Delhi High Court rules in favor of Karim’s in trademark lawsuit against Karin’s

By Nitika Sinha and Bhanu Dhingra

Businesses can achieve brand recognition and value through their trademarks as they distinguish their products or services. Hence, it is necessary for the business owners to obtain a timely trademark registration and to take a legal action against the infringer or respond properly to the trademark infringement notice in order to protect their place in the market. Such unauthorized use can confuse consumers and take advantage of the reputation of the registered trademark. In the case of KARIM HOTELS PVT LTD & ANR V. NIZAMUDDIN & ANR, the Delhi High Court restrained the defendants from using the mark “KARIN’S” which was closely similar to plaintiff’s mark “KARIM’S”.

FACTS:-

The plaintiff is the registered proprietor of the trademark “KARIM’S” used in respect of chain of restaurants famous for its Mughlai cuisine. The mark was first adopted by Haji Karimuddin in the year 1913. In 1987, his heirs constituted a private limited company under the name Karim Hotels Pvt. Ltd. in order to expand their business operations. Thereafter, plaintiff secured various formative versions of the mark “KARIM’S” under various classes and the continuous use of such marks resulted in accrual of formidable goodwill and reputation in its name.

SUBMISSIONS ON BEHALF OF THE PLAINTIFF

• Plaintiffs contended that they registered the trademark “ ” on December 24, 1998, in class 29 vide registration no. 833801 and thereafter secured multiple registrations in the name of plaintiff no. 1 for stylized variants which are detailed below:

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  Application No.	Trademark	Class	Date of Application	User claim since
  2051010		16	November 9, 2010	November 1, 1970
  2051011		30
  2051012		43
  2051013		16	November 9, 2010	November 1, 2001
  2051014		30		November 9, 2010
  2051015		43
  2051016		16	November 9, 2010	July 1, 1913
  2051017		30
  2051019		43
  2051018		16	November 9, 2010	July 1, 1913
  2051020				November 9, 2010
  2051023		30	November 9, 2010	December 1, 1968
  2051024		43
  2051021		30	November 9, 2010	Proposed to be used
  2051022		43		July 1, 1913
  2051025		16	November 9, 2010	November 1, 1970
  2051026		30
  2051027		43
  2051028		16	November 9, 2010	November 1, 1970
  2051029		30		November 1, 2010
  2051030		43		November 1, 1970

  Plaintiffs also claimed copyright protection for the artistic works comprising the above mentioned labels.

• The plaintiffs, also adopted a business model wherein they granted licenses authorizing the use of the mark “KARIM’S” for commercial exploitation in relation to restaurant services. Further in order to increase its presence in the market, plaintiff no. 2 secured a lease for the premises owned by the Defendant No. 2 and an agreement was executed on May 01, 2008 in this regard. As per the terms of the said agreement, Defendant No. 1 (son of Defendant No. 2) would lease the premises, along with culinary and other equipment and furniture specified in the agreement, to Plaintiff No. 2 for restaurant operations. In return, Plaintiff No. 2 would pay a fixed commission of 12% of the restaurant’s sales to Defendant No. 1. The Lease Agreement was to operate for a period of five years. Subsequently, when the restaurant’s operations failed to meet the business expectations, plaintiff opted to terminate the agreement by paying a severance fees of Rs. 10,00,000/- to the defendant vide Cancellation Agreement dated November 1, 2009.
• However, in 2010, the plaintiff learnt that the defendant has fraudulently started utilizing a deceptively similar mark “KARIN’S” along with the plaintiff’s registered marks “KARIM’S” and the tagline “SECRET OF GOOD MOOD TASTE OF KARIM’S FOOD” for a restaurant situated at the lease premises.
• Thereafter, Plaintiff issued a cease-and-desist notice to the Defendant, following which the Defendants apparently halted the disputed activities. However, in the year 2012, the Plaintiffs discovered that the Defendants had resumed the impugned operations at the lease premises, thereby unjustly benefiting from the goodwill associated with Plaintiff’s “KARIM’S” trademark.
• In November, 2010, it came to the knowledge of the plaintiff that Defendant No. 1 started utilizing a deceptively similar mark “KARIN’S” along with the Plaintiff’s registered marks “KARIM’S” and “SECRET OF GOOD MOOD TASTE OF KARIM’S FOOD” for a restaurant situated at the lease premises in contravention of the Cancellation Agreement. The plaintiff contended that the sign boards and menu cards at the leased premises were imitated by the Defendants, wherein they falsely claimed to be the heirs of Mr. Haji Karimuddin.
• The plaintiff further relied on the Lease Agreement dated May 01, 2008 and Cancellation Agreement dated November 1, 2009 wherein it was provided that the trade name and goodwill of the “KARIM’S” mark would vest with the Plaintiffs and Defendant shall have no claim over the same.

RELEVANT COURT PROCEEDINGS

• The court granted an ex-parte ad-interim injunction on May 18, 2012, restraining the Defendants from using the Plaintiff’s trademark. Additionally, a Local Commissioner was appointed to seize all goods, including moulds, packing material, sign boards, and advertising materials bearing Plaintiff’s trademark.
• The Local Commissioner executed the commission on May 26, 2012 at the leased premises wherein he found various signboards and menu cards bearing the plaintiffs trademarks. The Local Commissioner seized 21 Menu cards, 3587 Menu Leaflets and 1 cash bill dated 25.05.2012 in accordance with the directions of the court. The photographs of the infringing goods seized by the Commissioner are reproduced below:

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• The defendants failed to file their written statements and their right was subsequently closed. Thereafter, the court ordered the previously granted injunction to be continued till the pendency of the suit.
• The Plaintiffs led evidence to substantiate their case. However, the Defendants did not lead any evidence, in absence of any pleadings.

SUBMISSIONS ON BEHALF OF THE DEFENDANTS (NIZAMUDDIN)

Although the Defendants filed no written statement, they submitted short affidavits stating their positions.

Defendant No. 1 stated that he was running a restaurant on oral lease of monthly rental of Rs. 20,000/- from his father (Defendant No. 2). Subsequently he was offered franchisee from the Plaintiff and he entered into a franchisee agreement with the Plaintiff and continued running the restaurant on monthly rent payable to Defendant No. 2.

He further stated in his affidavit that the said franchisee agreement was subsequently terminated by the Plaintiff and an amount of Rs. 10,00,000/- was paid to him towards premature termination of said agreement. He added that after the termination of the franchisee agreement he had entered into a separate business which had nothing to do with the restaurant being run from the said premises.

He further stated that he suffered huge financial loss of around Rs. 35 Lakhs which was invested by him into the franchisee venture towards interior, furniture, Appliances, etc. However, when the franchisee was prematurely terminated he was paid an amount of Rs. 10 Lakh only.

Defendant No 2, on the other hand, submitted that the business activity of Restaurant in the name and style of “KARINS” has been stopped from October, 2012 and since then the said premises is lying vacant.

COURT’S OBSERVATION

After hearing the submissions of both the parties, the court was of the view that the trademarks were indistinguishable, with the Defendants replicating all aspects of the plaintiffs’ trademarks, including font, design, colour scheme, style, and taglines, used for identical services.

The Court further observed that there was a deliberate imitation suggested an attempt to deceive consumers into thinking the defendants’ business was still associated with the Plaintiffs. The similarities constituted a clear infringement under Sections 29(1) and 29(2)(b) and (c) of the Trademarks Act, 1999, and also violated the plaintiffs’ copyright.

The court was of the opinion that the defendants had not provided a defence, while the plaintiffs had established ownership of the “KARIM’S” trademarks with registration certificates. The defendants had acknowledged this ownership in affidavits and agreements, agreeing not to use the “KARIM’S” trademarks. However, they continued using the trademarks, as per the report submitted by the Local Commissioner.

The court further observed that the Defendant No. 1 claimed the termination of the franchise agreement with a payment of Rs. 10, 00,000, but this claim lacked evidence and was not presented in a written statement. No Franchise Agreement was produced, whereas the Plaintiffs proved the Lease and Cancellation Agreements, showing the Defendants used the marks without authorization after the lease termination.

DECISION OF THE COURT

After observing the above submissions, the Court found that the plaintiffs had clearly established trademark and copyright infringement by the defendants. The Court decreed the suit in favor of the plaintiffs and against the defendants. Regarding costs, Defendant No. 2 submitted that he is only the owner of the lease premises Defendant No. 1 conducted the infringing activities. Therefore, the plaintiffs were entitled to recover an amount of Rs. 3,31,000/- from Defendant No. 1 on account of litigation expenses incurred in prosecuting the said suit.

Ayush Jain, Associate Advocate at S.S. Rana & Co. has assisted in the research of this article.