June 06, 2018

India: Developing Jurisprudence on Trade Dress

 

Source: www.delhihighcourt.nic.in


Trade dress essentially refers to the visual appearance of the product. This includes the package, shape, pattern, design, graphics and even the combination of colors which effects its sensual features. Since the product packaging plays a key role in grabbing the attention of the consumer after which the consumers recognize the brand’s products by the packaging, the protection of the same from competitors becomes really important. For this reason, the proprietors get the trade dress of their product registered. The concept of trade dress originated from the US Legislation, The Lanham Act, wherein even the unregistered trade dress can be protected. The Trade Marks Act, 1999, does not contain a separate provision for trade dress and the same is included in the new definition of trade mark. It states that a mark consists of the shape of goods, packaging or combination of colors or any combination thereof.

Trade dress protection is intended to protect consumers from packaging or appearance of products that are designed to imitate other products; to prevent a consumer from buying one product under the belief that it is another. For E.g., Apple Inc. recently secured the registration over the design of its flagship Apple Stores as trade dress.

The Plaintiff is entitled to injunction, damages, accounts and even the infringing units. In majority of the cases where the counterfeit products use the same or similar packaging the courts do not award compensatory damages on account of loss of actual sales. Coordinate Benches of Delhi High Court had in 2008 awarded such damages of INR 100,000 (USD 1469 approx.) in M/s General Electric Company v. Mr. Altamas Kha & Others. Similarly, in 2005, in Microsoft Corporation v. Yogesh Papat & Anr. the Bench awarded a sum of INR 1,900,000 (USD 27922 approx.) for loss of profit to the Plaintiff. Recently, the Hon’ble Delhi High Court awarded a compensation of INR 33,16,320 (USD 48766 approx.) to the Plaintiff on account of loss of actual sales.

Sandisk LLC, & Anr Vs. Transton

On May 10, 2018, the Hon’ble Delhi High Court, in the case of Sandisk LLC, Anr vs. Transton, passed an order granting compensation of INR 33,16,320 (USD 48766 approx.) for loss of sales to Sandisk LLC, & Anr (hereinafter referred to as the “Plaintiff no. 1” and “Plaintiff no. 2” respectively), holding that Transton (hereinafter referred to as the “Defendants”) were using the registered trademark and product packaging of the Plaintiffs’ to sell its counterfeit products.

Brief Facts

  • The Plaintiff no. 1 is a company founded in 1998 and is the world’s largest providers of flash memory storage solutions under the house mark SANDISK. Plaintiff no. 2 is a registered user of the trademark SanDisk and the Red Frame Logo belonging to Plaintiff no. 1

  • Plaintiff no. 1 has been extensively and continuously using the trademark globally since 1995 and in India since 2005. It possesses both common law trademark rights as well as trademark registrations for the mark SanDisk worldwide. It is also the registered proprietor of a variety of word marks and device marks in India including the SanDisk logo and the Red Frame logo, since 2003 under Class 9 of the Trade Marks Act, 1999 and all these trademarks are valid and subsisting.

  • On October, 2017, upon inquiry by the Plaintiff, an investigator found that the Defendant was dealing in loose microSDHC cards which appeared to be “counterfeit products” and were “in a packaging identical to the Plaintiff No. 1’s packaging”. The aforesaid microSDHC cards were sold to the Plaintiffs’ investigator, in retail packaging under a kaccha invoice.

  • The Plaintiff seeks permanent injunction restraining infringement of its trade mark SanDisk and Red Frame Logo, passing off, rendition of account of profits, damages, delivery up, etc. against the Defendant.

  • On October 13, 2017, this Court granted an ex parte ad interim injunction in favor of the Plaintiffs and appointed a Local Commissioner to visit the premises of the Defendant.

  • On October 17, 2017, the Local Commissioner visited the premises of the Defendants and seized 493 units of MicroSDHC cards bearing the Plaintiff’s trademark and packaging. The same were sealed and were given by the Local Commissioner on Superdari to the Defendant.

  • Vide order dated April 3, 2018, the Defendant was proceeded ex-parte and the ad interim injunction was confirmed till the disposal of the suit.

Issues

  1. Whether the mark and product packaging as used by Defendant amounts to infringement of Plaintiff’s trademark and product packaging?

The Packaging of Parties [1]

The key elements of the Plaintiff’s product (memory card) packaging are

  1. Red product packaging with white lettering.

  2. A “Red Frame Logo” which describes the capacity of the memory card on the top right corner.

  3. The SanDisk logo in a unique font in white lettering prominently at the bottom.

Plaintiffs’ Contentions

  1. The counsel for Plaintiffs’ submits that an analysis of the sample products procured by the investigator reveals that the same were counterfeited.

  2.  It was contended that the Defendant had infringed upon the statutory rights of the Plaintiffs’ by copying each and every element of the Plaintiffs product and/or product packaging, with the sole intent of duping unwary customers by selling counterfeit products and to ride on the Plaintiffs reputation and goodwill.

Submissions

The Plaintiffs submitted their ex-parte evidence by way of an affidavit of Mr. Vishal Garg, the Constituted Attorney of the Plaintiffs. The affidavit deposed the costs claimed as follows: -

S. NO. PARTICULARS OF LOSS AMOUNT PRAYED (Rs.)
1 Actual lost sales[2] 33,16,320
2 Punitive damages[3] 67,00,000
3 Cost of litigation[4] 10,31,125

Court’s View

  1. The Court is of the view that due to extensive use, the Plaintiffs’ mark SANDISK, and Red Frame logo have acquired reputation and goodwill globally as well as in India.

  2. On the basis of the pleadings, documents as well as the evidence on record, the Court held that the Defendants were using the registered trade mark of the Plaintiffs and its product packaging to sell counterfeit products with the view to trade upon and benefit from the reputation and goodwill of the Plaintiff’s mark and pass off its services as that of the Plaintiffs.

  3. The Court opined that the use of the Plaintiffs’ mark by the Defendants is bound to cause incalculable losses, harm and injury to the Plaintiff and immense public harm.

  4. Keeping in view the evidences stating the costs on account of loss of actual sales, the Court decreed a compensation of INR 33,16,3321 (INR 2,72,360*6) along with costs relating to lawyer fees and court fees and delivery of the 493 units of infringing goods as seized by the Local Commissioner.

  5. Keeping in view the judgments of this Court in Super Cassettes Industries Private Limited v. HRCN Cable Network 2017 (72) PTC 556 [Del] and in Hindustan Unilever Limited Vs. Reckitt Benckiser India Limited, 2014 (57) PTC 495 [Del] [DB], the Court did not grant any punitive damages to the Plaintiff.

For more information please write to us at : info@ssrana.com

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[1]As averred in the plain by the plaintiff / as mentioned in the decision of Delhi High Court dated 10th May, 2018
[2]on the basis on quantity of units seized by the local commissioner, the Defendant had been doing business for at least 6 months prior to the institution of the present suit. The actual value of products will be Rs. 2,76,360. The value of stocks for 6 months will be Rs. 33,16,320 (2,76,360 * 6)
[3]damages on account of loss of business, loss of confidence and trust of customers and loss of “image”
[4]court fees, costs for drafting and filing lawsuits; costs of appearances; costs for all forms of service; costs for Local Commission proceedings

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