KHADI & VILLAGE INDUSTRIES COMMISSION v. RAMAN GUPTA AND OTHERS

#CaseSummary .

Submitted by :

Shivangi Banerjee, Intern_CIPRA.

Date of decision: 26.06.2022.

Overview:

In the present case, the ‘Khadi & Village Industries Commission’ (hereinafter as plaintiff) had filed a suit seeking permanent injunction restraining infringement of trademark, passing off, rendition of accounts, damages, delivery up, etc. to prevent One Raman Gupta (hereinafter Defendant ) from infringing the plaintiff’s registered mark ‘KHADI’ and affecting their goodwill. The plaintiff first impleaded the Defendant under Order VI Rule 17 r/w Order I Rule 10 r/w Section 151 of CPC on 4th March 2022.

The plaintiff is a registered statutory body established by the Khadi and Village Industries Commission Act of 1956 and the registered proprietor of the mark ‘KHADI’ since 1956. The plaintiff also owns the variants of the mark in several classes, in Hindi and English, both in the artistic and logo form. Furthermore, the Plaintiff’s trademarks are registered in various other jurisdictions/regions, including but not limited to United Kingdom, China, Australia, USA, New Zealand, Bhutan, Mexico, etc., making KHADI a brand with an exceptional global repute. The plaintiff sells over 50,000 products of more than 500 varieties ranging from food products, grocery products, and much more. More recently, the company started trading medical products such as hand sanitizers, soaps, etc. as well in aid of the needs of the pandemic. The Defendant of the suit is the owner of the brand ‘KHADI BY HERITAGE’, a company claiming to be the manufacturers of Organic, Natural & Eco-Friendly Products. The Defendants, through their website, promote and sell various products, especially products for use in the healthcare sector such as PPE Kits, hand sanitizers, and fireballs.

Facts of the case

The plaintiff’s suit was against the defendant’s brand ‘KHADI BY HERITAGE’ under which the defendant was selling beauty- care products, Hand Sanitizers, PPE Kits, etc., products that are also sold under by the plaintiff. It was asserted that the defendant company ‘KHADI BY HERITAGE’ was promptly stealing the plaintiff’s well established brand KHADI’s mark by producing deceptively similar products, websites, trademark and even the artistic work to sponge the plaintiff brand’s globally established goodwill. One of the popular means in which the plaintiff operates business is through the Company’s registered websites- ‘www.kviconline.gov.in’, ‘www.Khadiindia.gov.in, ‘https://www.kviconline.gov.in/khadimask/’ and the latest, ‘www.ekhadiindia.com’. Similarly, the defendant brand ‘KHADI BY HERITAGE’ also hosts websites for the operation of business under the domain name of ‘https://khadi-by-heritage.business.site/’,among others. The Defendants, through their website, amongst other products, sell medical products that are also available on the plaintiff’s website. It was asserted by the plaintiff company that the use of their well-known mark in such a manner constitutes violation of their statutory and common law rights and invites suspicion about the product quality of their brand.

Issues

The Delhi High Court examined the following issues:-

  1. Whether the Defendant’s mark infringed the Plaintiff’s trademark despite being registered and non-identical
  2. Whether an ex parte decree can be passed against the Defendant
  3. Whether the plaintiff could claim an injunction to stop the defendant company from selling its products

Observation

  1. On the first hearing of this case, the Hon’ble High Court of Delhi observed that the present case was not a case of mere infringement but is a possible threat to public health. Owing to KHADI’s revenue, global promotion, product quality and all-around goodwill, the brand has gained the faith of a massive number of people. In the pandemic, the plaintiff’s consumer base also relied upon their healthcare products for safety. Given that the defendant was selling the same medical products such as PPE kits, hand sanitizers and fireballs, without any quality control and supervision with not only the word ‘KHADI’ but also their registered ‘Charkha logo’, it was clear that the act was unlawful. Moreover, the defendant’s websites’ domain names along with the product design were similar enough to lead the consumers to believe that the Defendants are related or associated with or sponsored by the Plaintiff. The importance of protecting the mark and the Charkha logo is also highlighted in the cases of ‘Khadi Village and Industries Commission v. Roopika Rastogi & [CS (COMM) 146/2021], and ‘Khadi and Village Industries Commission v. M/s. JBMR Enterprises [CS (COMM) 284/2021)].
  2. After the first hearing, summons was issued for the defendants as no representative of the defendant was present in the previous proceeding. Despite multiple emails and other correspondences, defendants once again failed to appear for the final hearing. The second issue decided by the court was whether ex parte evidence by means of affidavits would be required for the decree to be passed. The single judge relied on Disney Enterprises Inc. & Anr. v. Balraj Muttneja &Ors[1]., Oliver Bernd Freier GMBH & CO. KG v. Jaikara Apparels and Ors[2]., and United Coffee House v. Raghav Kalra and Ors.[3], and stated that when there is sufficient material in front of the court to allow the claim of the plaintiff, the decree can be passed without putting the ex-parte evidence on record.

Held

  • Regarding infringement, it was concluded by the Hon’ble court that the defendant’s mark was purposefully infringing, misleading and could adversely impact public health and tarnish the reputation and market name of the plaintiff.
  • A decree of permanent injunction has been granted and the defendant was prohibited from manufacturing, selling, offering for sale any goods or services under the impugned mark and logo ‘KHADI BY HERITAGE’ or any mark deceptively similar to KHADI. The domain names have been directed to be transferred to the plaintiff and the defendant’s mark shall be rejected by the Registrar of Trademarks.
  • Since the infringement was mala fide in nature, damages to the tune of Rs. 10 lakhs and costs of Rs. 2 lakhs are awarded in favour of the Plaintiff.

Conclusion

In the present case, the High court of Delhi has laid special emphasis on the ‘medicinal’ aspect of the products in question. It is observed that courts tend to adopt a stricter test for assessing infringement of products that might pose a threat to the health of the general public as compared to other items. It is to be noted that quality control and related factors that make the plaintiff’s product reliable were also given due consideration in the case. Finally, sufficient emphasis has been laid on a global reach of the plaintiff’s brand.

[1] CS (OS) 3466/2012

[2] MANU / DE / 1247 / 2014

[3] 2013 (55) PTC 414 (Del);  MANU/DE/2714/2022

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