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CASE NO.: Appeal (civil) 3415-3420  of  2001

PETITIONER: UNIPLY INDUSTRIES LTD.

       Vs.

RESPONDENT: UNICORN PLYWOOD PVT. LTD. & ORS.

DATE OF JUDGMENT:       01/05/2001

BENCH: S. Rajendra Babu & K.G. Balakrishnan

JUDGMENT:

J  U  D  G  M  E  N  T RAJENDRA BABU,  J. :

       Leave granted. L...I...T.......T.......T.......T.......T.......T.......T..J

   A  suit  was  filed by the  appellant  in  C.S.No.705/99 stating  that it carries on business in all kinds of Quality Plywood,  Laminates,  Block  Boards  of  various  types   by claiming  that it was established in the year 1996;  that it has been pioneer in marketing international standard plywood in  innovative ways;  that it is the sole selling agent  and has  distributorship and selling agency from various foreign dealers;   that it has associates and business partners  all over the world;  that the said goods are sold with the trade marks UNIPLY, UNIBOARD, and UNIWUD and so on the basis of  which, it claims to have acquired a very high reputation amongst  the  Plywood and Wood Product Traders,  Architects, Interior Decorators, Carpenters and users of plywood, boards and  laminates;   that it pays a very high tax both  on  the sale  tax side and on the income tax side;  that it has  the registered  office  at  Tamil  Nadu and  branch  offices  at Kerala,  Karnataka  and Andhra Pradesh and has  distributors and agents in Maharashtra, Gujarat, Delhi and Calcutta.  The appellant  claims  to be the proprietor of the  trade  marks UNIPLY  and UNIBOARD and has extensively advertised  the same  in various media.  In July 1999 the appellant came  to know  that  the  respondents  have copied  the  trade  marks UNIPLY   and   UNIBOARD  and   have  been  selling   and distributing the same in the city of Chennai and claimed for grant  of  an injunction with an application  for  temporary injunction.   The trial court granted an ex parte  temporary injunction by order made on September 10, 1999.

   The  respondents also filed a suit in C.S.  No.  804  of 1999  against  the  appellant  claiming that  they  are  the manufacturers  of plywood and also selling the same with the trade  marks UNIPLY UNIBOARD and UNIDOOR;  that it has been  registered as a small scale industry in the year 1993; that  advertisements  had been made in 1993  containing  the above  trade  marks in newspapers and souvenirs or  dairies;

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that  they have been continuously using the trade marks from September 14, 1993;  and that the appellant is making use of the  trade  mark  used  by  the  respondents.   However,  no temporary   injunction   was  granted  in  favour   of   the respondents.   Thereafter  in the suit of the  appellant  an order was made on November 2, 1999 in the following terms :-

   The records filed by the plaintiff (appellant) indicate that  they  were using the trade marks Uniply  and  Uniboard anterior   in  point  of   time.   Although  the  Defendants (respondents)  had  filed  records to show  that  there  was inauguration  and  incorporation of the Company as early  as 1993, no record filed to show that it was manufactured since 1993.   As  adverted to, the invoices and bills produced  by the  Defendants  (respondents)  only  carried  the  name  as Commercial  Plywoods  and  the  brand   name  has  not  been furnished.   On  the  other  hand, the  invoices  and  bills produced  on the side of the Plaintiff (appellant), in  most of  the  documents the brand name finds a place.  The  first Defendant (respondent) has obtained excise registration only in  1997 and the trade mark application filed by him is only with  reference  to class 20.  On the other hand, the  trade mark  application  filed by the plaintiff (appellant)  dated 14.1.96  and it relates to the goods covered under Class 19. The Plaintiff (appellant) had also filed the turnover of the business  for number of years and the plaintiff  (appellant) has contributed Rs.  282.53 lakhs towards sales tax and also Rs.   58.85 lakhs towards income tax.  I am of the view that the Defendants (respondents) have not made a case to suspend the  Order  of  interim injunction already  granted  to  the plaintiff   (appellant)   on  10.9.99.    The   balance   of convenience  is  also  only  in   favour  of  the  Plaintiff (appellant)  and, hence, there is no valid reason to suspend the said Order.

   However,  by  an  order made on November 29,  1999,  the trial  court  took  the  view   that  the  respondents  have established  their factory since 1993-94 and have been using their  stickers  since  1994 and up to date they  have  been using  the trade marks by roller printing/screen printing on the  board  itself  and  it cannot be  removed.   While  the appellant  had only affixed stickers UNIPLY, UNIBOARD in the plywood;   thus, there is a strong circumstance to show that even prior to the use by the appellant, the respondents have been  using  the trade marks in question.  The  trial  court held  that  there  is prima facie material to  come  to  the conclusion  that the respondents alone had been using  these trade  marks  since 1993 and the appellant had entered  into trade  only  from  1996.  On that basis, it  held  that  the appellant has no prima facie case and balance of convenience is  not in their favour, while the respondents alone have  a prima  facie case and also the balance of convenience is  in their  favour.   On appeal against this order, the  Division Bench of the High Court held that the material placed before them   established   that   the    respondents   have   been manufacturing  the  products at least from the beginning  of 1994.   On the question of carrying on business in the State of  Kerala  it  was  noticed that  in  two  Malayalam  daily newspapers and in two souvenirs or brochures, advertisements have  been made in the years 1993 and 1995 and the appellant had not placed any material to show that inspite of the fact that  such advertisements had been made in those  respective years  the  said  trade  marks had not been  used  till  the appellant  started  using  the same.  The  High  Court  also

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relied  upon certain invoices and declarations filed  before the  excise  authorities and certain letters  from  dealers. The   High  Court  held  that   the  advertisement  of   the respondents  was only in relation to furniture and it  could not  be  said  that  the trade mark was being  used  by  the appellant in relation to plywood, boards, etc.  and accepted the  finding recorded by the trial court on the question  of prior  user  and  held  that   prima  facie  case  has  been established  to show that the respondents had made prior use of the trade marks in question.

   In attacking the decisions of the High Court both on the original  side  and the appellate side, the  learned  Senior Advocate  for the appellant, submitted that principles  laid down  by  this Court in Cadila Health Care Ltd.  v.   Cadila Pharmaceuticals Ltd., JT 2001 (4) SC 243, have been ignored. Apart  from  giving  a finding on the prima facie  case,  no findings  have  been given on balance of convenience  or  on question  of  irreparable hardship if interim injunction  is not  granted.  He adverted to several decisions to  pinpoint the distinction between action in a claim of passing off and infringement  of a right arising on registration of a  trade mark  under the statute.  He emphasised that valid cause for passing  off action is misrepresentation made by a trader in the  course of business to customers which is calculated  to injure  and cause actual damage to a business or goodwill of the  trader  by whom the action is brought.   He  elaborated that  the material available to the court did not  establish the  gist  of the action for passing off.  The principle  of prior user is wrongly applied.

   The   learned  Senior  Advocate   for  the   respondents controverted  these  contentions advanced on behalf  of  the appellant  by stating that the two courts have  concurrently held in favour of the respondents and the same should not be disturbed.   The  respondents having advertised their  goods with trade mark in question since 1993 and produced invoices for  the  period  14.12.1993 to 17.8.1999 it is  clear  that ample  material was placed before the court to establish the claim  of prima facie case of entitlement to trade mark  and infringement  of  the  same   would  definitely  damage  his reputation  in  business  and that the rule  of  prior  user applied in this case is justified.

   Considering  the  nature of pleadings in the  two  suits filed by the parties, it is clear that there is common field of  activity  between  two parties in respect of  goods  and trade  marks  sought  to be used by  either  are  identical. Hence  the decision in Cadilas case [supra] and of  similar context  may not be of much use in this case.  Inasmuch  the areas  of  activity  and the nature of goods dealt  with  or business  carried  on being identical, and the  trade  marks being  of similar nature the only question that needs to  be decided  is  as to who is the prior user.  In deciding  this question, the High Court relied upon :(1) advertisement made by  the  respondents,  (2)  invoices,  and  (3)  letters  of dealers.

   It is no doubt true that advertisement of goods had been made  by  the respondents in 1993 itself.  Whether that  was followed  up  by  goods being dealt with the trade  mark  in question  is  not  clear as is to be seen by  the  following discussion.

   So  far  as the invoices are concerned, it is  not  very

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clear  from  the  same that they were in relation  to  goods containing  the trade marks in question because there is  no mention  of any particular trade mark in the same and may be they  pertain to such goods, but this is a fact which is yet to  be  established  by placing proper material  before  the court.   So  far as the declarations made before the  excise authorities  are concerned, the High Court itself found  the material  to be dubious.  The letters issued by the  dealers are both in favour of the appellant and the respondents.  In this  state  of materials the courts below should have  been wary  and  cautious  in granting an injunction  which  would affect  the  trade and business of another person  using  an identical   trade   mark.   Both   the  appellant  and   the respondents   have  applied  for   registration   of   their respective  trade marks before the Registrar under the Trade and Merchandise Marks Act, 1958 and the respective rights of the  parties  will have to be investigated by the  Registrar and  appropriate  registration granted to either of them  or both  of  them,  as  the case may be, bearing  in  mind  the provisions  of  Section 12(3) of the Trade  and  Merchandise Marks  Act,  1958.  There are many precedents to the  effect that  for inherently distinctive marks ownership is governed by the priority of use of such marks.  The first user in the sale  of  goods  or service is the owner  and  senior  user. These  marks are given legal protection against infringement immediately  upon adoption and use in trade if two companies make  use of the same trade mark and the gist of passing off in relation to goodwill and reputation to goods.

   Some  courts  indicate  that even prior small  sales  of goods  with  the mark are sufficient to establish  priority. The  test  being to determine continuous prior user and  the volume  of  sale or the degree of familiarity of the  public with  the  mark.  Bona fide test of  marketing,  promotional gifts  and  experimental  sales  in   small  volume  may  be sufficient  to establish a continuous prior use of the mark. But  on  some other occasions courts have  classified  small sales  volume  as so small and inconsequential for  priority purposes.   Therefore, these facts will have to be  thrashed out  at  the  trial and at the stage of grant  of  temporary injunction  a  strong  prima  facie case  will  have  to  be established.   It  has also to be borne in mind whether  the appellant  had also honestly and concurrently used the trade marks  or  there are other special circumstances arising  in the matter.  The courts below have merely looked at what the prima  case  is  and  tried to  decide  the  matter  without considering the various other aspects arising in the matter. Therefore,  we  think, the appropriate order to be  made  is that  injunction  either in the favour of the  appellant  or against  them  or  vice-versa  is not  appropriate  and  the proceedings  in the suit shall be conducted as expeditiously as possible or the Registrar under the Trade and Merchandise Marks  Act, 1958 may decide the matter which may govern  the rights of the parties.

   The  order made by the High Court shall stand set  aside and  it  is  made  clear that there shall  be  no  order  of temporary injunction in favour of either party.

   The appeals are disposed of accordingly.  No costs.