MCAM SURLON INDIA LTD vs MS METALON MARKETING DELHI PARTNERSHIP FIRM & ANR.
$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CS(COMM) 846/2023 & I.A. 23556/2023
MCAM SURLON INDIA LTD. …..Plaintiff
Through: Mr. Manoj Kumar Garg & Mr. Pulkit Atal, Adv.
versus
MS METALON MARKETING DELHI PARTNERSHIP FIRM & ANR. …..Defendants
Through: None.
CORAM:
HON’BLE MS. JUSTICE MINI PUSHKARNA
J U D G M E N T
23.08.2024
I.A. 23556/2023
1. The present is an application filed on behalf of the plaintiff under Order XXXIX Rules 1 and 2 read with Section 151 of Code of Civil Procedure, 1908 (CPC), seeking to restrain the defendants from infringing the plaintiffs registered trademark, i.e., METALON.
2. The case, as canvassed by the plaintiff, is as follows:
2.1 The plaintiff is interalia engaged in the business of manufacturing, production and sale of engineering plastic products, etc., having considerable reputation and goodwill in the said industry.
2.2 The plaintiff coined, invented and adopted the distinctive mark METALON in January, 1994 for its business activities and has been using the same since then, continuously, extensively and openly, without any interruption. The trademark METALON of the plaintiff is registered in Class-17 in respect of Plastics and Nylon. The said trademark has been renewed from time to time, and its registration is valid and subsisting.
2.3 The mark of the plaintiff has highest degree of distinctiveness, connoting the plaintiffs goods exclusively.
2.4 The popularity and reputation enjoyed by the trademark METALON, can be gauged from the large sales enjoyed by the products of the plaintiff under the said mark. The details of the sales, as given in the plaint, are reproduced hereunder:
2.5 The defendant no.2 and the Director of the plaintiff have known each other, for a long time, as the defendant no.2 has family relations with the Director of the plaintiff-company. It is submitted that the defendant no.2 is also engaged in the same business activities, as that of the plaintiff, and is engaged in the distributorship of goods manufactured by the plaintiff.
2.6 In the year 2012, the defendant no.2 approached the Director of the plaintiff and requested to take distributorship of the goods manufactured/produced by the plaintiff. Accordingly, a Distribution Agreement was executed and entered into between the plaintiff and the defendant no.1-firm on 07th May, 2012, w.e.f., 01st April, 2012.
2.7 After entering into the Distribution Agreement with the plaintiff, the defendant no.2 also formed a partnership firm, namely, M/s Metalon Marketing (Delhi) by using the name and style of the plaintiffs registered trademark. After execution of the Distribution Agreement with the defendant no. 2, the plaintiff supplied the required products with customized specifications to the defendants.
2.8 Subsequent to the supply of goods/products by the plaintiff to the defendants, invoices were raised and duly sent to the defendants from time to time for their payment. Thus, it is submitted that total outstanding of ? 30,67,673/- still remains to be paid to the plaintiff. The defendants were negligent and habitual in making delayed payments to the plaintiff.
2.9 As per Article 5, sub-para 5.5 of the Distribution Agreement, the defendants were required to make the payment within sixty days from the date of the receipt of the invoices issued against the goods supplied. However, the defendants have failed to make the make the payments as per the Distribution Agreement. Accordingly, the plaintiff sent an E-mail dated 23rd January, 2023 terminating the Distribution Agreement.
2.10 However, the defendant neither responded to the E-mail nor made the payment of the outstanding amount. The plaintiff repeatedly demanded the outstanding payments, but defendants grossly neglected and miserably failed to make payments.
2.11 The plaintiff had given the permission to defendant no. 2 to use its registered trademark METALON only for business purposes and no other purpose. However, the defendant no. 2 continued to use the said trademark of the plaintiff, even after the plaintiff sent the notice terminating the Distribution Agreement.
2.12 The defendants, being fully aware of the fact that the plaintiff is the registered proprietor and exclusive owner of the trademark METALON, have deliberately and with the sole intent to deceive and cause confusion in the mind of traders and consumers/public at large, have been using the plaintiffs trademark METALON, and are continuously carrying out the business under the name and style of the firm, i.e., M/s Metalon Marketing (Delhi).
2.13 The defendants have malafidely and dishonestly adopted and started using the mark METALON, which belongs to the plaintiff. Thus, it is prayed that defendants be restrained from infringing the plaintiffs trademark METALON.
3. Having heard learned counsel for the plaintiff, it is undisputed that the plaintiff is the registered proprietor of its trademark METALON, which was registered in Class-17 in respect of Plastics and Nylon, on 15th March, 2002, with the user being claimed since January, 1994. The ledger accounts filed on behalf of the plaintiff show the sale figures of the products of the plaintiff being sold continuously and for a long time.
4. The Distribution Agreement dated 7th May, 2012 executed between the plaintiff and defendants is on record, which demonstrates that the plaintiff being in the business of production and sale of its engineering plastic products, appointed the defendants as its distributors for sale and distribution of its products in Delhi.
5. This Court also notes the E-mail notice dated 23rd January, 2023 issued by the plaintiff to the defendants for termination of the Distribution Agreement, which reads as follow:
6. Therefore, it is manifest that the defendants had been permitted to use the registered trademark of the plaintiff in view of the Distribution Agreement between the parties. Clearly, the defendants have no independent right to use the trademark of the plaintiff. There is no justification for the defendants to use the mark METALON, after the cancellation of the Distribution Agreement. Thus, there is a clear infringement of the trademark of the plaintiff in terms of Section 29(1), (2), (3) and (5) of the Trade Marks Act, 1999.
7. The use of the registered trademark by the defendants, will be taken as though the usage by the plaintiff, and is bound to create an association and affiliation in the minds of the consumers. Section 29(5) of the Trade Marks Act is very categorical that a registered trademark is infringed by a person, if he uses such registered trademark, as his trade name or part of his trade name or name of his business concern or part of the name of his business concern, dealing in goods or services, in respect of which the trademark is registered.
8. Thus, holding that once a licence is revoked, any use by the licensee of the trademarks and trade name, would amount to infringement of the trademark, the Division Bench of this Court in the case of Morgardshammar India Limited & Ors. Versus Morgardshammar AB1, has held as follows:
xxx xxx xxx
40. It is well settled law that once the licence is revoked, any use by the licensee of the trademarks and trade name would amount to infringement of the trade mark and the rights of the proprietor and on revocation, the licensee is restrained from using the trade mark and trade name belonging to the proprietor. We refer the following decisions on this aspect:
(a) In Fedders North American v. Show Line, reported in 2006 (32) PTC 573 (DEL), it has been held that after termination of the agreement dated 21st May, 1956, plaintiff had given right to defendant No. 18 to use the trade mark Fedders for a period of five years, by virtue of the agreement dated 11th October, 1963. It was held that after this period came to an end in the year 1968, use of trade mark Fedders by defendant No. 18 from 1968 onwards was not in line with the rights available to the plaintiff as a registered proprietor of trademark Fedders. In Velcro Industries B.V. v. Velcro India Ltd., reported in 1993 (1) Arb.LR 465, the facts involved were, more or less, similar to the present case. In the said case, Velcro Industries (plaintiff) had entered into collaboration agreement with the Indian Directors and pursuant thereof Velcro India Ltd. (Defendant) came in existence. Defendant was granted trademark license vide a License Agreement which was renewed and subsequently, defendant was permitted to use the word Velcro as part of its trade name. Renewed agreement also expired on 30th September, 1986, thereafter plaintiff called upon defendant to stop using the mark of the plaintiff which was not complied with. Accordingly, plaintiff approached the Bombay High Court wherein defendant was restrained from using the mark Velcro as their trade name in India. It was held that after the license expired, defendants had no right to use the same as that of their corporate name/trade name.
(b) In Rob Mathys India Pvt. Ltd. v. Synthes Ag Chur, reported in 1997 (17) PTC 669 (DB), this Court echoed the view expressed by the Supreme Court in Power Control Appliances v. Sumeet Machines Pvt. Ltd. JT, reported in 1994 (2) SC 17 to the effect that it is a settled principle of law relating to trademarks that there can be only one mark, one source and one proprietor. A trademark cannot have two origins. It was held that after termination of the collaboration agreement between the parties to that litigation, the appellant therein, not the owner of the trademark, could not use the word Synthes or the trademark AO/ASIF after revocation of the collaboration agreement.
(c) The Division Bench in the case of J.K. Jain v. Ziff Davies, reported in 2000 PTC 244 (DB) held that an ex licensee, having taken the benefit of an agreement with the licensor is estopped from resisting an application for an injunction by the licensor after termination of the agreement between the parties.
(d) In Baker Hughes Limited v. Hiroo Khushalani, reported in 1998 PTC (18) 580, this Court held as under:
Permission to use the mark granted in terms of a collaboration agreement which stipulated that the joint venture company shall be entitled to use the name of collaborator company till the share holding does not fall below 40% – Use of mark after the share in equity fell below 40% – Improper – Interim injunction granted.
41. In the present case, no doubt, there is no dispute about the fact that the respondent is the subsequent registered proprietor of the trade mark MORGARDSHAMMAR in question and the appellants are using the identical trade mark as well as part of its trade name in respect of the same goods as well as in its corporate name. It is obvious that a case of infringement of trade mark is made out by the respondent in case the agreement is validly terminated. And after the termination of the Trade Mark Agreement, as per settled law, the appellants by no means can be considered as permitted user. It is also not the case of the appellants that they are holding the registration of the trade mark in question. They were, after termination, using the identical trade mark and trade name, under those circumstances, any such use by them if not permitted, under Section 29 of the Act would likely to cause confusion to the public or which is likely to have an association with the registered proprietor.
xxx xxx xxx
(Emphasis Supplied)
9. Accordingly, it is held that the plaintiff has established a prima facie case in its favour that irreparable loss shall be caused to it, in case interim injunction is not passed in its favour. The balance of convenience also lies in favour of the plaintiff.
10. Accordingly, it is directed that the defendants, their representatives, agents and all acting on behalf of the defendants, are hereby restrained from using the plaintiffs registered trademark METALON, for carrying out their business or as a trade name, which would amount to infringement or passing off, of the plaintiffs registered trademark.
11. With the aforesaid directions, the present application is disposed of.
CS(COMM) 846/2023
12. List before the Joint Registrar (Judicial) for further proceedings on 5th September, 2024.
MINI PUSHKARNA, J
AUGUST 23, 2024
Ak/Au
1 2012 SCC OnLine Del 4945
—————
————————————————————
—————
————————————————————
CS(COMM) 846/2023 Page 8 of 8