R IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 31ST DAY OF JULY 2017 BEFORE THE HON’BLE MR.JUSTICE RAGHVENDRA S. CHAUHAN MFA No.2943/2017 (IPR) BETWEEN :
M/S. COTHAS COFFEE CO., A REGISTERED PARTNERSHIP FIRM HAVING ITS OFFICE AT 609-560/1, 609-560/2 & 323 PART B, JIGANI, BOMMSANDRA LINK ROAD, JIGANI INDUSTRIAL AREA, ANEKAL TALUK, BENGALURU – 562105, AND REPRESENTED HEREIN BY ITS PARTNER, MR. C. S. NITIN, S/O. MR. C. K. SREENATHAN, AGED ABOUT 37 YEARS. ... APPELLANT (BY SRI UDAYA HOLLA, SENIOR COUNSEL FOR SRI THOMAS VELLAPALLY, ADV.) AND:
1. M/S. COTHA ASSOCIATES RESPONDENT NO.1, A PARTNERSHIP FIRM HAVING ITS OFFICE AT B-16, INNOVA AGRI BIO PARK LTD., KIADB INDUSTRIAL AREA, 3RD PHASE, MALUR - 563130, AND REPRESENTED HEREIN BY ITS PARTNER, MR. C. P. CHANDAN, S/O. MR. COTHAS K PRAKAS, AGED ABOUT 43 YEARS.
2. MR. COTHAS K PRAKAS PARTNER, M/S. COTHA ASSOCIATES, S/O. LATE MR. C. KRISHNAIAH CHETTY, AGED ABOUT 72 YEARS, RESIDING AT NO.2 (OLD NO.48), THAMBU CHETTY ROAD, COX TOWN, BENGALURU - 560005.
3. MR. C. P. CHANDAN PARTNER, M/S COTHA ASSOCIATES, S/O MR. COTHAS K PRAKAS, AGED ABOUT 43 YEARS, RESIDING AT NO.2 (OLD NO.48), THAMBU CHETTY ROAD, COX TOWN, BENGALURU - 560005. ... RESPONDENTS (BY SRI ARAVIND KAMATH K., ADV. FOR C/R-1 TO R-3) THIS MFA IS FILED UNDER ORDER 43 RULE 1(R) OF THE CPC, 1908, PRAYING TO SET ASIDE THE IMPUGNED JUDGMENT DATED 07.03.2017 (ANNEXURE-A) DISMISSING I.A. NOS. 2, 3 AND 5 IN O.S. NO.5165/2015 BY THE XVIII ADDITIONAL CITY CIVIL JUDGE, BENGALURU CITY AND ETC.
THIS MFA HAVING BEEN HEARD AND RESERVED FOR JUDGMENT ON 11.07.2017, AND COMING ON FOR PRONOUNCEMENT THIS DAY, THE COURT DELIVERED THE FOLLOWING:
JUDGMENT Aggrieved by the order dated 07.03.2017, passed by the XVIII Additional City Civil Judge, Bengaluru City (CCH-10), whereby the learned Judge has dismissed the temporary injunction application, filed under Order 39 Rules 1 and 2 CPC, by the appellant-plaintiff, the appellant has approached this Court.
2. Briefly the facts of the case are that the appellant, M/s. Cothas Coffee Company is a registered partnership firm. The respondent No.1, M/s. Cotha Associates, is also a partnership firm, and the respondent Nos.2 and 3 are the partners of the said respondent firm.
3. According to the appellant, from 1969, the appellant was trading in the name and style of “Cothas Coffee Services.” At the relevant time, the partners of the said firm were Smt. K. Krishnaveni, Mr. Cothas K. Prakas, Mr. C.K. Srinathan, and Mr. C.K. Raghoonathan. The partners of this firm were the children of Late Cotha Krishna Iyer Chetty. In 1984, the name of the firm was changed from “Cothas Coffee Services” to “Cothas Coffee Company”. In the same year, while Mr. C.K. Raghoonathan retired, Smt. Gowri Raghoonathan was inducted into the partnership. In 1998, with the death of Smt. K. Krishnaveni, Mr. C.P. Chandan, and Mr. C.S. Nithin were inducted into the partnership.
Thus, from 1998, the continuing partners of the appellant firm were Mr. Cothas K. Prakas, Mr. C.K. Srinathan, Smt. Gowri Raghoonathan, Mr. C.P. Chandan, and Mr. C.S. Nithin. However, subsequently on 23.12.2013, Mr. Cothas K. Prakas, the respondent No.2, and Mr. C.P. Chandan, the respondent No.3 before this Court, retired from the appellant firm with effect from 09.12.2013.
4. At the time of their retirement, on 23.12.2013 the continuing partners, and the retiring partners entered into a Deed of Retirement (“the Deed”, for short). According to the said Deed, the respondent Nos. 2 and 3 clearly agreed that “they would have no manner of right, title, and interest in or upon the appellants partnership firm, and its assets and that their rights, interest, claims etc., whatsoever in the movable and immovable properties, lease hold rights, possessory rights, receivables, claims, credits, goodwill, Trade Mark, patents, etc.”; “all amounts due to them were fully settled, and no amount was due under any head”. They further agreed that “they shall have no right in, and shall not use the appellant’s name, trade name, patent, product name, goodwill, either directly, or indirectly, after their retirement from the appellant firm”. They further agreed that “the continuing partners shall have exclusive use of the goodwill and the right to carry on the business of the appellant firm”. For their retirement from the partnership firm, the respondent No.2 received Rs.11,74,25,000/-, and the respondent No.3 received Rs.59,90,000/-. They further promised that “they shall not engage, for a period of three years, from the date of the Deed, in any activity which is similar to the activities carried on by the continuing partners as on the date of the retirement, either directly, or indirectly in any capacity, except for the manufacture, and sale of roasted seeds/beans”. Thus, according to the Deed, the appellant is the absolute and exclusive owner with right to use the name and trading style “Cothas Coffee Company”, and trade mark “Cothas Coffee”, and “COTHAS” in respect of coffee and coffee products and certain other related products and business. According to the appellant, it has created a goodwill and reputation well known in the market as the manufacturer which sells coffee and coffee products under the brand name of “COTHAS COFFEE”. Furthermore, according to the appellant, the products produced by the appellant are not only sold within the country, but are also exported to West Germany, and to United States of America. Thus, its products are known nationally and internationally.
5. In order to obtain exclusive rights and protection of its trade mark “Cothas Coffee”, and “COTHAS”, the appellant had applied for registration of Certificate of Trade Marks before the Trade Mark Registry. Different Trade Marks ranging from “Cothas Coffee” to “Cothas Coffee Speciality Blend of Coffeee and Chickory” to “Cothas Coffee Premium Blend” were registered on different dates from 04.04.1977 to 22.11.2001.
6. Notwithstanding the commitments made by the respondent Nos.2 and 3 in the Deed, that they shall not engage in any activity similar to the activities carried on by the appellant, directly, or indirectly, sometime after their retirement, the respondent Nos.2 and 3 incorporated a Company in the names of their wives, in the name and style of “Avighna Coffee Private Limited”. The said company applied for registration of trade mark, (“Cothagiri”) for sale of Coffee, Tea, and allied products. Since the trade mark “Cothagiri” was not only infringing the appellant’s trade mark, but was also passing off the trade mark owned by the appellant, the appellant filed a civil suit for permanent injunction, namely O.S.No.4047/2015 before the Civil Court at Bengaluru. The learned Civil Court granted the temporary injunction in favour of the appellant. Subsequently, by order dated 20.02.2016, the said temporary injunction order was confirmed. Since the respondent Nos.2 and 3 were aggrieved by the order dated 20.02.2016, they filed an appeal before this Court, namely MFA No.2170/2016. However, by order dated 14.09.2016, this court dismissed the said appeal interalia on the ground that the trade marks “Cotha Coffee”, and “Cothagiri” are phonetically and visually similar to the appellants trade mark “Cothas Coffee”.
7. However, subsequently, the appellant was shocked to know that on 02.07.2014, the respondent Nos. 2 and 3 have applied for registration of Trade Mark “COTHA” (hereinafter referred to as “the impugned trade mark”) under Category 30. The respondent Nos. 2 and 3 further claimed in their application that they are users of the impugned trade mark in respect of Coffee, Tea, Coca, Sugar, artificial coffee, and other goods from 08.02.2013.
8. Since the appellant was aggrieved by the registration of the impugned trade mark, they filed another civil suit, namely O.S.No.5165/2015. Along with the civil suit, the appellant filed an interim application, namely I.A.No. 2 to 5, for temporary injunction, against passing off and infringement of their trade mark ‘Cothas Coffee’ by the respondent by the use of the trade mark “COTHA”. After hearing both the parties, by order dated 07.03.2017, the learned judge has dismissed the applications filed by the appellant. Hence, the present appeal before this Court.
9. Mr. Udaya Holla, the learned Senior Counsel for the appellant, has raised the following contentions before this Court:-
Firstly, the learned Judge has misread the facts and the prayers in the civil suit. The civil suit is not for injuncting the respondent/defendant from carrying their business in Coffee, Tea, and other allied products. The said suit is for permanent injunction, restraining the respondents from infringing the trade mark owned by the appellant, and from passing off the products produced by the defendants as though they are the products produced by the appellant, by using the trade mark “COTHA”.
Secondly, the learned Judge has erred in understating the facts of the case. For, according to the appellant, the continuing partners and the retiring partners had entered into the Deed, wherein the retiring partners, namely respondent Nos.2 and 3 had made certain commitments. One of the commitments was that it would not use the trade mark owned by the continuing partners, namely the appellant. The respondent Nos. 2 and 3 have also committed that it would not use the goodwill earned by the appellant. For the commitments made by the respondent Nos.2 and 3, as mentioned above, a large sum of money was paid to them.
Thirdly, the learned Judge has misapplied the law while passing the impugned order. For, the learned judge has granted the benefit of Section 35 of the Trade Marks Act to the respondents. According to the learned judge since the name ‘COTHA’ happens to be the family name of the continuing partners of the appellant firm, and the retirement partners, namely the respondent Nos.2 and 3, therefore, the respondent Nos. 2 and 3 could use their family name for getting it registered as trade mark for their business. However, the benefit of Section 35 of the Act could be given provided that use of persons name, or of his business, or of the name, or of the name of the place of business of any of his predecessors in business, or the use by any person of any bona fide description of the character or quality of his goods or services is used by such person in a bona fide manner. Thus, the use by the person or his family name must be in a bona fide manner. However, the learned Judge has failed to appreciate that the respondents have not acted in a “bona fide” manner. For, while they had agreed not to use the trade mark of the appellant, or exploit its goodwill in the Deed, while they had agreed not to indulge in any activity carried on by the appellant, either directly, or indirectly, yet, immediately after retiring from the partnership firm, the respondent Nos.2 and 3, had set up a company in the name of their wives, and had violated the conditions contained in the Deed. Moreover, the respondent Nos.2 and 3 had received a large sum of money, and yet were renegating from the commitments made by them in the Deed. Furthermore, well aware of the trade mark absolutely owned by the appellants, well aware of the great goodwill created and enjoyed by the appellant firm, the respondents were trying to pass of their products as the products of the appellant, and were equally trying to infringe on the trade mark owned by the appellant. Hence, they were not only trampling the rights of the appellant, but were also trying to take the consumer out for a ride. Hence, their entire intention in getting the name ‘COTHA’, as a registered trade mark, was a mala fide one. Since the intention was mala fide, since the essential requirement of Section 35 of the Act was not fulfilled, the benefit of Section 35 of the Act could not have been given by the learned Judge.
Lastly, although the learned Judge has noticed various judgments pronounced by different High Courts, and by the Hon’ble Supreme Court, the learned Judge has ignored these judgments while giving his reasoning for dismissing the application filed by the appellants. Hence, the impugned order deserves to be set aside by this court.
10. In order to buttress his pleas, Mr. Uday Holla, the learned Senior Counsel, has relied on the cases of Health & Glow Retailing Pvt.Ltd. v. Dhiren Krishna Paul, Trading as Health and Glow Clinic & Anr. [2007 (35) PTC 474 (Mad)], Adiga's Abhiruchi & Ors. v. Adiga's Fast Food [2007 (35) PTC 548 (Kar)], Dr. Reddy's Laboratories Ltd. v. Reddy Pharmaceuticals Limited [2004 (29) PTC 435 (Delhi)], Mahendra & Mahendra Paper Mills Ltd. v. Mahindra & Mahindra Ltd.[(2002) 2 SCC 147], and Ramdev Food Products (P) Ltd. v.
Arvindbhai Rambhai Patel and Others [(2006) 8 SCC 726].
On the other hand, Mr. Anand K. Kamath, the learned counsel for respondent Nos. 1 to 3, has raised the following counter-arguments before this court:-
Firstly, the family name of the respondent Nos.2 to 3 happens to be "COTHA". Thus, they are merely using their family name as their trade mark for their business.
Secondly, Section 35 of the Act is an exception to Sections 28 and 29 of the Act. For, it beings with a non-obstante clause by proclaiming that "nothing in this Act". Therefore, once the ingredients of Section 35 of the Act are fulfilled, the other provisions of the Act become inapplicable. Moreover, Section 35 of the Act prevents a proprietor or a registered user of a registered trade mark from interfering with a person who uses his own name, or that of his place of business, etc. as his trade mark provided the usage is a bona fide one. Further, once the usage is a bona fide one, the registered user of a registered trade mark is prevented from claiming that the trade mark being used by such a person is "deceptively similar" to his / her registered trade mark. Since the respondents were using their family name, the appellant cannot be permitted to claim that the trade mark is "deceptively similar" to theirs. In order to buttress this plea, the learned counsel has relied upon the case of Precious Jewels & Another v. Varun Gems [ (2015) 1 SCC 160] Thirdly, the respondents are using the trade mark "COTHA" in a bona fide manner. For, it is the respondents who had initiated the business in coffee and coffee beans way back in 1960s. In fact, the respondent No.2 had developed the entire business for the appellant. Further, even while the partnership firm was in existence, the respondents had begun their business in the name of "Cotha Associates". The appellant was well aware of this aspect. For the invoice dated 09.12.2013, produced by the respondent- defendants, clearly reveals that the appellant had dealt with the business concern of the respondents during the period when the respondents were part of the appellant firm.
Fourthly, once the embargo contained in the Deed was over, the respondents are free to use their expertise in the business of coffee and coffee beans, and to continue their business in the same. Therefore, the respondents were entitled to the protection of Section 35 of the Act. Hence, the learned Trial Court was legally justified in extending the benefit of the said provision to the respondents.
Fifthly, according to the Deed, the respondents had promised that they would not use the registered trade mark which was in the name of the continuing partners. However, they never held out that they would not use a trade mark “deceptively similar” to the registered trade mark of the appellant's. Thus, the respondents are entitled to use a trade mark “deceptively similar” to the one used by the appellant.
Sixthly, since the protection of Section 35 of the Act is available to the respondents, the appellant do not have a prima facie case in its favour. Moreover, since the respondents have been using the trade mark "COTHA" from 2013, the balance of convenience is in their favour. For, if they are denied the right to use the said trade mark for their business, their business is likely to suffer a grave loss. Since the financial loss cannot be quantified, the respondents would suffer an irreparable loss. Hence, none of the ingredients are in favour of the appellant.
Lastly, the learned counsel has tried to distinguish the case law cited by Mr. Holla, the learned Senior Counsel, on the basis of the factual matrix of the cases. Mr. Kamath, the learned counsel, has argued that since the facts of the cases are different from the facts of the present case, therefore, the case law cited at the Bar are inapplicable to the present case.
11. Heard the learned counsel for the parties and perused the impugned order, and considered the case law cited at the Bar.
12. Section 35 of the Act is as under:
Section 35. Saving for use of name, address or description of goods or services-- Nothing in this Act shall entitle the proprietor or a registered user of a registered trade mark to interfere with any bona fide use by a person of his own name or that of his place of business, or of the name, or of the name of the place of business, of any of his predecessors in business, or the use by any person of any bona fide description of the character or quality of his goods or service.
13. A bare perusal of the provisions brings out the following salient features: firstly, it prevents a proprietor or a registered user of a registered trade mark from interfering with the use by another person of "his own name, of that of his place of business, or of the name, or of the name of the place of business, of any of predecessors in business", provided that the use is "bona fide" one.
Secondly, such a person is permitted to use the "bona fide description of the character or quality of his goods or service." Thus, if there is either a "bona fide" use of the person's own name, or a "bona fide description of the character or quality of his goods or service", then the protection of Section 35 of the Act can be extended to such a person. Hence, "bona fide use" is the essential ingredient of Section 35 of the Act. The protection can be claimed against the proprietor or registered user of registered trade mark, provided bona fide use is established by the person claiming the protection under Section 35 of the Act.
Thirdly, since the provision begins with a non-obstante clause, it is an exception to Sections 27 and 29 of the Act. But nonetheless, the benefit can be given of this exceptional provision, provided the use is a "bona fide" one. "Bona fide use" normally means the honest use by the person of his own name without any intention to deceive anyone, or without any intention to make use of the goodwill which has been acquired by another trader.
14. Thus, the entire issue hinges on whether the use of the trade mark "COTHA" by the respondents is a bona fide use or not ?
15. Of course, Mr. Aravind Kamath has tried to argue that the name "COTHA" is the personal name of respondent No.2; it is he who had developed the entire business dealing with coffee and coffee beans. Thus, the use of the name "COTHA" was a bona fide one. However, such an argument loses its sheen under the harsh glare of the fact of the case.
Naturally, the “bona fide” use would have to be adjudged in the facts and circumstances of the case.
16. Admittedly, the respondent Nos. 2 and 3 were the former partners of the appellant firm. They were well aware of the goodwill the appellant firm had developed, over the years, in the market. They were well aware of its national and international reputation. They were equally aware of the use of the registered trade mark "Cothas" by the appellant firm.
17. Undoubtedly, on 23.12.2013, the continuing partners and the respondent had entered into a Deed. As mentioned above, the respondent had relinquished their right, title and interest in the partnership firm, as well as their interest in its goodwill and “the trade mark”. They had further promised that they shall not use the appellant's trade name or goodwill. For, their relinquishment, the respondent No.2 had been paid Rs.11,74,25,333/-, and respondent No.3 had received Rs.59,90,000/-. However, despite receiving large amounts, despite their legal commitments made to the appellant, the respondents had surreptitiously resiled from their commitment by setting up another company in the name of their wives. Subsequently, very cleverly they have sought the registration of the trade mark "COTHA". Thus, the sequence of their conduct clearly reveals that the use of trade mark "COTHA" is not a bona fide one. Hence, the benefit of Section 35 of the Act could not have been extended by the learned Trial Court.
18. Mr. Aravind Kamath has relied on the case of Precious Jewels and Another (supra) in order to buttress his plea that Section 35 of the Act permits anyone to do business in his own name in a bona fide manner. However, the said case is distinguishable from the present one. For, in the said case, the bona fide use of the trade mark was never disputed. However, in the present case, the bona fide use of the trade mark is strongly disputed by the appellant. Moreover, as discussed above, the bona fide use of a trade mark has to be inferred from the facts and circumstances in each case. Therefore, no universal principle can be laid down with regard to “the bona fide use” of the trade mark.
Therefore, the reliance on the case of Precious Jewels and Another (supra) is misplaced.
19. The learned trial court has also misunderstood the facts of the case. The respondents have produced an invoice dated 09.12.2013 in order to establish that they were using the mark "Cotha Associates" even prior to the Deed dated 23.12.2013. Thus, according to the respondents, the appellant was well aware of the use of the trade mark "COTHA" as the invoice related to a transaction between the appellant and Cotha Associates. However, the learned trial court has missed the woods for the trees. The learned trial court has ignored the fact that the invoice is dated 09.12.2013, whereas the Deed containing the commitment made and the relinquishment made, is dated 23.12.2013. Therefore, the respondents had relinquished their rights and made their commitments subsequent to the date of the invoice. Hence, if there had been a transaction between the appellant and the Cotha Associates prior to the Deed, such a transaction is irrelevant to the dispute involved in the case. Since a party cannot be permitted to recoil from its commitments, the learned trial court should have ensured that the respondents adhere to their commitments made in the Deed.
20. Mr. Anand Kamath, the learned counsel for the respondents, had claimed that the respondents had made a commitment that they will not use the trade mark registered in the name of the appellant. However, they never made a commitment that they would not use the trade mark which is “deceptively similar” to the one used by the appellant. Such a stand, on behalf of the respondents clearly reveals their cleverness, unscrupulous behaviour, and their mala fide intention. Moreover, such a stand clearly ignores the existence of a civil wrong of "passing off".
21. It is, indeed, trite to state that the twin objects of the Act is not just to protect the business interest of a proprietor, or of a registered owner of a registered trade mark, but most importantly to protect the consumer from being cheated by a clever trader. In order to protect the innocent consumer, even in Common Law “passing off” was considered a civil wrong. Therefore, the respondents cannot claim that they have a right to use “deceptively similar” trade mark as "Cothas" and to pass of their product as the products manufactured by the appellant.
22. Of course, Mr. Kamath has tried to distinguish the present case from the case law cited by Mr. Holla on factual matrix. Undoubtedly, the facts of each case would be different, but according to Rules of stare decisis, if a case establishes a principle of law, the principle is applicable to the subsequent case, although the two cases may differ in their factual foundation. The cases relied by Mr. Holla, the learned Senior Counsel, such as Nirulas Corner House Private Limited (supra), Health and Glow Retailing Private Limited (supra), Adigas Abhiruchi and Others (supra), all deal with the ambit and scope of Section 35 of the Act. Therefore, even if these cases do differ in factual matrix from the present one, nonetheless, the interpretation of Section 35 of the Act given in these cases is applicable to the present case. Hence, the contention raised by the learned counsel for respondents is clearly unacceptable.
23. The learned trial court is unjustified in claiming that the petitioners have failed to establish the three ingredients for seeking a temporary injunction against the respondents. Considering the fact that the respondents not only made a commitment in the Deed dated 23.12.2013, but they were also legally bound to adhere to their commitment, their attempt to escape from their commitment, clearly establishes a prima facie case in favour of the appellant.
24. Since the appellant has already paid the respondents for relinquishment of their rights, since the appellant has a goodwill to protect in the market, both national and international, since the appellant needs to grow as a business concern, obviously the balance of convenience is in its favour.
25. Since prima facie there is a deceptive phonetic similarity between the registered trade mark "Cothas" belonging to the appellant, and the trade mark "COTHA" used by the respondents, a grave loss may be caused to the appellant’s business which may not be compensated monetarily. Thus, the appellant would suffer an irreparable loss. Therefore, the three essential ingredients of having a prima facie case, balance of convenience, and suffering of irreparable loss are in appellant’s favour. Once these three ingredients exist, the learned trial court was legally bound to grant a temporary injunction in favour of the appellant.
26. Moreover, merely because the respondents were using the word “COTHA” from 2013, they cannot claim they will suffer a loss in their business if a temporary injunction were granted in favour of the appellant. After all, when the respondents relinquished their rights under the Deed, they were well aware that they could not indulge in passing off their products as the products of the appellants. If the respondents are earning by passing off, they cannot claim they have the right to earn through an illegal means.
27. Therefore, for the reasons stated above, this appeal is hereby allowed. the impugned order dated 07.03.2017, is hereby set aside. This court hereby grants a temporary injunction in favour of the appellant in the following terms:
28. Therefore, this court restrains the respondents No.1 to 3, their distributors, stockists, servants, agents, retailers, representatives, business associates or any other person claiming under/through them from in any manner infringing the plaintiffs' registered trade marks "Cothas Coffee" and 'COTHAS' by manufacturing, selling, offering for sale, stocking, advertising, either directly and/or indirectly any goods and in particular any Coffee, and/or allied products under the trade mark 'COTHA' and/or other mark either in English or any other language, identical with and/or deceptively similar to plaintiff's registered trade marks.
Np/-
Sd/- JUDGE