Selling Counterfeit Goods Is As Much A Tort Of Infringement Or Passing Off As Manufacturing The Goods: Delhi High Court

The Delhi High Court recently decreed a suit in favour of New Balance Athletics Inc., holding that dealing in counterfeit goods was sufficient to constitute infringement/passing off.

The suit had been filed by the plaintiff as proprietor of registered marks ‘NEW BALANCE’ and ‘NB’, under which it was selling footwear and readymade clothing in over 120 countries, including India.

It alleged that the defendants were selling counterfeit readymade garments using ‘NEW BALANCE’ and ‘NB’ marks. To support its contention, the plaintiff placed on record certain screenshots from e-commerce platforms Indiamart and Myntra.

With a view to establish its reach and reputation, the plaintiff asserted before the Court that it was using the marks ‘NEW BALANCE’ and ‘NB’ in India since 1986, adding further that it had subsidiaries in multiple countries, operated a website and had social media presence.

It was stated that plaintiff had spent 244 million over advertising in 2020 and earned 2.7 billion the same year. It also placed on record prior orders of the Court to show that its marks had earlier been protected from infringement and passing off.

During the pendency of the suit, a Local Commissioner (LC) was appointed by the Court, whose report indicated that defendant No.1 was engaged in making and selling of counterfeit goods.

The LC Report further showed that defendant No.1 had obtained the counterfeit goods bearing plaintiff’s mark from defendant No.3, who was manufacturing them in his factory.

During the course of proceedings before Justice C. Hari Shankar, Advocate Harsh Vardhan Singh argued that defendant No.1 had merely dealt with the counterfeit goods procured from defendant No.3 and was not conscious of any violation of plaintiff’s registered trademarks.

The Court rejected this contention, observing: “… sale of goods bearing deceptively similar all counterfeit marks is as much a tort of infringement, or passing off, manufacture of the goods oneself.”

With regard to counterfeiting, Justice Shankar reiterated the view taken earlier in Louis Vuitton Malletier v. Capital General Store that “…counterfeiting is a serious social evil, which erodes brand value which may have been gained over a long period of time and has, therefore, to be dealt with strictly.”

Noting that allegations in the plaint had not been traversed on affidavit by the defendants, the suit was decreed under Order 8 Rule 10 CPC and a permanent injunction granted in plaintiff’s favour.

The defendants were directed to pay actual costs (to be determined by concerned Taxation Officer) as well as to deliver goods seized by the LC to the plaintiff.

Mr. Dushyant Mahant, Mr. Urfee Roomi, Ms. Janaki Arun, Mr. Ritesh Kumar and Mr. Anubhav Chhabra, Advocates appeared for Plaintiff

Mr. Harsh Vardhan Singh, Advocate appeared for Defendant No.1

Mr. Animesh Rastogi, Advocate appeared for Defendant No.3

Case Title: New Balance Athletics Inc. v. Salman Khan & Anr.

Citation: 2023 LiveLaw (Del) 994

Click Here To Read/Download Judgment