1. The present suit was originally filed seeking decree for permanent injunction, infringement of Trademark, passing off, dilution, unfair competition, rendition of accounts of profits or damages, delivery up etc. The Court issued summons in the suit on 21st December 2018, and granted an ex parte ad interim injunction against all the Defendants, inter aliarestraining them from manufacturing, selling, offering for sale, advertising, directly or indirectly dealing in medicinal preparation with the mark 'ELDER', 'ELDER' logo, 'EVERVIT' or any other identical or deceptively similar to Plaintiff's registered trademark. This injunction is continuing till date.
2. All the Defendants after receiving summons entered appearance and objected to the maintainability of the suit for the action of infringement of trademark on the ground that Plaintiffs were not the registered proprietor of the trademark and also on the ground of mis-joinder of causes of action. Taking note on these objections, the Plaintiffs conceded on two aspects. Firstly, they gave up their claim of infringement of trade mark and confined the suit only to the action of passing off. Secondly, the suit was restricted against Defendant Nos. 1 and 5 with permission to file a separate suit against Defendant Nos. 2 to 4. The aforementioned prayer was accepted by the Court vide order dated 21st January 2018 and the suit was dismissed as withdrawn qua Defendant Nos. 2 to 4. With respect to Defendants 1 and 5, Plaintiff was permitted to amend the Plaint. Further, a notice was also issued to the Official Liquidator attached to the Bombay High Court in respect of the liquidation proceedings against Elder Pharmaceuticals Ltd. (hereinafter “EPL”).
3. Plaintiff amended the suit and deleted averments made in the suit vis- a-vis the claim of infringement of registered trademark including the prayer made in respect thereof. The amended prayer reads as under:
“30. In the aforesaid premises, and in the interest of justice, the Plaintiffs most respectfully pray that this Hon'ble Court may be graciously pleased to grant the following reliefs:
(b) a decree for permanent injunction restraining the Defendant, its partners or proprietor as the case may be, its assignee in business, franchisees, licensee, distributors and agents from manufacturing, selling, offering for sale, directly or indirectly dealing in pharmaceuticals goods or any medicinal product under the trade mark ELDER/ELDER logo(s) or EVERVIT or anyother trade mark/logo(s) as may be identical to or deceptively similar with the Plaintiff trade mark ELDER/ELDER logo(s) or ELDERVIT amounting to or abetting acts of passing off or unfair competition;
(c) a decree directing the Defendant to deliver up all the infringing and impugned packagings, printed material of infringing packagings, medicinal products bearing the impugned mark of ELDER or EVERVIT, packaging, invoices, brochures and equipments used in printing the infringing packagings, printing cylinders, their blocks, negatives or dyes, as the case may be, to an authorized representative of the Plaintiffs for destruction and also provide the details of the persons involved in printing the infringing packaging/material and the details of their partners or proprietor as the case may be, their dealers, representatives and those acting in concert with them and by whom they are being printed, sold or supplied;
(d) an order for rendition of accounts of profit illegally earned by the Defendants and a decree for an amount so found due or in the alternative, a decree for Rupees Two Crore towards token damages may be passed in favour of the Plaintiffs and against the Defendants;
(e) award exemplary costs of the present proceedings in favour of the Plaintiffs andagainst the Defendants.”
4. Thereafter, Plaintiffs filed suit CS(COMM) 59/2019 against Defendant Nos. 2 to 4. In the said suit, this Court examined the Managing Director of Plaintiff No. 1 under Section 165 of the Indian Evidence Act. The said statement has been placed on record in the present proceedings and is accepted to be correct with a minor clarification pertaining to the description of the designation of the Managing Director as 'CEO' of EPL in the Company Petition before the Bombay High Court.
5. The statement of Managing Director reads as under:
Statement of Anuj Saxena, S/o late Sh. Jagdish Saxena, aged 52 years, r/o 271, Kalpataru Pinnacle, Goregaon- West, Mumbai on S.A.:
I am a medical doctor having passed MBBS in the year 1991. I am the Managing Director of Elder Projects Limited. This company was incorporated in the year 1992. It is a Public Limited Company which is not listed now. I have not held any position in Elder Pharmaceuticals Ltd. My father Mr. Jagdish Saxena was the Managing Director of Elder Pharmaceutical Ltd. and after his death in 2013, my brother Alok Saxena became the Managing Director of that company. Elder Pharmaceutical Limited was wound up by the order of Bombay High Court dated 4th December, 2017. As per the report of the auditors, it was alleged that Rs. 1,300 crores was siphoned out of the Elder Pharmaceutical limited. Elder Projects Ltd. weredoing job work for EPL and were manufacturing the medicines for them. After the liquidation of Elder Pharmaceutical Limited, the plaintiff company commenced the production of the medicines in their own name in December 2017 to January 2018. The turnover of the plaintiff company in which the mark “Elder” has been used, is approx. Rs. 200 crores for this financial year. The plaintiff company does not claim any right of the trademark Elder which is registered in the name of “Elder” Pharmaceuticals Ltd. The Form TM-P submitted to the trademark registry claiming right over the trademark “Elder” was filed under a mistaken advice.
In paras 3 and 8 of the judgment dated 4th December, 2017 of Bombay High Court in company petition for liquidation, I have been mentioned as CEO of the Elder Pharmaceuticals Ltd. but I deny holding that charge. In the Form TM-P dated 27th June, 2018, I have mentioned being the owner and director of Elder Pharmaceuticals Ltd. but I deny the statement recorded therein.
RO&AC J.R. MIDHA,
IA No. 2918/2019 (under Order 7 Rule 11, CPC), IA No. 17710/2018 (under Order 39 Rules 1 & 2, CPC) & IA No. 827/2019 (under Order 39 Rule 4, CPC)
6. The Defendant No. 1 has filed the application under Order 7 Rule 11 for rejection of the plaint. In the application, the Defendants inter alia state that pleadings in the suit do not disclose any cause of action and are frivolous, vexatious and malicious.
7. During the course of the arguments, the Defendants also relied upon Order XIII-A of the Code of Civil Procedure, 1908 read with Chapter XA of the Delhi High Court Original Side Rules, 2018 (as amended in October 2018) and urged that without prejudice to the grounds raised for rejection of plaint, Plaintiffs have no real prospect of succeeding in the present suit and therefore the Court may give a summary judgment. Learned Counsels for the Parties were also heard on this aspect.
8. The amended suit is founded on common law rights of the Plaintiffs’, concerning their intellectual property. Plaintiff's claim is that the trademark 'ELDER' is an integral part of Plaintiff's trade name. Plaintiff No. 1 is an associate company belonging to the Elder group and is a sister concern of EPL and is engaged in manufacturing and trading of pharmaceuticals and medicinal products under the house mark/Trade name called ELDER. EPL was liquidated by an order of Bombay High Court and presently the said company is in possession of the official liquidator appointed by the said High Court. Pursuant to the liquidation, Plaintiff No. 1 has stepped into the shoes of it's predecessor and is engaged in manufacturing and marketing of the pharmaceutical products under the house mark 'ELDER'. Trade mark 'ELDER' was honestly adopted as a part of its corporate name since its inception. The goods of the Plaintiffs bearing the trademark 'ELDER' and/or 'ELDER' logo has been extensively advertised on account of long and continuous use and marketing and thus the trade marks/trade name/house mark 'ELDER' and/or 'ELDER' logo has acquired an enviable goodwill and reputation amongst the members of trade and public at large.
9. It is further argued that the Defendants have registered a company in the name of Elder Pharmacia LLP with the first name ELDER and are using the said name and the other trademarks of the Plaintiffs and selling infringing goods in the markets of Delhi under the name EVERVIT. Since, Plaintiff's trademarks 'ELDER' and 'ELDER' logo are perceived as household names; any unauthorised association would cause confusion amongst the consumers that the medicinal preparations of Defendants originate from Plaintiffs. The use of Plaintiff's trademark is fraudulent, dishonest and is likely to lead to deception amongst the members of the public. The acts of the Defendants would erode, destroy and dilute the distinctiveness of Plaintiff's trademark.
10. The Defendant No. 5 (presently Defendant No. 2) has filed the written statement and has contested the claims made in the suit on several grounds. It is averred that Plaintiffs cannot claim any rights over the assets of a Company which is pending in liquidation. Plaintiffs are thus not the owner of the registered trade mark 'ELDER'. It does not have locus standi to file the present suit against the Defendants in absence of any legal rights or legal ownership over the registered trademark 'ELDER'. Plaintiffs have applied for registration in the year 2018 and so far the same has not been granted. There is thus no real cause of action for the Plaintiffs to file the present suit and the suit is liable to be rejected.
Arguments of the parties
11. Mr. Neel Mason, learned Counsel for the Plaintiffs, at the outset, clarifies that in view of the amendments carried out in the suit, pursuant to the liberty granted by the Court, the scope of the present suit has to be examined only in the context of the common law rights of passing off. He submitted that in the present case the Court would only examine whether the Plaint has the ingredients for sustaining an action of passing off. The plaint discloses the essential elements of such an action that being (i) goodwill and reputation, (ii) misrepresentation by the Defendants and damage to the goodwill of the Plaintiff. To buttress this argument he has relied upon judgements of the Supreme Court and this Court in the case of Laxmikant V Patel v. Chetanbhai Shah, VIII (2001) SLT 284=I (2002) CLT 17 (SC)=(2002) 3 SCC 65; Satyam Infoways Ltd. v. M/s Sifynet Solutions Pvt. Ltd., IV (2004) SLT 219=III (2004) CLT 25 (SC)=2004 (2) R.A.J. 396 (SC) andIntex Technologies (India) Ltd. v. AZ Tech (India), reported in 239 (2017) DLT 99 (DB).
12. The learned Counsel for the Plaintiffs further urged that ELDER Projects Ltd. was the part of the ELDER group and was initially manufacturing drugs for EPL since the year 1992. Plaintiff No. 1 has been using the trademark 'ELDER' as a part of it's corporate name/trade name since 1992, to the knowledge of EPL. The drug licenses were issued by Food and Drug Administration, Maharashtra permitting Plaintiff No. 1 to manufacture the drugs for EPL from 1992 till January 2018. By virtue of the same, Plaintiff No. 1, enjoys individual as well as 'shared reputation/goodwill' by being a part of the Elder group and the manufacturer for EPL. He further states that prior to 4th December 2017, Plaintiff No. 1 being the manufacturer, it's name appeared prominently on the packaging as well. The quality of the medicines was ascertained from the goodwill of Plaintiff No. 1 and therefore even as the manufacturer, the Plaintiff No. 1 had the goodwill and the reputation in the trademark ELDER. On this issue, the learned Counsel has placed reliance on the judgments of this Court in the case of Double Coin Holdings Ltd. v. Trans Tyres (India) Pvt. Ltd., 181 (2011) DLT 577; Trans Tyres (India) Pvt. Ltd. v. Double Coin Holding, reported in 2012 (49) PTC 209 and B.K. Engineering Co. v. Ubhi Enterprises, AIR 1985 Del. 210. Pursuant to the liquidation of EPL, Plaintiff No. 1 has been independently manufacturing the drugs under the trademark 'ELDER'. This independent production of the medicines in the Plaintiff's own name commenced since December 2017. The 'shared reputation' in respect of the trademark thus continued with Plaintiff No. 1 and it has the right to injunct Defendant No. 1 for using the said mark being a prior user of the trademark in question.
13. Learned Counsel further argued that, Plaintiff No. 1 has been independently manufacturing products under the name 'ELDER' since December 2017 and the Defendants were incorporated on 16th July 2018 and commenced operations under the mark 'ELDER' since 31st October 2018. The Plaintiff No. 1 is the prior user of the mark 'ELDER'. Reference was made to several other documents which are in the nature of the drug licenses, sale licenses and Central Excise Registration Certificates, to show prior use. Learned Counsel thus argued that indisputably Plaintiff No. 1 has been in market prior to Defendant No. 1 and is therefore a senior user of the trademark. On account of such extensive and exclusive marketing of the products with the trade mark 'ELDER' within one year i.e. from December 2017 to December 2018, Plaintiff No. 1 has achieved exponential sales and earned substantial goodwill and reputation in the market. In support of this submission, the learned Counsel relied upon the certificate of the Chartered Accountant who has verified the sales figure for the financial year 2017-2018 and from 2018-February 2019. In sum and substance, the submission of the learned Counsel for the Plaintiffs is that prior use is considered to be superior to other rights. The duration or length of time of the use of the mark is not a significant factor while examining the merits of passing off action and it is sufficient if the use is prior in time. He further submitted that the use of the mark by the Plaintiff No. 1 isbona fide and honest from 2017 onwards. The use of the mark by the Defendants is only with the intention to ride on the reputation, which the Plaintiffs have earned in respect of the trademarks in question. To substantiate this argument, reliance has been placed on judgements of the Supreme Court and this Court in the case of Century Traders v. Roshan Lal Duggar & Co., 15 (1979) DLT 269=PTC (Suppl) (1) 720 (Del) (DB); Uniply Industries Ltd. v. UniocornPlywoods Pvt. Ltd., III (2001) SLT 786=II (2001) CLT 286 (SC)=2001 (5) SCC 95; Dhariwal Industries Limitedv. M.S.S Food Products, II (2005) SLT 620=I (2005) CLT 505 (SC)=2000 (30) PTC 233; Satyam Infoways Ltd. v. M/s Sifynet Solutions Pvt. Ltd., IV (2004) SLT 219=2004 (2) R.A.J. 396 (SC) and S. Syed Mohideen v. P. Sulochana Bai, II (2017) SLT 529=(2016) 2 SCC 683
14. Mr. Chander Lall, learned Senior Counsel appearing on behalf of the Defendants, though conceded that the Defendants are infringing the trademark 'ELDER', but urged that the suit is liable to be rejected under Order 7 Rule 11 being vexatious and malicious. He referred to several averments made in the plaint to contend that the stand taken by the Plaintiffs was not just factually incorrect but is also mischievous. He urged that the Court need not go into the merits of the case at all. The averments made in the suit are sufficient to come to the conclusion that the Plaintiffs have mislead this Court and got the injunction on the basis of false and vexatious pleadings. The suit on such patent misstatements is liable to be dismissed. To corroborate this argument, he placed reliance upon the judgement of this Court in the case of Ram Krishan & Sons Charitable Trust v. IILM Business School, dated 30th July, 2007 in CS (OS) No. 1308/2007, confirmed by the Division Bench in Ram Krishan and Sons Charitable Trust v. IILM Business School, reported in 2008 (DLT SOFT) 22 (DB)=2009 (39) PTC 16 (Del)(DB) and judgement of the Supreme Court in Ramjas Foundation v. Union of India, 174 (2010) DLT 100 (SC)=VIII (2010) SLT 156=IV (2010) CLT 351 (SC)=2010 (14) SCC 38.
15. He further submitted that without prejudice to the aforenoted stand, the Plaintiff No. 1 being a rank infringer, cannot claim any right in respect of the trademark 'ELDER' and/or 'ELDER' logo. Since the rightful owner of the mark is today not in a position to secure its rights, Plaintiff No. 1 have surreptitiously adopted the mark 'ELDER' and cannot sustain an action of deceit in respect of the said mark. The Plaintiff No. 1 is not a bona fide user of the mark in question and has attempted to steal this mark. Plaintiff No. 1 cannot claim shared reputation with the rightful owner, as the use of the mark was not an honest one. He further submitted that a Plaintiff who is a pirator of trade mark himself cannot seek injunction reliefs against third parties. To substantiate the argument, he relied on a judgment of this Court in Capital Plastic Industries v. Kappy Plastic Industries, 35 (1988) DLT 202=1998 (8) PTC 182 (Del). Further, Mr. Lall also submitted that the plaint is liable to be rejected under Order 7 Rule 11 and if not that, surely the suit is liable to be dismissed by way of a summary judgement under Order XIII-A of the CPC. He also pointed out that prior to liquidation of EPL, Plaintiff No. 1 was only manufacturing for EPL. A perusal of the Plaint prior to the amendment, elucidates that the Plaintiffs had sought the relief of grant ofex parte injunction, on the basis of the rights and ownership of the registrations owned by EPL and not by Plaintiff No. 1 independently. Therefore an ex parte injunction based on such falsity is liable to be vacated forthwith in view of the settled law as discussed in Virumal Praveen Kumar v. Gokal Chand Hari Chand, 87 (2000) DLT 327=2000 (20) PTC (Del).
16. On the claim of independent use by the Plaintiffs since December 2017, he argued that such use is with full knowledge of registrations of the ELDER mark of EPL and amounts to infringement of the registered trade mark of EPL.
17. The learned Senior Counsel further argued that using the trademark “ELDER” as part of its corporate name/trade name since 1992, was only permissive and post liquidation proceedings, the consent of EPL cannot continue and Plaintiff’s use as trade name is also an infringement.
Analysis and Findings
18. In order to adjudicate the questions that arise for consideration, it would be apt to first note that the three elements that are necessary for a passing off action also popularly known as 'classic trinity of passing off'. These components are—(a) good will and reputation of the proprietor. (b) Misrepresentation, and (c) damage to goodwill. In a passing off suit, the Plaintiff must establish that he has acquired a reputation and goodwill in his goods, name or mark; the Defendant's use of the name or mark is by way of misrepresentation or by other methods which lead or is likely to lead the purchaser into believing that the goods or services offered by the Defendant are those of the Plaintiff, or as a result of its association with the Plaintiff. Plaintiff is also required to establish that he has suffered or is likely to suffer on account of Defendant's misrepresentation.
Who is the owner of the trademark 'ELDER' and/or ELDER Logos?
19. The trademarks 'ELDER' or 'ELDER' logo that are subject matter of the present suit are registered trademarks. The Plaintiffs concede that the proprietor of the said registered trademark is the Company in liquidation-EPL. The said registrations in favour of EPL are presently valid, renewed and in force. Thus, there cannot be any gainsay that it is EPL who is the registered Proprietor of the trademark 'ELDER' and 'ELDER' logo in India and has the exclusive right to use the said trademark.
20. We are now poised with the question concerning the right of the Plaintiffs to use the said trademark. The answer to this question would also resolve and expound the right of the Plaintiffs to maintain the action of passing off in respect of the said trademark. Plaintiff No. 1 started using the mark 'ELDER' and 'ELDER' logo for manufacturing the medicines for the registered proprietor-EPL since 1992. In this arrangement, ELDER was also used as a part of the corporate name of the Plaintiff No. 1. Although no written agreement is shown to the Court, but since this use was not objected to by EPL and was within it’s knowledge, it could at the highest be considered as a "permitted use" under Section 2(r)(ii)(c) of the Trade Marks Act, 1999 (herein after referred to as the 'Act'). Post liquidation proceedings, Plaintiffs have embarked upon using the trademarks in relation to the goods manufactured sold under their own name. This is without permission or consent of EPL and thus such use of the 'ELDER' mark in relation to the goods and as part of the corporate name of Plaintiff No. 1 can't be characterized as "permitted use" and it would amount to infringement as provided in Section 29 Sub-clauses (1), (3) and (5) of the Act.
Plea of honest user and Acquiescence
21. Plaintiffs have also raised the contention of "honest and concurrent user". Under Section 12 of the Trademarks Act, in case of an honest concurrent use, the Registrar can permit the registration by more than one proprietor of the trademark which are identical or similar (whether any trademark is already registered or not) in respect of same or similar goods or services, subject to conditions and limitations as the Registrar may think fit to impose. In the present case, the use of the trademark by Plaintiff No. 1 is not honest. This is evident from the following admitted facts:
(a) Attempt by Plaintiff No. 2 to transfer the trademark 'ELDER' in his favour after EPL went into liquidation.
(b) Commencement of production of the medicines by the Plaintiff No. 1 in its own name from December 2017 (i.e. after EPL went into liquidation process).
(c). Pleadings in the suit, the relevant portion whereof reads as under:
“4. The trademark ELDER is the key and integral part of the Plaintiffs trade name. The Plaintiff No. 1 is an associate company belonging to the ELDER Group, incorporated in Shillong on 4th of July 1985 as Kenex Projects Limited as subsequently takenover by the Plaintiff No. 1 on 16th September, 1992.
Subsequently the name of Kenex Projects Limited was changed to Elder Projects Limited vide the certificate issued by the Registrar of Companies, Maharashtra. That the Plaintiff No. 1 i.e. Elder Projects Ltd. is sister concern of Elder Pharmaceuticals Limited and is engaged in the manufacture and trading of pharmaceuticals and medicinal products under the house mark/trade name called 'ELDER'.
5. EPL which is the sister concern of the Plaintiff No. 1 was incorporated in the year 1983. That the Plaintiff No. 1 namely Elder Projects Ltd. and it's another sister concern company namely Elder Health Care Ltd. Was formed in the year 1988. That in the year 2017 EPL was liquidated by the order of the Hon'ble Mumbai High Court and presently the said sister concern is in possession of the official liquidator appointed by the Hon'ble Court. Subsequently the Plaintiff No. 1 stepped into the shoes of it's predecessors and got engaged into full operations in the manufacturing and marketing of the pharmaceutical products all over India under the house mark 'ELDER'.
6. The Plaintiff No. 1, which expression shall include their predecessors in business/interest and title, is one of the leading manufacturers and traders of a large range of pharmaceuticals, toiletries and medicinal preparations and has been carrying on its trading activities since the year 1983. The reputation of the Plaintiff No. 1 been built for over the years with the input of pains taking effort and huge investments.
The acts of the Defendants would erode and destroy the distinctiveness of the trade mark ELDER acquired by the Plaintiff over the last 35 years and allow misappropriation and damage to its reputation, as the Plaintiff have no control or supervision on the quality of manufacturing maintained by the Defendants. The use of Plaintiffs' trade marks ELDER and ELDER logo(s) by the Defendants would cause 'dilution by blurring' of the Plaintiff trade mark which indicates' one source and one origin'. If one small user can blur the sharp focus of the famous mark to uniquely signify one source, then another will also follow. If the use of the trade mark/trade name ELDER and ELDER logo(s) on medicinal products, invoices and the packaging pertaining thereto is permitted, a situation would arise where the unique and distinctive significance of the mark/logo(s) to identify and distinguish the Plaintiff product will be diluted and weakened thereby causing irreparable damage to the Plaintiff. The public is likely to assume a connection between the business of the Defendants and the Plaintiff. This would result in 'Dilution by Blurring' which is an actionable tort as well as statutory violation under Section 29 (4) of the Trade Marks Act,1999 that ought to be injuncted being unlawful trade activity.”
22. The Pleadings are factually incorrect and false and particularly when the use of mark is with knowledge of EPL’s registration, it cannot be termed as honest or bona fide use. On this issue, Plaintiffs have also relied upon the Section 33 of the Act which provides that if the proprietor of the registered trademark owner has not opposed the use of the mark by Plaintiff No. 1, it should be considered that the proprietor has acquiesced the use of the mark. This plea is erroneous.
The aforesaid provision would be attracted where the acquiescence is for a continuous period of five years in the use of a registered trademark. Concededly, the use of the trademark by Plaintiff No. 1 has been only from the year December 2017 and five years have not lapsed and therefore Plaintiff No. 1 cannot claim acquiescence.
23. In the present case, the first constituent of passing off action-acquisition of reputation or valuable goodwill, requires a deeper probe. EPL started manufacturing and trading of medicines, under the trademark 'ELDER' and 'ELDER' logo from the year 1983. This resulted in establishing goodwill and reputation in the said brand name. Plaintiffs are staking claim on the said reputation. There is no doubt in the mind of the Court that if the trademark 'ELDER' and 'ELDER' logo were perceived as household names, the reputation and goodwill attached to the said trademarks belongs to EPL. The products under the trade name 'ELDER' and 'ELDER' logo created a nexus or an association or a trade connection amongst the members of the public with EPL alone. Plaintiff No. 1 has attempted to stake claim on this reputation and goodwill by raising the plea of 'shared reputation' in respect of the said marks from the year 1992 till December 2017. The Court is however not convinced with the stand taken by Plaintiff No. 1. The Managing Director of the Plaintiff No. 1 in his statement dated 11th February 2019 confirms that Plaintiff No. 1 was merely doing a job work for EPL. He has categorically stated that the Plaintiff’s Company does not claim any right in the trade mark ELDER which is registered in the name of EPL. In light of the said statement made on oath, Plaintiffs cannot claim to have earned shared reputation in the trademarks. Curiously, in the suit, goodwill is claimed in conjunction and jointly with EPL asit’s sister concern and there is no pleading or assertion of "shared reputation" as was urged at the time of the arguments. Therefore, use of the trademark 'ELDER' and 'ELDER' logo by Plaintiff No. 1 from the year 1992 till 2017 can only be considered as a permitted use and nothing beyond. Plaintiff No. 1 cannot stake claim in the reputation associated in respect of the “ELDER” mark. It would only be the official liquidator attached to Bombay High Court, the custodian of the assets of EPL who can rightfully claim benefit of the reputation and the good will associated with the said marks. Plaintiff No. 1 cannot assert goodwill and reputation in the said marks and file a suit for passing off. The judgements of this Court in Double Coin Holdings Ltd. (supra) and Trans Tyres (India) Pvt. Ltd. (supra) are not applicable. A perusal of the aforenoted cases elucidate that the facts in the said cases are distinguishable. The ratio of the said judgments is infact contrary to the submissions advanced by the learned Counsel of Plaintiff No. 1. The observations of the Court about the presumption of ownership of the trade mark vesting in the manufacturer is being misinterpreted. In the aforementioned case the Court has correctly held that the ownership of the trade mark as a general rule vests in the person who puts the mark on the product. Plaintiff No. 1 as a manufacturer of the products for EPL, cannot rely on this proposition and claim that the medicines that were marketed by EPL under the trade mark 'ELDER' came to be identified with Plaintiff No. 1. As discussed above, the trademarks in question were identified with the source from where the goods entered the market which in the present case is EPL. This is also clear from the statement of the Managing Director of Plaintiff No. 1.Therefore the judgments relied upon by the learned Counsel for the Plaintiffs are not applicable to the facts of the present case.
24. It is pertinent to note the observation of this Court in the case of Prem Singh v. Ceeam Auto Industries, reported in 42 (1990) DLT 548, wherein it has been held as under:
“(35) The consensus of judicial opinion is thus unmistakably clear to the effect that in order to succeed in an infringement of copyright, or passing off action, a party has to show that he is originator in the sense that the concept emanated from him, and further that the given design or get-up or style has become distinctive of his goods to the extent that the trading public associates his goods exclusively with the given design or get-up.”
25. The next question that arises for consideration is — whether the Plaintiffs can claim independent reputation in the marks from December 2017? To find the answer to this question, one would have to first ascertain whether Plaintiffs can use the mark in the first place. Plaintiffs first attempted to claim rights over the registered trademark 'ELDER 'by filing an application (TM-P) to the Trademark Registry, seeking transfer of the said mark in favour of (Plaintiff No. 2). Mr. Anuj Saxena, (Plaintiff No. 2), admits the filing of the said application, but pleads that the said action was initiated under a mistaken advice. After being unsuccessful in this attempt, Plaintiffs started using the trademarks and now asserts to have built up goodwill on the basis of the sales figures. This reputation is on account of infringing activities and therefore, to my mind, the same cannot satisfy the first element of the classic trinity of passing off as noted above.
Prior Adopter and User
26. Plaintiffs have also laid considerable stress on the fact that it is using the trademarks in question prior in time and is therefore the senior user of the mark, having right to injunct the junior user. Plaintiffs contend that the Defendants were incorporated on 16th July 2018, when it obtained manufacturing license and therefore Plaintiffs have a prior use by at least ten months. On this issue, the learned Counsel has relied upon the judgment of this Court and the Supreme Court in Century Traders (supra), Uniply Industries Ltd. (supra), Dhariwal Industries Limited (supra),S. Syed Mohideen (supra).
27. The argument of prior use is unsustainable in the facts of the present case. The case of Century Trader (supra) relied upon by Plaintiff No. 1 lays down a well settled proposition in law. The Supreme Court in S. Syed Mohideen (supra) has held that the rights conferred by registration are subject to the rights of the prior user of the trade mark. The aforesaid judgements, discuss and confirm the proposition that has been settled in N.R. Dongre v. Whirlpool Corpn., reported in 1996 (SLT SOFT) 1847=(1996) 5 SCC 714. However, these judgments have no application to the facts of the case. It is also apposite to note that there is also a categorical contradiction in the stand taken by the Plaintiffs on this issue. On one hand Plaintiff No. 1 claims to have continuously and extensively used the said trade mark since 1992 as a manufacturer and on the other hand Plaintiffs claims that upon liquidation of EPL, it has been independently manufacturing the medicines with the 'ELDER' mark. The independent use by the Plaintiff No. 1 since December 2017 is admittedly with full knowledge of registration of EPL in respect of the trade marks in question. Such use constitutes infringement of the registered trade mark of EPL under Section 29(1) read with Section 29 (3) of the Act. If the acts of the Plaintiff No. 1 are infringing, it is not that Defendant No. 1 is any better. The activities of Defendant No. 1 also appear to be in contravention of Section 29 of the Act. Thus, before the Court, both the Plaintiff No. 1 and the Defendant No. 1 are infringers. Therefore it is a case of a senior infringer suing a junior infringer. Mr. Lall admitted this position, but argued that the infringing activities of the Defendant No. 1 cannot be injuncted in an action of passing off brought by the another infringer. The judgment of Capital Plastic Industries (supra), relied upon by the Defendant No. 1 becomes relevant on this proposition. This Court in a suit for injunction, held that one pirator cannot sue another one. The relevant portion reads as under:
“9.....Even otherwise in my opinion the plaintiff is not entitled to any relief on the basis of this mark. Both the plaintiff as well as the defendant are pirators. They have copied and adopted this mark which already stands registered in the name of Plasticrafters Limited, Premier Insurance Building, Wallace Road, Karachi. None of them is entitled to claim any relief on the basis of this mark. Even otherwise the plaintiff has not been able to establish that he has acquired a valuable goodwill or reputation in respect of the mark RAHBER. The plaintiff has not been able to prima facie establish and fulfill the requirements of a passing off action. The result is that the plaintiff is not entitled to the interim relief at this stage.”
28. This Court has taken a similar view in the case of Prem Singh (supra).The Court while rejecting the claim of the Plaintiff observed as under:
“(23) When, therefore in a given case it becomes apparent, that plaintiff's own conduct is tainted and he himself is prima facie an imitator of another person's design, then the Court would not normally at the pretrial stage, afford him protection on the mere assertion or averments in the plaint, which the defendant has succeeded in showing to be prima facieunfounded or even false.
(35) ......But the crucial factor is always a question of fact, and in a case where the first party himself is shown to have adopted or imitated a trade mark or copyright of a third party, then Courts shall resolutely decline to step in aid of this party because honesty of action is the crux of the matter, and Court's protection is extended only on the principle that damage to a party who has acquired goodwill or reputation in certain trade-mark or design or trading-style for marketing his goods, should not be allowed to be effected by the dishonest user of the same by another. If this first party himself is shown to be guilty of identically wrongful conduct, then it cannot seek indulgence of the Court, particularly" at the initial stage, without even going to trial.”
29. In this case as well, Plaintiffs are infringing a registered trademark. Thus they cannot claim rights in the said mark for bringing an action of passing off against another infringer. Hence the plea of seniority in the present case is immaterial and the Court would refrain from injuncting the Defendants on the basis of the prior user of the mark by the Plaintiff No. 1.
Vexatious and mischievous pleadings
30. As noted above, the plaint gives an impression that the Plaintiffs are the successors of the trademarks 'ELDER' and 'ELDER’ logo which is factually false and untrue. The Plaintiff No. 1 has pleaded that EPL is its predecessor and after the appointment of the official liquidator by the Bombay High Court, it has stepped into the shoes of the said Company. On this basis, Plaintiff No. 1 has claimed the right over the trademarks in question. The reputation of EPL is also claimed to have been vested in Plaintiff No. 1 after it allegedly assumed the rights to manufacture and market the pharmaceutical products under the trademark 'ELDER'. The Plaintiffs claim reputation from the year 1992 onwards. All the statements are false and the suit is clearly a case of clever drafting and vexatious and meritless pleadings. The plaint does not disclose a clear right to sue and it is a fit case for the Court to exercise its power under Order 7 Rule 11, CPC as held by the Supreme Court in T. Arivandandam v. T.V. Satyapal, 1977 (SLT SOFT) 254=AIR 1977 SC 2421, to the
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following effect: “5. We have not the slightest hesitation in condemning the petitioner for the gross abuse of the process of the Court repeatedly and unrepentantly resorted to. From the statement of the facts found in the judgment of the High Court, it is perfectly plain that the suit now pending before the First Munsif's Court Bangalore, is a flagrant misuse of the mercies of the law in receiving plaints. The learned Munsif must remember that if on a meaningful — not formal — reading of the plaint it is manifestly vexatious, and meritless, in the sense of not disclosing a clear right to sue, he should exercise his power under Order 7 Rule 11, C.P.C. taking care to see that the ground mentioned therein is fulfilled. And, if clear drafting has created the illusion of a cause of action, nip it in the bud at the first hearing by examining the party searchingly under Order X, C.P.C. An activist Judge is the answer to irresponsible law suits. The Trial Courts would insist imperatively on examining the party at the first hearing so that bogus litigation cam be shot down at the earliest stage......” (Emphasis supplied) 31. The Court is also mindful of the fact that the present suit is a commercial suit and the mandate of Order XIII-A of CPC read with Delhi High Rules requires the Court to examine whether the Plaintiffs have no real prospect of succeeding. In view of the above discussion the Court has no hesitation to hold that the suit is liable to be dismissed on the ground that the Plaintiffs have no real prospect to succeed by alleging that the Defendants are passing off the goods as that of the Plaintiffs by using the marks 'ELDER' and 'ELDER’ logo. Plaintiffs cannot succeed on the claim of passing off because the use of the marks in question is not honest or bona fide and are also conflicting and infringing the registered marks of EPL. The present suit is thus gross abuse of process of law and is accordingly dismissed. 32. The rights of a person who comes before the Court with false claim or averment have been elaborately discussed by the Division Bench of this Court in the case of Prina Chemical Works and Others v. Sukhdayal, ILR 1974 (1) Del 545 (10), where in emphasis has been placed on the principle, that in cases where parties are seeking relief against the infringement of trade marks or in passing off, the entire action is premised on principle of equity and it is well established and that he who comes into equity must come with clean hands and when the Plaintiff makes any materially false statement in connection with the property which he seeks to protect, he loses his right to the assistance of a Court of equity. 33. Since the activities of Defendant No. 1 are also prima facie infringing the registered trademark of EPL, the Court is not inclined to award cost in favour of the Defendants while dismissing the suit of the Plaintiff. Nonetheless, as the suit is an abuse of process of law, cost of Rs. 50,000/- is being imposed on the Plaintiffs which is directed to be deposited with Delhi Legal Services Authority within four weeks from today. 34. Before parting with this judgment, the Court would like to note that in Cadila Health Care Ltd. v. Cadila Pharmaceuticals Ltd., III (2001) SLT 225=II (2001) CLT 124 (SC)=2001 PTC 541 (SC), the Supreme Court has categorically held that the Courts need to be particularly vigilant where the drugs passing off is alleged. Keeping that in mind, Court considers it appropriate to direct the Registry of this Court to forward a copy of this order to the official liquidator attached to the Bombay High Court for information. I.As. 17710-17711/2018, 827-828/2019, 2917-2918/2019 35. In view of the above discussion, IA No. 17710/2018 is dismissed. The interim ex parte injunction granted vide order dated 21st December 2018 is vacated. Consequently, IA No. 827/2019 and 2917/2019 are allowed. 36. All the pending applications are disposed off and the date fixed before the Learned Joint Registrar for completion of pleadings stands cancelled. 37. Accordingly, decree sheet be drawn up. Suit dismissed.