Maintainability of Composite Suit for Design Infringement and Passing Off

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Maintainability of Composite Suit for Design Infringement and Passing Off

A landmark judgment has been delivered on December 14, 2018, by a Special five-judge bench of the Delhi High Court in the judgment titled as Carlsberg Breweries A/S. v Som Distilleries and Breweries Ltd., 256 (2019) DLT 1 wherein it has effectively overruled the earlier judgment of the three- judge bench in Mohal Lal vs Sona Paint & Hardwares and Ors., AIR 2013 Delhi 143 and has held that two causes of action of passing off, and design infringement can be joined and tried in a Composite suit.

In Mohan Lal’s case, it was held that the cause of action for a suit for infringement of a registered design is different from the cause of action on which a claim of passing off is premised and therefore two separate suits have to be filed.

Previously in 2017, the reasoning in Mohan Lal’s case had been disregarded by the Bombay High Court, in the judgment titled as Cello Household Products v Modware India, AIR 2017 Bom 162, where both the design infringement and passing off actions were maintained simultaneously in the same suit. However, Mohan Lal’s judgment was, still effective and binding in the jurisdiction of Delhi High Court, until it was overruled by the Carlsberg’s judgment.

Brief analysis of the judgment Mohal Lal vs Sona Paint & Hardwares and Ors.:

Facts: The suit in question was filed by one Mohan Lal (plaintiff) against Sona Paint & Hardwares (defendant), contesting the infringement of registered design as well as passing off, in respect of mirror frames, door handles of almirah etc. by the defendant.

Issue: One of the substantial issues faced by the Court was, whether a Composite suit, for infringement of a registered design can be filed along-with an action for passing off.

Observations: It was held by the Court that, since the cause of action for bringing the two suits is different, separate suits would have to be filed; though if filed at the same time or in close proximity they may be tried together, as there maybe some aspects which may be common.

It was further observed that, the fundamental edifice of a  design infringement suit would be for the claim of monopoly based on registration, which is premised on uniqueness, newness and originality of the design whereas, an action for passing off is founded on the use of the mark in the trade for sale of goods and for offering services, generation of reputation and goodwill, association of the mark to the plaintiff’s goods and the misrepresentation sought to be created by the defendant by the use of the plaintiff’s mark.

The Court strongly relied upon the Supreme Court’s verdict in Dabur India Limited v. K.R. Industries, (2008) 10 SCC 595, to hold that different causes of action cannot be combined in one suit.

The facts before the Supreme Court in Dabur’s case were that, a Composite suit was filed with respect to two causes of action, where for one cause of action the Court in which the suit was filed had territorial jurisdiction, and for the other cause of action the Court had no territorial jurisdiction. In Dabur’s case, the Supreme Court held that, a Composite suit would not entitle a Court to entertain a suit in respect whereof it has no jurisdiction, territorial or otherwise. The Court further held that, Order II Rule 3 of the Code of Civil Procedure 1908, states so and, thus, there is no reason as to why the same should be ignored. The Court also clarified that in M/s Dhoda House vs. S.K. Maingi, (2006) 9 SCC 41 wherein a Composite suit within the provisions of the 1957 Act, was filed, would mean the suit which is founded on infringement of a copy right and wherein the incidental power of the Court is required to be invoked and a plaintiff may seek a remedy which can otherwise be granted by the Court and further, it was that aspect of the matter which had not been considered in Dhoda House’s judgment but it never meant that two suits having different causes of actions can be clubbed together as a Composite suit. 

Brief analysis of the judgment Carlsberg Breweries v Som Distilleries and Breweries:

Facts: The suit in question was filed by Carlsberg Breweries (plaintiff) against Som Distilleries (defendant), contesting the infringement of a registered design as well as passing off (of the plaintiff’s trade dress) in respect of the bottle and overall get up of the “Carlsberg” mark. The defendant objected to the frame of the suit, pointing out that as per the Mohan Lal’s judgment the two claims (for passing off and reliefs regarding design infringement) could not be combined in one suit. A Single Judge perused the submissions of both the parties concluding that the issue decided in the Mohan Lal’s case required a second look. In light of Order II Rule 3 of the Code of Civil Procedure, 1908 which permits joinder of causes of action, he referred the question of whether a composite suit could be maintained, where the parties to the proceedings are the same, for re-consideration to a larger bench.

Issue: The substantial issue in front of the Court was similar to the issue in Mohan Lal’s case i.e. to decide whether in one Composite suit, there can be joinder of two causes of action, one cause of action being of infringement by the defendant of a design of the plaintiff which is registered under the Designs Act, 2000 and the second cause of action being of passing off by the defendant of his/its goods/articles as that of the plaintiff.

Observations: The Special Bench has observed that there is a factual overlap in both the claims with respect to the presentation of the goods by the defendant. In order to establish infringement of a design, fraudulent imitation of the article by the defendant has to be proved, and to show passing off, it is necessary to establish that the defendant has misrepresented to the public that its goods are that of the plaintiff. The Court also took a dichotomous view that, as the definition of design excludes a trademark and for it to be a valid design it cannot be a trademark. The issue of presentation of the goods is one of a larger trade get up and not of a trademark in its stricter meaning, which otherwise precludes a design right. The Court further observed that, to claim a design right, the subject matter must not be used as a trademark in its stricter meaning but may constitute the larger trade appearance of the goods in question which, in turn, could give rise to a passing off claim.

The Court stated that in Mohan Lal’s case, the Court had failed to appreciate that the ratio of a case is dependent on facts. The Court while interpreting the Supreme Court judgments of Dabur India Ltd. and Dhodha House, observed that these judgments have not held that the Court had no jurisdiction to try a Composite suit encompassing two causes of action. The Court further held that, the provisions of Order II Rule 3 of the Code of Civil Procedure 1908, entitle the Court to entertain a Composite suit and the only exception to this rule would be that the jurisdiction in respect of one cause of action is lacking.

The Court also negated the second ground of the Mohan Lals judgment which stated that a claim of infringement was fundamentally different from that of passing off; and since no common questions of law and facts would arise between the two claims, a Composite suit cannot be filed joining such claims.

The Court also interpreted the law on joinders to ascertain whether there would arise common questions of facts and law in the two causes of action of infringement of registered design and passing off, so that these two causes of action can be joined under Order II Rule 3 of the Code.

Joinder of two causes of action is governed by Order II Rule 3 of the Code of Civil Procedure, 1908.

Rule 3 (1) reads as under:             

Save as otherwise provided, a plaintiff may unite in the same suit several causes of action against the same defendant, or the same defendants jointly; and any plaintiffs having causes of action in which they are jointly interested against the same defendant or the same defendants jointly may unite such causes of action in the same suit.”

Order II Rule 3 contemplates uniting of several causes of action in the same suit and even if the causes of action have no common nexus, the suit can be joined.

Reliance was placed by the Court, on Prem Lata Nahata v. Chandi Prasad Sikaria, (2207) 2 SCC 551, where the Supreme Court had ruled that the main purpose of consolidating suits was to save cost, time and effort and to make the conduct of several actions more convenient by treating them as one action. It was further observed in this case that “the jurisdiction to consolidate arises where there are two or more matters or causes pending in the court and it appears to the Court that some common question of law or fact arises in both or all the suits or that the rights to relief claimed in the suits are in respect of or arise out of the same transaction or series of transactions; or that for some other reason it is desirable to make an order consolidating the suits”. It was also held that the ultimate question for decision in all the suits is the nature of the transactions that were entered into between the parties and whether the evidence in those transactions would be common.

The Court further followed the ratio laid down in Prem Lata Nahata and opined that “if the substantial evidence of two causes of action would be common, then there can be a joinder of causes of action under Order II Rule 3 CPC”. Similarly, if the evidence is for the most part different for the two causes of action, then there cannot be a joinder of causes of action.

The Court also interpreted the term ‘cause of action’. To do this, the Court relied upon the Supreme Court’s decision in the case of Kusum Ingots & Alloys Ltd. v. Union of India, (2004) 6 SCC 254 where the term was interpreted to mean “every fact which would be necessary for the plaintiff to prove, if traversed, in order to support his right to the judgment of the Court”.

On the issue of misjoinder of causes of action, the Court relied on the judgment titled as Girdhari Lal (Dead) by LRs. vs. Hukam Singh & Ors. (1977) 3 SCC 347, to hold that misjoinder of causes of action cannot be a ground for rejection of a suit.

The Court also applied the Delhi High Court judgment in M/s. Jay Industries v. M/s. Nakson Industries, AIR 1992 Del 338 wherein the Court held that, where both the causes of action results from the single transaction, then in that case, both the causes of action could be joined.

The Court applied the ratio of the aforesaid judgments to the facts of the present case and opined that where the claims of infringement of a registered design and passing off arise from the same transaction of sale, the two causes of action will have common questions of law and facts. Hence, the evidence of the two causes of action will also be common. In such a situation, to avoid multiplicity of proceedings there should be a joinder of the two causes of action of (infringement of a registered design and passing off against the same defendant in one suit), otherwise multiplicity of proceedings will arise which will further lead to waste of time, money and energy of the parties and also of the Courts.

The Court further observed that in this case, the actions for passing off and design infringement emanate from the same fact, the sale or offer for sale by the defendant for the rival products. The act of sale of the rival products impelled the plaintiff to approach the Court for design infringement as well as for passing off. The Court noted that if such a situation arises then the cause of action cannot be “split”. A Composite suit gives a bird’s eye view with respect to a common set of facts. In cases where the claim for design infringement is prima-facie weak and the plaintiff cannot secure relief, the same Court can still provide relief if on the basis of the same facts and evidence, a prima-facie case for passing off is made out.

Observations of Justice Valmiki Mehta:

Justice Valmiki Mehta, concurring with the rest of the Judges also delivered a separate opinion. He observed that since the sale of products by the defendant would be in question in both causes of action, a substantial part of the facts of the two actions would be the same as to whether the article being sold by the defendant of a particular design is, or is not, a fraudulent or obvious imitation of the article of the plaintiff. Thus, it was held that to a considerable extent, the evidence of the two causes of action would be common and therefore, in order to avoid multiplicity of proceedings, which will result in waste of time, money and energy of the parties and also of the Courts, a joinder of the two causes of action should take place.

Conclusion:

The conundrum on the maintainability of a Composite suit of infringement of design as well as passing off has been cleared by the Court, with this judgment. It is important to note that in the Mohan Lal’s case, the three-judge bench had missed referring to Order II Rule 3 of the Code of Civil Procedure, 1908 which clearly allows Courts to combine different causes of action. Through the present decision, the five-judge bench has rightly placed reliance on Order II Rule 3 of the Code of Civil Procedure, 1908, and held that the purpose of this provision is to avoid superfluous multiplicity of suits. With the ever escalating cost of Intellectual Property litigation, the decision in respect to the maintainability of Composite suits, in particular, will bring immense relief to the plaintiffs. Composite suits for design infringement and passing off will also promote expedient disposal of such disputes.

Edited & Published  by Sakshi Raje

References:

1. http://www.mondaq.com/india/Carlsberg+Breweries+V+Som+Distilleries+And+Breweries+Ltd

2. https://barandbench.com/composite-suit-design-infringement-passing-off-maintainable/

3. http://www.indialegallive.com/constitutional-law-news/courts-news/delhi-hc-okays-composite-suit-for-design-infringement-and-passing-off-58858

4. http://www.mondaq.com/india/x/766340/trials-appeals-compensation/Delhi-High-Court-Allows-Composite-Suit-For-Design-Infringement-And-Passing-Off