Principle of ‘International Exhaustion’ and Marlboro Cigarette’s Trademark Violation

On Monday, a single-judge bench of the High Court of Delhi (“High Court”), in two similar suits, had granted an ex-parte injunctions in favour of the Plaintiffs, proprietor of trademark ‘MARLBORO’ and ‘ROOF DEVICE’ (“suit trademarks”). While one dispute was related to sale of infringing cigarette products in Mumbai, other dispute was related to its sale in Kolkata. In both the actions, the High Court restrained the defendants from selling counterfeit and grey versions of the cigarette. In Philip Morris Products S.A. & Anr. v. Sameer & Ors ("first suit") and Philip Morris Products S.A. & Anr. v. Anil Kumar Singh & Ors ("second suit") [both dated 10/03/2014], the High Court had awarded damages of Rs. 10,000 against some of the defendants and Rs. 5,000 against other. In reaching its judgment, the High Court also discussed the principle of ‘international exhaustion’ with respect to section 30(3)(b) of The Trade Marks Act, 1999 (“TM Act”).Through both the suits, Plaintiffs had sought to restrain the defendants from using suit trademarks and had sought Rs. 20,00,000/- as damages (apart from punitive damages). The suit(s) were originally filed by Philips Morris Products S.A., the original proprietor of suit trademarks. Later, suit trademarks were assigned in favour of Philip Morris Brands Sarl – by virtue of this, the latter become the substituted Plaintiff No.1.

(Image Source: cgtrader.com)

Factual Background: Sometime in May 2010, it came to the knowledge of the Plaintiffs that some retailers in Mumbai and Kolkata were selling, stocking & distributing the counterfeit as well as grey market versions of Plaintiff’s products (cigarettes). While grey market version products were not meant for sale in India, counterfeit products were duplication of Plaintiff’s products. That is, grey market version is imported through another country, either legally or illegally (e.g., smuggling). On becoming aware of these activities and finding the cigarette products to be infringing, Plaintiffs filed two suits before the High Court. The defendants, in both the proceedings, preferred not to appear or file written statement. As a result, the High Court, apart from considering Plaintiff’s evidence ex-parte, also allowed their application for passing an ex parte decree.

In both the suits, the High Court had appointed two commissioners to inspect the premises of the defendants. With respect to second suit, concerned commissioner found substantial amount of infringing products in the premises of defendant no. 7. (9660 cigarettes); certain amount of infringing product was also found in the premises of defendant no.5. However, in the premises of some of the other defendants (defendants no. 1,2&4 in first suit and defendants no. 1,3,5 & 6), not much infringing product(s) were found. In the premises of the remaining defendants, nothing incriminating was found. Among all the defendants, only defendant no.7 maintained books of accounts, ledger etc.

Section 29(5) of the Trade Marks Act does not preclude the application of Section 29(4)

Recently, the Delhi High Court (“High Court”) has decided a trade mark dispute (Bloomberg Finance LLP v. Prafull Sak lecha & Ors.) wherein the court had to analyse whether section 29(5) of Trade Marks Act, 1999 (“TM Act”) is exhaustive for all situations of uses of the registered mark as part of the corporate name . That is, if conditions laid down under section 29(5) of TM Act are not satisfied, can the plaintiff still seek a remedy under section 29(4) of the Act. In the present case, a suit was filed by Bloomberg Finance LLP, the plaintiff, to restrain the defendants from using term ‘Bloomberg’ as a part of their corporate names.

(Image courtesy: Westpalmbeachlaw.com)

According to section 29(5) of the TM Act, a registered trade mark is infringed if (i) it has been used in relation to a trade, and (ii) it has been used in relation to goods or services in respect of which the trade mark registered. On the other hand, section 29(4) of the TM Act provides for a situation where a mark is infringed when it ‘is used in relation to goods or services which are not similar to those for which the trade mark is registered’. In this post, I am highlighting only the issues related to the interpretation of section 29(4) and section 29(5) of the TM Act and not the other parts.

Section 28(3) of Trade Marks Act Protects Infringement Only for Similar Goods: Delhi High Court

Last week, Delhi High Court had to decide a trade mark dispute where an issue had arisen with respect to the usage of two similar trademarks. In A. Kumar Milk Foods Pvt Ltd. v. Vikas Tyagi& Ors, an injunction had been sought against the defendant for restraining it from using the trade mark which had alleged deceptive similarity with trade mark of plaintiff. The plaintiff, A. Kumar Milk Foods Pvt Ltd., was the proprietor of the registered trade mark, ‘SHRIDHAR’, which had been granted for Class-29 goods such as ghee, edible oils, milk, dairy products etc. The Defendants, Vikas Tyagi and M/s. Shreedhar Dairy Products, were the proprietor of a similar trade mark, ‘SHREEDHAR’, but the same had been granted for the Class-30 Goods, i.e., Atta, Maida and Besan. Though the defendants had also sought registration of ‘SHREEDHAR’ for Class-29 goods, the application is still pending and the same has been opposed by the plaintiff.

(Image Source: Apex Law Group LLP)

In the present case, it had been claimed by the plaintiff that its trade mark had become distinctive and is associated with the above-mentioned Class-29 goods on account of its long, continuous and extensive use. The main problem of the plaintiff is the usage of trade mark, ‘SHREEDHAR’, by the defendant with respect to Class-29 goods since the same Class-29 goods are sold by the plaintiff under the trade mark, ‘SHRIDHAR’. As the impugned Class-29 goods are sold by the defendant under the trademark which is deceptively similar to that of the plaintiff, the same, according to the plaintiff, is the infringement of its trade mark. Further, it was the contention of the plaintiff that such an activity on the part of defendant has also lead to passing-off the impugned Class-29 goods as its goods. On the other hand, it has been the contention of the defendants that they have been using the trade mark, “SHREEDHAR”, since October 2003 and that their use of the trade mark was prior than that of the plaintiff. Contrary to the submissions of plaintiff, defendants submitted that it is the plaintiff which had copied its trade mark.