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Liberty to file afresh does not warrant forum shopping

April 18, 2022

It is not an unknown fact that Courts in Delhi are IP savvy, given the plethora of judgments passed by the Delhi High Court concerning IPR laws, wherein the Courts are known for proactively protecting the rights of the parties, based upon the merits of the case.

Recently, a Division Bench of the Delhi High Court in the case of Black Diamond Track Parts Pvt. Ltd. & Ors. vs. Black Diamond Motors Pvt. Ltd.[1] adjudicated upon an appeal seeking to set aside an interim injunction that was granted against the Defendants’ alleged infringement of the Plaintiff’s trade mark BLACK DIAMOND, even though the same relief was earlier refused by a District Court in Bilaspur as well as the Chhattisgarh High Court.

Brief Facts of the case

The suit, from which this appeal arises, was filed by the Respondent (Plaintiff before the Trial Court) inter alia pleading that it was carrying on the business of manufacture and sale of Trippers, Tip-Trailers, Flat Bed Trailers, Ash Handling Bulkers and Tailor made Carriers (hereinafter called “subject goods”) since 2005.

The trade mark ‘BLACK DIAMOND’ was being used by the family of the Directors of the Respondent, since the year 1983, in relation to a number of businesses. As per the Respondent, the word ‘BLACK DIAMOND’ is the most essential feature of its trade mark / label. Under an oral family settlement between the members of the family of the Directors of the Respondent, the right to use the trade mark ‘BLACK DIAMOND’ in relation to the subject goods came to the Respondent, and the right to use the same mark for manufacturing of mining machinery and spares was given to the Appellant (Defendant No. 1 in the Trial Court). With this arrangement, it was jointly agreed by the family members that they will not interfere or compete in one another’s business.

Due to the success and goodwill garnered by the Respondent in the said industry, the Respondent had also applied for registration of the trade mark ‘BLACK DIAMOND’ and its formative variants in relation to goods under Class 12 i.e. the goods that were part of the suit, sometime in 2009.

Arguments on behalf of the Plaintiff (In Trial Court)

The Appellants are not entitled to use the trade mark ‘BLACK DIAMOND’ in relation to subject goods, in view of the family settlement.

After four years of the family settlement, the Appellants started acting in breach of the settlement by carrying on business in subject goods in the name of BLACK DIAMOND. The Appellant No.1 also applied for registration of the mark BLACK DIAMOND TRAILER TECH and BLACK DIAMOND TRACK PARTS in Class 12, sometime in the year 2018, with a user claim since January 28, 1991.

The adoption by the Appellants of the trade mark ‘BLACK DIAMOND’ in relation to the subject goods is dishonest and mala fide. From the website of the Appellants it is evident that they have entered into the business of subject goods, only in or about 2017-2018.

These actions of the Appellants amount to trade mark infringement and are also in breach of the family settlement.

Time- line of the Plaintiff’s Suit and Reason for Appeal

The suit for infringement was filed for the first time in 2018 before the District Judge in Bilaspur, Chhattisgarh. However, the Court dismissed the application of the Respondent for interim relief.

The Plaintiff failed to obtain a favourable order in appeal before the High Court of Chhattisgarh as well.

Thereafter, an application to withdraw the suit was filed, with liberty to apply afresh, which was allowed.

After a period of six months, the Plaintiff filed the suit afresh before the Commercial Court, South District, Saket Court, Delhi. It was here when the Learned Single Judge, while issuing summons, granted an ex-parte interim order against the Appellants, without taking into consideration that the Respondent since the year 2018 had been unsuccessful in getting the interim relief in the proceedings, which were earlier instituted in the Courts at Bilaspur and that even the High Court of Chhattisgarh had also not found that the Respondent was entitled to any interim relief. In view thereof, the Appellants filed an appeal against the said impugned order.

Observations by the Division Bench

The Hon’ble Division Bench of the High Court of Delhi, while deciding the appeal in question analysed the ingredients of a prima facie case, particularly,  irreparable loss and injury, and the balance of convenience, required to be satisfied for granting an interim injunction.

The Court while observing that to an ordinary, unwary customer and purchaser, use of trade mark/label ‘BLACK DIAMOND’ is quite likely to cause confusion regarding the true source of the goods allowed the application of the Respondent for interim relief and restrained the Appellants.

It was additionally noted by the Court that in the impugned order, there was no discussion or analysis of the merits of the pleas and contentions of the respective parties and no reason had been given as to why the Commercial Court accepted the arguments and contentions of the counsel for the Respondent and rejected the arguments of the counsel for the Appellants.

The Court held that the “impugned order does not meet the parameters prescribed to constitute a judgment, as an order on an application under Order XXXIX Rules 1&2 of the CPC is, since determines the rights of the parties. The impugned order, in our view, is liable to be set aside on this ground alone… though there can be no doubt that once the suit is permitted to be withdrawn with liberty to file afresh, no pleas, on the basis thereof can be taken in the subsequent suit, of Order II Rule 2 of CPC or of res-judicata etc., but in our view nothing prevents the Court from, at least at the stage of grant/non-grant of interim relief, taking notice of the said facts to test the bona fides of the Respondent/Plaintiff.”

Forum Shopping

The Court while taking note of the fact that the Plaintiff had withdrawn the suit from Bilaspur with the intent of filing it in Delhi, elaborated upon the concept of forum shopping and stated that it amounts to the abuse of the process of the Court and needed to be strongly condemned. The Court enquired from the counsel on behalf of the plaintiff as to why the plaintiff should not be disentitled for any interim relief, when they’ve indulged into the act of forum shopping. The plaintiff placed reliance on Chhaganlal Pratapchand Vs. State of Gujarat[2] and Patel Chunibhai Dajibhai Vs. Narayanrao Khanderao Jambekar[3], which were then aptly distinguished by the Hon’ble Court, which held that “if the practice, as indulged in by the respondent/plaintiff were to be approved of and encouraged, then considering the multiple options of territorial jurisdiction available to a plaintiff in a suit for permanent injunction to restrain infringement of trade mark and/or passing off, a plaintiff, after failing to get interim relief in one Court, would successively approach other Courts, making litigation a game of chance and a mockery of. Such conduct, we have no doubt whatsoever, amounts to abuse of the process of the Court and needs to be strongly condemned”. With these observations, the Hon’ble Division Bench allowed the appeal.

 Author’s Note: The Hon’ble Court laid down certain key aspects to be taken into consideration, especially in cases wherein there seems to be a prima facie instance of forum shopping. The Hon’ble Court also noted that it was essential to decide upon the plaintiff’s bona fides in such an instance and that such behaviour should be strongly condemned to discourage such practices.

[1] FAO(COMM) 41/2021

[2] 1969 SCC OnLine Guj 10

[3] AIR  1965  SC  1457

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