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COUNTERFEITING OF LUXURY GOODS- GUCCIO GUCCI S.P.A V/S INTIYAZ SHEIKH

November 25, 2021

By Priya Adlakha and Deepika Shrivastav
Gucci
GUCCIO GUCCI
Issues of trademark infringement and passing off were recently brought up for discussion before the Delhi District Court at Tis Hazari, when luxury fashion house GUCCI filed a suit for infringement and passing off against Shipra Overseas, owned by one Intiyaz Sheikh. The fashion brand claimed that the defendant was involved in manufacture and retail of counterfeit and sub-standard goods (‘socks’ as well as ‘packaging material’) incorporating their world-renowned ‘GUCCI’ logo as well as the green and red stripes which are distinctive of the brand. The plaintiff moved a Delhi District Court for grant of permanent injunction against the defendant so as to restrain them from infringing their trademark, copyright, passing-off their trademarks, etc.

FACTS

  • The plaintiff is a leading luxury fashion house whose products are some of the most sought-after luxury goods in the world. The plaintiff’s rights in the mark GUCCI date back to 1921 i.e. the date when the plaintiff company was founded and stand officially recognized since 1980 i.e. the date of first registration of the mark. Plaintiff’s rights in its GUCCI trademark as well as the green and red stripes logo stand valid, subsisting and with full legal force. The plaintiff’s products are available across the globe through independent and conglomerate stores as well as through various online retail portals.
  • In 2019, the plaintiff through its field agents, had become aware that the defendants are engaged in the manufacturing and selling of large quantities of counterfeit merchandise, such as, socks and packaging material under its well-known GUCCI trademark as well as the green and red stripes Given the identical nature of the defendant’s logo and mark, it was claimed that the adoption and usage was evidently deliberate and not just a mere coincidence and was clearly intended to carry out misrepresentation and confusion amongst the public/consumers.
  • Accordingly, the plaintiff filed a suit for permanent injunction for restraining the defendant and persons claiming under him from infringing their trademark and copyright and from passing off their goods as those of the plaintiffs, and also for rendition of accounts, delivery up etc.
  • Along with the suit plaint, the plaintiff also filed an application for grant of ad-interim injunction under Order XXXIX Rule 1 and 2, read with Section 151 of the Civil Procedure Code as well as another application under Order XXVI Rule 9 seeking appointment of a Local Commissioner to visit the premises of the defendant and confiscate all infringing material being manufactured/procured by them, and also to inspect the books of accounts/inventories and other related documents pertaining to the defendant’s business.
  • Vide Order dated April 24, 2019, the presiding judge in the District Court passed an ex-parte ad-interim order against the defendant and also appointed a Local Commissioner to visit the premises and confiscate all infringing material being manufactured/procured by the defendant and also to inspect the books of accounts/inventories and other related documents. Summons for the suit as well as the accompanying applications were also duly notified to the defendant.
  • At the premises, the Local Commissioner and the local police found a large number of infringing products bearing the plaintiff’s trademark GUCCI as well as the green and red stripes Further, the Local Commissioner duly apprised the defendant’s representatives present at the premises of the Court’s order and the purpose behind their visit.
  • When the matter was taken up on November 15, 2019, it was informed that the service of the summons on the defendant could not be completed as their premises were found to be locked. The plaintiff was accordingly directed to once again effect service upon the defendant and in case of non-availability of the defendant, to affix the summons at a conspicuous place at the house of the defendant. The matter was thereafter scheduled for a hearing on January 31st, 2020.

FINAL ORDER

Regarding Non-appearance of Defendant

Notwithstanding the fact that the service of the summons could not be completed owing to the defendant’s premises being locked, the Ld. Judge observed that since that the defendant’s subordinates (Manager, Supervisor and other staff) were present at the time of the raid and were supplied with the Court’s Order dated April 24, 2019, it can be concluded that the defendant is well aware of the pendency of suit and has deliberately not been appearing before the Court. Accordingly, the defendant was ordered to be proceeded ex-parte.

Regarding Reliefs claimed in the suit

The Ld. Judge granted a decree of permanent injunction in favour of the plaintiff while holding that the plaintiff has been successful in establishing its case for trademark infringement and passing off and also awarded damages of INR 2,00,000 as well as cost of litigation estimated at INR 1,66,000 to the plaintiff. Regarding the relief of rendition of accounts, the Ld. Judge observed that as not only the defendant has not participated in the present proceedings but even otherwise as no further averments have been made on behalf of Plaintiff for ascertaining or obtaining any such rendition of accounts, therefore, no orders/directions were passed in this regard. As regards delivery-up, the Ld. Judge directed that all infringing goods found at the premises of the defendant shall be handed over to the plaintiff for destruction/erasure etc. Hence, the suit was favorably decreed in favour of the plaintiff.

AUTHOR’S POINT OF VIEW

While the Ld. Judge has inter-alia also granted a decree of delivery-up of the sized goods, the actual implementation of such relief remains questionable. As mentioned above, the defendant’s premises were found to be shut down, thereby indicating that the defendant has absconded from the premises. In such a situation, it is unlikely that the plaintiff will be able to seek the delivery of the infringing goods from the defendants and in all probability, the counterfeit goods will be back in circulation in the market. Therefore, this poses a serious concern to all the brand owners.

A plausible solution to this concern is that at the time of seizure of the infringing goods, the plaintiff is given an option to preserve the said infringing goods/take its delivery from the defendant at its own cost and risk. This would mitigate the risk of the defendant absconding from the premises with the infringing goods though the defendant may still fail to join the suit proceedings.

It is to be noted that the power of a civil court to pass a decree for delivery-up of the infringing goods/labels come from Section 135 (1) of the Trade Marks Act. Whereas, power to pass interlocutory orders to preserve the infringing goods comes from Section 135 (2) of the Act. The said sub-section does not specify that the plaintiff can also seek an order to preserve the infringing goods in its custody at the time of the commission conducted by the Local Commissioner or any time later during the pendency of the suit.

It is worth noting that the Copyright Act, 1957 differs in such situations and provides for preservation of the infringing goods in the custody of the owner of the copyright.

Relevant provision of the law is reproduced below:

Section 66 in the Copyright Act, 1957

  1. Disposal of infringing copies or plates for purpose of making infringing copies.—The court trying any offence under this Act may, whether the alleged offender is convicted or not, order that all copies of the work or all plates in the possession of the alleged offender, which appear to it to be infringing copies, or plates for the purpose of making infringing copies, be delivered up to the owner of the copyright.

This begs for a shift in law especially in cases where the plaintiff pleads that the defendant is a fly-by-night small business operator and there is a likelihood that he may not join the case proceedings after the seizure of the infringing goods by the Local Commissioner. In case the plaintiff is able to obtain a decree of delivery-up in its favour, the infringing goods lying in the custody of the plaintiff may then be directed to be destroyed. Whereas, if the defendant has a good case in defense and is able to get an order to vacate the ad-interim injunction, the court may then direct the plaintiff to deliver-up the infringing goods to the defendant as is usually allowed in cases where the ad-interim injunction orders are vacated.

This would strike a balance between the plaintiff’s interest in the destruction of the counterfeit goods as well as the consumers whose interest the brand owners as well as the courts are liable to protect.

 

[1]https://docs.google.com/viewerng/viewer?url=https://lawstreet.co/secure/uploads/pdfs/lj_2802_Gucci_Gets_Permanent_Injunction.pdf

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