Delhi High Court: In a suit filed by Adidas AG (‘Adidas’) to secure their rights against the use of an identical mark by the defendants for various classes of goods, including textiles, a Single Judge Bench of Sanjeev Narula, J. granted permanent injunction to Adidas and restrained the defendants from manufacturing, trading, selling, marketing, offering for sale or dealing in any way in textile piece goods under the ‘Adidas’ marks or any other marks deceptively similar to Adidas’ marks.
Background
The trade mark ‘Adidas’ was first registered in India in 1971, and in 1989, Adidas granted a license to Bata India Pvt. Ltd. for commercial trade in the country. It was submitted that Adidas had been openly and continuously carrying on their business in India since 1989 and their goods were being purchased in the country even before that.
It was submitted that to promote their products, Adidas sponsored several teams participating in the Indian Premier League along with other sports tournaments and issued advertisements in print media extensively distributed throughout the country.
The grievance of Adidas arose from the defendant’s adoption of the word ‘Adidas’ as a trade mark and a part of its trade name. The defendants, in bad faith, commenced using an identical term ‘Adidas’ for their textile business.
It was stated that defendant 1 applied for registration of the word mark ‘Adidas’ on 16-04-1992. This application was opposed by Adidas’ licensee and distributor — Bata India Pvt. Ltd. However, the Assistant Registrar of Trade marks, Bombay rejected the opposition, and the application was allowed to proceed to registration.
The Bombay High Court stayed the operation of the trade mark through an interim order dated 18-02-2000, and vide final order dated 07-02-2002, the matter was remitted back to the Assistant Registrar for de novo consideration of the opposition.
While the plaintiff was awaiting fresh consideration, a review of the online records of the office of the Registrar revealed the status of the trademark application as ‘registered’. Thereafter, the plaintiff filed an application before the Intellectual Property Appellate Board (‘IPAB’) for the removal of the defendants’ impugned trademark from the trademark register.
During the pendency of the present suit, the IPAB vide order dated 24-08-2018, directed the removal of the impugned mark registered in the name of defendant 1. Apart from this, the defendants had also filed other applications which were opposed by Adidas.
Defendant 1 claimed that the adoption of the trade mark ‘Adidas’ was both bona fide and honest. Defendant 1 stated that from childhood, he held a deep affection for his elder sister, addressed as ‘Adi’ in the Sindhi community, and his admiration was so profound that he was commonly described as her devotee, addressed as ‘Das’ in Sindhi. Thus, the term ‘Adidas’ was conceived to reflect this familial devotion.
Analysis and Decision
The Court analyzed the arguments of the parties and framed the issues to be considered in the present matter on 31-10-2018.
Issue I: Whether the Court had territorial jurisdiction to try and entertain the present suit.
The Court noted that Adidas conducted its business through its wholly-owned subsidiary, ADIDAS India Marketing Pvt. Ltd. located in Delhi, which fell within the jurisdiction of the Court.
The Court noted that to substantiate its claim, Adidas had also produced sales invoices that indicated the address of the wholly-owned subsidiary which indicated that Adidas’ goods were sold and marketed within the jurisdiction of the Court.
The Court stated that the defendants were specifically directed to produce the list of dealers, in response to which the defendants submitted that the entire record of the Trade mark Registry had been missing which is why they were unable to produce a copy for the same. The Court stated that the defendants had failed to adduce evidence to counter the submissions of Adidas.
Further, the Court stated that apart from Section 134(2) of the Code of Civil Procedure, 1908 (‘CPC’), Adidas could also rely upon Section 20(c) which provided that a suit can be filed in a court within whose local limits the cause of action, wholly or in part, arises.
While deciding the issue of territorial jurisdiction in favour of Adidas, the Court stated that they had convincingly established that the Court had territorial jurisdiction in the present matter.
Issue II: Whether the suit filed by Adidas was barred by delay, acquiescence, and laches.
The Court stated that since the defendants had not led any evidence to discharge the burden of proving this issue, it had independently considered the same.
The Court noted that the defendants argued that the suit should be dismissed due to delay, acquiescence, and laches alleging that Adidas had known of the defendant’s use of the mark since 1987 and had not taken timely action which resulted in a delay of almost 20 years.
The Court stated that although there was some delay by Adidas, they had duly explained that there was no official record or notification issued to them regarding the outcome of the reconsideration by the Trade mark registry.
Further, the Court said that Adidas had demonstrated a consistent effort to challenge the defendant’s attempts to register the impugned trade mark. It was stated that in the present matter, rather than delaying, Adidas actively opposed defendant 1’s trade mark applications and promptly challenged the registration upon becoming aware of the same in 2010, which negated the argument of unreasonable delay and laches.
The Court stated that in the present matter, Adidas’ opposition and legal actions to defendant 1’s registration, demonstrated a clear lack of acquiescence and reflected an effort to protect their trade mark rights. Further, the Court noted that there was no evidence of positive encouragement or consent from Adidas regarding the defendant’s use of the mark. Thus, the Court held that the defence of delay, laches, and acquiescence did not apply in the present matter.
Issue III: Whether Adidas’ trade mark had trans-border reputation in India before 1987.
The Court refrained from rendering a finding on this issue since Adidas was no longer pursuing the claim of passing off.
Issue IV: Whether the defendants were the prior users of the trade mark in India, and if so, to what extent?
The Court noted that the defendants contended that they were the prior users of the mark since when they adopted and began using the mark in 1987, Adidas’ products were not commercially available in the country.
However, the Court noted that evidence led by Adidas showed that their products bearing the ‘Adidas’ mark were introduced in the market in 1989 through Bata India Pvt. Ltd. who were acting as their licensee and distributor. The Court stated that to prove prior use, the defendants would have to satisfy usage before the date of registration of Adidas’ mark.
The Court noted that Adidas had adopted the trade mark in 1971 and secured registration of the same before registration by defendant 4 which made Adidas’ adoption ex facie prior.
Further, the Court stated that given the defendants’ failure to substantiate their claim of prior use and their disengagement from the legal process, no basis was found to accept the defendants’ defence of prior use.
Issue V: Whether the use of the mark in respect of textile pieces by the defendants resulted in infringement or passing off.
The Court stated that the issue of identity between the use of the mark by both parties could not be understated as the mark in question was structurally and phonetically identical. The Court stated that the defendant’s use of ‘Adidas’ for textiles, classified under Class 24 had to be evaluated against Adidas’ registered use of the same mark in Class 25 for readymade garments.
The Court stated that the similarity of the nature and purpose of the goods met the requirement of Section 29(2)(a) of the Trade Marks Act, 1999 where the identity of the mark and the similarity of the goods covered by the trade mark could lead to public confusion.
The Court stated that Adidas had successfully established a case of trade mark infringement since both parties operated in closely related sectors of readymade garments and textiles which meant that the likelihood of overlap in trade channels was high which could potentially lead to consumer confusion.
Further, the Court stated that the legal protection of the trade mark was predicated not only on preventing consumer confusion but also on protecting the owner’s investment in the mark. The Court stated that the defendants had failed to provide credible justification or evidence to demonstrate that their adoption of the identical mark was honest and in good faith.
Thus, the Court stated that the unauthorized use of the mark by the defendants, especially without evidence of honest adoption must be viewed as an attempt to benefit from the established reputation and goodwill of Adidas.
The Court found that Adidas was entitled to grant of a permanent injunction and accordingly restrained the defendants or anyone acting on their behalf from manufacturing, trading, selling, marketing, offering for sale, or dealing in any way in textile piece goods under the ‘Adidas’ marks or any other marks deceptively similar to Adidas’ marks.
Further, the Court stated that there had been no recovery of infringing goods through the appointment of a Local Commissioner which could have assisted the Court in assessing the award of damages, which is why the Court held that Adidas was not entitled to damages amounting to Rs. 20,00,000/- as they had prayed for.
The Court opined that considering that the defendants had abstained from participating in the court proceedings from the stage of leading their evidence, as well as the overall facts of the case, Adidas was entitled to nominal damages of Rs. 3,00,000/-.
The Court lastly stated that Adidas was found to be entitled to cost of litigation amounting to Rs. 11,22,060/- which was to be paid to the Local Commissioner for recording evidence as per order dated 31-10-2018.
[Adidas AG v. Keshav H Tulsiani, 2024 SCC OnLine Del 4940, Decided on 19-07-2024]
Advocates who appeared in this case :
For Plaintiff — Advocate Ranjan Narula, Advocate Aishani Singh, Advocate Shivangi Kohli
For Defendant — None
Buy Trade Marks Act, 1999 HERE
