Goodwill Acquired After 'Terminus Ad Quem' Inconsequential: Delhi HC Declines Interim Relief To 'Khadi' In Trademark Infringement Suit

The Delhi High Court has refused to pass interlocutory injunction order against two entities from using “Girdhar Khadi” and “BR Khadi” marks in a trademark suit filed by Khadi and Village Industries Commission.

Justice C Hari Shankar however directed the two manufacturers to maintain accounts of the manufacture, stock and sales of their products bearing the two marks and file accounts with the court every three months, pending disposal of the suit.

Though the order was passed on December 26 during the winter vacations, Justice Shankar clarified that the judgment shall take effect only on January 03, when the court will reopen.

The court observed that there was no prima facie basis to hold that the registration of “Girdhar Khadi” mark by Girdhar Industries, the defendant manufacturing soap bars and detergent powder, was invalid. It added that no case of passing off could prima facie lie against the said defendant either.

“There is no prima facie evidence, on record, of the plaintiff's mark KHADI having acquired goodwill or reputation, for soaps, prior to 2001, from which date the defendants claim user of the GIRDHAR KHADI mark, or even prior to 2005, when the GIRDHAR KHADI mark was registered in the plaintiff's favour,” the court said.

It added that the plaintiff, Khadi Industries, prima facie was unable to demonstrate goodwill and reputation commanded by the KHADI mark for soaps or detergents, prior to 2005, by which time at least the GIRDHAR KHADI mark was adopted by the Girdhar Industries.

“No prima facie case of passing off has, therefore, been made out by the plaintiff against the defendants,” the court said.

Justice Shankar ruled that the existence of pre-existing goodwill and reputation, prior to the commencement of user of the impugned marked by the defendant, is an indispensable sine qua non for a passing off action to legitimately lie.

“The terminus ad quem, by which date the plaintiff has to prove the acquisition of the requisite goodwill and reputation for a plea of passing off to succeed, is the date of commencement, by the defendant, of the rival mark. Goodwill or reputation acquired by the plaintiff, in the asserted mark, after that date, is of no consequence,” the court said.

Furthermore, the court said that Khadi Industries' assertion, that Girdhar Industries must have been aware of existing KHADI mark registration when it applied for registration of GIRDHAR KHADI mark in the same class, did not suffice to characterize the registration of latter's mark as having been obtained in bad faith. 

“In the absence of a prima facie finding of invalidity of Defendant 1's registration of the trade mark GIRDHAR KHADI, no action for infringement of the mark can lie at the instance of the plaintiff, which is a later registrant of the mark KHADI,” the court said.

It added, “Even if it were to be assumed that the defendants were using the BR KHADI mark, no prima facie case for injunction against such use can be said to exist in the plaintiff's favour, as the findings hereinabove, apropos the GIRDHAR KHADI mark, would – except for the finding regarding suppression of fact – apply mutatis mutandis to the prayer for injuncting use of the BR KHADI mark as well.”

Counsel for Plaintiff: Ms. Shwetasree Majumder, Ms. Diva Arora, Ms. Devyani Nath and Ms. Archita Nigam, Advs

Counsel for Defendants: Mr. Shrawan Bansal and Mr. Kankaran Singh, Advs

Title: KHADI AND VILLAGE INDUSTRIES COMMISSION v. GIRDHAR INDUSTRIES AND ANR.

Citation: 2024 LiveLaw (Del) 1

Click Here To Read Order