In Suit For Passing Off, Plaintiff Required To Prove Figures Of Sale/ Advertisement Expenses To Establish Goodwill : Supreme Court

The Supreme Court has reiterated that in a suit for passing off, for establishing goodwill of the product, it is necessary for the plaintiff to prove not only the figures of sale of the product but also the expenditure incurred on promotion and advertisement of the product.

The Court was hearing an appeal against the decision of the High Court, who had stayed the execution of the decree passed by the Triall Court in favour of the appellant-plaintiff in a suit for copyright infringement and passing off, in the appeal filed by the respondent-defendant.

The Top Court observed that though the statement of sales, advertisement and sale promotion expenses certified by a Chartered Accountant, were exhibited by the plaintiff in the suit before the Trial Court, the Chartered Accountant was not examined to prove the statements. The Court said that though the statements may constitute a material for examining whether a prima facie case was made out against the opposite party by the plaintiff, however, at the time of the final hearing of the suit, the figures must be proved in a manner known to law.

Since the plaintiff had failed to establish reputation/goodwill in the passing-­off action before the Trial Court, the Supreme Court ruled the High Court was justified in staying the decree of the Trial Court by which injunction was granted for the action of passing­ off.

“Prima facie, it appears to us that at the time of the final hearing of the suit, it was incumbent upon the appellant-plaintiff to actually prove the figures of sales and expenditure incurred on the advertising and promotion of the product. Only by producing the statements without proving the contents thereof, the appellant could not have established its reputation or goodwill in connection with the goods in question. According to the witness, the statements produced were signed by a Chartered Accountant Mr. Natesh. This aspect surely makes out a prima facie case for grant of stay to the execution of the decree in favour of the respondent as regards the passing-off action,” the bench of Justices Abhay S. Oka and Rajesh Bindal said.

While considering the stay granted by the High Court qua the decree of copyright infringement, the court observed that the respondent-defendant had applied to the Commissioner, State Excise for permission to use the impugned label. Though the plaintiff had taken objection to the use of the labels by defendant, the objections were later withdrawn on 25^th April 2016 and the suit was filed on 4^th October 2017.

 Acquiescence is a defence available in action for the infringement of copyright

Thus, while retreating that acquiescence is a defence available in an action for infringement of copyright, the court said that a prima facie case of acquiescence by the plaintiff-appellant was made out in favour of the defendant-respondent.

“Therefore, it is very difficult to find fault with the impugned interim order of the High Court which will be operative till the disposal of the substantive appeal preferred by the respondent,” said the court while upholding the order of the High Court.

The top court was also dismayed by the disturbing conduct of the plaintiff’s counsel while the trial was being conducted in the suit. During the course of the cross-examination of the witness in the suit, the Trial Court had recorded that the plaintiff’s counsel was taking objections for each and every question. Accordingly, looking at the persistent objections raised by the advocate, the Trial Court was required to record a substantial part of the cross-examination in question-and answer form which consumed a lot of time of the Trial Court, the Supreme Court observed.

The Supreme Court thus remarked:

“If we peruse the data available on the National Judicial Data Grid, we find that there is a huge pendency of suits in the Trial Courts in the State of Maharashtra. If the members of the Bar do not cooperate with the Trial Courts, it will be very difficult for our Courts to deal with the huge arrears. While a trial is being conducted, the members of the Bar are expected to act as officers of the Court. They are expected to conduct themselves in a reasonable and fair manner. The members of the Bar must remember that fairness is a hallmark of great advocacy. If the advocates start objecting to every question asked in the cross-examination, the trial cannot go on smoothly. The trial gets delayed. In the facts of the case, looking at the persistent objections raised by the learned advocate, the Court was required to record a substantial part of the cross-examination in question-and-answer form which consumed a lot of time of the Court.”

Background facts

The appellant-plaintiff, Brihan Karan Sugar Syndicate Private Limited, is engaged in selling country liquor with the label “Tango Punch”, over which it holds copyright. The plaintiff filed a suit for copyright infringement and passing off against the respondent-defendant, Yashwantrao Mohite Krushna Sahakari Sakhar Karkhana, who is engaged in selling country liquor with the label “Two Punch Premium”. The plaintiff sought to restrain the defendant from infringing the former’s copyright in its artistic label.

The Trial Judge found that the labels used by the defendant on the liquor bottles sold by it were deceptively similar to the labels used by the plaintiff.

The Trial Judge further held that the defendant, by reproducing a substantial part of the label of the plaintiff, had infringed its copyright. Hence, the Trial Court held that the plaintiff was entitled to a permanent injunction on both counts, i.e., infringement of copyright and passing­ off.

In the appeal filed by the defendant before the Bombay High Court, the Single Judge, vide order dated 23^rd June 2021, stayed the execution and operation of the decree till the final disposal of the appeal. Against this, the plaintiff-appellant filed an appeal before the Supreme Court.

The Supreme Court, while upholding the order of the High Court, observed that one of the relevant factors which was considered by the High Court was that in the suit filed by the plaintiff-appellant, the relief of temporary injunction was denied to it. The said relief was denied by the Trial Court by order dated 12^th April 2019, which was confirmed by the High Court by order dated 7^th January 2020 in appeal.

“Thus, during the pendency of the suit, there was no prohibitory order operating in favour of the appellant. This aspect was certainly relevant when the Court decided the prayer for a grant of a stay of the execution of the decree pending a substantive appeal,” the top court said.

Case Title: Brihan Karan Sugar Syndicate Private Limited vs Yashwantrao Mohite Krushna Sahakari Sakhar Karkhana

Citation : 2023 LiveLaw (SC) 784

Counsel for the Appellant: Mr. Rahul Chitnis, Adv. Mr. Dinesh Y. Mali, Adv. Mr. Kamlesh Y. Mali, Adv. Mr. Yogesh K. Ahirrao, Adv. Mr. Chander Shekhar Ashri, AOR

Counsel for the Respondent: Mr. Suhaskumar Kadam, Adv. Mr. Prashant Kadam, Adv. For M/S. Black & White Solicitors, AOR

Copyright Act, 1957; Copyright Infringement; Passing-off action: The Supreme Court has reiterated that in a suit for passing off, for establishing goodwill of the product, it is necessary for the plaintiff to prove not only the figures of sale of the product but also the expenditure incurred on promotion and advertisement of the product.

The top court observed that though the statement of sales, advertisement and sale promotion expenses certified by a Chartered Accountant, were exhibited by the plaintiff in the suit before the Trial Court, the Chartered Accountant was not examined to prove the statements. The court said that though the statements may constitute a material for examining whether a prima facie case was made out against the opposite party by the plaintiff, however, at the time of the final hearing of the suit, the figures must be proved in a manner known to law.

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