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Citation: 226 (2016) DLT 662
As per a study conducted in 2016 by OECD (Organisation Economic Cooperation and Development) and the European Union’s Intellectual Property Office, India ranks amongst the top five exporters of counterfeit products. Inspite of the legislative authorities providing stringent anti-counterfeit laws that award both civil and criminal remedies to the wronged, there still exist rampant export of fake goods and parallel exports that have caused grave losses in terms of goodwill and revenue to number of companies in various industries.
In the present case, Plaintiff filed an injunctive suit against the Defendants who was the proprietor of several e-commerce websites that dealt in trading of international luxury products.
- Plaintiff No. 1, Cartier International A.G., is the proprietor of the trademark CARTIER since 1847. The trademark CARTIER has also been recognized as a well known mark under section 2(zg) of the Trademarks Act, 1999.
- Plaintiff No. 2, Officine Panerai AG, is the proprietor of the trademark PANERAI since 1860.
- Plaintiff No. 3, Richemont International S.A., is the proprietor of the trademarks VACHERON CONSTANTIN and JAEGER LECOULTRE. Plaintiff No. 3 has been engaged in manufacture and sale of watches under the trademark VACHERON CONSTANTIN since 1819 and under the trademark JAEGER LECOULTRE since 1903.
- The Plaintiffs are part of Richemont Group. Plaintiff Nos. 2 and 3 deal in watches and other horological and chronometric instruments while plaintiff No. 1 deals in jewellery, writing instruments and leather goods as well.
- Defendant No. 4 is a company trading under the name and style of Digaaz e-Commerce Pvt. Ltd. and that defendant Nos. 1 to 3 are the directors thereof.
- The defendants operate an e-commerce website www.digaaz.com, where they offer lifestyle and fashion products for sale. The defendants have been found to be offering for sale and supplying huge quantities of counterfeit products bearing trademarks and logos of various luxury brands including the plaintiffs on their website www.digaaz.com.
- Many customers have already been cheated by the defendants who have purchased large quantities of counterfeit products, including those bearing the plaintiffs’ trademarks. Subsequently, complaints were lodged in the Cyber Cell. The matter was still pending against them and was at the stage of filing charge sheet.
- The plaintiffs came to know in February, 2014 that the defendants were selling and supplying counterfeit products of various luxury brands including those of the plaintiffs on their website www.digaaz.com and issued cease and desist notices to them on 20th February, 2014, which were left unanswered.
- The volume of counterfeit goods sold by the defendants demonstrates that the defendants were seasoned infringers and counterfeiters with a regular supply of counterfeit goods. Many of the right holders of these brands had instituted proceedings against the defendants before this Court and have obtained orders restraining the defendants from selling counterfeit products bearing their respective trademarks and logos.
- The Chandigarh Cyber Cell’s investigation and raid confirm that the defendants were offering for sale of counterfeit products including those bearing the suit trademarks on the impugned websites www.digaaz.com, www.watchcartz.com and www.luxecart.com. The Cyber Cell also confirmed that the defendants procure the counterfeit products from New Delhi, Ludhiana and Chandigarh at throw away prices and sell these at exorbitant rates cheating both customers and brand owners and making enormous illegal profits in the process.
- On 8th October, 2014 defendant Nos.1 and 2 were arrested by the Cyber Cell and were remanded in judicial custody for 14 days. The matter is still pending against them and is at the stage of filing charge sheet.
- The plaintiffs ultimately filed the present suit seeking permanent injunction restraining infringement of trademark, passing off and damages.
Whether Plaintiffs are entitled for permanent injunction against Defendants as prayed for?
Trade Marks Act, 1999
Section 135- Reliefs in suits for infringement or for passing off include temporary and permanent injunction on court‘s terms and at the option of the plaintiff, either damages or an account of profits, together with or any order for the delivery-up of the infringing labels and marks for destruction or erasure.
Decision of the Court
- While holding that there is a prima facie case of infringement, the court delved into the issue of damages and punitive damages.
- In terms of Section 135 of the Trade Marks Act, 1999, the plaintiffs in the instant suit opted for damages and the computation thereof was accepted by the court.
- The Court held that defendants have deliberately stayed away from the present proceedings with the result that an enquiry into their accounts for determination of damages could not take place. The Hon‘ble Court observed that allowing such conduct would give arise to situation where defendant who appears in Court and submits its account books would be liable for damages, while party who chooses to stay away from proceedings would escape the liability on account of failure of the availability of books of account.
- The Hon‘ble Court observed that this Court has in previous instances granted exemplary and punitive damages and referred to the case of Time Incorporated v. Lokesh Srivastava & Anr., (citation) where Justice R.C. Chopra observed that “time has come when the Courts dealing in actions for infringement of trademarks, copyrights, patents etc., should not only grant compensatory damages but also award punitive damages with a view to discourage and dishearten law breakers who indulge in violation with impunity out of lust for money, so that they realise that in case they are caught, they would be liable not only to reimburse the aggrieved party but would be liable to pay punitive damages also, which may spell financial disaster for them.”
- The Hon‘ble Court further referred to the case of Microsoft Corporation v. Rajendra Pawar & Anr.,2008 (36) PTC 697 (Del.) in which it was stated that: “Perhaps it has now become a trend of sorts, especially in matters pertaining to passing off, for the defending party to evade court proceedings in a systematic attempt to jettison the relief sought by the plaintiff. Such flagrancy of the Defendant’s conduct is strictly deprecatory, and those who recklessly indulge in such shenanigans must do so at their peril, for it is now an inherited wisdom that evasion of court proceedings does not de facto tantamount to escape from liability. Judicial process has its own way of bringing to tasks such erring parties whilst at the same time ensuring that the aggrieved party who has knocked the doors of the court in anticipation of justice is afforded with adequate relief, both in law and in equity. It is here that the concept of awarding punitive damages comes into perspective.“
- In light of the above approaches of concurrent Benches, the Court in Cartier passed a decree of permanent injunction against the Defendant and proceeded to order the Defendants to furnish books of accounts to the Plaintiffs to compute exact damages. The Hon‘ble Court finally ordered punitive damages of Rs. 1 crore to be paid to the Plaintiffs, along with the costs.
This Judgment was much appreciated for the high punitive damages that were ordered. This judgment poses as a strong precedent for trademark infringement and anti-counterfeit cases. On analysing the judgment, it can be concluded that the following factors among other things were taken into consideration while granting punitive damages to the Plaintiffs: the Defendants’ absence in the proceeding, thus implying their complete dismissal and total disregard for the rule of law; the fraudulent techniques implemented by the Defendants to attract affluent consumers who would have otherwise been the Plaintiffs’ consumers and, blatant trademark infringement and sale of counterfeit products.
About the Author: Nadine Kolliyi, Legal Intern at Khurana & Khurana, Advocates and IP Attorneys and Amruta Mahuli, Legal Associate at Khurana & Khurana, Advocates and IP Attorneys who can be reached at firstname.lastname@example.org.