Goodwill and reputation of trademark in India - Worldwide prior use plays significant role

The plaintiffs (H&M Hennes & Mauritz AB, Sweden and H&M Hennes & Mauritz Retail Pvt Ltd.) form part of the H&M group of companies carrying out the business of designing/marketing and selling of fashionable clothing collections and ancillary products/ services for women, men, teenagers and children under the trademark “H&M”. The plaintiffs run more than four thousand stores and sixty-one outlets worldwide along with providing goods through online shopping in twenty-one countries including India, on shopping portals such as www.hm.com, www.jabong.com, www.myntra.com and www.amazon.com.

 

It is the case of the plaintiffs that they came across the infringing goods of the defendants, HM Megabrands Pvt Ltd. (Hashim Merchant and Hamza Merchant) under the trademark ‘HM’ & ‘HM Megabrands’ and also the website ‘www.hmmegabrands.com’ of the defendants offering goods/ services similar to that of the plaintiffs.   The plaintiffs also found that the defendants were offering such infringing goods for sale on the same online shopping portals as the plaintiffs and had filed applications seeking registration of the trademarks ‘HM’ & ‘HM Megabrands’ in various classes. 

The plaintiffs instituted an infringement and passing off action against the defendants for protection of their well-known trade mark ‘H&M’. The plaintiffs argued that the defendants had knowingly incorporated the alphabets ‘H’ and ‘M’ in their corporate name, designed the alphabets ‘H’ and ‘M’ in an informal and asymmetrical italicized manner using the same colour combination as that of the plaintiffs’ with the intention to pass off their goods as that of the plaintiffs. That the defendants being in the same line of business as the plaintiffs, of manufacturing, marketing and selling garments, the defence that they had no knowledge of the plaintiffs’ trademark, was not available to them.

 

The plaintiffs’ adopted the trade mark/ name ‘H&M’ in 1972 and secured earliest registration for the mark in 1985 in UK. In India, the plaintiffs obtained registration of its trademark in October 2005 and formally established their presence in December 2013.

The plaintiffs submitted that their trademark ‘H&M’ was a well-known trademark and formed a prominent part of their corporate name. The products and services of the plaintiffs were extensively marketed and promoted in India, information pertaining to the plaintiffs’ business being readily and frequently accessible through search engines such as www.google.com and www.yahoo.com.  

The defendants contested the suit by firstly stating that they started the proprietorship concern ‘HM Enterprise’ utilising the first two alphabets of their names Hashim Merchant and Hamza Merchant. The defendants submitted that their trademark ’HM’ in ‘HM Megabrands’ stood for the initial alphabets of their names. Secondly, they stated that in 2011, the mark ‘H&M had no recognition in India since the plaintiff was formally established in India on December 16, 2013 and the first retail store was opened in October 2015. Lastly, it was argued that since the defendants did not have any stores in Delhi, the Hon’ble High Court of Delhi did not have the jurisdiction to entertain the present suit. The defendants raised the argument that since the plaintiffs had not used the trademark ‘H&M’ in India for five years since the date of registration, the question of the plaintiffs’ trademark having acquired distinctiveness did not arise. Additionally, the plaintiffs were not entitled to any relief on the ground of laches, acquiescence and waiver. That the plaintiffs had, before the Trade Marks Registry, while differentiating their trademark from the trademarks ‘HMT’, ‘HMV’, ‘HMW’ etc. pleaded that the trademarks had to be compared as a whole and not in components and were therefore estopped from taking a contrary stand in the present suit.

The defendants also contended that the plaintiffs had not filed any documents to either show use of the trademark in India or trans-border reputation of the mark in India before the defendants adopted the trademark ‘HM Megabrands’. Further, even though the alphabets ‘H’ & ‘M’ part of the two trademarks was same, the addition of the word ‘Megabrands’ in the defendants’ trademark distinguished their mark from that of plaintiffs.

The Ld. Single Judge after hearing the contentions of the parties, first decided the issue of jurisdiction and held that as long as the effect of infringement or passing off, if any, by the defendants, of the trademark of the plaintiffs and/or of the goods of the defendants as the goods of the plaintiffs, can be felt in Delhi, the Hon’ble High Court of Delhi would have the jurisdiction to entertain the suit. 

 

With respect to the defendants’ argument regarding the stance taken by the plaintiffs before the Trade Marks Registry, the Ld. Single Judge observed that the businesses of the proprietors adopting the trademarks ‘HMT’, ‘HMV’, etc., were not even remotely related to that of the plaintiff and were in fact abbreviations of the earlier names of the proprietors, for example, Hindustan Machine Tools and His Masters Voice, respectively. The Court further observed that in the present suit, it is not the case the defendants - Hashim Merchant and Hamza Merchant, set up the business under their full names which over a period of time came to be known as ‘HM’. On the contrary, the defendants themselves claim to have chosen their initials to set up their business and therefore, could not claim that the people transacting with them would know that they are transacting with Hashim Merchant or Hamza Merchant.

 

The Ld. Single Judge rejected the defendants’ contention that the addition of the word ‘Megabrands’ in the defendant’s trademark distinguished their mark from that of plaintiffs and observed that the distinctiveness of the trademark depended upon the nature of the prefix or suffix along with the nature of the business. The Court remarked that businesses of the plaintiffs and the defendants were the same i.e. of manufacturing, selling, marketing of garments and ancillary products/services, therefore the trade circles and customers would also be the same. The Court further remarked that since ‘Mega’ meant huge or successful and ‘brand’ is the name given to a product or service, the addition of the suffix ‘Megabrands’ to ‘HM’ only connoted that ‘HM’ was a megabrand and the word ‘Megabrand’ being a generic word cannot be solely associated with the defendants. Even otherwise considering the only other distinguishing feature of the plaintiffs’ trademark - the ‘&’ symbol between the alphabets ‘H’ and ‘M’ written in a much smaller font than that of the alphabets ‘H’ and ‘M’, the presence of the said symbol did not distinguish the mark of the plaintiffs from the defendants.

 

The Ld. Single Judge placed reliance on Christopher Wadlow’s Law of Passing Off (1995 Edition), and held that where a defendant is found to have imitated or adopted the plaintiff’s distinctive trademark or business name, injunction needs to be granted. Further, reliance was placed on Mahendra & Mahendra Paper Mills Ltd. v Mahindra & Mahindra Ltd.[(2002) 2 SCC 147] , wherein the plaintiff had been using the word ‘Mahindra’ for a long time and had acquired distinctiveness and a secondary meaning in the business and trade circles. Accordingly, in spite of the surname of the defendant being ‘Mahendra’, it was held that the use of the word ‘Mahendra’ by the defendant was likely to create an impression of a connection with the plaintiff.
 

The Ld. Single Judge while drawing a parallel between the facts of the present case and the case of S.B.L. Limited v. The Himalaya Drug Co.[ILR (2) Delhi 168; appealed in The Himalaya Drug Company v. S.B.L. Limited, 194(2012) DLT 536] wherein the issue was whether the mark ‘LIV-T’ is deceptively similar to the mark ‘LIV-52’, observed that  though nobody can claim exclusive right to use any word, abbreviation or acronym which becomes publici juris, if two trademarks by two competing traders use a generic word common to both trademarks, it has to be seen whether the customers would be guided by the use of such words/expressions or would ignore it and give emphasis to prefixes/suffixes or words used in association therewith..

Contrasting the facts of S.B.L. Limited to the present case, the Single Judge observed that ‘H&M’ or ‘HM’ are not generic or publici juris to the business for which they are being used. The plaintiffs had, much before the defendants applied the said alphabets to the business of garments and therefore, needed to be protected.

 

On the argument of the defendants that the marks had not been used by the plaintiffs in India for five years from the date of the registration and had not acquired any distinctiveness, the Ld. Single Judge held that the plaintiffs had sales in India since 2015 i.e. prior to the institution of the suit. Further, it was observed that since the opening up of the economy in 1991, there had been a rise in Indians traveling outside the country, interaction of Indians with foreigners along with increase in online shopping which led to the mark having goodwill/reputation without necessarily setting up a brick n mortar shop in India. The court placed reliance on Neon Laboratories Limited Vs. Medical Technologies Limited[(2016) 2 SCC 672], wherein the Supreme Court had held that “first in the market test” has always enjoyed pre-eminence. The court also relied on N.R. Dongre v Whirlpool Corpn.[ (1996) 5 SCC 714] and Milmet Oftho Industries [(2004) 12 SCC 624] to hold that the worldwide prior user is given preference and predominance over the registered trademark in India. It was held that for the purpose of establishing reputation, visibility in India of webpages displaying the product is sufficient to show that buyers in India or Indian travelling abroad are aware of the product and are likely to associate it with plaintiffs.
 

Thus, the Ld. Singe Judge ruled in favour of the plaintiffs and held they were prior users of the mark ‘H&M’. The Ld. Single Judge further observed that the defendants should not be permitted to continue their business as they are likely to develop further goodwill under the impugned mark which will cause injury and loss to the plaintiff. In view of the same, the interim application of the plaintiff was allowed and the defendants were restrained from using their marks in any manner whatsoever.

The instant case provides an insight that when determining the goodwill and reputation of a mark in India, it is not mandatory to show that there is a brick n mortar shop in India. The introduction of e-commerce and online shopping has increased the knowledge of international brands in India significantly and the worldwide prior use of a mark will play a significant role in determining the goodwill and reputation of the mark in India. While it is accepted that registered trademarks in India have greater rights than unregistered marks, it remains to be seen whether the application of the “first in the market test” as applied in the present judgment will give primacy to unregistered marks in India which are otherwise in prior use worldwide or to a mark which is used and registered in India.