Arraying an unknown party as Defendant No. 1 in IPR cases to avoid detection in causelist impermissible in law, Delhi HCMay 11 2019
The Delhi High Court has iterated that arraying an unknown person or an employee or Director of an entity as the first defendant in IPR cases to avoid detection in the causelist is impermissible in law.
It has thus directed the Registry to seek undertakings of plaintiffs in IPR cases, clarifying that the first defendant is the main contesting defendant in the suit.
Pursuant to the Court's order, an office order has also been issued, directing the plaintiffs in IPR cases to provide an undertaking to this effect at the end of the memo of parties.
The order was passed by a Single Judge Bench of Justice Prathiba M Singh in a trademark dispute between shoe manufacturers Bata and Red Chief.
Bata India Limited had moved the Court against Leayan Global Pvt. Ltd, which owns the footwear brand Red Chief, alleging infringement of trademark, passing off, unfair competition, damages, etc. with respect to its mark ‘POWER’.
It was Bata’s case that Red Chief’s use of the mark ‘POWER FLEX' and tagline ‘THE POWER OF REAL LEATHER' was a violation of its statutory and common law rights.
In an order passed in February, the Court had injuncted Red Chief from using the word ‘POWER’ in respect of footwear either solitarily or in combination with any word. It had nonetheless refrained from passing a similar order with respect to the tagline.
Subsequently, Red Chief was also allowed to dispose of its existing stock, subject to further orders of the Court. Red Chief then moved an application seeking vacation of the interim order. Red Chief argued that ‘POWER FLEX’ and ‘THE POWER OF REAL LEATHER’ were derivative marks and were hence different than Bata’s ‘POWER’.
The Court was further informed that Red Chief itself was a well-known footwear company and that ‘POWER FLEX’ was not used as a trademark in isolation but always with its own mark ‘RED CHIEF’. The same was also advertised in major newspapers and in-flight magazines, it was further claimed. Hence, there was no chance of confusion with Bata’s mark.
It was further argued that the word ‘POWER’ was a dictionary word, which was incapable of being exclusively monopolised by any one party.
Before it proceeded to pass orders in the application, the Court deemed it appropriate to take note of the manner in which the defendants were arrayed as parties in the suit.
“At the outset, this Court notices the fact that Defendant No.1 which has been impleaded in the present suit is a shopkeeper called - Chawla Boot House, based out of Gandhi Nagar, Delhi. The main Defendant is ‘Leayan Global Pvt. Ltd.’ which is Defendant No.2. This is a practice usually adopted in order to avoid detection in the cause list.”, it said.
Referring to the judgment of the High Court in Micolube India Ltd. v. Maggon Auto Centre & Anr (2008), the Court recorded that the object behind such a practice is ‘easily discernible’. Quoting this judgment, the Court stated,
"When the counsel for the main defendants scan the list of cases, they would not be able to know as to whether any case has been filed against them so as to enable them to appear on the very first date on which the case is listed before court. The very fact that the plaintiff has also indulged in this practice is also an indicator that it did not want the counsel for the defendant No. 2 to appear on the first date on which the matter was taken up for consideration of the grant or non-grant of ad interim injunction."
The Court thus opined that in spite of the settled legal position with respect to the array of parties, in most cases, an unsuspecting party is made the first defendant to avoid detection in the cause list.
Taking note that Defendant No.1 in the case was a shopkeeper, the Court deleted it from the array of parties.
It further directed the Registry to ensure strict compliance with the judgment in Micolube and to seek an undertaking from the plaintiffs in IPR cases where there are multiple defendants that Defendant No.1 being arrayed is the main contesting defendant in the suit.
Coming to the applications at hand, the Court rejected all the submissions made by Red Chief.
The Court stated that Bata held several trademark registrations for the mark ‘POWER‟ and that the mark was being used since 1971.
Rejecting the argument that ‘POWER FLEX' was being used only with 'RED CHIEF', the Court observed that Red Chief was using the mark ‘POWER FLEX’ within the inside of the shoe, on a standalone basis.
"The clear impression that the Court gets while looking at the documents of Defendant No. 2 is that it is adopting a clever, tactical and a `camel-in-the-tent‟ approach and slowly attempting to expand the mark ‘POWER‟ in respect of its footwear. The Plaintiff’s "POWER‟ brand is on the other hand, a brand that is being used prominently and extensively for almost five decades."
It further held that the distinction sought to be drawn between sporting footwear and leather footwear by Red Chief was no distinction in the eyes of law, as the manufacturer of a product is entitled to a reasonable scope for expansion.
It was also observed that Red Chief was completely estopped from arguing that the word ‘POWER' was laudatory or a dictionary word and could not be monopolised as it had itself applied for registration of the mark ‘POWER FLEX' in the year 2009.
Further holding that ‘POWER’ is a distinctive mark in respect of footwear, the Court concluded that it had no hesitation that the mark ‘POWER' was exclusively associated with the Bata’s brand of footwear.
It thus reiterated its earlier order injuncting Red Chief from using the mark/word ‘POWER' in respect of footwear, clothing and accessories and other related products including the mark ‘POWER FLEX' or any other mark containing the word ‘POWER’.
The Court, however, refused to restrain Red Chief from using the word ‘POWER’ as part of an advertising slogan or as in tagline ‘THE POWER OF REAL LEATHER'.
It also allowed Red Chief to sell its existing stock of products by filing a monthly statement of disposal, including the value of the stock so sold, subject to the final adjudication in the suit.
Bata was represented by Advocates Neeraj Grover, Anmol Chadha and Rudrarti Kaur.
Red Chief was represented by Advocates SK Bansal, Pankaj Kumar and Somnath.
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