SpicyIP brings you a guest post on the issue whether under current Indian trademark law, a distributor of goods has any rights in a trademark by Archana Sahadeva, a practicing advocate at the Delhi High Court, and who also represented one of the defendants in the cases “Double Coin Holdings Ltd. & Anr. V. Trans Tyres (India) Pvt. Ltd. & Anr.” CS (OS) No. 89/2011; and “Satish Kakkad & Anr. V. Zafco Trading LLC & Anr.” CS (OS) No. 90/2011. Both these cases were decided by a common order. The issues raised and the arguments advanced make for an interesting read. Long post follows.
The two suits are cross suits. Double Coin Holdings Ltd. (DCH) and Zafco Trading LLC (Zafco) are referred to as ‘Plaintiffs’ and to Trans Tyres (India) Pvt. Ltd. (Trans Tyres) and Mr. Satish Kakkad as ‘Defendants’. Plaintiffs filed a suit for passing off seeking to restrain the Defendants from manufacturing, advertising any goods under the trademark Double Coin and from holding themselves as owners of the trademark. Defendants filed a cross suit for trademark infringement, seeking to restrain Plaintiffs from manufacturing and selling products in India under the trademark Double Coin.
Admitted facts: DCH, a Chinese company manufacturing tyres, claims adoption and use of the trademark DOUBLE COIN since 1930 and 1934. Zafco, founded in 1993, claims a worldwide presence in 85 countries selling tyres manufactured by DCH and acting as its agent. Having no presence in India, in 2005 Zafco was supplying Double Coin tyres through independent dealers.
Trans Tyres, engaged in the business of manufacture and sale inter alia of tyres and tubes was appointed as authorized representative and distributor of DCH in India by Zafco vide Agreement dated September 16, 2006 (valid till June 30, 2007) to sell/advertise the products of DCH in India and execute government liaison jobs including BIS. The Agreement was very cryptic and did not throw any light on the exact nature of terms on which the trade had to be concluded.
Though the Agreement was not renewed, it was admitted that sale of tyres to Trans Tyres continued even after the expiry of the Agreement. Trans Tyres was selling tyres in India under the trademark DOUBLE COIN. DCH did not have a registration for Double Coin in India. Trans Tyres, on the other hand, obtained registration for Double Coin in India for tyres and tubes since October 31, 2007. Trans Tyres also applied for registration of Double Coin in classes 4, 9 and 12. Rectification Petition filed by DCH seeking cancellation of the trademark registration obtained by Trans Tyres is pending before the IPAB.
Plaintiffs’ Arguments: Plaintiffs contended that they became aware of the trademark registration obtained by Trans Tyres in January 2010 when Zafco started selling and marketing Double Coin tyres in India. Upon seeking an explanation, Mr. Harish Kakkad (Director in Trans Tyres and brother of Mr. Satish Kakkad) acknowledged that Double Coin was an international brand and DCH’s ownership of the same. He justified the registration by saying that it was necessitated in order to curb parallel imports into India.
Thereafter Trans Tyres attempted to obtain registrations for Double Coin in classes 4, 9 and 12. This caused issuance of Cease and Desist notice to Defendants. In reply, Defendants denied any association with Mr. Harish Kakkad a.k.a Tony. DCH is the registered proprietor of Double Coin in a number of countries including China, USA, Dubai, Brazil; and the website of Trans Tyres provides a link to DCH’s website.
Defendants’ Arguments: About 99% of Double Coin tyres sold in India are imported by Defendants alone. DCH has never advertised its tyres or tubes in India. Defendants on the other hand, have extensively advertised Double Coin tyres in India. It is pertinent that in these advertisements no reference is made to the Plaintiffs.
It was asserted that prior to 2005 DCH tyres were not sold in India. It was in 2005 when Defendants commenced sale of DCH tyres, that the sale of tyres rose to Rs. 20crores out of which Rs.12crores was attributable to the sale under the mark Double Coin. The figures rose consistently and reached Rs.36crores in 2009.
It was contended that Defendants built warehouses at major trucking centres like Mumbai, Delhi, Hyderabad, Ahmedabad and Bangalore. Defendants also trained marketing personal and organized a convention for dealers in 2007 in Mumbai in which Mr. Wilson Itoop, the GM of Zafco also participated. In 2009, Defendants at their expense organized a trip for customers to DCH’s factory premises in China.
Defendants relied heavily on Mr. Wilson Itoop’s interview (published in TransTopics, June 11, 2009) in which he said that they (Plaintiffs) were looking to market Double Coin not as a Chinese product but as a domestic brand. It was emphasized by him that the pre-dominant importer in India is Trans Tyres. In another article (published in TransTopics, October 25, 2007) it was advertised that Trans Tyres was a company importing Chinese Radials which were considered to be the best radial tyres in town.
To summarize, it was argued that prior to 2005 Double Coin tyres were unheard of in India and it was the Defendants who created a market for the goods and earned goodwill in the trademark Double Coin in India. The grievance of Defendants was that Plaintiffs were now attempting to directly enter the Indian market and capitalize on the goodwill and market created by Defendants for the mark Double Coin in India. Defendants argued that they were prior users of the mark Double Coin in India and that the customers identified and associated Double Coin solely with them.
Issues: The issue was whether Defendants, the distributors of DCH, could be allowed to claim ownership of the brand Double Coin in India?
Case law discussed: “DIEHL Case” 1970 RPC (15) 435: In this case the claim of Respondent, the sole representative of Applicant in a particular territory, over the trademark DIEHL was upheld by the court as long as it was restricted to that particular territory. The Ld. Judge distinguished this case on facts, primarily for the reason that unlike the Diehl case, Trans Tyres is not the sole distributor of Double Coin Tyres in India.
"Adrema v. Adrema-Werke” 1958 RPC (13) 323: In this case the Defendant, a German company named Adrema-Werke, for purposes of its trade in the UK, formed the Plaintiff and conferred upon it the name ‘Adrema Ltd.’. By the method of trading which was adopted i.e. by selling the goods to the Plaintiff as principals for re-sale in the UK under the mark Adrema without any reference to the German company; the same was held to have allowed the Plaintiff to acquire the goodwill in the word Adrema in the UK. The Ld. Judge distinguished this case on facts.
“ITC v. Punchgini” 2008 US App. LEXIS 5359: In this case there were disputes re the mark ‘Bukhara’ in respect of restaurant services. ITC sued certain individuals for using the mark ‘Bukhara’ and also the related trade dress. The court refused to grant any relief to ITC since it found that ITC did not use the mark in the US for more than three years. The Ld. Judge distinguished the case and held that the use of the mark Double Coin in India would be considered use by DCH and not by Trans Tyres which was merely importing and selling the goods.
Defendants also relied on “Omega Nutrition v. Spectrum Marketing” [756 F. (Suppl.) 435 (1991)]; “Alain Bernadin ET Companies vs. Pavilion Properties Ltd.” [1967 RPC 581], “Persons Co. Ltd. vs. Christmas” [14 USPQ 2d 1477], “Menendez vs. Holt” [128 US (514) 1888], “IMAF vs. JC Penney Co.” [806 F. (Suppl.) 449 (1992)], “Uniply V. Unicorn” [2001 PTC 513], “Gillette vs. A.K. Stationery” [2001 PTC 513], “Procter & Gamble vs. Satish Patel” [1996 PTC (16) 646], “Kaviraj Pandit vs. Navaratna Pharmaceutical” [1965 1 SCR 737], “Ruston & Hornsby vs. Zamindara Engineering Co.” [PTC (Suppl 1) 175 SC].
The Ld. Judge concluded that none of the judgments would persuade him to hold that the goodwill in the mark Double Coin belongs to Defendants or that the customers in India associate the mark with Defendants.
Findings: On the aspect of prima facie case, the Ld. Judge held that 1) DCH first used Double Coin in India; 2) ownership and goodwill in Double Coin continues to vest with DCH; 3) customers in India do not associate Double Coin with Trans Tyres. Trans Tyres, therefore, despite having a registration in its favour, does not have any legal right to use Double Coin on any tyre or tube which is not manufactured by DCH. DCH being the first user of Double Coin has a legal right to use the mark in India and therefore, has a prima facie case against use of that mark by Trans Tyres on any tyre or tube which is not manufactured by DCH.
It was further held that since Trans Tyres was not manufacturing nor outsourcing the manufacture of tyres; DCH being an established manufacturer of tyres and tubes who is selling products in India since 2005; no substantial harm would be caused if Defendants are restrained. Therefore, balance of convenience would lie in favour of DCH.
The Ld. Judge held that irreparable loss would be caused to DCH if Trans Tyres were to sell tyres or tubes under the trademark Double Coin which are not manufactured by it since Trans Tyres may introduce products manufactured by other manufacturers and sell them under the trademark Double Coin. This would, not only create confusion in the market with respect to the origin of the product, it may also result in deceiving the public at large. This would adversely affect DCH’s reputation and goodwill through out the world.
Therefore considering prima facie case, balance of convenience and irreparable loss, the Ld. Judge restrained Defendants from selling any tyre or tube bearing the trademark Double Coin or any mark deceptively similar thereto, unless that product has been manufactured by DCH. Also since a rectification petition filed by DCH was already pending, the suits were stayed pending its disposal.
Appellate Motions: Defendants preferred an appeal. The Ld. Division Bench vide order dated January 31, 2012 held in favour of DCH and dismissed the appeal. IPAB has however been requested to expedite its decision since the suit has been stayed pending its decision.
Conclusion: The peculiar facts of the instant case, I believe, prevented the Ld. Judge from holding in favour of Defendants. The arguments advanced and the case laws relied upon by Defendants however, were novel given the Indian scenario and I believe that under apt circumstances a Distributor can acquire rights in a trademark.