V.M. Kanade, J.
1. Heard learned counsel appearing on behalf of the appellant and learned counsel appearing on behalf of the respondent.
2. The appellant-original plaintiff filed Special Civil Suit No. 1 of 2003 in the District Court at Silvassa against the respondent original defendant Silvassa Bottling Company. In the said suit the plaintiff claimed relief of permanent injunction restraining the respondent from infringing its trade mark and for other consequential reliefs.
3. Initially, on April 29, 2003 the District Court Silvassa passed an ex parte order of interim injunction against the respondent in terms of prayer Clauses (a) and (b) and the respondents were restrained from using the impugned trade mark. The said order was served on the respondent. The application for temporary injunction (Exhibit 5 ) was heard by the District Court and the same was dismissed by judgment and order dated June 27, 2003. The appellants have preferred an appeal from that order. Thereafter, matter appeared on board on September 30, 2003 and, thereafter it was adjourned on number of occasions and finally the matter was fixed for final disposal on October 8, 2003 at 2.45 p.m. and by consent of parties it was agreed that the matter would be finally decided at the admission stage itself.
4. The brief facts which are necessary for the purpose of deciding the present appeal are as under:
The appellants are the successor of Royal Crown Company Inc., a company incorporated in the USA in respect of the certain trade marks. The Royal Crown Company applied for obtaining the registration on July 8,1970 of the trade mark containing letters "RC" written in stylised manner in respect of non-alcoholic beverages, syrups and extracts for making such beverages in Class 32 in Part B of the Register.
5. The plaintiffs predecessors also applied for the registration of the label mark containing the letters "RC" written is stylised manner. However, the said registration is pending and final permission is yet not granted. The plaintiffs in their plaint have dmitted that the Royal Crown Company have plans to use "RC as a trade mark since 1970, however, the plans did not materialise on account of various reasons including the fact that several restrictions were imposed at that time by the Government of India. The case of the plaintiff is that in the year 1999 the Royal Crown Company made an attempt to revive their plans and arrangements were made with the Indian Companies for manufacturing and sale of "RC Colas" in India.
6. The said Royal Crown Company by deed of assignment dated July 19, 2001 assigned various trade marks including the registered trade mark in favour of the appellants. It is the case of the appellants that they came to know about the application preferred by one Sadraddin Masani for registration of a mark containing the letters "RC Cola" being Application No. 892398 and thereafter the present suit was filed. The respondents-original defendants filed their reply. They denied the allegations made by the plaintiffs. The defendants filed their written statement stating therein, inter alia, that the suit is not maintainable. It was averred that the plaintiffs had no locus standi to file the suit. It was further averred that the plaintiff has not produced any document of registration of assignment of the said trade mark under Section 44 of the Act and, therefore, the question of infringing of such trade mark did not arise. It was submitted by the respondents that the plaintiffs had not explained delay and had obtained an ex parte order by suppressing the material facts and by committing fraud on the Court. It is further alleged that the certificate regarding the assignment of the trade mark was not produced and, therefore, application was liable to be dismissed. It is the case of the defendant in the reply that they are manufacturing and marketing the softdrinks including the Cola drink under the mark "RC Cola" since 5.12.1999 and Soda under the mark "Royal Club Soda" much before the said date. It was further averred that the sales of the defendants products was to the tune of Rs. 12,46,027 during the period 2002-2003 and that the plaintiffs were very well aware of the defendants' products being sold under the said trade mark "RC Cola". It is the case of the defendant that the plaintiff had knowledge about the defendants' products. It is submitted that the plaintiffs allowed the defendants to continue, expand and consolidate the business under the said mark and the suit was filed on 29.4.2003. The defendants have further averred that fraud has been practiced on the Court and as a result the legitimate business of the defendants had come to a standstill and it has seriously affected not only the reputation of the defendants but it had triffled its business overnight. It was further submitted that the plaintiffs are not the registered proprietors of the alleged trade mark and, therefore, they were not entitled for the infringement of the same. It was further averred in the reply that the plaintiffs have not produced any documentary evidence that the "RC Cold" is the trade mark registered in the name of the Royal Crown Company. It was further submitted that the defendants were using the trade mark "RC Cola" much before the alleged agreement of assignment. The defendant thereafter in their reply has given the history as to how the company was doing business of Soda and soft drinks since 1985. It was further averred in the reply that there was no infringement of the trade mark. The agreement on which the appellants are relying had no rights under the Trade Marks Act, there was no infringement of the trade mark nor a case of passing off is made out.
7. Learned counsel appearing on behalf of the appellant has vehemently urged that the Trial Court had erred in vacating the order of ex parte injunction, on the ground that for want of registration of assignment the appellants have not acquired the status as a "assignee" and, therefore, they have no locus standi to file the suit. Learned counsel appearing on behalf of the appellants assailed the said finding of the Trial Court. It was submitted that the registration of the deed of assignment or transmission of the name of the appellants as the subsequent owner of the trade mark is a mere formality. It was submitted that assignee was entitled to file and maintain the suit and that the assignment had taken place on the date on which the deed of assignment had been executed and since then the right, title and interest from the Royal Crown Company had been transferred and vested in the appellants. Learned counsel appearing on behalf of the appellant relied on the judgments of Madras High
Court in the case of T.I. Muhammad Zummon Sahib v. Fathimunnissa alias Bibijan and Ors. and so also on the case of Ishlee v. Henshaw, Reports of Patent, Design and Trade Mark Cases, Vol. III, No. 1, page 15. It was submitted that the Madras High Court while considering the provisions of Section 35 of the Act, which corresponds to the provisions of Section 45 of the present Act, had come to the conclusion that suit was maintainable even without the registration of the mark.
8. It was further submitted that Section 44 of the Trade and Merchandise Marks Act was no bar to the maintainability of the suit and that the finding of the learned Judge that the document could not be looked into is contrary to the provisions of law. It was further submitted by the learned counsel for the appellant that there was no dispute between the assignor and assignee and if such a construction is given to the said provisions then in that event it will lead to an unscrupulous defendant raising an issue to non-suit the plaintiff in a blatant case of infringement of trade mark. The learned counsel further relied on the decision in the case of Blighty Industries Association, Ln. v. The Scottish Home Industries Association, Ln., Reports of Patent, Design and Trade Mark Cases, Vol. XLIV, No. 9, Page 269. It was further submitted that the provisions of Section 44 are in the nature of procedural provision and that could not create any bar for filing a suit.
9. Learned counsel appearing on behalf of the appellant further challenged the finding of the Trial Court on the ground that the Trial Court had come to the conclusion that the plaintiffs were very well aware about the existence of the product of the respondent-defendant being in the market for a quite sometime and that inspite of having such a knowledge, they did not take any steps and, therefore, it amounted to acquiescence on their part. Learned counsel for the appellant, therefore, submitted that the finding of the Trial Court that there was acquiescence on the part of the plaintiff was untenable. It was submitted that no plea of acquiescence was taken by the respondent. It was further submitted that even assuming that such a plea would have been taken they are not entitled to raise such a plea. It was submitted that a person who deliberately adopts a make which is deceptively similar to the make of the plaintiffs could not be said to have acted under a mistaken plea. It was submitted that one of the factual requirements to settle the plea of the acquiescence is that a person who raises such a plea must prove that he had made a honest mistake and that the plaintiff by some act had encouraged the conduct of the defendant. Learned counsel appearing on behalf of the appellant relied upon the case of I Willmot v. Banta, XV Chancery Division 1996. He submitted that this decision was considered by the supreme Court in the case - Power Control Appliances and
Ors. v. Smeet Machines Pvt. Ltd.
10. It was further submitted that the respondents were aware of the appellant's mark "RC" written in the stylised manner and it was the responsibility of the respondents to have taken the search before adopting the mark "RC". It was submitted that if a search had been taken by the respondents, they would have come to know about the claim which was made by the appellants predecessor and if such a search was not taken the respondents alone were to be blamed. The appellants counsel relied on the case reported in 2002 (24) PTC 226, Bal Pharma Ltd. v. Centaur Laboratories Pvt. Ltd. and Anr. in particular paragraph 9 on page 230 thereof.
11. It was further submitted on behalf of the appellant that no material was brought on record to show that the appellants had at any time encouraged the conduct of respondents and, therefore, mere delay was not a defence for an action for infringement or passing off. Learned counsel relied on decision of Division Bench of this Court in the matter of Schering Corporation and Ors. v. Kilitch Co. (Pharma) Pvt. Ltd., dated 13th March, 1990.
12. Learned counsel appearing on behalf of the appellant further submitted that the finding of the learned Judge that "RC" is very common because it is common in the country and respondents-defendants cannot have information that "RC" stands for Royal Crown Company was erroneous. Learned counsel appearing on behalf of the appellant, therefore, challenged the finding of the Trial Court that there was no case of infringement of trade mark or passing off made out by the appellant-original plaintiff. It was submitted that it was been held by the Apex Court that an earlier attempt to register the trade mark would make no difference and would still be a case of infringement of the trade mark. The counsel appearing on behalf of the appellant relied on the case of Ruston and Hornby Ltd. v. Zamindara Engineering Co., . In that case it is held, it was argued by the
learned counsel appearing on behalf of the appellant, that the word "Rustom" was held to be infringement of the registered mark "Ruston" and addition of a word "India" after "Rustom" is of no consequence and use of the word "Rustom India" amounted to the infringement of the registered mark "Ruston". Therefore, it was submitted that the addition of the word "Cola" to the word "RC" is of no consequence.
13. Learned counsel appearing on behalf of the respondent has vehemently opposed the submissions advanced by the learned counsel appearing on behalf of the appellant. Learned counsel appearing on behalf of the respondent submitted that since the plaintiff was not the registered proprietor or registered user of the mark, the infringement action was not maintainable. He further submitted that the Deed of Assignment is not registered and, therefore, the same cannot be admitted in evidence. It was further submitted that since the purported assignment is without goodwill of the business and the conditions under Section 41 have not been fulfilled or have been completed, the assignment would not take effect under Section 41. Further he submitted that the Deed of Assignment cannot be admitted in evidence under Section 44 and, therefore, the plaintiff was disqualified from filing the present suit. Further he submitted that the defendant acquired the right of property in connection with its goods "RC Cola" by adopting the mark and launching its goods in the market on December 5,1999 and from that date the defendant was entitled to its mark, since the goods had assumed vendible character and having been launched in the market and since the plaintiff had not used the mark in India prior to the adoption and use by the defendant. It was further submitted that there was absolutely no evidence on record of the use of the mark by the plaintiff in India prior to December 1999. It was further submitted that though the mark was registered in the year 1970, the registered proprietor had not used the mark in India in relation to its goods. It was further submitted that the defendants use of the mark, since the year 1999 being prior in point of time, was honest and bona fide. Therefore, the present suit amounted to the unjustified harassment of the defendant and as such the application for temporary injunction should be rejected.
14. It was further submitted by the learned counsel appearing on behalf of the respondent that the goodwill, if any, in respect of the subject mark vested in the Royal Crown Inc. in December 1999, when the respondent adopted and used its mark. It was submitted that since there was absence of assignment of goodwill by the Royal Crown Company, in favour of the plaintiff, the essential ingredient for maintaining a passing off action was absent and, therefore, the plaintiff was not entitled to the claim made by them. It was further submitted that no relief of passing off should be granted since the plaintiff's user of the mark was subsequent to the defendant's user. It was further submitted that the plaintiff had failed to show that in December 1999, the plaintiff has established reputation of goods in India. It was further submitted that there was no evidence on record of the mark having attained a reputation in India prior to December 1999, therefore, prima facie, there was no case for grant of interim relief is made out. Thereafter, it was submitted that the plaintiffs were disentitled to the relief since they had misrepresented their mark as being registered. Lastly, it was submitted that the trade mark was registered in Part B which confers lower rights and defence under Section 29(2) was available to the defendant and, therefore, it was submitted that in the facts of the present case that the defendants had made out a strong prima facie case that they would succeed under Section 29(2).
15. I have heard learned counsel appearing on behalf of the appellant as well as learned counsel appearing on behalf of the respondent at length. In order to decide the controversy, it is necessary to summarise the facts very briefly:
The plaintiff is a company incorporated in the State of Georgia in the United State of America, carrying on business of manufacturing and selling soft drinks including colas, aerated waters and other beverages. The plaintiff claims to be the assignee of the mark "RC stylised". A company known as Royal Crown Company, Inc. incorporated in the United States of America started its operation in Columbus, Georgia in the year 1905. The said company executed a Deed of Assignment dated July 19, 2001 with the plaintiff company and one year thereafter on June 12, 2002 the plaintiff made an application in the Trade Mark Registry, Mumbai to record the said assignment and substitute the plaintiff's name instead of Royal Crown Company Inc. (Assignor) in the registry's record. The said application is pending disposal. It is an admitted position that thought the Royal Crown Company, has registered the mark "RC stylised" due to import restrictions they could not start production of its goods. Thereafter negotiations were initiated from 1996 with various parties in India. However, all those negotiations failed. Thereafter between January 25, 2000 to January 10,2002, the plaintiff executed three letters of intent with three Indian companies for production of bottles and sale of its product bearing "RC" trade mark in India. It is an admitted position that the production was to commence between April and Jun 2003. The case of the plaintiff was that the marketing of RC Cola product has commenced in Andhra Pradesh. During market survey, the plaintiff found that the defendant was producing and selling soft drinks and soda under the name "RC Cola" and "RC Soda". They made enquiry in the trade mark registry and found that an application to register "RC Cola" trade mark, made by one of the partner of the respondent was pending. Thereafter, the suit was filed by the plaintiff.
The respondent firm-M/s. Silvassa Bottling Company was formed on January 1, 1999. On April 1, 1999 the firm was reconstituted. On September 22,1999 the respondent obtained a license to work a factory. In November 1999, the respondent received supplies of RC Cola glass bottles from Larsen and Toubro. On December 5, 1999 respondent commenced selling of cola drinks under the name "RC Cola".
15A. So far as the first contention of the appellant is concerned, is that mere pendency of the registration of assignment would not act as a bar for the maintainability of the suit for infringement of the trade mark. In support of the said submission, the learned counsel has relied on the judgment of the Madras High Court reported in the case of T.I. Muhammad Zummon Sahib v. Fathimunnissa alias Bibijan and Ors. (supra). It was submitted that the relevant provisions under the old Act of 1940 and the provisions under the new Act of 1958 are identical. In the said case, it was held that the suit was maintainable even before an order was passed under Section 35. In the said case, the plaintiff had claimed exclusive right under the rules of personal Jaw and had contended that though an application for transmission was pending, that by itself would not create a bar for filing of the suit. In the said case, during the pendency of the suit and before the judgment was delivered an order of registration was filed by the plaintiffs. Section 35(1) of the said Act of 1940 and the Section 44 of the present Act are identical. The learned counsel appearing on behalf of the appellant, thereafter, relied on the judgment in the case of Ishlee v. Henshaw (supra), in which it was held that the registration of an assignment would not be said to be a condition precedent on the part of the assignee to file a suit. The learned counsel further relied on a judgment in the case of Blighty Industries Association v. The Scottish Home Industries Association (supra). In this case also the Court took the view that the right to sue an unregistered proprietor has not in term being excluded, however, it was affected by Section 11 of the Act of 1919.
16. Learned counsel appearing on behalf of the respondent has submitted that only a registered proprietor of the trade mark or registered user of the trade mark cap sue for the infringement. He has relied on the judgment reported in 1999 (19) PT 444 - Himalaya Drug Co. Pvt. Ltd. v. Arya Aushadhi Pharmaceutical Works. He has further submitted that when a party claims as an assignee of the trade mark otherwise than in connection with the goodwill of the business, it is mandatory to make an application of the Registrar within six months which was extendible upto nine months with respect to the advertisement of the assignment, and if such an application is not made, it is barred by limitation. He relied upon the judgment of the Madras High Court reported in 1995 AIHC 6569(Mad) in the case of M. Ramaswami Chettiar v. T.M. Ramaswami and Co.
17. Prior to 1940, there was no statutory law relating to the trade marks in India. The Trade Marks Act, 1940 introduced, for the first time, a machinery for the registration and statutory protection of trade marks in India. This Act was substituted and replaced by the Trade and Merchandise Marks Act, 1958 (43 of 1958). Although the present Act differs from the U.K. Act in certain important respects, the basic principles relating to the law are similar in both the countries and the decisions of the Courts in relation thereto are, therefore, have been quoted with approval in India for interpreting some important provisions of the Act. The Apex Court, however, has held that the rule laid down in any of these cases must be judged in the context of out laws, legal procedure and the practical realities in our country. The Apex Court has so observed in American Home Products Corporation v. Mac Laboratories Pvt. Ltd., .
18. In order to decide the said issue, it will be necessary to advert to the relevant provisions as contemplated in the Trade and Merchandise Marks Act, 1958 and Rules framed thereunder, viz. the Trade and Merchandise Marks Rules, 1959. The relevant statutory provisions are as under:
"Section 2(i)(a) - "assignment" means an assignment in writing by act of the parties concerned.
Section 2(i)(o) - "register" means the Register of Trade Marks referred to in Section 6.
Section 2(i)(p) - "registered" (with its grammatical variations) means registered under this Act.
Section 2(i)(q) - "registered proprietor", in relation to a trade marks, means the person for the time being entered in the register as proprietor of the trade mark.
Section 2(i)(s) - "registered user" means a person who is for the time being registered as such under Section 49.
Section 36 - Power of registered proprietor to assign and give receipts: The person for the time being entered in the register as proprietor of a trade mark shall, subject to the provisions of this Act and to any rights appearing from the register to be vested in any other person have power to assign the trade mark, and to give effectual receipts for any consideration for such assignment. Section 37 - Assignability and transmissibility of registered trade marks: Notwithstanding anything in any other law to the contrary, a registered trade mark shall, subject to the provisions of this Chapter, be assignable and transmissible, whether with or without the goodwill of the business concerned and in respect either of all the goods in respect to which the trade mark is registered or of same only of those goods.
Section 41 - Conditions for assignment otherwise than in connection with the goodwill of a business: Where an assignment of a trade mark, whether registered or unregistered, is made otherwise than in connection with the good-will of the business in which the mark has been or is used, the assignment shall not take effect unless the assignee, not later than the expiration of six months from the date on which the assignment is made or within such extended period, if any, not exceeding three months in the aggregate, as the Registrar may allow, applied to the Registrar for directions with respect to the advertisements of the assignment, and advertises it in such form and manner and within such period as the Registrar may direct.
Explanation - For the purposes of this section an assignment of a trade mark of the following description shall not be deemed to be an assignment made otherwise than in connection with the goodwill of the business in which the mark is used, namely -
(a) as assignment of a trade mark in respect only of some of the goods for which the trade mark is registered accompanied by the transfer of the goodwill of the business concerned in those goods only; or
(b) an assignment of a trade mark which is used in relation to goods exported from India if the assignment is accompanied by the transfer of the goodwill of the export business only. Section 44 - Registration of assignments and transmissions:
(1) Where a person becomes entitled by assignment or transmission to a registered trade mark, he shall apply in the prescribed manner to the Registrar to register his title, and the Registrar shall, on receipt of the application and on proof of title to his satisfaction register him as the proprietor of the trade mark in respect of the goods in respect of which the assignment or transmission has effect, and shall cause particulars of the assignment of transmission to be entered on the register: Provided that where the validity of an assignment or transmission is in dispute between the parties, the Registrar may refuse to register the assignment or transmission until the rights of the parties have been determined by a competent Court.
(2) Except for the purpose of an application before the Registrar under Sub-section (1) or an appeal from an order thereon, or an application under Section 56 or an appeal from an order thereon, a document or instrument in respect of which no entry has been made in the register in accordance with Sub-section (1), shall not be admitted in evidence by the Registrar or any Court in proof of title to the trade mark by assignment or transmission unless the Registrar or the Court, as the case may be otherwise directs.
Section 51 - Power of registered user to take proceedings against infringement:
(1) Subject to any agreement subsisting between the parties, a registered user of a trade mark shall be entitled to call upon the proprietor thereof to take proceedings to prevent infringement thereof, and if the proprietor refuses or neglects to do so within three months after being so called upon, the registered user may institute proceedings for infringement in his own name as if he were the proprietor, making the proprietor a defendant.
(2) Notwithstanding anything contained in any other law, a proprietor so added as defendant shall not be liable for any costs unless he enters an appearance and takes part in the proceedings.
Rule 76 - Assignments involving transmission of moneys outside India: If there is in force any law regulating the transmissions of money outside India, the Registrar shall not register the title of a person who becomes entitled to a trade mark by an assignment which involves such transmission except on production of the permission of the authority specified in such law for such transmission.
Rule 77 - Application for Registrar's direction as to advertisement of an assignment of a trade mark without goodwill of the business:
(1) An application for directions under Section 41 shall be made on Form TM-20 and shall state the date on which the assignment was made. The application shall give particulars of the registration in the case of a registered trade mark, and in the case of an unregistered mark shall show the mark and give particulars including user of the registered as well of the unregistered trade mark that has been assigned therewith in accordance with Sub-section (2) of Section 38. The Registrar may call for any evidence for further information and if he is satisfied with regard to the various matters he shall issue directions in writing with respect to the advertisement of the assignment.
(2) The Registrar may refuse to consider such an application in a case to which Section 40 applies, unless his approval has been obtained under the said section and a reference identifying the Registrar's notification of approval is included in the application.
(3) A request for an extension of the period within which the application mentioned in Sub-rule (1) may be made shall be on Form TM 21. Rule 78 - Application for entry of assignment without goodwill: An application under Rule 71 relating to an assignment of a trade mark in respect of any goods shall stale -
(a) whether the trade mark had been or was used in the business in any of those goods; and
(b) whether the assignment was made otherwise than in connection with the goodwill of that business,
and if both those circumstances subsisted, then the applicant shall leave at the Trade Marks Registry a copy of the directions to advertise the assignment, obtained upon application under Rule 77, and such proof, including copies of advertisements or otherwise as the Registrar may require, to show that his directions have been fulfilled and if the Registrar is not satisfied that the directions have been fulfilled, he shall not proceed with the application."
19. From the perusal of the aforesaid provisions, in my view, Section 44 does not create a bar for filing a suit by the assignee whose application is pending disposal for registration. A discretion, however, is vested in the Court under Sub-clause (2) of Section 44 of the Act, whether to permit the said unregistered document in evidence or not. At the same time, it cannot be said that the procedure of registration of assignment is a mere formality. It appears from the various provisions which I have enumerated hereinabove that the Legislature has thought it fit to scrutinise every application for assignment and transmission keeping in view the various other Acts, including the import restrictions, foreign exchange, etc. as also any inter se disputes between the assignor and assignee and only thereafter, if the Registrar is satisfied the said application for assignment would be registered. In my view, therefore, the view taken by the Madras High Court in the case of T.I. Muhammad Zummon Sahib (supra), that the registration is a mere formality cannot be accepted. In any case, in the said judgment, the question which fell for consideration before the Court was regarding the transmission of registration and in the said case the transmission has acquired finality by virtue of personal law prevailing at that time in respect of the plaintiff. Lastly, during the pendency of the suit before the judgment was delivered, registration of transmission was already granted in favour of the plaintiff. In my view, therefore, the said judgment will not be of any assistance to the appellant. However, the subsequent judgment in the matter of Blighty Industries Association (supra), Court has held that the right to sue an unregistered proprietor is not in terms excluded but is affected by Section 11 of the Act of 1919. In the present case also, therefore, thought the plaintiff is an unregistered assignee, it cannot be said that he is prevented from filing a suit during the pendency of the registration; for Sub-clause (2) of the same section clearly vests discretion with the Court either to admit the same in evidence or to reject the admissibility of the same in evidence. The Trial Court, therefor, in may view erred in holding that the document of assignment cannot be admitted in evidence as a proof of title to the trade marks. In my view, in view of Sub-clause (2), the discretion is vested in the Court to examine as to whether it is admissible or not. However, in my view, the registration of Deed of Assignment would be one of the important factors which would have to be taken into considerations by the Court while deciding the question of grant of temporary injunction. Section 44 has been incorporated merely as a safeguard by the Legislature in order to avoid the multiplicity of the proceedings and also in order to ensure that the various other laws prevailing in the country are safeguarded while registering the assignment. Thus, the grant of registration of assignment or transmission cannot be said to be a mere formality and on a conjoint reading of the provisions it will be apparent that the Registrar has to be satisfied after going through the application, which has to be filed in the prescribed form giving various particulars. In the present case, in my view, non-registration of the assignment will have to be considered as an important factor while deciding the question as to whether the plaintiff is entitled to the relief of temporary injunction during the pendency of the suit.
20. I have perused the Deed of Assignment, which is annexed to the plaint at Exhibit B. The Deed of Assignment was executed on July 19, 2001 for the consideration of $ 10. The assignor-Royal Crown Company has assigned the trade mark in India to the assignee. From the perusal of the said Deed, it is apparent that the said assignment is without goodwill.
21. Chapter V of the Trade and Merchandise Marks Act, 1958 referred to hereinabove lays down the conditions for assignment otherwise than in connection with the goodwill of the business. Section 41 of the said Act lays down, the condition of such assignment. It specifically lays down that the assignment shall not take effect unless the assignee applies to the Registrar for directions with respect to the advertisement of the assignment and advertises it in such form and manner and within such period as the Registrar may direct. In the present case this mandatory formality has not been complied with and, therefore, it cannot be said that the assignment has taken effect. As admittedly, the Deed to Assignment is dated July 19, 2001. An application for registration has been made on June 20,2002, even thereafter during the pendency of registration no evidence has been produced by the plaintiff to show that any application was submitted to the Registrar for direction with respect to the advertisement of the assignment. In any event, prior to July 19, 2001, within 9 months no such attempt had been made by the plaintiff. I am of the view, therefore, that even through it cannot be said that the suit itself is not maintainable, in view of the non-compliance of the condition under Section 41, the assignment itself has not taken effect and, therefore, on this ground alone the plaintiff would not be able to ask for the order of temporary injunction during the pendency of the suit. In the present case, the defendant has commenced the selling of goods under the name "RC Cola" and then had filed an application for registration of the "RC Cola" bearing No. 892398 on 17.12.1999. The appellant-plaintiff claims to have obtained assignment of trade mark from Royal Crown. Cola on 19.7.2001. The said assignment obviously is without goodwill, therefore, the plaintiffs were under the legal obligation to comply with the conditions laid down under Section 41 which have not been complied with. I am, therefore, of the view that the suit by the plaintiff is maintainable pending assignment. The question of pendency of registration can be considered as an important factor while deciding an application for temporary injunction as prayed by the plaintiffs. Other factors and conditions as laid down under Chapter V of this Act and Rules made thereunder and also other provisions of the Act also will have to be taken into consideration among other things while deciding the question of temporary injunction.
22. The Madras High Court in the case reported in M. Ramaswami Chettiar v. T.M. Ramaswamy (supra), has taken a similar view in paragraph 10 of the said judgment. In the said judgment, the Court has also taken into consideration the earlier judgment
(supra), where a distinction was made in respect of the said judgment on the ground that the said judgment was not applicable to the case of assignment. The said observation is made in paragraph 7 of the said judgment.
23. The second submission of the learned counsel appearing on behalf of the appellant is that the finding of the Trial Court that they have not infringed the trade mark of the Royal Crown Company and the question of the passing off the goods under the trade name deceptively did not arise. Learned counsel has assailed the said finding on the ground that the finding of the Trial Court that "RC" is very common is based on no evidence. It is submitted that the respondent's mark of the letters "RC" written in the stylised manner is deceptively similar to the applicant's registered mark "RC" and the addition of the word "Cola" makes no difference. In support of the said submission, he relied upon the case reported in Ruston and Hornby Ltd. v. Zamindara Engineering Co. (supra). In the case it was held that once word "Rustam" was held to be infringement of the registered mark "Ruston", the addition of the word "India" after "Rustam" was of no consequence and the use of the word "Rustam India" amounted to an infringement of the mark "Ruston". The learned counsel appearing on behalf of the appellant further submitted that the finding of the learned Judge that once there was no infringement, the question of passing off does not arise, is a wrong proposition of law. In support of the said submission, he relied upon the judgment of this Court in the case of Aktiebolaget Volvo v. Steels Limited, 1998 PTC 18 (DB).
24. Learned counsel appearing on behalf of the respondent, on the other hand, submitted that the appellants-plaintiffs were not entitled to the interim relief, firstly, because they had made misrepresentation in the mark they had used to the effect that it was a registered trade mark when, in fact, it was not so. In support of the said contention, he relied on the judgment in the case of Johnson & Son (Loughborough) Ltd. v. W. Pubber & Co. Ltd., 1930 RPC 95 and on the case reported in 1988 FSR 575 in the matter of Intercontex and Anr. v. Schmidt and Anr. It was further submitted that in view of Section 29, Sub-clause (2) of the said Act, any mark which is registered in Part B of the Register, confers lower rights than that of mark registered in Part A and, therefore, a defence under Section 29(2) is available to the defendant and that the defendant had made out a strong prima facie case; the said Section 29(2) would disentitle the plaintiff from claiming any relief. It was further submitted that the plaintiff-appellant is not entitled to the goodwill, if any, of the Royal Crown Co. Inc., and that there was no pleading, much less, any material to show that the goodwill, if any, in respect of the subject mark was assigned to the plaintiff and, as a result it was submitted that the same shall be an ingredient for maintaining a passing off action which was absent. It was further submitted that the defendants rights in the trade mark acquired by use are superior to the rights acquired by the plaintiff by registration under the Act. It was further contended that without use of the mark, the proprietor cannot restrain other from use of the mark for similar goods. He relied on the judgment of this Court in 1998(18) PTC 156 in the case of Cluett Peabody & Co. Inc. v. Arrow Apparals. Learned counsel appearing on behalf of the respondent further submitted that assuming that the plaintiffs had right which was assigned in respect of a mark, which was registered but not used for 30 years had become a source of monopoly which is against the object of the Trade and Merchandise Marks Act. The respondents being in business for a very long period of time cannot be harassed by litigation by a registered proprietor, particularly when after registration they have not used the mark for the long period.
25. In the present case, few dates would be very relevant. The Royal Crown Company obtained registration of "RC stylised" in India on 8.7.1970 and the registration is in Part B of the register. On 21.9.1984 Barkatali Allauddin Roy obtained license under the PFA Act, 1954 and carried on business as Royal Coldrinks. On 16.5.1995 M/s. Royal Crown Co., Inc. filed an Application No. 665825 for registration of Royal Crown Cola over RC Cola in India as proposed to be used. The said registration application is still pending disposal. On 11.7.1997, a firm by name Royal Beverages was constituted. On 1.12.1999, M/s. Royal Beverages was reconstituted. On 1.1.1999, the respondent firm M/s. Silvassa Bottling Company was formed. The firm was reconstituted on 1.4.1999. The license to work a factory was obtained by the respondent on 22.9.1999 and the respondent commenced selling of the cola drinks under the name "RC Cola" from 5.12.1999. On 17.12.1999 the respondent filed an application for registration of "RC Cola" under Application being No. 892398 which is pending. The appellant claims to have obtained an assignment of trade mark on 19.7.2001 and on 26.1.2002 and application was made for registration of assignment. In this background it would be relevant to take into consideration some of the provisions of Chapter IV, Section 27 and Section 29 of the Trade and Merchandise Marks Act, 1958, which are relevant, the same are reproduced hereinbelow: "Section 27 - No action for infringement of unregistered trade mark:
(1) No person shall be entitled to institute any proceeding to prevent, or to recover damages for, the infringement of an unregistered trade mark.
(2) Nothing in this Act shall be deemed to affect rights of action against any person for passing off goods as the goods of another person or the remedies in respect thereof. Section 29 - Infringement of trade marks:
(1) A registered trade mark in infringed by a person who, not being the registered proprietor of the trade mark or a registered user thereof using by way of permitted use, uses in the course of trade a mark which is identical with, or deceptively similar to, the trade mark, in relation to any goods in respect of which the trade mark is registered and in such manner as to render the use of the mark likely to be taken as being used as a trade mark.
(2) In an action for infringement of a trade mark registered in Part B of the register an injunction or other relief shall not be granted to the plaintiff if the defendant establishes to the satisfaction of the Court that the use of the mark of which the plaintiff complains is not likely to deceive or cause confusion or to be taken as indicating a connection in the course of trade between the goods in respect of which the trade mark is registered and some persons having the right, either as registered proprietor or as registered user, to use the trade mark."
26. In the present case the admitted position is that the plaintiff, alleging to be an assignee, has filed a suit for infringement of trade mark registered in Part B of the register. Section 29, Sub-clause (2) mandates that the Court shall not grant an order of injunction to the plaintiff if the defendant establishes to the satisfaction of the Court that he has a prima facie case which would disentitle the plaintiff from getting an interim order. The main suit is still pending in the Trial Court and during the pendency of the suit an application for temporary injunction was made by the plaintiff. While considering such an application, the Court is entitled to consider whether a prima facie case is made out by the plaintiff for grant of temporary injunction during the pendency of the suit. In my view, the Trial Court has taken into consideration various facts and circumstances of the case and has come to the conclusion that the plaintiffs had failed to establish user of the trade mark prior to the point of time before the user of the defendants. The Trial Court has also taken into consideration that the defendants are running its business of manufacturing and selling softdrinks since December, 1999. The Trial Court has considered the fact that the question of registration of trade mark is still pending before the Registrar of Trade Marks, Bombay and further has considered the fact that an ex parte injunction which was granted in favour of the plaintiff has resulted in the closure of the business of the defendants.
27. In my view, the plaintiffs have failed to make out a prima facie case for temporary injunction restraining the respondents from production, marketing or selling of the goods which are manufactured by them in the name and style of "RC Cola". In the first instance what is registered by the assignor Royal Crown Company is only the words "RC stylised". Though these words were registered as the trade mark in Clause No. 32, the admitted position is that due to import restrictions, the assignor-Royal Crown Company was not in a position to start the manufacturing of the goods. In the year 1995, Royal Crown Company made an application for registration of "RC Cola" which application is still pending and is not yet decided. The respondents also have made an application for registration of mark "RC Cola" which is pending. Both these applications for registration of "RC Cola" are thus pending registration and the matter will have to be decided as to who is entitled to get the registration of the trade mark "RC Cola". The respondents admittedly have started sale of the "RC Cola" from 5.12.1999. On the contrary, the appellants have been assigned the trade mark "RC stylised" only, on 17.7.2001. They have apparently failed to take steps as required under Section 41 inspite of taking permission from the Registrar for advertisement within a period of nine months, their application for registration of assignment is also pending. The question as to whether the Royal Crown Company or the word "RC" was known to the common man in India will have to be proved by leading evidence. The fact remains that the word "Cola" is commonly used by various manufacturers. The production of the plaintiff's goods is yet to commence in Maharashtra though it is alleged that they have started marketing the imported "RC Cola" in Andhra Pradesh and Bangalore. The respondents have been advertising their product as "RC Cola" from 1999, much before the plaintiff's were assigned the trade mark in their favour from the assignor-Royal Crown Company. The respondents, therefore, had bona fidely advertised their goods and sold goods as "RC Cola". The words "RC Cola" used by the respondents are not in a stylised manner. Thus, prima facie, it appears that the respondents have bona fidely sold their goods and the question of causing deception has not been proved by the plaintiff. The plaintiffs have also not placed on record a single advertisement published in India on invoice prior to the adoption and use by the defendant-respondent to show that there is substance of goodwill in this country. There is, thus, in my view, no evidence to show that the goods have achieved transborder reputation. In my view, principle what was necessary for grant of temporary injunction was; whether the plaintiffs had made out a prima facie case of use of mark prior to commencement of its use by the defendant. In my view, the plaintiffs have not made out a prima facie case to show that in December, 1999 the plaintiff had established reputation of goods in India. I am of the view that the ratio laid down by this Court in a case reported in the case of Cluett Peabody and Co. Inc. v. Arrow Apparals (supra), is squarely applicable to the facts of the present case. The Court in paragraphs 27 has summarised the principles which emerge under the Trade and Merchandise Marks Act which are reproduced below:
"27. Now before going into facts, the following principles emerge under the Trade Marks Act which are required to be noted;
(a) An application for injunction is an infringement action based on Trade Marks. It is an application in support of the right to property.
(b) Trade Mark is a property. A mark which is sued in the course of trade to indicate a connection between the goods and the proprietor of the mark is a Trade Mark [See Trade Marks by Shavaksha, page 14]. It is not a property in a pervasive sense. It is property in the sense that proprietor is entitled to exclusive use of it or to prevent others from using it in relation to goods in respect of which it is registered or used. It may be adopted and used to distinguish the goods of the proprietor from goods of others. The mark must be distinctive. It must show the source of the goods to the customer. Words like, 'Best', 'Superior', etc. are not distinctive of the goods. They are only descriptive and hence cannot constitute trade mark, the vendor who sells his goods under a trade mark acquires a limited right to the use of the mark.
(c) An infringement action is based on invasion of the statutory right, the issues which arise in this action are whether the plaintiff is proprietor of the trade mark and whether the defendant's mark is identical or similar to trade mark of the plaintiff. In an infringement action the question of deception of confusion will not arise.
(d) In an infringement action, defendant is restrained from using the infringed mark whereas in passing off defendant is restrained from using the mark in such a way so as to pass off his goods as that of the plaintiff.
(e) The abovementioned limited exclusive right to the use of mark is acquired by use. It is recognized as property. A person can also acquire it by registration (See para 1.01 of Narayanan). The proprietor of the mark gets a perpetual right to the exclusive use of it in respect of particular goods in respect of which it is registered or used [See para 1.02 of Narayanan). Therefore, it can be acquired in three ways, viz., Registration, User and Assignment.
(f) Object of the Act is to protect the right and not to be a source of monopoly. It is also to protect bona fide interests of traders from harassment by registered owners of a trade mark, apart from protection of public fraud, fraud by infringers of genuine trade mark.
(g) Registration enables the registered proprietor to sue for infringement of registered trade mark irrespective of the fact whether it is used or not used. Registration confers on the proprietor a monopoly right over the use of the mark. But, proprietary rights in a trade mark acquired by use are superior to rights obtained by registration under the Act. This is the main defence put up on behalf of the defendants in this Notice of Motion. Therefore, prior user of the marks should be protected against monopoly rights conferred by the Act. (Pages 5 and 6 of Narayanan). A trade mark has no meaning even if it is registered unless it is used in relation to goods. Otherwise, its non-use may lead to its death. A trade mark which drops out of the use dies. Where there are no goods offered for sale, there is no use of trademark.
(h) Use of the trade mark does not mean user by affixing the word on the goods. It could be in the form of advertisements in Magazines, T.V. etc. It would be with regard to goods exported out of India. With advancement of technology and globalization after 1991, use of trade mark can take place in different ways. But, this case essentially concerns the period 1985-90. Property in trade mark can be acquired by public use of it.
(i) The test as to "who gets it there first' is not applicable in cases where registration is sought under Section 18.
(j) The mark can loose its distinctiveness by non-user. Therefore, the enforcement of the right of exclusive user of a trade mark will depend on continuous use of the mark by the proprietor. If he fails, piracy will result and the mark will become common to the trade because there is no exclusive ownership of the symbol constituting a trade mark apart from the use of it in respect of vendible goods, particularly in context of principles governing them. Acquisition of proprietary right is different from enforcement of rights/reliefs.
(k) Courts shall not protect this rights of a proprietor unless there is sale of the articles to which trade mark is attached or related to. Without use of the mark, the proprietor cannot restrain others from use of it on similar goods.
(1) An infringement action is a suit on the trade mark and not on reputation. The defendant (infringer) who copies the mark cannot plead delay as a defence particularly because the defendant is dishonest as he has copied the mark, but, priority in use cannot be dishonest and, therefore, the defendant who has prima facie evidence of priority in use, could plead delay as a strong defence. This principle is in context of defence to infringement action, particularly in context of this Notice of Motion."
28. In the present case the mark was registered in the year 1970 but it was admittedly not used in India till 2002; by that time the defendants had already started marketing and advertising their products from 5.12.1999. The case of the respondent is that of prior user. Therefore, the ratio laid down in the case in the
matter of Consolidated Foods Corporation v. Brandon & Co. Pvt. Ltd. would be squarely applicable. There cannot be dispute regarding the ratio laid down in Ruston & Hornby Ltd. v. Zamindara Engineering Co. (supra). However, in my view, the ratio laid in the said judgment will not be applicable to the facts of the present case. In the said case it was held that the word "Rustam" was an infringement of the registered mark "Ruston" and, therefore, addition of the word "India" after the word "Rustam" was of no consequence and use of the word "Rustam India" amounted to the infringement of the mark "Ruston". However, in the present case, the admitted position is that the word "RC" is only registered as the trade mark in favour of the Royal Crown Company. The Royal Crown Company itself has made an application for registration of "RC Cola", which application is still pending and the registration has not been granted. The respondents also have made an application for registration of "RC Cola" which is also pending and it is not yet disposed of. Thus, the ratio laid down in the said case will not be applicable to the facts of the present case. So far as other judgment relied upon by the learned counsel for the appellant is concerned, Aktiebolaget Volvo v. Volvo Steels Ltd (supra), there cannot be dispute regarding the ratio laid down in the said judgment. However, in the said case, in paragraph 17, the Division Bench has given a finding that the Volvo had shown its presence in India, and therefore, the Court was of the opinion that the material, prima facie, showed that the Volvo is recognised as one of the distinctive brand and has a goodwill throughout the world. However, in my view, in the present case no such material is there on record to show that the plaintiffs had proved that the words "RC stylised" had made it presence felt throughout India. Thus, the ratio of the said judgment is not applicable to the facts of the present case. I am of the view, therefore, that no prima facie case is made out by the plaintiffs that the infringement of the trade mark "RC" has been caused by the respondents or that they are guilty of passing off the registered trade mark and it is deceptively similar to the appellant's mark.
29. Lastly, it was submitted by the learned counsel appearing on behalf of the appellant that the Trial Court had erred in holding that there was prima facie material to show that the defence of acquiescence was a good defence. In my view the submission of the learned counsel appearing on behalf of the appellant will have to be accepted. In view, at this stage, it will be difficult to hold that the defence of acquiescence would be a good defence. Firstly, because there is no direct pleading to that effect in the written statement. In any event the respondents-defendants would be entitled to argue the said aspect at the final hearing of the trial.
30. In the present case, the respondents are manufacturing and selling their goods since 5.12.1999. The plaintiff-appellants has started marketing its goods in Andhra Pradesh and Bangalore and the production of their goods is to commence shortly. Both the parties have invested huge amount. In my view, therefore, the ends of justice would be met if the trial is expedited. Accordingly, the Trial Court is directed to decide the suit as expeditiously as possible and in any case by the end of January, 2004. It is made clear that the Trial Court shall decide the said suit without being in any manner influenced by the observations made by this Court while deciding this appeal from order and on its own merits.
In the result, appeal from order is dismissed. Under the circumstances, there shall be no order as to the costs.