for removal of the Impugned mark from the Register.
6.6. Defendants No. 1-3 have fraudulently adopted the Impugned mark which is deceptively similar/ nearly identical to the Plaintiffs marks. The Plaintiff is the first and prior user of the marks RACHNA SAGAR and has been using the same uninterruptedly since 1996. Plaintiff and Defendants No. 1-3 are enagaged in similar business of publishing books. Therefore, Defendant Nos 1-3s adoption and use of a nearly identical tradename/mark and device mark would inevitably lead to confusion and deception amongst the public and members of trade and public.
7. Mr. Khanna, on the other hand, strongly resists the grant of an interim injunction by submitting as follows:
7.1. Defendant No. 1 is the registered proprietor of the Impugned mark and therefore, there is a statutory presumption regarding the validity of the trademark in their favour.
7.2. Defendants have honestly adopted the Impugned mark and are the senior users. Mr. Mukesh Gupta, who is the father of Defendant Nos. 2 and 3, was a shareholder of the family-run company called Rachna Prakashan Pvt. Ltd., wherein he and his brother, Mr. Satish Gupta, used to carry out the business of publishing. The said company was incorporated on 3rd May, 1995 and continued its business till 2009, which goes on to show the adoption of the word Rachna by the predecessor of Defendant Nos. 2 and 3. Somewhere in the month of May 1995, a book authored by Ms. Vimla Saini and Ms. Neelam Gandhi on the instructions of Mr. Mukesh Gupta titled as Rachna Sagar was published in June 1995 by the predecessor of Defendant No.1 Rachna Prakashan Pvt. Ltd. The title Rachna Sagar was given by Mr. Mukesh Gupta. The name Rachna was derived from the corporate name, and is also the name of Mr. Satish Guptas Daughter. The word Sagar was adopted so as to convey the idea that the said book was an ocean of knowledge. The book became a multiple part series of short stories and in a short span of time, the said title Rachna Sagar acquired tremendous goodwill and reputation to an extent that it became a source identifier of the book/ study material or the products that originated from Defendant No. 1s predecessor. Further, Mr. Mukesh Gupta, through his proprietorship firm M/s Sovereign Mercantile, also published the book titled RACHNA SAGAR, which also bore the mark . M/s Sovereign Mercantile operated between the years 1995-99, and as a sister concern of Rachna Prakashan Pvt. Ltd., was engaged in the sale of the RACHNA SAGAR books. The logo was created upon the instructions of Mr. Mukesh Gupta and thus, the intellectual property rights in the Impugned mark vested with him, till the time that it was decided that the same would be transferred to Defendant No. 1. In the year 1999, the usage of the trademark Rachna Sagar by Defendant Nos. 1-3 expanded, in the sense that it became a house mark and was used as an imprint by the partnership firm – M/s May Flower Publisher (India), wherein Mr. Mukesh Gupta was also a partner, and various titles or series of books were being published under the said imprint/house mark. In 2002, the partnership firm got converted into May Flower Avantika Publication Pvt. Ltd. and the said company started publishing various titles and series of books under the house mark/ imprint RACHNA SAGAR. In 2013, Defendant No. 1 company Sovereign Mercantile Pvt. Ltd. was incorporated with Mr. Mukesh Gupta as one of the directors, and they immediately started publishing books under the house mark/ imprint RACHNA SAGAR. In 2016, Defendant No. 1 also published other editions of the books titled RACHNA SAGAR. It was Mr. Mukesh Gupta who was the proprietor of the trademarks RACHNA, RACHNA SAGAR and the logo , and all of the above entities, who are the predecessors of Defendant No. 1, were using the trademarks with the consent and permission of Mr. Mukesh Gupta. Thus, it is evident that the predecessor of the Defendants adopted the Impugned mark and prior to the Plaintiff. With the Defendants being the prior adopter of the Impugned mark, the Plaintiff cannot have a case of passing off against them.
7.3. Plaintiffs application bearing application no. 5226218 for the mark was objected to on the ground that it conflicted with a pre-existing mark which was similar to the subject mark of the application. In response to the said objection, a response dated 20th January, 2022 was filed which reads as follows:
In reference to the objection raised under section 11, It is respectfully submitted that the applicants mark RACHNA SAGAR is neither identical nor deceptively similar to the mark cited in the search report as the mark applied for is different and distinguishable from the cited marks. phonetically and visually as a whole. On The comparing the applicants mark with the cited marks as a whole, there is absolutely no similarity of whatsoever nature. There would be no chance of confusion and deception among the trade and public at large.
7.4. The above extract reveals that Plaintiff categorically took a stand that their trademark is completely different from that of Defendant No.1s Impugned trademark. It is a settled position of law that a party cannot be permitted to approbate and reprobate at the same time. The Plaintiff as per their own convenience, while prosecuting their trademark application, made declarations about existence of no confusion between the conflicting marks, however, when it comes to obstruction of the lawful use of the trademark by the Defendant Nos.1-3, the Plaintiff completely changes its stand and asserts that confusion and deception shall prevail amongst consumers if the Defendant Nos.1-3 continue to make use of Impugned trademark.
7.5. The documentary evidence adduced by the Plaintiff does not demonstrate any use of the trademark RACHNA SAGAR, in relation to a book publishing house, for the period 1996-99. There is only one invoice bearing invoice no.001 dated 9th February, 1996 which is hand written, and cannot considered to be credible. The invoice refers to books titled Indradhanush and Abhyapustika but the said books bear no ISBN numbers. There is no book that has been placed on record by the Plaintiff for the aforesaid period that illustrates usage of the trademark RACHNA SAGAR in context of a book publishing house.
7.6. The Plaintiff has not demonstrated use of the expression Rachna Sagar in the context of a trademark. This is apparent from the Plaintiffs own LinkedIn profile, which identifies their brand name as Together With, and not Rachna Sagar. Consequently, since the term Rachna Sagar is not used as a trademark and is used as their tradename, no goodwill or reputation can be said to be associated with it. Hence, the present legal action, grounded solely on the accusation of passing off, lacks the necessary foundation for a case against Defendants No.1-3. This deficiency arises from the Plaintiffs failure to establish any significant goodwill or reputation, which is essential in a passing off claim.
8. The Court has considered the aforenoted contentions. While the Plaintiff does not have registrations for the marks RACHNA SAGAR and , they claim common law rights with respect to the trademark , on the basis of their prior, long and continous use, commencing from the year 1996. Therefore, they allege that Defendants No.1-3s use of their device mark amounts to passing off.
9. Although there is no dispute that the two competing marks are deceptively similar, yet a side-by-side comparison of the same would be apposite:
10. The comparative analysis of the two logos in question clearly demonstrates a troubling similarity, suggesting more than mere coincidence. The Plaintiffs logo, characterized by the stylized letter r accompanied by wave-like elements in a distinctive black and red color scheme, is not only inherently unique, but is also presumed to have acquired distinctiveness through its use. The Defendant Nos.1-3 logo, comprising of the term Rachna Sagar, used in conjunction with in monochrome, retains the essential features that constitute the identity of the Plaintiffs mark, including the overall shape and artistic stylization. The possibility of consumer confusion is not to be understated, particularly as both logos co-exist in similar trade channels, presumably catering to the same consumer demographic. The close resemblance between the two marks risks misleading consumers and diluting the Plaintiffs brand equity, which is protected by trademark law. Thus, without substantial evidence from the Defendant Nos.1-3 to justify the adoption of a mark bearing such similarity, one cannot escape the conclusion that the Impugned mark encroaches upon the commercial identity and goodwill of the Plaintiffs trademark. While Defendant Nos. 1-3 might argue independent creation, the burden of proof lies heavily upon them, particularly given the artistic complexity and distinctiveness of the Plaintiffs logo. Thus, considering the striking similarities between two marks, the doctrine of prior use emerges as the linchpin in determining the rightful claimant of trademark ownership. This case hinges on the first to use principle, well recoginsed in trademark law, which posits that the party who first utilized the mark in the course of trade holds a paramount claim over it. It is this initial use that confers upon the proprietor not only the right to the marks exclusivity, but also safeguards against any subsequent entities that may employ a confusingly similar mark.
11. Defendant Nos.1-3 claim use since the year 1995 with respect to the Impugned mark. In order to showcase such use, they have filed documents depicting books published since the year 1995, which are reproduced below:
12. It must be noted that the screenshots extracted above look like a digital print of the book. Upon the Courts query, Mr. Khanna acknowledges that the copy filed is a digital copy and not the original publication. The original print copy is not produced before the Court. In light of the same, the credibility of the Impugned mark imprinted on the cover of the book comes into question. Digital images, unlike physical copies, are susceptible to alterations, raising concerns about their authenticity. The Defendants failure to produce the original printed books considerably undermines the reliability of their claim and invites scrutiny of the digital facsimiles presented as evidence. In deliberating Defendant Nos. 1-3s claim of prior use dating back to 1995, the Court notes the historical context of publishing during that era. It was a time characterized predominantly by print media, with digital publishing not yet widely adopted. The evidence proffered, while reflecting the marks presence in a digital format, does not convincingly bridge the gap between the past and present use. While the Court acknowledges the existence of a digital version of the document, it remains circumspect about its origins and whether it accurately represents the 1995 publication. The original use of the mark should ideally be substantiated by physical copies of the publications from that period. Given these concerns, the burden of proof rests heavily on Defendant Nos.1-3 to establish the genuineness of their claimed prior use. They must demonstrate, with unequivocal evidence, that the mark was not only in use at the claimed dates, but also that such use was by the legal predecessor whose rights they have lawfully acquired and continued. In the absence of such compelling evidence, the claim of prior use asserted by Defendant Nos.1-3 is tenuous. The court is thus compelled to view the Defendants assertions with a degree of skepticism until original and incontrovertible proof is furnished. That apart, it is necessary to note that the afore-noted evidence does not correspond to Defendant No.1, Sovereign Mercantile Pvt. Ltd., but to a different entity, M/s Sovereign Mercantile, a proprietorship that ceased operations in 1999. This raises significant questions about the continuity of such use and the legitimacy of any purported transfer of rights in the Impugned trademark in favour of Defendant No.1. Any transfer of rights, especially from a proprietorship to a corporation, necessitates explicit documentation that confirms the rights in the trademark were duly assigned and that the corporate entity is the rightful successor in interest.
13. Apart from the above-mentioned document, various other copies of books bearing the Impugned mark, have been placed on record to demonstrate continuous use since the year 1995, one of which is as follows:
14. The afore-noted documentary evidence furnished by Defendant Nos.1-3 also fails to substantiate their claim of prior and continuous use of the Impugned mark. Notably, the document in question is attributed not to Defendant No.1 entity M/s Sovereign Mercantile Pvt. Ltd, but to distinct legal entityM/s May flower Avantika Publications Pvt Ltd. The other documents placed on record to demonstrate prior use, being copies of books bearing the Impugned mark, also possess the same discrepancy i.e., they are published by entities (Rachna Prakashan Pvt Limited and M/s May flower Avantika Publications Pvt Ltd), other than Defendant No.1. This misalignment does not support Defendant Nos 1-3s stance and instead, introduces a crucial divergence that cannot be overlooked. The essence of the Defendant Nos 1-3s argument rests on the assertion that these various entities serve as predecessors in interest to Defendant No. 1 and that there exists a linear succession, with Defendant No.2 and his father as the common links. Mr. Khannas assertions, while providing a narrative, are not corroborated by documentary evidence establishing a legal assignment or transfer of the rights in the Impugned mark to Defendant No.1. In the absence of such evidence, the narrative alone is insufficient to fulfil the evidentiary requirements of a valid trademark claim under the law. For a claim of succession to be legally recognized, there must be a clear trail of documentation evidencing the chain of title from the original owner to the present claimant. This would typically include assignments, business transfer agreements, or other legal instruments that clearly denote the transfer of rights in the trademark. The Court must base its decision on concrete evidence, not on unverified linkages, however plausible they may seem. Thus, given the absence of such critical documentation, the claim of continuous and prior use of the Impugned mark by Defendant Nos.1-3 raises doubts and cannot be accepted. The onus is on the Defendant Nos.1-3 to present irrefutable proof that the rights associated with the Impugned mark were indeed legally transferred to Defendant No.1 entity. Until such evidence is presented, the claims of historical use purported by other entities cannot be deemed as contributing to the legal history or rights of Defendant No.1 in the Impugned mark. Further, Defendant No.1 has also failed to prove continuous use of the mark in question. The documents annexed along with the written statement are intermittent and sporadic and do not establish any continuous user of the mark.
15. On the contrary, Plaintiff has shown that the Plaintiff-company was incorporated on 1st January, 1996 as Rachna Sagar Pvt. Ltd. They have also placed on record, the letter written to the Registrar of Companies (ROC) for seeking availability of the said tradename prior to its adoption. They have also placed on record invoices, which clearly demonstrate the use of the trademark in question and in particular the marks RACHNA SAGAR and . Specifically, invoice bearing no. 001 dated 8th February 1996, demonstrating sale of books under its tradename Rachna Sagar Pvt Ltd. Apart from that, during the course of the hearing, several books in original, with ISBN details are placed on record, such as the book titled Together with Mathematics by Mr. Rajesh K. Diwan and Mr. Sanjeev published in 2002; Together with Business Studies by Mr. Yogesh Vijay and Mr. Vikas Vijay published in 1998 were shown. These books clearly bear the Plaintiffs mark.
16. In such circumstances, upon a prima facie view, it is the Plaintiff who is the prior user of the device mark . The prior use of the term Rachna Sagar, which is the name of the Plaintiffs corporate entity, is also proved through certificate of incorporation, a copy of which has been placed on record.
17. That apart, Plaintiffs registered mark bearing registration No. 1624801 in class 16 with user claim since 1st January, 2004, has the registration date of 27th November, 2007. This device mark, incorporating , is nearly identical to Defendant No.1s registered mark , which has the registration date of 16th January, 2019, claiming use since 6th June, 1995. The Plaintiffs afore-noted registration is certainly prior in time to that of Defendant No.1s and casts doubt on the bona fide of Defendant Nos.1-3s adoption of the Impugned mark.
18. Furthermore, the Defendant Nos. 1-3 had different publication companies, several of which are claimed to be part of the group companies and family business as mentioned in Defendant Nos. 1-3s written statement. All these publication companies were incorporated under different names except for Rachna Prakashan Pvt Ltd, which utilised the word Rachna in their brand name. With such distinctive publication names and Rachna Prakashan Pvt Ltd. using its own device along with their brand name, the Court is unable to discern as to how Defendant Nos.1-3 adopted the stylised logo along with their brand name and started applying the same to the books published by them. Moreover, during the course of arguments, Mr. Khanna also states that Defendants No. 1-3 would be agreeable to discontinue the use of the stylised logo, but they should be permitted to use the trademark RACHNA SAGAR as the same is being used as a title of the books which were published prior in time. In the opinion of the Court, such a request cannot be allowed. The Plaintiff, Rachna Sagar Pvt. Ltd., has established use of both the name RACHNA SAGAR and the accompanying logo , as part of its brand identity. Granting the Defendants the right to use the textual element RACHNA SAGAR independently of the logo would not sufficiently mitigate the risk of confusion among consumers. When two entities operate in the same commercial sphere, under markedly similar marks, the probability of the average consumer mistaking one for the other is significantly high. Thus, permitting Defendants No. 1-3 to use the mark RACHNA SAGAR in isolation is likely blur the distinction between the two businesses, given the pre-established association of the said name with the Plaintiffs products. The fact that the Defendant Nos.1-3 had used the mark prior in time as a book title, does not eliminate the potential for consumer confusion.
19. At this juncture, the Court is tasked to form a prima facie view, rather than rendering a final determination on the merits of the case. To form such a view, the Court must consider whether the Plaintiff has demonstrated a likelihood of success on the merits of the case, which includes an initial appraisal of the strength of the Plaintiffs trademark claim and any possible confusion that might arise from the Defendants use of a similar mark. Thus, considering the Plaintiffs prior use of the logo/device mark and RACHNA SAGAR, substantial presence in the market, demonstrated from the revenue that they have earned over the years, and the expense incurred for publicising their mark, Defendant Nos.1-3s adoption of along with RACHNA SAGAR, in the opinion of Court, amounts to misrepresentation, which is bound to cause loss to the Plaintiff.
20. In light of the same, Defendant Nos 1-3s adoption and use of the Impugned marks, which is visually and phonetically similar to the Plaintiffs mark, prima facie amounts to passing off.
21. In view of the above, the injunction order dated 12th May, 2023, is confirmed, which shall continue to operate during the pendency of the present suit. The findings rendered upon are not final. In trial, the parties will have the opportunity to present comprehensive evidence, fully articulate their arguments, and thereupon the Court will deliberate to reach a definitive conclusion.
22. Accordingly, the I.A. 9200/2023 is allowed and I.A. 17021/2023 is dismissed.
I.A. 23717/2023 (seeking summary judgement)
23. Issue notice. Mr. Khanna accepts notice on behalf of Defendant Nos. 1-3. Mr. Arjun Aggarwal, counsel, accepts notice on behalf of Defendant No. 4. Reply be filed within four weeks from today. Rejoinder, if any, be filed within two weeks thereafter.
24. List before Court on 25th July, 2024.
CS(COMM) 304/2023
25. List before the Joint Registrar for completion of pleadings on 21st May, 2024.
SANJEEV NARULA, J
APRIL 9, 2024/nk
CS(COMM) 304/2023 Page 12 of 13