LT Foods Limited v. Saraswati Trading Company [2022 SCC OnLine Del 3694]

LT Foods, a leading food manufacturing and processing company known for its rice products, including for its popular brands Daawat, Daawat Devaya, Daawat Bestow and Chef’s Secret, filed a suit against the Defendant, Saraswati Trading Company, for trademark infringement. In August 2021, the Plaintiff discovered the Defendant’s activities of selling, storing, and distributing counterfeit “Daawat” products. Upon examination, it was revealed that the product was lower quality jawaphool rice sold as basmati rice under the branding of “Daawat Chef’s Secrets Basmati Rice,” with packaging identical to that of the Plaintiff. The Plaintiff claimed that such activities were deliberate and dishonest, amounting to infringement and leading to dilution of its trademark and business.

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Trademark infringement

The Plaintiff claimed that its registered word and device marks, “Dawat” and “Daawat” have achieved significant goodwill and recognition, contributing to sales of over Rs. 700 crores in 2020-21, with a considerable amount of Rs. 33 crores spent on promoting the brand. Its marks have been registered in various countries including Australia, Canada, European Union and the United Kingdom. The Plaintiff cited actions where it has successfully protected its marks against infringement by various entities.

Decision

The Hon’ble High Court of Delhi passed an ex parte interim injunction on 7th September 2021. Additionally, a Local Commissioner was appointed in accordance with Order 26 of the Code of Civil Procedure, 1908, to investigate the Defendant’s premises and prepare an inventory of the infringing goods. Upon inspection of the Defendant’s premises in addition to 3 other premises, the Commissioner discovered a total of 89 packets of rice, which included empty as well as packed Daawat and Daawat’s Chef’s Secretz rice bags, containing the Plaintiff’s mark. The Commissioner’s report explicitly stated that the packages were counterfeit versions of the Plaintiff’s renowned Daawat products.

The Court was of the unequivocal opinion that the Defendant had intentionally and deceitfully committed acts of infringement, taking into account the substantial amount of counterfeit goods seized. The Commissioner’s report, which remained unchallenged, was deemed to be admissible as evidence, thereby negating the need for any ex parte evidence. Furthermore, the Court was convinced that no further evidence was necessary since the Defendant failed to file their written statement within the stipulated time. The Court placed reliance on ML Brother LLP v. Mahesh Kumar Bhrualal Tanna[1], where it was held that the report submitted by the Commissioner and the evidence taken by him shall be evidence in the suit. The Court also took into consideration the decision in Levi Strauss & Co. v. Rajesh Agarwal[2] which noted that the Commissioner is appointed as a representative of the Court and the evidence collected and the report submitted would be evidence in the suit and parties having any objection to the same have the option to examine the Commissioner personally in open Court.

The Court found that the Defendant had misled customers with an intention to deceive and as a result, the Plaintiff’s business and reputation had suffered irreparable harm. Thus, in view of the Defendant’s infringing activities, the Court awarded damages and costs of INR 25,00,000/- to the Plaintiff. In awarding damages to the Plaintiff, the Court relied on Procter & Gamble Company v. Joy Creators[3], wherein it was noted that trademark and copyright owners invest a significant amount of effort and resources in pursuing legal action against infringers. Failure to award punitive damages in such cases could embolden individuals with dishonest intentions to misappropriate the goodwill of established brands, passing off their own goods and services as that of the well-known brand and profit from the deception, while evading compensation by remaining absent from court proceedings. This would deny the plaintiff the opportunity to prove the actual extent of the infringer’s profit.

Conclusion

The case of LT Foods v. Saraswati Trading Company establishes the importance of protecting registered trademarks from infringement and passing off. The Court’s decision emphasized the significance of evidence presented by Commissioners appointed under Order 26 of CPC. The judgment also reiterates that punitive damages may be awarded to discourage infringers and to compensate the plaintiff adequately. The case serves as a warning to potential infringers that the Court will take strong action against deliberate and dishonest infringement, and the lack of a written statement or appearance will not prevent the Court from awarding damages to the aggrieved party.

Author: Dinesh Ganesh, KLE Society’s Law College, Bangalore, in case of any queries please contact/write back to us via email to chhavi@khuranaandkhurana.com or at Khurana & Khurana, Advocates and IP Attorney.

[1] 2022 SCC OnLine Del 1452

[2] 2018 SCC OnLine Del 6421

[3] (2011) 450 PTC 541

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