Dilution of Well-Known Trademarks: An Analysis of the ‘Daawat’ Case at the Delhi High Court
Introduction
A Trademark is ordinarily granted protection under two cases, viz., infringement and passing off. However, in cases of trademarks that are well known amongst the general public in their specific sector of business wherein, they are applied, dilution of the mark takes place. Any mark, whether registered as a trademark or not can be protected under the Doctrine of Dilution. However, this only applies to Well-known Trademarks. There have been several instances wherein the Courts have granted protection and recognized marks as Well-Known Trademarks.
One such instance was the recent case involving the renowned Basmati Rice Brand ‘DAAWAT’. The suit was filed by the proprietors of the brand, LT Foods Limited (“Plaintiff”) against Saraswati Trading Company (“Defendant”), who were accused of having diluted the trademarks of the Plaintiff[1].
Facts of the Case
The Plaintiff was engaged in the business of marketing, processing, and exporting food products including rice having an Annual Turnover of Plaintiff: Rs. 2,000 Crores in Financial Year 2020-21. It is the case of the Plaintiff that it is one of the 50 most renowned brands among Food Companies in North India. The Plaintiff is mainly occupied in the business of manufacturing, producing, and distributing Basmati Rice. It also has an enormous network of distributors for the same not only in India but also in the US, UK, Canada as well as EU. Some of the well-known marks used by the Plaintiff are:
- HERITAGE
- DAWAT
- DAAWAT
- DAAWAT DEVAYA
- DAAWAT BESTOW
The trademarks ‘DAWAT’ and ‘DAAWAT’ were used in connection with Basmati Rice. In the present case, these trademarks were infringed by the defendants. It was pleaded that the defendants were using a deceptively similar trademark that could not be differentiated from the trademark registered and used by the Plaintiff.
[Image Sources : Gettyimages]
The trademark was first adopted by M/s Lal Chand Tirath Ram Rice Mills in 1985 and thereafter, in 2003, was assigned to the Plaintiff. According to the Plaintiff, owing to the strict quality control standards maintained by it, the products under the marks ‘DAWAT’ / ‘DAAWAT’ have attained enormous goodwill and reputation throughout the world. According to the Plaintiff, the marks ‘DAWAT’ / ‘DAAWAT’ are well-known marks having achieved a considerable sales turnover of more than Rs. 700 crores in 2020-2021. The Plaintiff claimed its sales promotion to the tune of Rs.33 crores in the year 2020-21 in respect of the said marks. The Plaintiff also cited several cases wherein it had initiated action against the infringement of its trademark.
The Plaintiff had gained the knowledge about Defendant’s business in the year 2021. Thereafter, it procured some of the products sold by the Defendant and upon careful examination, found that the Defendant’s product was not Basmati Rice but Jawaphool Rice, which is of an inferior quality to Basmati Rice which is sold by the Plaintiff. In this suit, previously an ex parte order appointing a Local Commissioner was passed. The Commissioner was empowered to visit the premises of the Defendant and prepare an inventory of the infringing goods. The inventory prepared by the Local Commissioner showed that the Plaintiff’s trademark was used in several packets of Rice containing various qualities of rice.
Consequently, the Court accepted the report of the Commissioner and the evidence collected by him in the process of preparing the inventory, as evidence under Rule 10(2) of Order XXVI. Additionally, the Court noted that there were no written statements filed by the Defendants and therefore, it found the situation appropriate for passing an ex parte order.
Observations
The Court found that there was a blatant infringement of the Plaintiff’s Trade Mark and that the trademarks ‘DAWAT’ and ‘DAAWAT’ were well-known trademarks. Further, the Court also noted that since the rice being sold was meant for human consumption, the inferior quality of rice being sold as Basmati Rice was impermissible as well as misleading consumers into thinking of it as a product sold by the Plaintiff.
Judgement
The Court held that the Defendant’s act of counterfeiting was completely contrary to law and was also diluting the reputation and goodwill of the Plaintiff’s marks. It further held that there could be no justification for manufacturing and selling rice in counterfeit ‘DAAWAT’ branded packaging. The Court also observed that customers were being misled by the Defendant and that the entire effort made was deliberate, and dishonest.
The Court decreed the suit in terms of the prayer made by the Plaintiff and awarded Rs. 20,00,000 (Rupees Twenty Lakhs only) as damages to the Plaintiff. Additionally, the Court also awarded Rs. 5,00,000 (Rupees Five Lakhs only) as Costs to the Plaintiff.
Conclusion
Any trademark is an indispensable asset for any business. Infringement of such mark causes not only harm to trademark proprietor but also affects the goodwill and causes economic losses to the business using such trademark. A Well-Known Trademark is one which is known very widely to the substantial segment of the public which uses such goods or services wherein the Well-Known Trademark is widely used. As such, consequences of dilution are graver in some cases where the consumers might even lose faith in the brand due to dilution of the trademark. As in this case, the marks ‘DAWAT’ and ‘DAAWAT’ were protected by registration even though they were well-known to the general public. The Court, after proper consideration of the circumstances, awarded damages to the proprietor of the infringed trademarks and also recognized them as well-known trademarks. Therefore, it is of paramount importance to protect the Well-Known Trademarks.
Author: Debaditya Mitra, A Fourth Year Law Student at Amity University Kolkata, in case of any queries please contact/write back to us at support@ipandlegalfilings.com or IP & Legal Filing.
[1] LT FOODS LIMITED vs. SARASWATI TRADING COMPANY, 2022/DHC/004806
