Patton International Ltd. vs Patton Electronics (I) Pvt. Ltd.

Patherya, J.—This is an application for an order of injunction in an infringement action.

Petitioner''s Case.

2.1 The case of the Petitioner is that it is the owner of the registered trade mark PATTON and is registered in all classes including Class 9. As the registered trade mark owner it has the exclusive right to use of the said trade mark under Sections 28(1) of the Trade Marks Act, 1999 (the 1999 Act). The Defendant Company has infringed the said trade mark as it is neither a registered owner nor a permitted user, and by user of the Petitioner''s trade name has infringed the Petitioner''s exclusive right of user. This has given rise to two causes of action - one of infringement and the other of passing-off. The Petitioner is confining itself to infringement. Section 134 gives jurisdiction to the Petitioner to file the instant application in this Hon''ble Court. Section 20(2) of the Companies Act, 1956 after amendment, has included a registered trade mark as a bar to registration of a name if identical or nearly resembling such registered trade mark. As held in Midas Hygiene Industries P. Ltd. and Another Vs. Sudhir Bhatia and Others, , normally a restraint order ought to be passed in an infringement action. On the basis of the aforesaid facts an ad interim order was passed on 19.8.2008 and continued. Although an appeal was filed the same was disposed of on 5th September 2008.

2.2 The two defences taken by the Defendant are of Sections 34 and 35. Section 34 has no application as the date of incorporation of the Defendant Company is 7th January, 2008. In paragraph 53 of the stay petition it was pleaded that the American Company is the 31.33% share holder of the Defendant Company.

2.3 In the affidavit filed by the Defendant in paragraph 28 it has stated to the contrary that 31.33% is held by the Swiss Company. Therefore the share holding, if at all, is not of the American Company but is of the Swiss Company and such share holding, if at all, is in the minority. Therefore the case of bona fide use cannot subsist. In the Memorandum and Articles of Association annexed, wherein the names of the First Directors or the Promoters of the Defendant Company is mentioned, the name of the PATTON brothers will not appear. The First Directors/promoters are one Mr. S. Kailasanathan and Mr. Rajiv Talwar. The incorporation is in January, 2008 and the question of prior user does not arise. The business carried on by PATTON in America cannot tantamount to business in India. There must be prior or bona fide use and must be localised as held in (1936) 3 All ER 137 and followed in K.G. Khosla Compressors Ltd. Vs. Khosla Extrakting Ltd. and Others, . Reliance has also been placed on 51 RPC 157 for the proposition that registration of trade mark is the necessary requisite and user need not be shown. The NICE Treaty wherein Class 9 has been specified covers switch box. The use of the trade mark PATTON as its corporate name by the Defendant Company is a case of infringement as the registration of the Plaintiff is on record. No application has been filed for rectification and use in view of 51 RPC 157 is irrelevant. The defence of Sections 34 and 35 are not available to the Defendant Company as the use by the American Company is not use by the Indian Company as the Indian Company was incorporated only in January, 2008. No share of the Indian Company is held by either the American Company or by any of the PATTON brothers none of whom is the First Director. The goodwill of the American Company cannot be attributed to the Indian Company. Reliance has been placed on the decision reported in Poddar Tyres Ltd. Vs. Bedrock Sales Corporation Ltd. and Another, , Ellora Industries Vs. Banarsi Das Goela and Others, and (2002) 3 SCC 65. The sales figure set out in paragraph 18 of the affidavit of the Defendant Company is misleading as the same cannot be that of the Defendant Company. For all the said reasons as the Petitioner is the owner of the registered trade mark PATTON, the same cannot be used by the Defendant Company and the restraint order passed be confirmed.

Defendant''s Case

3.1 Counsel for the Defendant submits that the American Company has been selling the said products covered by Class 9 under the name, PATTON, internationally since 1987 and in India since 1993, and all that is sought to be done is to sell the said products through the Defendant Company. Therefore the American Company is a bona fide user prior to the Plaintiff. The right acquired by the Defendant flows from its principals. By virtue of the incorporation of the Defendant Company the American Company will route its business through it. In fact, from the invoices annexed to the petition it will appear that the goods in which the Plaintiff deals under Class 9 are nuts and bolts and the trade mark PATTON is not associated with such products.

3.2 The defence of Section 34 i.e. of prior use is available to the Defendant. Such use is not restricted to India but if user elsewhere can be evidenced that is adequate for no rest raint order being passed. For the said proposition reliance is placed on AIR 1998 SC 261, Milmet Oftho Industries and Others Vs. Allergan Inc., and (2006) 4 CHN 65. The American Company has been selling its products in India since 1993 that is prior to the Plaintiff.

3.3 The Defendant Company is claiming use as licensee of the trade mark PATTON and the same is a good defence as user through licensee is recognized.

3.4 The Defendant Company is entitled to sell the products of its licensee and granting of such license will tantamount to classify the Defendant Company as a prior user and a bona fide user. For the said proposition reliance has been placed on the decisions reported in Dhariwal Industries Ltd. and Another Vs. M.S.S. Food Products, and M/s Fatima Tile Works and etc. Vs. M/s. Sudarsan Trading Company Ltd., and another, . There is no connection between the products of the American Company and the Plaintiff.

3.5 In fact, as held in Vishnudas Trading as Vishnudas Kishandas Vs. Vazir Sultan Tobacco Co. Ltd., Hyderabad and another, , trafficking is not permitted. The intention of the Plaintiff in getting a registered trade mark for all Classes ought to be examined. In fact, in the decision reported in 37 PTC 27 no injunction was granted.

3.6 Sections 34 and 35 are good defence in a case where infringement is alleged and reliance is placed on the decision reported in 1962 RPC 265 . The cases cited by the Petitioner are distinguishable as the decisions reported in Midas Hygiene Industries P. Ltd. and Another Vs. Sudhir Bhatia and Others, , K.G. Khosla Compressors Ltd. Vs. Khosla Extrakting Ltd. and Others, are cases of ex-employees who had dishonestly adopted the trade mark of their ex-employer. The decisions reported in K.G. Khosla Compressors Ltd. Vs. Khosla Extrakting Ltd. and Others, are cases of passing off and (1936) 3 AER 137 must be read in the light of the decision reported in Angsuman Mukherjee Vs. M/s. Shyamalmoy Pal and Co. and Others, . The decisions reported in Poddar Tyres Ltd. Vs. Bedrock Sales Corporation Ltd. and Another, and Ellora Industries Vs. Banarsi Das Goela and Others, were cases where defence of Sections 34 and 35 were not considered.

The decision reported in 51 RPC 157 was a case of non-user although registered in all Classes. Therefore the intention must be seen. Section 20(2) of the Companies Act, 1956 has been considered in order dated 29th August, 2008 and needs no further consideration. The cases cited are not relevant as the Plaintiff and the Defendant are in the same line of business, and the defence of Sections 34 and 35 were not taken. The trade channels were different and target customers are different so also the price. The mis-statement, if any, in paragraph 53 of the Stay Petition, is due to inadvertence. Therefore in the light of the defence of Sections 34 and 35 the restraint vacated.

Petitioner-in-Reply

4.1 Counsel for the Petitioner-in-reply submits Section 34 specifically provides that user must be by that person or its predecessor-in-title. Predecessor-in-title contemplates vesting of title. In the instant case the Defendant Company is a licensee and there has been no transfer of interest or title in its favour. The decision reported in Dhariwal Industries Ltd. and Another Vs. M.S.S. Food Products, is distinguishable as it is a case of assignment. The Memorandum of Association annexed to the stay petition and the objects of the American Company do not provide for transfer of business or ultimate working for it. Section 37 of the 1999 Act permits assignment though in the instant case no assignment has been granted. Angsuman Mukherjee Vs. M/s. Shyamalmoy Pal and Co. and Others, and Milmet Oftho Industries and Others Vs. Allergan Inc., are cases of passing off and no defence under Sections 34 and 35 were taken. It was not a case of a licensee. M/s Fatima Tile Works and etc. Vs. M/s. Sudarsan Trading Company Ltd., and another, was a case of rectification and from the documents it is evident that the American Company is not in control of the Defendant Company. The decision reported in Vishnudas Trading as Vishnudas Kishandas Vs. Vazir Sultan Tobacco Co. Ltd., Hyderabad and another, was a case where rectification was not allowed and the mark allowed to remain. The decision reported in 1962 RPC 265 was a case of passing off and that was the only question considered. The infringement of the corporate name was not in issue. In 1962 RPC 265 reliance was placed on the dissenting judgment of Lord Denning. The Stock-holders Agreement has not been ratified and therefore no right has accrued to the Defendant Company. For the said proposition reliance has been placed on a decision reported in ELR 13 BLR 415. The case of infringement in the instant case is restricted to user of the corporate name and not of the goods.

Conclusion

5.1 Having considered the submissions of the parties the interim order dated 19.8.2008 and continued till varied by order dated 16.9.2008 is confirmed for the following reasons.

5.2 The Plaintiff is the registered owner of the corporate name PATTON in respect of all classes under the 1999 Act.

5.3 The Defendant is claiming the right to use the said trade name PATTON on the basis of agreements with PATTON Electronics of U.S.A. (American Company) and therefore has taken the defence of Sections 34 & 35.

5.4 To be entitled to the defence u/s 34 the Defendant must evidence that it has been or its predecessor-in-title was using the trade mark as a corporate name continuously from a prior date.

5.5 The use by both the Defendant and its predecessor-in-business must be bona fide. (S.35).

5.6 From the agreements disclosed undoubtedly the First Directors/promoters of the Defendant Company are not any of the PATTON Brothers. The license granted under the Exclusive distributorship agreement must be examined and is set out.

Grant of Trademark Licenses: Patton hereby grants to Patton India a limited and revocable license to the "Patton" brand, including use of Patton''s trademarks and logos in accordance with Patton''s reasonable written guidelines, as provided to Patton India from time to time. Patton India rights are revocable at anytime by Patton, provided Patton notifies Patton India giving 120 days written notice that it must cease utilizing the Patton brand. The right to brand is limited to use within the country of India. Within these limits, Patton India shall be free to use Patton''s name, or any Patton trademark, service mark. This Agreement does not give the Patton India any ownership title or interest in any Patton name, trademark, service mark or logo. The parties agree that such grant of license has significant value, the costs of continued use of the Trademark may be negotiated between the parties and an amendment made to this agreement.

5.7 By virtue of the Distribution Agreement the Defendant Company is entitled to use of the "PATTON" name in India, while the ownership right and title in the name is retained by the principal. Such user is given under a license.

5.8 A license does not create any title in the licensee. The language used in Section 34 is "predecessor-in-title". Title can be derived by assignment or transmission. This is not so in the instant case. In fact the Defendant Company has not claimed the American Company to be its predecessor-in-title in the affidavit filed. It has described itself as a successor-at-law.

5.9 Successor-in-law is not what is contemplated in Section 34. The American Company not being a predecessor-in-title of the Defendant Company the defence of Section 34 will not be available to the Defendant Company. Such defence may have been available to the American Company as "that person" but the American Company has not come to contest the proceedings.

5.10 The word "predecessor in business" in Section 35 will have no application to the Defendant Company as the Defendant Company has been appointed under the Exclusive Distribution Agreement as an "independent exclusive authorised distributor". Therefore it is not entitled to do the business of its principal, the American Company. This is evident from the Memorandum of Association wherein the Main Objects of the Company have been set out. Therefore the defence of Section 35 of the 1999 Act is also of no assistance to the Defendant Company.

5.11 The cases cited by the Defendant are distinguishable on facts as Angsuman Mukherjee Vs. M/s. Shyamalmoy Pal and Co. and Others, , Milmet Oftho Industries and Others Vs. Allergan Inc., Modern Food Industries (I) Limited Vs. Modern Bakery and Others, and Dhariwal Industries Ltd. and Another Vs. M.S.S. Food Products, are cases of passing off action. M/s Fatima Tile Works and etc. Vs. M/s. Sudarsan Trading Company Ltd., and another, is also distinguishable on facts.

5.12 For all the said reasons and in view of (1936) 3 AER 137 which is still good law, the interim orders passed and varied by order dated 16.9.2008 is confirmed.

5.13 It is made clear that the order of injunction is restricted to the use of the corporate name PATTON by the Defendant Company.

5.14 In view of the a foresaid this application is disposed off.

(PATHERYA, J.)

G.A. No. 2242 OF 2008 C.S. No. 138 OF 2008

PATTON INTERNATIONAL LTD.

-VS.- PATTON ELECTRONICS (I) PVT. LTD.

Before The Hon''ble Justice Patherya Date: 26/9/2008 Later:

Prayer for stay is considered and refused.

After the judgment has been delivered Counsel for the Petitioner submits that the word "PATTON" has not been used while selling the goods of the Defendant company, and therefore the said trade name "PATTON" ought not to be used while selling the said goods by the Defendant company.

This is disputed by the Counsel for the Defendant company as according to her the goods of the American company are being sold through the Defendant company. In the event the American company is using the name "PATTON" on its goods no restraint order be passed.

Haying considered the submissions of the parties no evidence has been disclosed by the Petitioner to show that the goods sold by the Defendant company or the American company bears the trade name "PATTON". In fact the Defendant company is selling the products of the American Company who is well within its right to use its trade-mark, therefore, no order of injunction as regards the goods need be passed at this stage.