On September 14, 2023, the Supreme Court issued a judgment in the case of Brihan Karan Sugar Syndicate Private Limited v. Yashwantrao Mohite Krushna Sahakari Sakhar Karkhana. This case addressed matters concerning passing off and acquiescence, emphasizing the ongoing litigation in the Trial Courts within the State of Maharashtra. The Court also encouraged the members of the Bar to collaborate with the Trial Courts. This case has brought forth crucial aspects warranting further deliberation and discourse.
The Factual Matrix
The case stems from an October 2017 legal dispute regarding copyright infringement and passing off relating to labels and artwork bearing the title ‘TANGO PUNCH,’ affixed by the Plaintiffs onto bottles of country liquor. This matter involves an appeal contesting a decision from the High Court of Judicature at Bombay, which temporarily halted the enforcement of the injunction issued by the District Court. The core issue revolves around the appellant (initially the plaintiff) using “Tango Punch” for the sale of liquor, while the respondent (originally the defendant) employs “Two Punch Premium” for similar products. The appellant argued that the respondent’s use constituted an infringement of their copyright in the artistic label featured on the liquor bottles. Consequently, they sought a permanent injunction against the respondent. However, the High Court intervened by placing a temporary hold on this order, leading to the Supreme Court’s consideration of the matter at hand.
Spotlight on Crucial Elements of the Verdict
Employing the Triple Test
In cases of passing off, the Court reiterated the significance of the triple test – namely, assessing goodwill, establishing misrepresentation, and demonstrating damage. It emphasized that if a plaintiff cannot establish goodwill, there is no necessity to further investigate other aspects of the passing-off action. This point deserves special attention. In numerous instances, passing off claims are a customary feature of trademark disputes. Nevertheless, it is frequently noted that the crucial matter of establishing goodwill or reputation, which forms the bedrock of such claims, is not given the thorough consideration it warrants. The current case serves as a compelling reminder to treat this question with the gravity it deserves. Additionally, the Court underscored, “For establishing goodwill of the product, it was necessary for the appellant to prove not only the figures of sale of the product but also the expenditure incurred on promotion and advertisement of the product.”
Reaffirming the Acquiescence Defence
In relation to the matter of acquiescence, the Court firmly restated its acknowledgment of acquiescence as a legitimate defense against copyright infringement. Drawing on the precedent set by the Power Control Appliances v. Sumeet Machines Pvt. Ltdcase, the Court interpreted the concept of acquiescence expansively, extending its application beyond mere rights over a mark. It emphasized that “[…] acquiescence is a course of conduct inconsistent with the claim for exclusive rights, and it applies to positive acts and not merely silence or inaction such as is involved in laches.” Within this context, the Court viewed the appellant’s decision to retract its objection to the respondent’s request for authorization to use ‘Two Punch Premium’ labels, as submitted to the State Excise Commissioner, as a manifestation of acquiescence.
Legal Proof of Statements a Necessity
The Court emphasized that in the context of a passing-off suit and its application for a temporary injunction, the inclusion of signed account statements by a Chartered Accountant on the part of the plaintiff may serve to establish a preliminary case. However, it was made clear that substantiated legal evidence supporting these figures would be necessary during the ultimate hearing.
Rebuking the Excessive Questioning
The Court explicitly recognized the observation made by the trial Court regarding the objections raised by the plaintiff’s advocate, who interjected with objections to nearly every question during cross-examination. While the current order does not specify the exact details of the objections, questions, or circumstances prompting this notation by the trial Court, it did underscore that such a practice (excessive objections without valid grounds) renders it impractical for the Court to document each objection, leading to unnecessary delays in the trial proceedings. Within this framework, the Court, considering the substantial backlog of cases in Maharashtra’s Trial Courts, emphasized that legal practitioners are anticipated to serve as officers of the Court. They are further expected to conduct themselves in a manner that is both reasonable and impartial. Consequently, the Court implored advocates to collaborate with the trial courts in a spirit of cooperation.
Scrutinizing The Astuteness of the Court’s Observations
Probing the Goodwill Aspect of the Triple Test
The Supreme Court confronts a summary decision overturning a post-trial ruling against the Plaintiffs in this case. The challenge lies in the striking resemblance of the rival label to that of the Plaintiffs, making proving similarity a daunting task. In response, the Court shifts its focus to specific factual details critical in a passing-off action. It emphasizes the paramount importance of prior use in such inquiries as established in S. Syed Mohideen vs P. Sulochana Bai, highlighting its safeguarding of business goodwill. The Court asserts that goodwill is not exclusively contingent on the duration of use, citing a statement from the Satyam Infoway v. Siffynet Solutions case of May 2004, which posits that goodwill can also be established through a claimant’s sales volume under a trademark and the extent of its advertising endeavors. However, this reliance on Satyam overlooks the more comprehensive treatment of the matter in the pre-Satyam ruling of May 2001’s Uniply Industries v. Unicorn Plywood, which underscored caution in granting injunctions when priority of use is at stake and provided additional factors unaddressed by Satyam. In light of subsequent developments, any approach limiting goodwill exclusively to sales and advertising volumes may be inadequate. Consequently, concerns arise over the Supreme Court’s adoption of such a restricted inquiry.
Determining the Acquiescence Defence
In the Brihan Karan case, a key aspect is the defense of acquiescence in intellectual property infringement, notably established as a prima facie finding by the Plaintiffs regarding the Defendants’ label use. This decision stands out due to its contrast with previous attempts by the Supreme Court in this realm. The modern understanding of acquiescence, as shaped by the Power Control Appliances v. Sumeet Machines case in 1994, emphasizes the claimant’s explicit or implied consent and their intentional conduct. In this context, acquiescence can stem from both affirmative acts and the claimant’s deliberate inaction. The Brihan Karan facts encapsulate both elements, with objections to product labels followed by conditional withdrawals. The Supreme Court deems this a prima facie case of acquiescence, solidifying the Plaintiffs’ position in the matter.
The Controversy Surrounding Appellate Interference
The approach taken by the Supreme Court towards the material it considers is highly questionable. It’s crucial to note the infrequency of the appellate profile before the Supreme Court in this case, where Brihan Karan reached the Court as an appeal against a summary stay order, but with the underlying judgment issued post-trial. The Court typically follows well-established standards for appellate review when dealing with prima facie opinions. However, when sitting in appeal for an intellectual property case with a full judgment and evidence, the protocol becomes less defined due to the rarity of such occurrences. In such instances, the Court has generally deferred to the first instance court and refrained from finding any initial errors, as established in cases including Manmohan Garg v. M/S Radha Krishna Narayan Das and Neon Laboratories Ltd v. Medical Technologies Ltd. & Ors. Yet, the Supreme Court diverges from this practice, particularly in its assessment of the Plaintiffs’ failure to present witness evidence from their certified accountants, which it deems as a lack of proof for their goodwill claim, unlike what was established in the case of Skyline Education Institute v. S.L. Vaswani & Anr. Moreover, the Court’s standard of review, especially regarding goodwill and acquiescence issues, deviates from established norms, as it relies heavily on its own prima facie satisfaction rather than meeting established criteria for appellate interference in intellectual property cases. This departure from accepted standards raises concerns about the Court’s decision-making process.
The Dilemma of Interim Measures vs. Trial Proceedings
The Brihan Karan case raises a crucial issue concerning the conduct of the Osmanabad trial. The Supreme Court acknowledges the challenges posed by a backlog of cases in Maharashtra’s Trial Courts and emphasizes the importance of cooperation from legal practitioners to ensure timely proceedings. While the Plaintiffs’ advocate may have contributed to delays through vigorous cross-examination, significant delays mark the overall timeline of the case. Despite the Court’s stern rhetoric on the matter of trial delays, illustrated in the cases of Aristo Pharmaceuticals Limited v. Wockhardt Limited, Shree Vardhman Rice and General Mills v. Amar Singh Chawalwala, and Bajaj Auto Ltd v. TVS Motor Company Ltd, its recent shift towards intervening in intellectual property cases at the interim stage presents a trade-off between interim measures and timely trials. In this context, Brihan Karan‘s ruling falls into the category of cases where the Court’s interference may prolong the resolution process without providing substantial closure. This situation grants appellate courts a degree of latitude in interim decisions, potentially leading to widespread and unregulated interference. Ultimately, this represents a suboptimal trade-off for the parties involved and could lead to extended litigation.
The Supreme Court, on September 14, aligned with the Bombay High Court, summarily overturning the Osmanabad decision on appeal. It delivered two key findings against the Plaintiffs in a concise manner. Firstly, it asserted that the Plaintiffs’ passing off claim relied on demonstrating goodwill in their label and trademark, a requirement it deemed unmet. Secondly, it determined that the Plaintiffs’ actions included a clear act of acquiescence to the Defendants’ use of a similar label, effectively dismissing the copyright infringement claim. While the case doesn’t introduce new legal principles, it underscores the importance of maintaining efficiency and professionalism in the litigation process. Overall, the Brihan Karan decision leaves much to be desired, raising questions about the value of the Supreme Court’s involvement in intellectual property cases.