SUMEET RESEARCH AND HOLDINGS LTD v. ELITE RADIO & ENGINEERING CO., LTD

044-SLLR-SLLR-1997-2-SUMEET-RESEARCH-AND-HOLDINGS-LTD-v.-ELITE-RADIO-ENGINEERING-CO.-LTD.pdf


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Sumeet Research and Holdings Ltd. v.
Elite Radio & Engineering Co., Ud.
393
SUMEET RESEARCH AND HOLDINGS LTD.v.
ELITE RADIO & ENGINEERING CO., LTD.
SUPREME COURT.
FERNANDO. J.,
DHEERARATNE, J. ANDWIJETUNGA, J.
S.C. APPEAL NO. 36/95
A. APPLICATION NO. 504/94
C. COLOMBO NO. 4065/Spl.
SEPTEMBER 11, 1995.
Code of Intellectual Property Act No. 52 of 1979 – Action for unfair competition inrespect of goods – Defendant's claim as registered owner of trade mark for thegoods – Sections 117, 118 and 142 of the Act – Plaintiff’s entitlement to anenjoining order.
The plaintiff company was registered in India as the owner of the trade mark“SUMEET” in respect of mixing machines (Electric) for kitchen use. The'defendantcompany was for some time the sole agent in Sri Lanka for importation,distribution and sale of “SUMEET" machines manufactured by the Power ControlAppliances (“PCA”) under the authority of the plaintiff. The defendant's agencywas established by an agreement with the 'PCA'. Later, the defendant registereditself as the owner of the trade mark “SUMEET" in Sri Lanka. The defendant nextclaimed that it was importing “SUMEET” mixers (for sale in Sri Lanka)manufactured in India by SMPL Ltd. Plaintiff sued “SMPL” in India for infringementof the “SUMEET” trade mark and obtained an interim injunction against “SMPL”.The plaintiff also filed two actions in Sri Lanka one for cancellation of thedefendant's trade mark “SUMEET” and this action, for unfair competition contraryto section 142 of the Code. The District Judge issued an enjoining orderrestraining the defendant from importing and trading in goods, under the trademark “SUMEET", not manufactured by the plaintiff. Thereafter upon thedefendant’s application, the District Court set aside the enjoining order.
Held:
Serious questions arise whether the defendant,
by registering the “SUMEET" mark in Sri Lanka in its own name, during thesubsistence of its agreement with the PCA. and without notifying PCA, and
by importing, advertising and selling mixers in Sri Lanka, which had beenmanufactured in India with the "SUMEET” mark in violation of Court orders inIndia, had acted contrary to honest practices in industrial and commercialmatters and/or in such a way as to create confusion with goods in respect ofwhich the plaintiff had intellectual property rights; and the plaintiff hasestablished a prima facie case in that respect.
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The enjoining order was wrongly set aside.
Per Fernando, J.
"the protection which a Sri Lankan Court can give the owner of a trade
mark, in respect of his rights arising from registration, does not extend to aninfringement committed outside Sri Lanka; that has no bearing in the verydifferent question whether a Sri Lankan Court can give relief to the owner of atrade mark registered in India for an act of unfair competition – not for breach ofIndian registration rights – committed in Sri Lanka.”
Cases referred to:
Stassen Exports Ltd. v. Hebtulabhoy & Co., Ltd., S.C. Appeal No. 20/89 S.C.Minutes 31st March, 1994.
Hexagon Pty. Ltd. v. Australian Broadcasting Commission (1975) ALR 233,251-525.
Dior v. Milton (1956) 110 USPQ 563, 566.
Erven Warnink BV v. Townend & Sons [1979] 2 All ER 927,931-932.
Reddaway v. Banham (1896) A.C. 199,211.
Amerasekera v. Mitsui & Co., Ltd. [1993] 1 Sri L.R. 22, at 37.
APPEAL from the judgment of the Court of Appeal.
S. Sivarasa, P.C., with K. M. B. Ahamed, S. Mahenthiran, S. Sriskantha. U. A.Mawjooth, Sampath Welgampola and N. Y. Gunaseelan for plaintiff-appellant.
R. K. W. Goonesekera with N. R. Sivendran for defendant- respondent.
Cur. adv. vult.
October 6,1995.
FERNANDO, J.
An ex parte enjoining order was issued by the District Court ofColombo on 16.6.94 restraining the defendant-respondent-respondent (“the Defendant") from –
(i) importing into Sri Lanka and/or selling and/or dealing in SriLanka in mixers with the trade mark or trade name “SUMEET” orany other similar mark or name manufactured by any enterpriseother than the plaintiff-petitioner-appellant (the “plaintiff”) andcertain specified enterprises;
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advertising in Sri Lanka in a manner which would depict orgive the impression that the “SUMEET” kitchen mixers sold by thedefendant, which were not manufactured by the plaintiff or underits quality control, were manufactured by the plaintiff and theaforesaid enterprises;
from reproducing and/or adapting and/or communicating theartistic work in the mark “SUMEET” in the stylised and artisticmanner in which it is drawn with the letter “S" separately in capitaland other letters following it in simple script joined together (asdepicted in the annex P1 to the plaint).
Upon the defendant’s application, that enjoining order was setaside on 5.7.94. The Court of Appeal dismissed the plaintiff’sapplication for revision and leave to appeal. On appeal to this Court,the question is whether the enjoining order should have been setaside.
THE PLAINTIFF’S CASEThe plaintiff's case as presented in its plaint dated 15.6.94,supporting affidavit and annexes, may be summed up as follows:
In April 1970, Mrs. Mathur, the chairperson of the plaintiffCompany, was registered in India as the owner of the trade mark“SUMEET” in respect of “mixing machines (electric) for kitchen use";in January 1981 she assigned that trade mark to the plaintiff; in 1983,the plaintiff entered into two agreements with Power ControlAppliances (Kandia) – (“PCA”) – authorising PCA to manufacturemixers under the “SUMEET” trade mark. PCA entered into anagreement with the defendant in October 1983, by which it appointedthe defendant as sole agent in Sri Lanka for the importation,distribution and sale of “SUMEET" mixers; that agreement wasoperative from 1.1.84 for three years, and was to continue in forcethereafter unless terminated; under that agreement, the defendantimported “SUMEET” mixers from PCA and sold them in Sri Lanka; theagreement provided for termination by three months notice, whetherbefore or after 31.12.86, but no notice of termination was given; thatagreement referred to “SUMEET” as being a trade mark, andrequired the defendant not to use in connection with sales of the
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mixers any trade mark other than that used by PCA, and to notify anyviolation of any trade mark relating to the mixers, but it did not specifythe registered owner.
On 24.11.86, during the initial three-year period, the defendantapplied for registration in Sri Lanka of the trade mark “SUMEET’’ in itsown name, without notifying PCA or the plaintiff of this application; inFebruary 1988, the defendant obtained such registration, but neithernotified PCA nor terminated the agreement. Before that, on 29.7.86,the defendant instituted D.C. Colombo Case No. 2612/Spl againstThe Geekay Organisation Ltd., which was importing "SUMEET”mixers, manufactured by PCA, from an exporter in Hong Kong. Thedefendant’s position was that this was contrary to its “sole agency”agreement with PCA. It averred that it had been selling “SUMEET”mixers in Sri Lanka from 1980. On 18.1.89, judgment was delivereddismissing that action on the ground that the agreement with PCAonly prohibited PCA from selling “SUMEET” mixers to any one else inSri Lanka, but not to purchasers elsewhere, so that “SUMEET”mixers could lawfully be imported into Sri Lanka from suchpurchasers; the present defendant was ordered to pay damages forwrongfully obtaining an interim injunction.
There is no dispute that during the pendency of litigation in whichthe defendant was claiming rights derived from its agreement withPCA, the defendant obtained registration in Sri Lanka of the"SUMEET” mark; this was undoubtedly detrimental to PCA's interests.Learned Counsel for the defendant contended that at that time thedefendant believed that the “SUMEET” mark belonged to PCA, anddid not know that it was the plaintiff who was entitled to rights byregistration in India.
It would thus appear, prima facie, that mixers manufactured inIndia to which the “SUMEET” trade mark had been lawfully appliedwith the plaintiff’s authority, were being sold in the Sri Lankan marketat least from 1980, by the defendant as well as by others. On 10.2.92,relying on its registration of the “SUMEET” mark in Sri Lanka, thedefendant instituted another action, against Easwaran Brothersaverring that from 1979 it had been importing “SUMEET” mixers (forsale in Sri Lanka) manufactured in India by Sumeet Machines (Pvt)
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Ltd. (“SMPL”), from that Company. However, according to whatappears to be a copy of the certificate of incorporation of SMPL(annexed to the plaint), SMPL had been incorporated only in 1984. Itis not known whether the mixers which Easwaran Brothers wereimporting and selling were manufactured under the “SUMEET” markwith the plaintiff's authority.
The plaintiff was thus faced with three problems. SMPL wasmanufacturing mixers in India in violation of the rights which theplaintiff had (in India by virtue of its registration) and these werefinding their way into the Sri Lankan market through the defendant.The plaintiff’s “SUMEET” mark had been registered in Sri Lanka bythe defendant, without its knowledge. Finally, there was a possibilitythat products lawfully manufactured in India under the plaintiff’s“SUMEET” mark might be kept out of the Sri Lankan market.
Accordingly, the plaintiff instituted proceedings against SMPL in theHigh Court of Madras to restrain the manufacture, sale and export ofmixers under the “SUMEET” mark; and in February 1994 the SupremeCourt of India granted an interim injunction against SMPL. InDecember 1992 the plaintiff instituted action against the defendant in
C. Colombo Case No. 3662/Spl for the cancellation of thedefendant’s registration of "SUMEET”, as well as two other confusinglysimilar marks, "SUMMIT" and “SUMITH”; that action is still pending.Notwithstanding the order of the Indian Supreme Court, mixers with the“SUMEET” mark, apparently manufactured by SMPL in India, wereadvertised for sale by the defendant in February and March 1994.Consequently, the plaintiff had to institute this action alleging, inter alia,unfair competition by the defendant contrary to section 142 of theCode of Intellectual Property Act, No. 52 of 1979, (“the Code”). I
I must repeat that the above is a summary of the plaintiff’s case asappearing, prima facie, from the plaint and its annexes, and are notfindings of fact reached by this Court.
THE IMPUGNED ORDER
The District Court held that “the main reliefs claimed by the plaintiffin this action depend on the question whether the trade mark"SUMEET” should be declared null and void”; that relief had been
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sought in D.C. Colombo 3662/Spl, and therefore any enjoining ordershould have been sought in that action; that the advertisementsrelied on by the plaintiff “cannot be considered as sufficient to justifythe issue of an enjoining order in view of Case No. 3662/Spl which isstill pending”. Further, “at least as far [back as] 1992 the plaintiff wasaware that the defendant has been and is selling mixers with trademark "SUMEET” and therefore the plaintiff should not have made anapplication for enjoining order on the basis that the delay in issuinginterim injunction after inquiry would have been defeated if enjoiningorder is not issued” – meaning, apparently, that undue delay prior to1994 disentitled the plaintiff to an enjoining order in 1994. Finally, itwas stated that:
“The defendant's counsel also submitted that there was no unfaircompetition as the plaintiff is the registered owner of the trademark “SUMEET" in Sri Lanka. In support of this contention thedefendant’s counsel referred to Stassen Exports Ltd. v.Hebtulabhoy & Co. Ltd.1" He further submitted that the publicconcerned is [the] public of Sri Lanka and that the plaintiff has nogoodwill in Sri Lanka. The cited authority supports the plaintiff.”
The Court of Appeal agreed, and upheld that order.
THE ISSUES FOR DETERMINATIONSpecial leave to appeal was granted in respect of the followingquestions:
Whether the enjoining order should not have been dissolvedbecause a serious question of law arose as to whether theregistered owner of the mark “SUMEET” in Sri Lanka can beguilty of acts of unfair competition.
Whether, in any event, the District Court was right in dissolvingthe enjoining order on the ground of laches and/or that theplaintiff could have claimed the relief sought in the previousaction D.C. Colombo No. 3662/Spl.
Whether, in any event, the plaintiff was disentitled to an enjoiningorder as the only relief prayed for was a permanent injunction.
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THE“RABEA”CASEThe Court of Appeal quoted two passages from my judgment inStassen Exports Ltd. v. Hebtulabhoy & Co., Ltd., and observed:
“Thus by a parity of reasoning the registration of the trade mark“SUMEET" in India does not give the [plaintiff] protection againstthe [defendant] who is the owner of the mark in Sri Lanka. The[defendant] will continue to enjoy the protection afforded by theCode until such time the [defendant’s] registration is declared nulland void.”
However, these two passages, dealing, respectively, with the twodistinct topics of “infringement under section 117” and “Unfaircompetition under section 142” have not been quoted in full. Theyare as follows:
“No authority was cited which even suggested that the Code mighthave extra-territorial effect. It seems to me that the operation of therights and the prohibitions under the Code is confined to the limitsof Sri Lanka; and hence the use outside Sri Lanka of aregistered mark or an infringing sign would not be a violationof section 117(2)… The cases cited … are all consistent with thestatute giving protection to the registered owner against aninfringement occurring within the jurisdiction in which the mark isregistered, but not outside.”
“Further, in none of the authorities cited did a Court give the ownerof a mark or a name redress in respect of an act done, or intendedto be done, outside the territory of the State, within which that markor name enjoyed protection, whether by virtue of registration orotherwise. Hence any act of unfair competition in Egypt doesnot fall within the ambit of section 142.
[Emphasis has been added to the portions omitted in the Court ofAppeal judgment].
The question which arose in that case was whether the plaintiff, theregistered owner in Sri Lanka of the “RABEA” mark for tea, which it
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exported only to Saudi Arabia, was entitled to remedies – undersection 117 and/or section 142 – in respect of the defendant'sexports of tea to Egypt, under an allegedly infringing mark, to apurchaser who was the registered owner in Egypt of that mark. TheSaudi Arabian purchaser did not sell “RABEA” tea in Egypt. Thedecision in that case was that the protection which a Sri LankanCourt can give the owner of a trade mark, in respect of his rightsarising from registration, does not extend to an infringementcommitted outside Sri Lanka; that has no bearing on the verydifferent question whether a Sri Lankan Court can give relief to theowner of a trade mark registered in India for an act of unfaircompetition – not for breach of Indian registration rights – committedin Sri Lanka.
The second passage quoted followed an express finding thatthere had been no competition (in Saudi Arabia or Egypt) betweenthe goods of the plaintiff (who exported only to Saudi Arabia) and thedefendant (who exported only to Egypt); and, further, that there wasno element of unfairness, since the defendant’s exports were only tothe registered owner, in Egypt, of the allegedly infringing mark (andbecause neither the plaintiff nor the Saudi Arabian purchaser had anylegal right, business, reputation or goodwill in Egypt).
These two passages thus set out the conclusions that the SriLankan Courts did' not have jurisdiction in respect of infringementsand unfair competition in Egypt. Those conclusions cannot, either inlaw or in logic, be regarded as authority for the proposition that theSri Lankan Courts lack territorial jurisdiction in respect of unfaircompetition within Sri Lanka. As the learned trial Judge said, "thecited authority supports the plaintiff”.
Thus observations based on a misunderstanding of the “RABEA”case led the Court of Appeal to finally determine the fundamentalissue in this case, holding, in effect, that the plaintiff could not claimrelief on the basis of unfair competition “without first having theregistration of the trade mark registered by the [defendant] setaside”. No statutory provision of precedent justifying such aconclusion was cited in this Court or any of the Courts below; norwere the provisions of section 118(b) considered.
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UNFAIR COMPETITION(a) Nature and scopeSection 142 of the Code provides:
"142(1) Any act of competition contrary to honest practices inindustrial or commercial matters shall constitute an act of unfaircompetition.
142(2) Acts of unfair competition shall include the following:
(a) all acts of such a nature as to create confusion by anymeans whatsoever with the establishment, the goods, servicesor the industrial or commercial activities of a competitor.”
Section 142(2) goes on to define four more categories of “unfaircompetition”.
It is important to note that the rights of the proprietor of a trademark are defined in another Chapter in the same Part (i.e. Part V,which deals with “Marks, Trade Names and Unfair Competition”).Section 117(1) provides:
“Subject and without prejudice to other provisions of this Part, theregistered owner of a mark shall have the following exclusive rightsin relation to the mark …”
Section 118(b) provides:
“The registration of the mark shall not confer on its registeredowner the right to preclude third parties . . . (b) from using themark in relation to goods lawfully manufactured, imported, offeredfor sale, sold, used or stocked in Sri Lanka under that mark,provided that such goods have not undergone any change.”
While I refrain from expressing any view on the matter, it seemsarguable that the rights conferred by section 117 are not absolute,but are subject to sections 118 and 142; and that therefore even theregistered owner must not engage in unfair competition.
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Apart from that, what is meant by "contrary to honest practices inindustrial or commercial matters”? If this includes only conductcontrary to obligations imposed by statute law (criminal or civil) orcommon law (especially the law of delict), section 142 would seem tobe superfluous – because anyway such conduct is prohibited by law.It seems arguable, therefore, that section 142 mandates higherstandards of conduct – some norms of business ethics – and doesnot merely restate existing legal obligations. If so, what thosestandards of conduct are would be a matter for determination by thetrial Judge. It is also arguable that the prohibition against unfaircompetition in section 142(2) must be interpreted not only in thecontext of protecting intellectual property rights, but also ofsafeguarding the rights and interests of consumers – by enabling.consumers to know what exactly they are getting, without, forinstance, being deceived, confused or misled as to the manufacturer,the source, the origin, and the quality of goods or services. In the“RABEA” case, I referred to the following precedents:
Hexagon Pty Ltd. v. Australian Broadcasting Commission(2)
", . . 'unfair competition’ is an extension of the doctrine of passingoff, or, possibly, is a new and independent cause of action. Itconsists of misappropriation of what equitably belongs to acompetitor… in all these cases, English and American, the courthas found an element of fraud or inequitable conduct on the partof the defendant. The very description of the tort "unfaircompetition” leads one to a conclusion that there must besomething underhand or sharp in the conduct of the defendant.”
Dior v. Milton®
’’… this branch of the law … originated in the conscience, justiceand equity of common-law judges … It is a persuasive example ofthe law’s capacity for growth in response to the ethical, as well asthe economic needs of society. As a result of this background, thelegal concept of unfair competition has evolved as a broad andflexible doctrine with a capacity for further growth to meetchanging conditions …
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There is no complete list of the activities which constitute unfaircompetition. The general principle, however, evolved from all of thecases is that commercial unfairness will be restrained when itappears that there has been an appropriation, for the commercialadvantage of one person, of a benefit or property right belongingto another.”
Erven Warnink BV v. Townend & Sons(4) where reference was made tothe “premonitory hint” given by Lord Herschell in Reddaway v.Banham,(5) about misrepresenting one's goods as the goods ofsomeone else:
“I am unable to see why a man should be allowed in this way morethan in any other to deceive purchasers into the belief that they aregetting what they are not, and thus to filch the business of a rival.”
In that background it is premature for this Court to attempta definitive interpretation of section 142, and its relationship tosection 117; but it is quite clear that serious questions, of mixed factand law, arise for consideration in the District Court, with littleassistance from local precedents.
In regard to the facts, learned Counsel for the defendant was notable to dispute that the plaintiff had established a prima facie casethat mixers with the plaintiff's trade mark, lawfully applied in India,had been in the Sri Lankan market for many years, and in significantnumbers; that the defendant itself had been importing and sellingsuch mixers from about 1980, although it had incorrectly representedto the District Court, in another action, that it had been importingmixers from SMPL since 1979 (implying thereby that it had neverimported from the plaintiff); that while the defendant's agreement withPCA was subsisting, it procured the registration of the “SUMEET"mark in Sri Lanka in its own name, contrary to the interests of PCA,and of the plaintiff from whom PCA had derived its rights. Arguably,such conduct was not an “honest practice”, if not also a breach ofcontractual obligations; it was “something underhand or sharp”,whether or not it was a ground justifying annulment of the registration;and the sale of "SUMEET” mixers by the defendant in suchcircumstances could confuse or deceive consumers into the belief
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that they are getting what they are not, namely the product which thedefendant had previously been selling (i.e. the plaintiff's mixer).
(b) “The goods of a competitor”The Court of Appeal erred on the facts as well. Having mentionedthe argument that the plaintiff “has not sold “SUMEET” kitchen mixersdirectly or through any agents in this country”, it held that since theplaintiff “does not do any business either directly or through agents inthis country, its claim [that it had reputation and goodwill which wasbeing destroyed by the wrongful acts of the defendant] lackssubstance”. It also rejected the submission that the use of “SUMEET”was likely to mislead the public, upon the assumption that the SriLankan public “are only aware of the trade mark registered by the[defendant]”. Nowhere in its judgment did the Court of Appeal dealwith the real issues relevant to section 142(2) – whether the plaintiff’smixers had been, and were, in the Sri Lankan market; whether thosemixers had acquired a reputation in Sri Lanka, and thereby createdgoodwill for the plaintiff; and whether there was a likelihood of“confusion”, as between the goods of the defendant and those of theplaintiff, created by the acts of the defendant. Instead, the matter wasdealt with on the assumption that “unfair competition” was just onemore way of infringing the rights conferred by registration – ignoringthe alternative possibility that it may well be a broad and flexibledoctrine, capable of growing to meet the changing ethical needs ofsociety, especially by preventing the commercial unfairness whichwould result from the appropriation by one person of the benefitwhich equitably belongs to another.
Learned Counsel for the defendant submitted that the mixerspreviously sold were not the plaintiff’s goods; that the defendantbelieved that it was PCA which was entitled to rights by registration inIndia, and knew nothing of the plaintiff’s registration in India; and thatunfair competition, if any, was only in relation to PCA. It seems to methat the expression “the goods of a competitor”, occurring in anenactment concerning intellectual property, cannot be confined togoods which, considered only as corporeal property, are "owned" bya competitor; it includes goods in respect of which a competitor hasintellectual property rights. (Although attention was focussed only on
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the words "the goods”, it must be noted that section 142(2)(a) refersalso to “commercial activities”; hence even if the mixers were not “thegoods”, narrowly defined, of the plaintiff, yet the further questionarises whether what the plaintiff had been doing in relation to the SriLankan market constituted “commercial activities”, in respect ofwhich too confusion must not be created.) The mixers were, arguably,the plaintiff’s goods. Further, since section 142 does not makeintention or knowledge relevant, it would seem that the defendant’sbelief would make no difference, and it was sufficient if what wasdone was in fact “unfair” in relation to the real competitor, whoever hewas. But here the defendant was also aware that someone else hadrights in respect of the goods, even if it can be accepted that it haddealt for several years with “SUMEET" mixers, and had institutedlegal proceedings in 1986, without troubling to find out who hadthose rights.
I hold that the plaintiff had established, for the purposes of theenjoining order, a sufficient interest in “SUMEET” mixers previouslysold in the Sri Lankan market.
LACHESThe Court of Appeal held that the plaintiff was guilty of unduedelay because it knew in December 1992 (when it instituted CaseNo. 3662/Spl) that the defendant was importing mixers from SMPL,but nevertheless waited 18 months, until June 1994, to file this actionclaiming injunctive relief:
“The argument that the [plaintiff] considered it appropriate to seekan enjoining order after it vindicated its right against the rivalcompany in India is unconvincing and amounts to an admissionthat the [plaintiff] was in fact doubtful of its legal rights."
The institution of proceedings in India to vindicate its rights was aproper assertion of the plaintiff’s legal rights, and cannot reasonablybe regarded as acquiescence in the importation and sale of.“SUMEET” mixers by the defendant, or as a waiver of, or anadmission of doubt as to, its legal rights. So long as SMPL unlawfullymanufactured “SUMEET" mixers in India, sales of such mixers could
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take place not only to purchasers in Sri Lanka, but anywhere else inthe world. It was possible to try to deal, piecemeal, with theconsequences of such unlawful manufacture, by means of amultiplicity of legal proceedings in several jurisdictions outside India;but it was more reasonable, prudent and effective to try to deal oneshort, sharp and swift stroke at the root of the problem, by restrainingmanufacture in India – in the legitimate expectation that the infringingproduct could not thereafter reach other markets, in Sri Lanka orelsewhere. Thereupon, further legal proceedings in Sri Lanka shouldnot have become necessary. Thus there was neither undue norunexplained delay in instituting proceedings in Sri Lanka.
Indeed, in the absence of at least an interim ruling by the IndianCourts as to the ownership of the mark, a cause of action to restrainunfair competition might well have encountered a formidabledefence, namely, that the "SUMEET’ mark had been lawfully appliedto the mixers in India, and that the mixers had been lawfully importedinto Sri Lanka, and sold under that mark, in terms of section 118(b).
However, "SUMEET” mixers unlawfully manufactured in Indiacontinued to be imported and sold in Sri Lanka, despite the order ofthe Indian Courts. Within three or four months after the impugnedadvertisements appeared, this action was filed. The plaintiff was notguilty of laches. Its legitimate endeavours to assert and vindicate itsrights were thwarted by illegal conduct on the part of SMPL, which SriLankan Courts should not condone, if honest practices are to beencouraged.
I hold that there was no delay disentitling the plaintiff to injunctiverelief.
RELIEF BARRED BY DC COLOMBO 3662/SplHaving expressed views, prematurely, and without fullconsideration, that the claim based on unfair competition could notsucceed unless the defendant’s registration was first annulled, bothCourts below took the view that the application for injunction shouldhave been made in D.C. Colombo 3662/Spl, and that there was someidentity of pleading, in regard to unfair competition, in the two
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actions, and that therefore an enjoining order should not have beenissued in this action.
It would appear that “unfair competition” has some relevance tothe annulment of a registration. Section 130 of the Code empowersthe Court to declare a registration null and void “if such registration isprecluded under the provisions of sections 99 and 100”. Section 100provides:
“100(1) A mark shall not be registered ….
(b) which resembles, in such a way as to be likely to mislead thepublic, an unregistered mark used earlier in Sri Lanka by a thirdparty in connexion with identical or similar goods or services. Ifthe applicant is aware, or could not have been unaware, of suchuse; …
which infringes other third party rights or is contrary to theprovisions of Chapter XXIX relating to the prevention of unfaircompetition;
which is filed by the agent or representative of a third party whois the owner of such mark in another country, without theauthorization of such owner, unless the agent or representativejustifies his action.”
Although some of the ingredients may be common, the cause ofaction for annulment of a registration seems to be quite distinct fromthat in respect of unfair competition. Redress may thus be availablefor unfair competition even while the registration of the "confusing”mark remains, and without its annulment. For example, the plaintiffmight have been content to allow the defendant to enjoy the benefitsof its registration so long as it did not create confusion with theplaintiff’s goods – and in that way the defendant might haveregistration rights as against all others. These matters remain to bedecided.
I hold that the plaintiff’s pleadings in D.C. Colombo 3662/Spl, andits failure to seek an enjoining order in that case, did not disentitle itto an enjoining order in this case.
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OTHER OBJECTIONSWhen special leave to appeal was granted, learned President’sCounsel who then appeared for the defendant submitted that in anyevent the plaintiff was not entitled to an enjoining order because theonly substantive relief prayed for was a permanent injunction. Thiscontention cannot succeed. Section 179 read with section 142(3) ofthe Code suggests that the proper remedy, and sometimes the soleremedy, for unfair competition is. a permanent injunction. Further, inthis case the plaintiff also claimed damages for loss already incurredprior to action, as well as the annulment of the registration of twoother deceptively similar marks (“SUMITH” and “SAMIT”). Thiscontention was not considered by either of the Courts below, andwas not pursued at the hearing by learned Counsel for thedefendant.
However, adverting to the plaintiff’s claim for damages, the Courtof Appeal held, contrary to the fact, that the plaintiff had not pleadedthat it would suffer irreparable or continuing loss; that by claiming asum of Rs. 50 million as damages on account of loss alreadysuffered, it had thereby, quantified its loss; and that "once loss isquantified, the need for an enjoining order restraining the [defendant]does not arise". But the plaintiff did not attempt to quantify its futureloss (as in the precedents cited on behalf of the defendant). In anyevent, a claim for damages is not an inflexible bar to the grant ofinjunctive relief, and I would respectfully adopt the observations ofAmerasinghe, J. in Amerasekera v. Mitsui & Co. Ltd,(6), the question iswhether it is unjust, in all the circumstances, to confine a plaintiff todamages for the breach of contract.
CONCLUSIONSerious questions arise whether the defendant,
by registering the “SUMEET'’ mark in Sri Lanka in its own name,during the subsistence of its agreement with PCA, and withoutnotifying PCA, and
by importing, advertising and selling mixers in Sri Lanka, whichhad been manufactured in India with the “SUMEET” mark in violationof Courts orders in India,
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Elite Radio & Engineering Co., Ltd. (Fernando, J.)
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had acted contrary to honest practices in industrial and commercialmatters and/or in such a way so as to create confusion with goods inrespect of which the plaintiff had intellectual property rights; and theplaintiff has established a prima facie case in that respect. I hold thatthe learned trial Judge erred in dissolving the enjoining order on thegrounds that the plaintiff should first have obtained the cancellation ofthe defendant's registration, that the plaintiff was disentitled to relief,because of laches or delay, and that the only substantive reliefprayed for was a permanent injunction.
The enjoining order was wrongly set aside. It has taken more thanone year to restore it. The plaintiff must therefore be put back, asnearly as possible, in the position in which it would have been if theenjoining order had been allowed to continue until the interiminjunction inquiry was over – which, Counsel informed us, has not yethappened.
The appeal is allowed, and the judgment and orders of bothCourts below are set aside; the enjoining order made on 16.6.94 bythe District Court is restored. The defendant will on or before 10thNovember 1995 file in the District Court a statement giving fullparticulars (including cost and selling prices) as to its stock of mixerswith the “SUMEET'’ mark (and similar marks) as at 4.7.94, its importsand sales of such mixers between 4.7.94 and today, and its balancestock as at today. If the learned trial Judge allows the plaintiff'sapplication for an interim injunction, the defendant will also deposit tothe credit of this case a sum of 15% of the proceeds of sale of suchmixers sold between 4.7.94 and today, on account of profits earnedby such sales; this sum, and any interest accruing thereon, will beavailable for satisfaction or part-satisfaction of any judgment whichthe plaintiff may ultimately obtain. Any surplus will be refunded to thedefendant. It will be open to the District Court to permit thedefendant, in lieu of such deposit, to secure the payment of this sum,by means of a Bank guarantee or otherwise. The plaintiff will beentitled to costs in a sum of Rs. 50,000/- in all three Courts.
DHEERARATNE, J. -1 agree.
WIJETUNGA, J. -1 agree.
Appeal allowed.