Supreme Court Stays Injunction in Copyright and Passing Off Dispute: Brihan Karan Sugar Syndicate vs. Yashwantrao Mohite (2023)

Date of the Judgment: 14 September 2023

Citation: 2023 INSC 831

Judges: Abhay S. Oka, J., Rajesh Bindal, J.

Can a court stay the execution of a decree passed after a full trial? The Supreme Court of India recently addressed this question in a case involving a dispute over copyright and trademark infringement. The core issue revolves around whether the High Court was correct in staying the operation of a decree granted by the District Court, which had permanently restrained the respondent from infringing on the appellant’s copyright and trademark. The Supreme Court, in this judgment, examines the High Court’s decision to stay the execution of the decree. The bench comprised Justices Abhay S. Oka and Rajesh Bindal.

Case Background

The appellant, Brihan Karan Sugar Syndicate Private Limited, is a company that sells country liquor under the label “Tango Punch.” The respondent, Yashwantrao Mohite Krushna Sahakari Sakhar Karkhana, sells country liquor under the label “Two Punch Premium.” The appellant claimed that it held a copyright on the artistic label used on its liquor bottles.

The appellant filed a suit seeking a permanent injunction to restrain the respondent from infringing on their copyright by reproducing the label or any substantial part of it. They also sought an injunction to prevent the respondent from using a deceptively similar trademark label, which could lead to passing off the respondent’s liquor as that of the appellant.

The District Judge, after a complete trial, ruled in favor of the appellant and decreed the suit, granting a permanent injunction against the respondent, ordering damages of ₹1,00,000, and directing the destruction of the infringing labels and materials. The District Court found that the respondent’s labels were deceptively similar to the appellant’s and that the respondent had infringed on the appellant’s copyright.

Aggrieved by the District Court’s decree, the respondent appealed to the High Court of Judicature at Bombay (Aurangabad Bench). The High Court stayed the execution and operation of the decree until the final disposal of the appeal.

Timeline

Arguments

Appellant’s Submissions:

• The appellant’s counsel argued that the High Court should not have given much importance to the fact that the appellant’s application for interim relief was rejected during the pendency of the suit, especially since a decree was passed in favor of the appellant after a full trial.
• The appellant contended that the High Court should not have stayed the decree merely because the appellant withdrew its objections to the respondent’s labels before the Commissioner for State Excise.
• The counsel emphasized that the Trial Court’s findings, based on evidence, should not have been disturbed by granting a stay on the execution of the decree.
• The appellant argued that there were striking similarities between the labels used by the appellant and the respondent.
• The appellant relied on the decisions in Cadila Health Care Ltd. v. Cadila Pharmaceuticals Ltd. and Laxmikant V. Patel v. Chetanbhai Shah & Anr., arguing that acquiescence in copyright cases requires a positive act, not mere silence.
• The appellant submitted that it is not necessary to prove a long period of use to establish the reputation of a product in a passing-off action.
• The appellant argued that the court cannot stay the decree of injunction merely because there is a possibility of disrupting the respondent’s business.
• Granting a stay at this stage would virtually amount to granting final relief in the appeal, which is not permissible in law.

Respondent’s Submissions:

• The respondent’s counsel argued that the appellant failed to establish that its brand and label were well-established in the market.
• The respondent contended that there was no similarity between the labels used by the parties and that the appellant had not provided sufficient evidence of its sales figures, turnover, and advertisement expenses.
• The respondent argued that the appellant’s Chartered Accountant should have been examined to prove the documents related to sales and expenses.
• The respondent pointed out that the appellant had initially objected to the respondent’s labels before the Excise Commissioner but later withdrew the objections.
• The respondent argued that the delay on the part of the appellant in approaching the court amounted to acquiescence.
• The respondent submitted that the High Court was not required to record detailed reasons for granting a stay, especially given that the appellant had withdrawn its objections to the respondent’s labels.
• The respondent relied on the decisions in Khoday Distilleries Ltd. v. Scotch Whisky Association & Ors., Toyota Jidosha Kabushiki Kaisha v. Prius Auto Industries Ltd. & Ors., Corn Products Refining Co. v. Shangrila Food Products Ltd., Ciba Ltd. Basle Switzerland v. M. Ramalingam and S. Subramaniam, and the English cases of Payton & Co. Ld. v. Snelling Lampard & Co. Ld. and Reckitt & Colman Products Ltd. v. Borden Inc. & Ors.

Submissions Table

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues in this judgment, as it was dealing with an interim order. However, the core issue before the court was:

• Whether the High Court was justified in staying the execution of the decree passed by the Trial Court, which granted a permanent injunction against the respondent for copyright infringement and passing off.

Treatment of the Issue by the Court

Authorities

Cases Cited by the Court:

• Satyam Infoway Ltd. v. Sifynet Solutions (P) Ltd. [2004] 6 SCC 145 – Supreme Court of India: This case was cited for the principles related to passing off actions, including the requirement to establish reputation, misrepresentation, and likelihood of confusion.
• Toyota Jidosha Kabushiki Kaisha v. Prius Auto Industries Ltd. & Ors. [2018] 2 SCC 1 – Supreme Court of India: This case was cited for the principle that a passing off action is premised on the rights of the prime user generating goodwill and remains unaffected by any registration. The court also approved the triple test laid down in Reckitt & Colman Products Ltd.
• S. Syed Mohideen v. P. Sulochana Bai [2016] 2 SCC 683 – Supreme Court of India: This case was cited to support the view that rights of a prime user generating goodwill in a passing off action remain unaffected by any registration.
• M/s. Power Control Appliances & Ors. v. Sumeet Machines Pvt. Ltd. [1994] 2 SCC 448 – Supreme Court of India: This case was cited for the principles relating to acquiescence as a defense in copyright infringement cases.
• Cadila Health Care Ltd. v. Cadila Pharmaceuticals Ltd. [2001] 5 SCC 73 – Supreme Court of India: Cited by the appellant for the principle of passing off.
• Laxmikant V. Patel v. Chetanbhai Shah & Anr. [2002] 3 SCC 65 – Supreme Court of India: Cited by the appellant for the principle of passing off.
• Khoday Distilleries Ltd. v. Scotch Whisky Association & Ors. [2008] 10 SCC 723 – Supreme Court of India: Cited by the respondent.
• Corn Products Refining Co. v. Shangrila Food Products Ltd. AIR 1960 SC 142 – Supreme Court of India: Cited by the respondent.
• Ciba Ltd. Basle Switzerland v. M. Ramalingam and S. Subramaniam AIR 1958 Bom 56 – High Court of Bombay: Cited by the respondent.
• Reckitt & Colman Products Ltd. v. Borden Inc. & Ors. [1990] 1 WLR 491 – House of Lords: This case was cited for the triple test in a passing off action, including the requirement to prove goodwill or reputation.
• Payton & Co. Ld. v. Snelling Lampard & Co. Ld. – Court of Appeal (UK): Cited by the respondent.

Authorities Table

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• The Supreme Court relied on Satyam Infoway Ltd. v. Sifynet Solutions (P) Ltd. to reiterate the principles for a passing-off action, emphasizing the need to prove reputation, misrepresentation, and likelihood of confusion.
• The Court followed Toyota Jidosha Kabushiki Kaisha v. Prius Auto Industries Ltd. & Ors., which approved the triple test laid down in Reckitt & Colman Products Ltd. v. Borden Inc. & Ors., highlighting that a passing-off action is based on the goodwill generated by the prime user.
• The Court followed S. Syed Mohideen v. P. Sulochana Bai to support the view that rights of a prime user generating goodwill in a passing off action remain unaffected by any registration.
• The Court relied on M/s. Power Control Appliances & Ors. v. Sumeet Machines Pvt. Ltd. to explain the concept of acquiescence, stating that it is a course of conduct inconsistent with the claim for exclusive rights and applies to positive acts, not mere silence.
• The Court noted the appellant’s reliance on Cadila Health Care Ltd. v. Cadila Pharmaceuticals Ltd. and Laxmikant V. Patel v. Chetanbhai Shah & Anr. for the principle of passing off.
• The Court acknowledged the respondent’s reliance on Khoday Distilleries Ltd. v. Scotch Whisky Association & Ors., Corn Products Refining Co. v. Shangrila Food Products Ltd., Ciba Ltd. Basle Switzerland v. M. Ramalingam and S. Subramaniam, and the English cases of Payton & Co. Ld. v. Snelling Lampard & Co. Ld. and Reckitt & Colman Products Ltd. v. Borden Inc. & Ors.

What weighed in the mind of the Court?

The Supreme Court’s decision to uphold the High Court’s stay order was primarily influenced by the following factors:

• Lack of Proof of Goodwill: The Court emphasized that the appellant had not sufficiently proven its reputation or goodwill in connection with the product. The Court noted that the appellant had not examined the Chartered Accountant who had certified the sales and advertisement expenses.
• Acquiescence: The Court found that the appellant’s withdrawal of objections to the respondent’s labels before the Excise Commissioner was a positive act that could amount to acquiescence, which is a defense in copyright infringement cases.
• Prima Facie Assessment: The Court noted that the High Court was not required to make an in-depth consideration of the merits of the appeal, but only a prima facie assessment. The Court found that the High Court had correctly assessed the facts and circumstances.
• Denial of Temporary Injunction: The Court also took into account that the appellant’s application for a temporary injunction during the pendency of the suit had been denied by the Trial Court and confirmed by the High Court.

The Court’s reasoning demonstrates a balance between protecting intellectual property rights and ensuring that a party is not unduly restrained without sufficient proof of its claims. The Court was also concerned about the conduct of the advocate during trial.

Sentiment Analysis of Reasons Given by the Supreme Court:

Fact:Law Ratio:

Logical Reasoning

Key Takeaways

• Burden of Proof: In a passing-off action, it is crucial for the plaintiff to prove not only the similarity of the marks but also their reputation and goodwill in the market. Mere production of statements certified by a Chartered Accountant is not sufficient; the Chartered Accountant must be examined to prove the statements.
• Acquiescence as a Defense: In copyright infringement cases, acquiescence, which involves a positive act inconsistent with the claim for exclusive rights, can be a valid defense. Withdrawing objections to a party’s actions can be considered a positive act amounting to acquiescence.
• Interim Orders: While dealing with a prayer for a stay of execution of a decree, a High Court is required to make only a prima facie consideration of the merits of the appeal.
• Conduct of Advocates: The Court expressed concern about the conduct of an advocate during trial, emphasizing that members of the Bar are expected to act as officers of the Court and conduct themselves in a reasonable and fair manner.

Directions

The Supreme Court clarified that when the High Court decides the pending appeal, it will not be influenced by the observations made in the impugned judgment or the observations made in this judgment. The appeal shall be decided on its own merits.

Specific Amendments Analysis

There was no discussion of any specific amendments in this case.

Development of Law

The ratio decidendi of this case is that a High Court is justified in staying the execution of a decree of permanent injunction granted by a trial court in a case of copyright infringement and passing off, if the High Court finds that the plaintiff has not sufficiently proven its case for passing off and that the defense of acquiescence is plausible in the copyright infringement claim. The Supreme Court reiterated the importance of proving goodwill in passing off actions and the significance of positive acts in establishing acquiescence in copyright cases. There is no change in the previous positions of law, but the judgment reinforces the existing principles and provides guidance on their application in specific factual scenarios.

Conclusion

In conclusion, the Supreme Court dismissed the appeal, upholding the High Court’s decision to stay the execution of the District Court’s decree. The Court emphasized that the High Court had made a prima facie assessment, taking into account the lack of sufficient evidence of goodwill and the appellant’s acquiescence. The Supreme Court clarified that the High Court should decide the pending appeal on its own merits, without being influenced by the observations made in this judgment or the impugned judgment.