Full Judgment Text
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
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Reserved on: 12 July, 2024
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Pronounced on: 25 February, 2025
+ CS(COMM) 443/2020
LIFESTYLE EQUITIES CV & ANR. .....Plaintiffs
Through: Mr. Gaurav Pachnanda, Sr. Adv. with
Mr. Sidhant Goel, Mr. Mohit Goel,
Mr. Deepankar Mishra, Mr. Abhishek
Kotnala, Mr. Karmanya Dev Sharma
Ms. Avni Sharma, Mr. Vivek Pratap
Singh, & Ms. Jyotika Jain, Advs.
versus
AMAZON TECHNOLOGIES, INC. & ORS. .....Defendants
Through: Defendant No. 1 – Ex-Parte
Defendant No. 2 and 3 (suit already
decreed)
CORAM:
JUSTICE PRATHIBA M. SINGH
JUDGMENT
Prathiba M. Singh, J.
Table of Contents
A. Background ...................................................................................................................... 2
B. Presence in India ............................................................................................................... 6
C. Infringement ..................................................................................................................... 8
D. Proceedings in this suit.................................................................................................... 11
E. Recording of Evidence...................................................................................................... 17
F. Submissions of Parties ..................................................................................................... 18
F1. Submissions of Mr. Gaurav Pachnanda, ld. Sr. Counsel for the Plaintiffs ........................... 19
G. Analysis and Findings ...................................................................................................... 22
Analysis of Evidence .................................................................................................................. 32
G1. Evidence of PW-1- Mr. Eli Haddad ..................................................................................... 32
G2. Evidence of PW-2 – Mr. Sanjay Shetty ............................................................................... 37
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G3. Evidence of PW-3 – Mr. Gaganpreet Singh Puri ................................................................ 38
G4. Evidence of PW-4 – Mr. Arvind Dhingra ............................................................................. 42
G5. Evidence of PW-5 – Mr. Gavin Rawling .............................................................................. 43
H. Findings .......................................................................................................................... 47
I. Assessment of Damages ................................................................................................... 50
J. Costs of Proceedings ........................................................................................................ 79
K. Relief .............................................................................................................................. 84
A. Background
1. The present suit has been filed by Plaintiff No. 1- Lifestyle Equities
C.V. (hereinafter ‘ LECV ’) and Plaintiff No. 2- Lifestyle Licensing B.V.
(hereinafter ‘ LLBV’ ) inter alia, seeking permanent injunction and damages
against the Defendants for infringement of their registered trademark Beverly
Hills Polo Club (hereinafter ‘ BHPC ’). The mark is extracted below:
The Plaintiffs assert that they are the rightful proprietors of the BHPC mark,
which enjoys extensive goodwill and recognition in the domestic and
international markets. The Plaintiffs contend that the Defendants have been
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unlawfully using a mark identical or deceptively similar to the Plaintiffs’
trademark, thereby violating their statutory and common law rights.
2. The Plaintiffs along with its subsidiaries and licensees are engaged in
the business of manufacturing, distribution and sale of a wide range of
products including garments, apparels, accessories, footwear for men, women
and children, furniture, textiles, watches and other lifestyle/ personal care
products under the trademark ‘BHPC’. Plaintiff No.1, an Amsterdam based
company, is the proprietor of the BHPC trademark and holds exclusive rights
over its use and commercialization. The BHPC trademark consists of a
distinctive logo featuring a charging polo pony with a mounted rider wielding
a raised polo stick (mallet), symbolizing the sport of polo. Plaintiff No. 2 is the
licensee of the said trademark pursuant to the Master License and Licensing
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Service Agreement dated 20 May, 2008.
3. Under the terms of the said agreement, Plaintiff No. 2 has been granted
the right to further sub-license the BHPC trademark in various jurisdictions.
Accordingly, Plaintiff No. 2 licenses the use of Plaintiff No. 1’s trademark to
multiple licensees, distributors, and manufacturers across the globe. As a
result, the said products bearing the BHPC trademark are distributed and sold
in over 60 countries, including those in Europe, Asia, South America, North
America, the Middle East, and the Gulf region.
4. The Plaintiffs, through their extensive global distribution network,
make BHPC -branded products available to consumers via multiple retail
channels. These products are made available to consumers through various
retail outlets directly operated by the Plaintiffs, as well as their network of
authorized licensees. Additionally, the products are sold in multi-brand stores
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in collaboration with numerous retail chains worldwide. The BHPC branded
products are also present in other online platforms.
5. The BHPC word-mark is stated to have been inspired from the
geographical location Beverly Hills in Los Angeles, California, USA, an area
renowned for its luxury, affluence, and association with high-end fashion and
lifestyle products. The business under the BHPC mark with the accompanying
logo has been established in the year 1982 and in India, the mark and the logo
have been used since 2007. The Plaintiffs assert that, through consistent use
and extensive marketing efforts, the BHPC brand has acquired substantial
goodwill and brand recognition in India and internationally.
6. The trademark of the Plaintiffs consists of the word-mark ‘BHPC’
along with the accompanying logo i.e., the image of a “charging polo pony,
the rider and the polo stick or mallet”. According to the Plaintiffs, the
combination of the use of the word mark and logo in a device form serves as
a unique identifier of the Plaintiffs’ brand and symbolizes its association with
the sport of polo, luxury, and premium lifestyle products. Further, the word
mark along with the logo device is used in various forms and stylistic
variations across different product lines and marketing materials. Some of the
forms and stylistic variations of the use of the marks of the Plaintiffs are set
out below:
, , ,
,
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7. It can be seen that the horse device is a prominent part of the trademark.
The word mark along with the logo is a registered trademark of the Plaintiff
No.1 in various countries of the world. As per the Plaintiffs, they are the
registered proprietors of various marks including the device mark in
approximately 91 countries including USA, UK, India, UAE, Nepal, Mexico,
Germany etc. The list of registrations of the Plaintiff has been filed along with
the plaint and exhibited as Exhibit PW1/5 . The BHPC mark both
independently and along with the logo was registered in India under various
classes including classes 3,9, 14 18, 24, 25, 35, 36, 42, 45 etc., The said
registrations are not even in dispute.
8. The BHPC mark and logo are also stated to be advertised and promoted
internationally including on in-flight advertisements. The BHPC branded
products are showcased in various international fashion shows, such as
• MIPEL - An international leather goods and fashion accessories fair,
held in Europe,
• MICAM - A bi-annual international trade fair for footwear, held in
Milan Italy,
• PITTI BAMBINO - An international trade fair for children-wear,
• INTERGIFT - A bi-annual international trade fair for, inter alia,
fashion and fashion related goods, based in Spain,
• PREMIUM - A leading international fashion show, based in Germany,
• WHO’S NEXT - A leading international fashion show, based in
France,
• HEIMTEXTIL - An international trade fair for home and contract
textiles,
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• BRAND LICENSING EXPO - An international licensing expo for,
inter alia, fashion and fashion related goods,
• PITTI UMAO - An international fair and/or promotional events
conducted in all areas fashion,
• The Copenhagen International Fashion Fair - based in Denmark and
• Cosmoprof Worldwide - based in Bologna, Italy.
9. The BHPC marks have been recognized for their exceptional brand
value and consumer trust, having been awarded the prestigious status of
‘ Superbrands ’ by the UAE Superbrands Council for the years 2016, 2017, and
2019 . Therefore, the said trademark has acquired immense goodwill and
recognition since its launch in 1982 and according to the Plaintiffs the use of
the mark or the logo immediately identifies with the Plaintiffs.
B. Presence in India
10. The Plaintiff No.1 launched its products in India under the BHPC
trademark in 2007. In 2008, an agreement was entered into between the
Plaintiffs and M/s Spencer’s Retails Ltd. for the distribution and sale of BHPC
branded products in India. Pursuant to this agreement, the Plaintiffs’ licensee,
Spencer’s Retail Ltd., is stated to have opened 20 exclusive stores selling
BHPC branded products in prominent locations such as DLF Promenade mall
and Select Citywalk mall, etc., Further, the Plaintiffs claim to provide
consumers and internet users with information on its product range, latest
designs, and styles, through their official website www.bhpoloclub.com . The
said website serves as a platform where customers can explore the various
BHPC branded products included updates on new collections. According to
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the Plaintiffs, their online presence ensures that internet users and customers,
including those in India, have access to their product range while
strengthening global brand awareness and customer engagement.
11. It is further submitted that the Plaintiffs have generated substantial
revenues from the sale of products bearing the Plaintiffs’ BHPC logo mark in
India. As per the Plaint, the sales turnover from products bearing the BHPC
mark is more than Rs. 20 crore each year from 2016-2017 onwards. Further,
in the plaint is has been highlighted by the Plaintiffs that for the advertisement
and promotion of the BHPC logo mark, the responsibility lies with their
licensees and retail partners, including entities such as the Apparel Group. It
is averred that the licensees and retail partners are contractually obligated to
undertake promotional campaigns for the BHPC logo mark in their respective
regions, with a stipulated minimum expenditure on advertising and marketing.
12. In 2012, the Plaintiffs entered into two Trademark License Agreements
( hereinafter ‘TLA’), one with Major Brands India Pvt. Ltd. (now known as
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Apparel Group India) on 26 November, 2012 and another with Apparel
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Group FZCO on 8 November, 2012 for India and the GCC region
respectively. Both these licensees are prominent retailers of various
internationally well-known brands.
13. The licensing model of the Plaintiffs with their retail partners is by
categorising two levels of sales in the agreement:
(i) business plan sales, and
(ii) minimum sales.
According to the Plaintiffs, the Plaintiff No. 2 is entitled to receive 7.5% as
royalty from the sales effected by the licensees.
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C. Infringement
14. The allegation in the plaint is that the three Defendants have engaged
in activities that constitute a violation of the exclusive rights in the BHPC
logo mark. The said three Defendants and their addresses as per the Memo of
Parties is set out below:
S. No. Name of Defendant Address
Defendant No. 1 Amazon
410 Terry Avenue North, Seattle,
Washington 98109, U.S.A.
Technologies, Inc.
Defendant No. 2 Cloudtail India
Ground Floor (rear portion), H-9,
Block B-1, Mohan Cooperative
Industrial Area, Mathura Road,
New Delhi – 110044.
Private Limited
Defendant No. 3 Amazon Seller
No.26/1, 8th Floor, Brigade
Gateway, Dr. Raj Kumar Road,
Malleshwaram (West), Bengaluru-
560055, Karnataka.
Service Private
Limited
As per the plaint, Defendant No.1 was dealing with apparel products under
the private label- ‘Symbol’ consisting of a horse device mark almost identical
to the BHPC logo device thereby leading to infringement and unauthorized
use. Defendant No.2-Cloudtail India Private Limited is alleged to have acted
as the retailer of the said infringing apparel products, making them available
for sale on the e-commerce platform www.amazon.in , which is managed and
operated by Defendant No.3, i.e. Amazon Seller Services Private Limited. The
Plaintiffs contend that such unauthorized use of the infringing marks on the
Defendant’s platform constitutes trademark infringement and
misrepresentation, causing consumer confusion and dilution of the Plaintiffs’
mark and goodwill. The illustrative images from the website
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‘ www.amazon.in ’ where the infringing logo mark is being used are set out
below:
15. A comparison of the Plaintiffs’ and Defendants’ mark/logo along with
the manner in which the same is being used on the products is set out below:
Plaintiffs Device Mark Mark used by the Defendant
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Plaintiffs’ Product
Defendants’ Product
16. It is the claim of the Plaintiffs that in May, 2020, the Plaintiffs came
across sale of the said infringing products on Defendant No. 3’s website
‘ www.amazon.in ’. As per the Plaintiffs, the said sale was being conducted by
Defendant No. 2, under Defendant No.1’s private label ‘ Symbol ’. However,
the exact relationship between the three Defendants was not known to the
Plaintiffs.
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17. According to the Plaintiffs, the entire attempt was to impinge upon the
Plaintiffs’ rights in BHPC logo. The Plaintiffs purchased some of the products
through the platform ‘ www.amazon.in ’ and confirmed the fact that the logo
which was being used was nothing but a slavish imitation of the Plaintiffs’
BHPC logo. In fact, according to the Plaintiffs, this was an attempt to ride
upon the goodwill of the BHPC trademark as the logo device was a prominent
feature of the BHPC trademark. According to the Plaintiffs, such use of the
logo is violative of the Plaintiffs’ statutory and common law rights which
deserve to be injuncted.
D. Proceedings in this suit
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18. Vide order dated 12 October, 2020, the Court heard the matter at the
ad-interim stage where even Defendant No.2 and 3 were represented,
however, none appeared for Defendant No.1, despite advance service.
19. After hearing the parties, the Court passed an ad-interim injunction
restraining Defendant Nos. 1 and 2 from infringing the Plaintiff’s trademark.
The Defendant No.3 was also directed to take down the products of Defendant
No.1 within 72 hours of the URLs being communicated. The operative portion
of the order reads as under:
“ 12. Considering that the defendant No.1 is a separate
entity, this Court is prima facie of the view that the
present suit would be maintainable. From the
averments in the plaint as also the documents filed
therewith, this Court finds that the plaintiff has made
out a prima facie case in its favour and in case no ex-
parte ad-interim injunction is granted, the plaintiff
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would suffer an irreparable loss. Balance of
convenience also lies in favour of the plaintiff.
Consequently, till the next date of hearing, defendant
No.1 and defendant No.2, their Partners, Directors,
Proprietors, Shareholders, Affiliates, Licensees,
Agents etc. are restrained from selling, offering lor
sell, advertising, directly or indirectly dealing in any
products or reproducing or using in any manner
whatsoever the infringing logo mark
which is identically/deceptively similar to the
plaintiffs logo mark "BEVERLY HILLS POLO
CLUB In the meantime, defendant
No.3 is directed to take down the products of the
defendant No.1 with the infringing logo within 72
hours of the URLs being provided by the plaintiff ”
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20. On 20 April, 2022, the Defendant No.1 did not appear despite service
and was proceeded ex-parte . Defendant No.3 and 2 were directed to file
separate affidavits giving details of the exact relationship they share with
Defendant Nos.1 along with other directions. The relevant paragraphs of order
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dated 20 April, 2022 read as under:
“LA. 9254/2020 (for stay)
2. Defendant No.1 has not entered appearance in this
matter, despite service. Written statement has also not
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been filed by Defendant No.1. Accordingly, Defendant
No.1 is proceeded against ex parte.
3. Let an affidavit be filed by the Defendant No.3 -
Amazon Seller Service Private Limited giving exact
details of whether Defendant No.1- Amazon
Technologies, Inc. is, in any manner, related to
Defendant No.3, or any of its subsidiary or holding
companies. The affidavit shall also state as to whether
Defendant No.1-Amazon Technologies, Inc. is, in any
manner, related to Amazon.com, Inc.
4. Let an affidavit be filed by Defendant No.2 giving
details as to the total stock of products sold by the
Defendant No.2 on Defendant No.3's platform, under
the impugned logo and motif which was injuncted by the
Court, vide order dated 12th October, 2020. Similar
affidavit shall also be filed by Defendant No.3 as to the
total sales made under the mark 'Symbol' as also the
impugned logo on its platform. Let the said affidavits be
filed, within four weeks.
5. Let Defendant No.2 also place before this Court the
agreement between itself and Defendant No.1-Amazon
Technologies, Inc., which is stated to be the owner of the
mark/label 'Symbol', in respect of which Defendant No.2
is a licencee, as pleaded in the written statement.
6. Both the Defendant Nos. 2 and 3 confirm that, there
are no products with the impugned logo which are now
sold on the platform of Defendant No.1-Amazon
Technologies, Inc. Accordingly, the interim injunction is
made absolute during the pendency of the present suit. ”
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21. Pursuant to the said order, Defendant No.2, on 18 August, 2022, had
placed on record a license agreement which was executed between itself and
Defendant Nos.1. The redacted copy of the same was also supplied to the
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Plaintiff. The unredacted copy is lying in a sealed cover as part of the suit.
However, on the said date, the Court observed that the affidavit filed by
Defendant No.3, explaining its interse relationship to Defendant No.1, was
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unsatisfactory and directed it to comply with the order dated 20 April, 2022
to the letter and spirits, both in terms of the sales figures as also the interse
relationship.
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22. On 5 September, 2022, it was submitted on behalf of Defendant No.2
and Defendant No.1 that they were willing to (i) suffer a decree of injunction
and (ii) pay reasonable damages. The matter was then referred to the Delhi
High Court Mediation and Conciliation Centre. It is, thus, clear that the
Defendant No.1 has also entered appearance before this Court.
23. For the purposes of determining the quantum of damages, the sales
figures were required to be examined by the parties. To maintain the
confidentiality of the terms of license agreement and the sale figures, the
parties had agreed to set up a confidentiality club consisting of members
nominated by both the parties. Accordingly, a confidentiality club was
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constituted vide order dated 15 September, 2022 and the club had perused
the license agreement between Defendant Nos.1 and 2.
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24. On 2 March, 2023, the Court heard the ld. Counsel for Defendant
No.2 and the Plaintiff and decreed the suit in favour of Plaintiffs in the
following terms:
“4. Amazon has not appeared despite service and
has been proceeded exparte vide order dated 20th
April, 2022. On the same date, injunction order
dated 12th October, 2020 was confirmed and made
absolute till the pendency of the present suit. Later,
on 05th September, 2022, Cloudtail made a
statement, that they are willing to suffer a decree of
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injunction and prayed that the Court may consider
awarding reasonable damages in favour of
Plaintiffs. Parties were referred to mediation which,
unfortunately, was unsuccessful.
5. Mr. Nishchal Anand, counsel for Cloudtail,
reiterates his stand as noted on 05th September,
2022. He emphasizes that Cloudtail has stopped
using Infringing Device Mark or any marks
similar thereto and the same was used only a brief
period from year-2015 till July 2020, and in this
period, on account of sale of infringing products,
Cloudtail earned a revenue of only INR
23,92,420/- on which the profit margin is no more
than 20%. He submits that the Court may awards
damages on the basis of above-noted figures. Mr.
J. Sai Deepak, counsel for Plaintiffs, do not
dispute the sales figures and agrees that for award
of damages, aforenoted data is sufficient and no
further evidence is required.
6. At this juncture, it must also be noted that Mr.
Anand submits that the liability for damages should
be solely fixed on Cloudtail and not Amazon. He
states that the decision to use the Impugned Device
Mark was solely that of Cloudtail and Amazon has
no liability in the matter. Reliance is placed on
Amazon Brand License and Distribution Agreement
dated 23rd December, 2015 [hereinafter
''Agreement'"'] to demonstrate that Amazon's mark
'Symbol' was licensed to Cloudtail and the use
thereof, in relation to the infringing products was
entirely that of Cloudtail. He further highlights that
under the Agreement, Cloudtail is liable to
indemnify Amazon for any loss arising from any
breach on their part. Mr. Sai Deepak refutes the
above statement and argues that the Infringing
Device Mark is not a subject-matter of the
Agreement between Amazon and Cloudtail and
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damages are liable to awarded against both
Amazon and Cloudtail.
7. The obligations arising from the Agreement
referred above between Amazon and Cloudtail
cannot bind Plaintiffs and consequently, the
admission of liability on part of Cloudtail cannot
bind Plaintiffs. They cannot be denied the
opportunity to seek damages from Amazon, if any.
Considering the above and since there is no contest
to the sales figures for computation of damages, the
Court proceeds to pass a decree qua Cloudtail.
8. Accordingly, the suit is decreed in favour of
Plaintiffs and against Defendant No. 2/ Cloudtail,
in terms of paragraph No. 64 prayer clauses (a),
(b) and (c). Towards use of Infringing Device
Mark, accepting the stand of Cloudtail that profit
margin is only 20%, Plaintiffs are awarded
damages of 20% of INR 23,92,420/- i.e., INR
4,78,484/- Since Amazon has not contested the suit
and use of products bearing the Infringing Device
Mark was discontinued in July 2020, prior to the
filing of the suit, no costs are being awarded. ”
25. Thus, the suit was decreed qua Defendant No.2 for permanent
injunction and for a sum of Rs.4,78,484/- was awarded as damages. Insofar
as Defendant No.3 is concerned, it was submitted by Defendant No.3 that it
is only an intermediary and the statement on behalf of Defendant No.3 was
recorded to the following effect:
“ 10. This brings us to the remaining Defendants.
Amazon Seller is an intermediary, on whose
platform, products bearing Infringing Device
Mark were offered/ listed. Ms. Sneha Jain, counsel
for Amazon Seller, requests that the said Defendant
be deleted from the array of parties as they have
complied with all directions issued by this Court.
She states that in future, as-and-when directed by
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this Court, listings qua products bearing Infringing
Device Mark shall be removed. She adds that no
substantive relief is sought against them.
Accordingly, taking her statement on record, and
binding Defendant No. 3/ Amazon Seller, to the
same, they are deleted from the array of parties.
Plaintiffs are directed to file an amended memo of
parties before the next date of hearing. ”
26. On the said date, since none appeared for Defendant No.1, Defendant
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No.1 has been proceeded ex parte . Thereafter, vide order dated 25 May,
2023, this Court had permitted the Plaintiffs to lead ex-parte evidence in the
present suit. The relevant extract of the said order is set out below:
“1. Mr. J. Sai Deepak, counsel for Plaintiffs, states
that pursuant to the leave granted on 02"'' March,
2023, Plaintiff has filed the additional documents and
would now like to lead ex-parte evidence.
2. Plaintiffs are permitted to file a list of witnesses
within a period of one week from today along with
the affidavit(s) of evidence. Mr. Sai Deepak submits
that the witnesses to be deposed are not residents of
India. Considering the same, it is directed that as and
when Plaintiffs request for recording of. witnesses'
statement(s) through video conferencing mechanism,
the Joint Registrar shall consider the same and pass
necessary orders, in accordance with law.”
E. Recording of Evidence
27. Subsequent to the above orders, the Plaintiffs led the evidence of five
witnesses namely,
(i) Mr. Eli Haddad – PW-1,
(ii) Mr. Sanjay Shetty – PW-2,
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(iii) Mr. Gaganpreet Singh Puri – PW-3,
(iv) Mr. Arvind Dhingra – PW-4, and
(v) Mr. Gavin Rawlings – PW-5.
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28. Vide order dated 5 July, 2023, this Court permitted the evidence of
Mr. Gavin Rawlings, PW-5 to be recorded through video conferencing. On
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12 July, 2023, PW-1 to 4 were present. Their examination-in-chief was
recorded, and they were discharged. A remote point coordinator was
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appointed for examining PW-5, Mr. Gavin Rawlings on 19 July, 2023 in
accordance with Rule 5.1 of the High Court of Delhi Rules for Video
Conferencing for Courts, 2021 which mandated the appointment of a remote
point coordinator for examining a witness overseas. Accordingly, Mr. Gavin
Rawlings (PW-5) evidence was recorded through the video conferencing as
per the said rules.
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29. On 7 August, 2023, the matter was listed for hearing and the Court
had directed that the witnesses ought to be present for the purposes of assisting
the Court as detailed evidence has been led on the question of damages.
F. Submissions of Parties
30. Mr. Gaurav Pachnanda, ld. Senior Counsel appeared on behalf of the
Plaintiffs and Defendant No.1-Amazon Technologies did not enter
appearance. Considering the Defendants have acceded to infringement, the ld.
Sr. Counsel argued primarily on the quantum of damages.
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F1. Submissions of Mr. Gaurav Pachnanda, ld. Sr. Counsel for the
Plaintiffs
31. Mr. Pachnanda, ld. Sr. Counsel relies upon the Plaintiffs Trademark
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License Agreement (‘ TLA ’) dated 26 November, 2012, the evidence and
statements of Expert Witnesses, certain articles and cases from contemporary
jurisdictions, to establish the quantum of damages prayed to be awarded. His
submissions are as under:
• Impact of Large-Scale Infringement and Deep Discounting on a Brand
32. The ld. Senior Counsel submitted that large scale infringement, along
with deep discounting, can have a deleterious impact on a brand. The Plaintiff
sells its products in the price range of Rs.3,000/- to Rs.5,000/-, whereas on
Amazon, the products bearing the similar logo as that of the Plaintiffs are
being sold at Rs.300 to Rs.400/-.
33. In this regard, the Plaintiffs have led evidence of two expert witnesses
i.e., Mr. Sanjay Shetty (PW-2) and Mr. Gaganpreet Singh Puri , (PW-3) .
In paragraphs 120 to 126 of his statement, Mr. Gaganpreet Singh Puri has
provided illustrations of how brands can be destroyed by such rampant
infringement. The evidence of Mr. Arvind Dhingra (PW-4) , specifically
paragraphs 4 to 9, 14 to 17, 19 to 26 have also been highlighted by ld. Sr.
Counsel for the Plaintiffs. In addition, Mr. Eli Haddad (PW-1) , who is the
Managing Director of the Plaintiff No.1, has explained in paragraphs 100 to
104 of his evidence affidavit the impact that wilful infringement on such large
scale can have on the Plaintiffs and their business plans.
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• Calculation of Compensatory Damages in terms of the Trademark
License Agreement –
34. The fulcrum of the case of the Plaintiffs for the purpose of damages is
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the Trademark License Agreement dated 26 November, 2012 which was
executed between Plaintiff No.2, a Dutch licensee of Plaintiff No.1, and M/s
Major Brands India Ltd. The said TLA was for an initial period of 10 years
with mutual renewal terms. The TLA had two kinds of sales which were
contemplated.
a. A minimum sale – The minimum sale figures were to be achieved by the
licensee for the purpose of continuing the license and the Plaintiffs have the
option of terminating the same if the minimum sales were not achieved.
b. Projected sale figures. – The optimum level of sales to be achieved by the
licensee.
The royalties were to be calculated at the rate of 7.5% on the gross sales.
35. The TLA, though entered into in 2012, it was only between December
2013 and January 2014 that the agreement commenced between the parties.
Therefore, the first year of sales 2014-15 has been calculated on the basis of
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December 2013/January 2014 till 31 July, 2015 during which period the sales
achieved by the licensee was to the tune of Rs.38,36,326/-. According to the
Plaintiffs, the minimum sales that were to be achieved were Rs.20,92,545/-
and the projected sales that were to be achieved were Rs.29,89,350/-.
36. On the basis of these figures, it is the submission of ld. Sr. Counsel that
the Plaintiffs achieved more than the minimum sales and the business
projected sales on the said period. On this basis, the damages have been
calculated considering that the infringement commenced sometime in July,
2015 by the Defendants. The suit was filed in September, 2020. The case of
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the Plaintiffs is that they detected the sales by the Defendants only in 2020
and filed the suit but in the suit proceedings, the Defendants have disclosed
that they have been selling the products since 2015. Thus, the damages have
been calculated on the basis of sales since 2015 till 2020 as the first period.
Between 2020-2024 as the second period and, thereafter, with terminal value
(TV) basis. According to the Plaintiffs, the Plaintiffs are entitled to royalties
on various heads. The witnesses have given justification for the manner in
which the calculations have been achieved.
37. Reliance is also placed upon the quantum expert - PW-3 to quantify the
losses at USD 21.85 million based upon minimum damages/actual losses.
However, loss based on plans and projections was much higher i.e., USD
33.78 million. The standards which have been adopted by the said witness are
completely reliable for quantifying the losses.
38. It is also urged by the ld. Senior Counsel that the Plaintiff has a sub-
licensee in India who is also known as the retail partner. The losses which the
retail partner has suffered, in terms of Clause 9.2(b) of the Contract can be
claimed by the Plaintiff in the present case. Thus, the Plaintiff’s claims also
extend to losses suffered by the retail partner at 10% profit which constitutes
USD 29.06 million. In terms of the business plans, the losses are to the tune
of USD 42.9 million.
• Exemplary and Punitive Damages to be awarded on account of wilful
infringement by Defendant No.1
39. According to the ld. Senior Counsel this would be a classic case where
owing to the wilful nature of the infringement, exemplary and punitive
damages would be liable to be granted. In fact, it is his submission that
such indiscriminate use also prevails in other jurisdictions and reliance is
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placed upon an article published by Reuters which is republished in the
Economic Times dated 13th October, 2021 to show how Defendant No. 1
habitually copies brands of well-known companies. It is further submitted that
the said position is also prevalent in other jurisdictions as is evident from the
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recent decision of the U.K. Supreme Court on 6 March, 2024 in the case of
Lifestyle Equities v. Amazon U.K. Services Ltd. , [2024] UKSC 8 where the
Court was looking at a similar situation and the question was with respect to
whether jurisdictions ought to be exercised in England or not.
40. Punitive damages are also required to reprimand the conduct of the
Defendants which run a famous e-commerce portal and are also indulging in
such a flagrant violation of IP Rights. According to ld. Senior Counsel, the
test laid down in Hindustan Unilever Limited v. Rickett Benckiser India Ltd
(ILR (2014) II Delhi 1288) has been fully satisfied owing to the cascading
effect that losses would have on businesses. In conclusion, it is submitted that
lack of evidence in respect of any particular head ought not to result in
rejection of any claim for damages as the present is a case for consideration
of full compensation based on the principles in Rookes v Barnard ([1964] 1
ALL E.R. 367) . The said decision also makes it clear that the means of parties
would by itself have no bearing on the grant or non-grant of punitive damages.
G. Analysis and Findings
41. Heard.
42. Traditionally, violation of rights in a trademark would take place in
brick-and-mortar stores where the identity of the infringing party is easily
determinable. The growth of the internet and the rise of digital commerce have
significantly transformed the promotion and sale of branded products,
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creating both opportunities and challenges for IP owners. As with all
technological advancements, the internet has facilitated both legitimate trade
and unauthorized exploitation of IP rights. The emergence of e-commerce
intermediaries, who claim to be distinct from traditional retailers on e-
commerce platforms, has introduced legal complexities for IP owners in their
efforts to enforce their rights and seek redress for trademark infringement.
This distinction has complicated IP enforcement, as such entities often claim
intermediary status to mitigate liability for the sale of infringing goods.
Unlike conventional retail models, where accountability for infringement was
clearly attributable, e-commerce platforms operate within a multi-tiered
ecosystem, often making it difficult to identify and hold liable those
responsible for violations.
43. E-commerce platforms, while making products and services more
easily available and accessible have also posed significant challenges for IP
owners seeking to protect their brands and marks being infringed through
online platforms. The proliferation of e-commerce is now here to stay and is
an irreversible reality, giving rise to a new species of infringement which can
be termed as ‘ e-infringement’ . In this species of infringement, unlike
traditional forms of trademark violations, there are multiple parties who could
be involved in the violation of rights:
a) The owner of the infringing brand which is being used on the
product.
b) The retailer or seller who is selling the infringing product.
c) The e-commerce platform which is enabling the retailer to sell
the product or the aggregator who may be collecting similar
products and making them available for sale.
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d) The party/entity who is warehousing, raising invoices,
packaging, delivering and receiving payments for the product.
e) The party who supplies the product, i.e. the infringing goods.
f) Finally, the brand being used on the infringing products
In the present suit the brand ‘Symbol’ is owned by Defendant No.1- Amazon
Technologies, Inc. The retailer, Defendant No.2- Cloudtail India Pvt. Ltd.,
sells the products on the e-commerce platform www.amazon.in which is
operated by Defendant No.3, Amazon Sellers Services Pvt. Ltd.
44. In e-infringement , the biggest challenge would first be in fixing
responsibility on each of the parties. There are complex questions which arise
including issues relating to intermediary liability, entitlement to safe harbour
protection, as also jurisdictional issues. Clearly, the multi-layered nature of e-
commerce has made it increasingly difficult to identify, attribute liability, and
effectively enforce IP rights, necessitating clear legal frameworks to address
the evolving challenges posed by online trademark infringement.
45. The present case would be one such case which could qualify as an e-
infringement case. The brand ‘Symbol’ being used by Defendant No. 2-
Cloudtail India Private Limited is admittedly owned by Defendant No.1.
During the proceedings, ld. Counsel appearing for Defendant No.2 had
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appeared for Defendant No.1 on 5 September, 2022 and submitted that
Defendant No.1 would be willing to suffer a decree of permanent injunction
and also pay the reasonable damages. The said order is of significance and is
extracted below:
“ IA 14249/2022
The learned senior counsel for the defendant
no.2/applicant herein submits that the said defendant,
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including for and on behalf of the defendant no.1, is
willing to suffer a decree of injunction and also for
paying reasonable damages to the plaintiff . He prays
that the parties be referred to the Delhi High Court
Mediation and Conciliation Centre for exploring the
possibility of arriving at an amicable settlement.
The leamed counsel for the plaintiffs prays for
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time to seek instructions. List on 15 September,
2022.”
46. As per the above order, the matter was referred to mediation, however,
the same did not fructify into a settlement. It is at that stage that Defendant
No.2 and Defendant No.3 sought to delineate and distinguish their role from
that of Defendant No.1 leading to a decree being passed against Defendant
No.2 for a sum of Rs.4,78,484/-. This amount constituted 20% of the sales
made by Defendant No.2. Defendant No.3 claimed that it is merely an
intermediary and undertook that whenever there are future listing/s bearing
the infringing device mark, the same shall be removed, as and when directed
by the Court.
47. It clearly appears to this Court that, all three companies which are
closely related to or interlinked with each other have sought to project that
they are independent of each other, clearly with an intent to avoid fastening
of liability. The intention of the said Defendants has clearly been to somehow
diffuse and dissipate the consequences of infringement.
48. None of the Defendants have disputed the rights of the Plaintiffs in
BHPC trademark including their registration under class 25 which deals with
apparel products. The list of registrations obtained by the Plaintiffs have been
exhibited as Exhibit PW1/4 and Defendant No.1 has chosen to ignore the
present proceedings despite having knowledge of the same. Though, the entity
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may be different, it is a matter of public knowledge that the ‘www.amazon.in’
platform is closely linked with Defendant No.1.
49. Written statements have been filed by Defendant No.2 and Defendant
No.3. The stand of Defendant No.2 is that the impugned logo is not being used
in a trademark sense. Insofar as the stand of Defendant No.3 is concerned, it
has submitted that the alleged listings, which the Plaintiffs objected to, have
been removed. Almost all the averments related to the Plaintiffs’ case are
denied for want of knowledge. Thus, neither written statement raises any
substantive defence.
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50. Considering that on 5 September, 2022, Defendant No.2’s Counsel has
also appeared for Defendant No.1 and the suit already stands decreed qua
Defendant No.2, the complete absence of any defence qua Defendant No.1 is
clearly deliberate and conscious. Thus, insofar as the prayer for permanent
injunction is concerned, the ownership of the BHPC trademark has been
established and the infringement by the use of a slavishly imitative logo under
the brand ‘Symbol’ has also been established. Therefore, this Court is of the
opinion that the Plaintiffs’ rights in the trademark deserve to be protected. The
Plaintiffs have, during the course of arguments produced one of the products
which was purchased by them. An image of the said product is set out below:
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51. A perusal of the above image would reveal that the logo which has been
used is hardly distinguishable from the Plaintiffs BHPC logo. The damages
awarded against Defendant No.2 have in fact been deposited by way of
demand draft before this Court – thereby clearly acknowledging the rights and
complying with the decree of damages. The redacted copy of the said
agreement between Defendant No.1 and Defendant No.2 was directed to be
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disclosed vide order dated 20 April, 2022. As per the said redacted
agreement which was filed, the brand ‘Symbol’ clearly is in the ownership of
Defendant No.1:
“2. Trademark License
A. License to Amazon Marks. Amazon grants
Distributor a non-exclusive, non-transferable, non-
assignable and revocable right and license during
the term of the Agreement to use, reproduce, perform,
display, \ distribute and affix without alteration of
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any kind, the trade names, trademarks, service
marks, specifications, designs, logos or symbols
specified in Exhibit A attached hereto (“Amazon
Marks”), solely for the purpose of manufacturing,
distributing or causing to be distributed within the
Authorized Territory, and selling or causing to be
sold within the Authorized Territory, and producing,
causing to be produced, or procuring as applicable
solely as necessary to achieve the foregoing
distribution and sale activities within the Authorized
Territory, the products specified in Exhibit B attached
hereto, which may only be finished goods ready for
resale and not any raw materials or sub-components,
and which may be updated by the Parties over email
from time to time (“Products”), solely in strict
compliance with the terms of this Agreement. Amazon
may determine, in its sole discretion, which Products
Distributor is authorized to distribute and sell
hereunder. Distributor will comply with the
Trademark Guidelines attached as Exhibit C which
Amazon may update from time to time by written
notice to Distributor (“Trademark Guidelines”).
Distributor will not produce, distribute, market, sell
or dispose of Products, Product components that
include Amazon Marks, or any ancillary materials
(including marketing materials) containing Amazon
Marks or Products except as expressly permitted by
this Agreement.
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7. Representations. Distributor represents and
warrants that: (i) Products will be handled, stored,
distributed,
and sold so as to keep them at all times in a first class
condition appropriate for sale to customers and in
any event free of all defects, or safety or health
hazards of any kind; (ii) Distributor's performance
hereunder will not infringe any third party's
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Intellectual Property Rights (except that Distributor
shall not be liable to Amazon for any claim that
Amazon's grant of rights (including with respect to
Amazon Marks) to Distributor hereunder so
infringes); (iii) each Product unit will be sold to
customers only when new and in its sealed original
packaging, unless agreed otherwise between the
Distributor and Amazon; (iv) Distributor's
performance hereunder will conform to all
requirements of applicable law, including all
applicable health, privacy, data security, safety and
environmental regulations; (v) the Reports will be
accurate and complete in all respects; (vi) the
Product Information and import documentation will
comply with all applicable laws and rules in the
Authorized Territory; (vii) Distributor's performance
hereunder (and those of its Affiliates, designees,
permitted successors or assignees, agents, sub-
contractors, and any other Person participating in
Distributor's performance hereunder) will comply in
all respects with Amazon's Supply Chain Standards,
including Amazon's Supplier Code of Conduct, as
displayed at
http://www.amazon.com/gp/help/customer/display.ht
ml/ref=hp sn sup?nodeld-200885140 from time to
time (or any successor site thereto) as though
Distributor were a Supplier to Amazon, including
without limitation that no Products will be handled
by, stored within, or distributed using facilities that
employ forced or prison labor or labor by children
under the age of 15 or the minimum working age
within the applicable jurisdiction, whichever is older.
Amazon represents and warrants that: (i) Amazon's
grant of trademark license (including with respect to
the Amazon Marks) to Distributor hereunder, does
not infringe upon or misappropriate any trademark
or copyright of any third party and (ii) executing this
Agreement will not result in breach by Amazon of
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agreement or understanding, if any, that Amazon may
have entered into with a third party.
8. Warranty. AMAZON MAKES NO
REPRESENTATIONS OR WARRANTY TO
DISTRIBUTOR, EITHER EXPRESS OR IMPLIED,
WITH RESPECT TO THE PRODUCTS, SAVE AND
EXCEPT AS MAY BE SPECIFICALLY PROVIDED
HEREIN. FURTHER, SAVE AS OTHERWISE
PROVIDED IN THE PRECEDING SENTENCE
AND TO THE EXTENT PERMITTED BY
APPLICABLE LAW, AMAZON SPECIFICALLY
DISCLAIMS ALL WARRANTIES INCLUDING BUT
NOT LIMITED TO THE IMPLIED WARRANTIES
OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE.
10. Indemnity.
A. Amazon Indemnity. Except to the proportional
extent caused by Distributor's negligence or
intentional misconduct as determined by a final order
of a court having jurisdiction, Amazon will indemnify
Distributor and its Affiliates and their respective
officers, directors, employees and agents from and
against any claim, llability, loss, damage, cost or
expense, including court costs and reasonable
attorneys and expert witnesses fees before and at trial
and on appeal, (collectively, Expenses") arising from
or related to any actual or threatened claim made by
a third party (collectively, "Claims") based upon (i)
false or misleading representations and/or
warranties, or a breach of warranties, provided by
Amazon to Distributor regarding the Products
hereunder or (iii) the infringement of any copyright
or trademark rights of a third party by Amazon's
grant of rights (including in relation to Amazon
Marks) to Distributor hereunder. Amazon will have
no obligation to indemnify Distributor to the extent a
Claim arises from (x) advertising materials not pre-
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approved by Amazon in accordance with this
Agreement; (y) modifications made by Distributor to
the advertising materials without Amazon's prior
written approval; and/or (2) Distributor's failure to
cease the use and distribution of or substitute
advertising materials or Amazon Marks upon
Amazon's request.”
52. A perusal of the trademark license, liability, and intellectual property
protection clauses in the Amazon Brand License and Distribution Agreement
between Defendant No.1 and Defendant No.2 indicates that Amazon retains
significant control over Cloudtail’s branding and distribution activities. In the
opinion of this Court, the clauses in the Agreement clearly diminish Amazon’s
ability to distance itself from the alleged infringement committed by
Cloudtail. The contractual restrictions on unauthorized trademark use,
coupled with indemnification obligations, provide strong legal grounds for the
Plaintiffs to argue Amazon’s direct involvement in trademark infringement.
The agreement being a license agreement, Defendant No.1 being a licensor
and Defendant No.2 being a licensee, any infringement or unlawful use by the
licensee would also affix liability upon the licensor. While licensing the word
mark SYMBOL, Amazon would be unable to distance itself from the use of
the accompanying horse logo device mark. Thus, the consequences of
infringement squarely fall upon the Defendant No.1. The Defendants were
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also directed on 20 April, 2022 to file an affidavit giving the sales figures
and their inter se relationship at which stage the matter was prayed to be
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referred to mediation. Defendant No.1 was proceeded ex parte on 20 April,
2022. The inter se relationship has not been satisfactorily explained or placed
on record by any of the Defendants. Under such circumstances, the Court has
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to proceed on the basis that Defendant No.1 being fully aware of the pendency
of the present litigation has chosen not to file any defence. It has chosen to
suffer a permanent injunction and, thus, the only question that remains is in
respect of damages.
Analysis of Evidence
53. The evidence has been led by the Plaintiffs of the following witnesses:
G1. Evidence of PW-1- Mr. Eli Haddad
54. PW-1 is the Founder of Plaintiff No.1 and the Managing Director of
Plaintiff No.2. He has personal knowledge of the business of the Plaintiffs.
He, based on the said personal knowledge, has deposed on the following
aspects:
• Details such as the statutory registrations, promotion and advertising,
awards which have been won, etc.,
• Reputation of the Plaintiffs’ brand among the target consumers,
• Steps taken by the Plaintiffs for enforcement of the brand and the mark,
• The models and the manner of licensing of trademark by the Plaintiffs,
• The sales figures of the Plaintiffs’ licensee in India.
55. Deposing on the sales figures, PW - 1 deposed that there are two major
trademark licensing contracts that were entered into by Plaintiff No.2 - one
with Major Brands India Pvt. Ltd. and the another with Apparel Group FZCO.
The first retail store with Major Brands was made operational in December,
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2014. During the first period of operation i.e., from December 2013 to 31
July, 2015 (20 months), Major Brands saw a huge success in its sales and
exceeded the expectation fixed under the TLA. The actual sales made were to
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the tune of $3,836,326/-. However, immediately from the second year of
operations there was a dip in the retail sales of BHPC branded products. From
the period 2015-2016 till 2019-2020, the sales continue to dip. The same is
set out in PW-1 affidavit and is extracted below:
Time Period
Amount
(01 August to 31 July Annually)
(In United States Dollars)
BY 2015-16 2,878,209
BY 2016-17 3,657,308
BY 2017-18 3,205,791
BY 2018-19 3,231,500
BY 2019-20 2,117,092
56. PW-1 had deposed to state he has personal access to the Plaintiffs
company’s data and despite no substantial change being effected either in the
price, the design or the quality, the sales continued to dip.
57. According to PW-1, the fall in sales was due to the infringement by the
defendants which was detected only in May, 2020, when a search was
conducted on platform ‘ www.amazon.in ’. According to PW-1, purchases on
e-commerce platforms are based on images shown to the consumers and the
same can be easily confused. The BHPC brand is immediately identified with
the BHPC logo. The defendants by offering products with the logo device
which is a close dishonest imitation of the BHPC logo has caused the fall in
sales.
58. PW-1 also deposes that the Defendants engage in predatory pricing.
The price of the Plaintiffs’ branded apparel was between Rs.2,500/- to
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Rs.4,500/- whereas the average retail price of the Defendants’ product was
Rs. 375/- or Rs.399/-. According the Plaintiffs, www.amazon.in , one of the
largest e-commerce platforms for retailing of apparel, completely destroyed
the BHPC’s brand by offering infringing goods at throw-away prices. The
Plaintiffs’ sales completely took a hit. This according to PW-1 also led to
destruction of the market of the Plaintiffs’ licensee and disabled the Plaintiffs’
licensee from achieving its targets under the TLA with the Plaintiffs.
59. PW-1 contrasts the falling sales figures in India with that of the other
licensee for the Gulf region wherein the sales during the same very period
multiplied almost 10 times. The actual sale figures for the GCC region are set
out below:
Time Period
Amount
(01 August to 31 July Annually)
(In United States Dollars)
01 January 2013 to 31 July 2014 3,184,289
BY 2014-15 12,009,081
BY 2015-16 20,680,927
BY 2016-17 27,389,718
BY 2017-18 32,161,132
According to PW-1, there is no infringement in the GCC region in the manner
as was indulged in by Amazon in India.
60. PW-1 deposes that apart from the fall in the actual sales, such kind of
pricing led to complete dilution of the Plaintiffs’ brand not merely on online
platforms but even in the normal retail brick and mortar stores. This is
because, the association of the BHPC brand was changed from being a luxury
brand to a cheap brand among the target consumers. The sale of such
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infringing goods according to the Plaintiff completely destroyed the mark of
Major Brands i.e., its licensee. PW-1 also deposes that a platform like
Amazon, which is so popular amongst consumers, indulging in such large-
scale infringing activity on its online e-commerce website, resulted in shaking
the very foundation of the Plaintiffs’ business.
61. PW-1 also highlights the business tie-up of Amazon with another
competitor i.e., the U.S. Polo Association which has also benefitted from its
listings on Amazon. In furtherance of this allegation, PW-1 states that while
in the GCC region there are 120 stores retailing the BHPC branded products
as against 35 stores of U.S. Polo Association, in India only 20 stores of BHPC
brand products exists as against 350 stores of U.S. Polo Association.
62. Thus, according to the PW-1, the benefit to defendants was three-fold.
The said benefits include:
• Profiting from infringing sales under the BHPC mark.
• Devaluing the BHPC brand, reducing its appeal to premium consumers.
• Boosting the market position of U.S. Polo Association, a direct
competitor.
63. Lastly, PW-1 also deposes that the Defendant No.1 was not an innocent
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infringer. He relies on a Reuters publication dated 13 October, 2021, which
analysed a systematic campaign allegedly undertaken by Defendant No. 1,
involving the creation of counterfeit goods and the manipulation of search
results.
64. PW-1 relies upon the quantification of damages by an independent
expert Mr. Gaganpreet Singh Puri-PW-3. PW-1, further, deposes that its
proposed joint venture with a retail partner was also completely destroyed due
to the violations indulged into by the Defendants. According to PW-1, had this
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intended collaboration materialised, the Plaintiffs would have benefitted with
substantial financial gains. It is the claim of PW-1 that on account of the
infringing activities of the Defendant, the Retail Partners did not proceed with
the collaboration, directly resulting in lost enterprise value for the Plaintiffs.
In respect of the lost opportunity to pursue the joint venture with retails
partners and floating an Initial Public Offering (IPO), PW-1 has claimed
reasonable compensation to the tune of USD 50 million dollars, estimated as
the Plaintiff’s share of the lost enterprise value from the proposed joint
venture. The PW-1 has quantified economic damages at USD 33.78 million
on the basis of business plan sales and USD 21.85 million on the basis of
minimum sales in terms of the TLA. In addition, PW-1 highlights that the
unauthorized activities of the Defendant had a cascading effect on the
Plaintiffs’ regional expansion plans. PW-1 has deposed to say that the
Plaintiffs had intended to extend operations into Bangladesh, Sri Lanka, and
Pakistan, expecting to generate at least half the royalties projected from India.
However, on account of the disruptive market conditions caused the
infringement, the said expansion efforts were thwarted. As a result, PW-1
claims compensation for lost royalty earnings between USD 16.89 million
and USD 10.93 million. PW-1 also deposes to say that the Plaintiffs suffered
substantial reputational harm, leading to a loss of trust and confidence among
Retail Partners and also consumers. In addition, PW-1 has specifically
claimed that the Plaintiffs have been forced to increase marketing
expenditures to rebuild customer confidence in the BHPC brand and marks,
which had been severely damaged by the Defendants’ actions. As
compensation for these additional marketing costs, PW-1 claims
compensatory damages amounting to USD 5 million dollars. Additionally, the
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Plaintiffs seek a further USD 5 million as reasonable compensation for the
diminished goodwill and reputation caused by the infringing activities.
G2. Evidence of PW-2 – Mr. Sanjay Shetty
65. PW-2, Mr. Sanjay Shetty, was an official from Major Brands (India)
Pvt. Ltd., one of the licensees which was also dealing with other brands such
as Aldo, Mango, Bebe and Nine West etc., The said PW-2 – Mr. Sanjay Shetty
was handling operations under the BHPC brands since 2014 and had personal
knowledge of the various retail stores , etc., under the BHPC brand. As per his
evidence, the company Major Brands, now called as Apparel Group India, had
opened more than 100 retail stores in India for various retail products
including apparel products. Therefore, PW-2 claimed to have first-hand
knowledge of consumer trends in the Indian fashion market and testified
regarding the same.
66. PW-2 deposed on how the target customer perceives brands worn by
them. The social appeal of a brand, according to PW-2, is also judged by its
pricing along with the market image. Even quality is judged based on the
pricing of the product. There is a presumption that cheaper priced products
are associated with low quality and higher priced products are associated with
high quality. According to him, luxury brands command respect. As per PW-
2, counterfeiting results in credibility of the brand being destroyed. Usually,
luxury brands do not offer products on discounts. According to PW-2, BHPC
products were positioned as affordable luxury products. The target audience
and the customer base majorly constituted of upwardly mobile young urban
professionals who wanted to follow the trends in the market within a certain
price range.
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67. According to PW-2, BHPC was specifically positioned between its two
competitors, U.S. Polo Association and Ralph Lauren Polo Company. The
TLA with Apparel Group India provided a clause that required/mandated the
licensee to achieve business plan sales and minimum sales based on which
royalties would be paid. Online shopping, according to PW-2, has disrupted
the retail fashion industry with the penetration of mobile phones. However,
online shopping makes it difficult for brands to control quality and pricing. In
view thereof, many brands have chosen not to engage in online business.
68. In the first year of operations, the business did very well. However,
thereafter the sale plummeted and as per PW-2, the infringement by the
Defendants was one of the major causes for the same. PW-2 has also reiterated
the evidence given by PW-1 by contrasting the fallen sales figures in the India
region with those in GCC region which rose considerably during the same
period.
G3. Evidence of PW-3 – Mr. Gaganpreet Singh Puri
69. PW-3 is a Chartered Accountant with 20 years of experience. He
deposed with regards to the different models for computation of damages.
PW-3 has, thus, deposed as an independent expert for quantification of
economic losses. The quantification is based on three separate periods i.e.:
th st
i) Pre-infringement period from 26 November, 2012 to 31 July,
2015;
st st
ii) Period of infringement from 1 August, 2015 to 31 July, 2020
commencing from the period when the Defendants launched the
products and provided information of sales till July, 2020;
st
iii) Post-infringement period from 1 August, 2020 and onwards.
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70. PW-3 has applied various models for the purpose of computing the
losses suffered and the damages that the Plaintiffs are entitled. For the said
purpose, PW-3 has positioned the Plaintiffs in the following manner:
“5.4 As laid down in the GAR Publication, I have
used one of the globally accepted methodologies, for
computation of loss of profits or economic damages,
which entails the comparison of the following:
• The financial position that the plaintiff would
have been in the absence of any breach or cause
of damage (But for position)
• The financial position that the Plaintiff is
actually in as a result of such breach or cause of
damage (Actual position)”
71. In order to compute the damages, PW-3 has taken the TLA as the basis
and applied the prescribed percentage of royalty to estimate the economic loss
suffered by the Plaintiffs. For the computation of the ‘but-for’ performance
st
scenario, PW-3 has considered actual sales data for the period between 1
st
August, 2015, and 31 July, 2020, adjusting for operational delays that
occurred at the inception of BHPC’s business in India. Additionally, for a
market-based assessment, PW-3 has incorporated industry literature and
insights from the Indian Fashion Market, including the Wazir Report dated
th
14 June, 2020, to validate the projected sales trends and market positioning
of BHPC.
72. As per PW-3, the total estimate of sales, after computing the ‘but-for’
position of the Plaintiffs, for all the years from 2015-16 to 2023-24, would
have been approximately $343 million dollars. PW-3 has also thereafter
computed the same on the basis of actual plus simulated performance and has
arrived at the conclusion that the Plaintiffs would be entitled to $21.85 million
dollars based on minimum sales criteria prescribed under TLA and $33.78
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million dollars based on the business sales plan criteria prescribed under TLA.
The summary of the computation as set out by the PW-3 is extracted below:
“ 6 . Executive Summary
The executive summary should be read along with the
detailed sections of My Report and must not be
considered to be a substitute for My Report
6.1 Based on the methodology set out in Section 5
above, I have computed the economic damages suffered
by the Plaintiff on account of the IP Infringement, as
enumerated in Section 2.6 above.
But-For Performance
6.2 Clause 4.2 of the TLA, lays down the expected
quantum of "Business Plan Sales" and "Minimum
Sales", for BHPC in India.
6.3 I have considered the TLA as a reliable basis for the
computation of the But-For Performance. The rationale
for the same is as follows:
• The actual quantum of sales for BHPC in India
during the Pre-Infringement Period, after
considering operational delays, was greater than
both the "Business Plan Sales" (by 21.92 %) and the
"Minimum Sales" (by 74.17%), as set out in the TLA.
This has been explained in detail in Section 7.6 to
Section 7.11 of My Report.
• Further, to additionally test the TLA, I was informed
that the Plaintiff had a similar Trade License
Agreement with a sister concern of MBIPL for the
Gulf Cooperating Countries ("GCC") region ("TLA
for BHPC in GCC"). The TLA for BHPC in GCC also
provided for similar benchmarks of "Business Plan
Sales" and "Minimum Sales" for BHPC in GCC.
Based on the information provided to me for GCC by
Counsel, the actual sales of BHPC in GCC exceeded
the Minimum Sales as per the TLA for BHPC in GCC.
Since, the minimum sales for another geographic
location, from the business relations between the
Plaintiff and a sister concern of MBIPL was in line
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with TLA for BHPC in GCC, this provided additional
comfort to rely on the Minimum Sales as per the TLA
for the quantification of economic damages caused to
the Plaintiffs. This has been explained in detail in
Section 7.13 and Section 7.14 of My Report.
st
6.4 As per the TLA, the 1 period of business was
envisaged from 01 January 2013 until 31 July 2014, the
nd
2 period of business from August 2014 until July 2015,
th
5 Period of business from August 2017 until July 2018
th
and the 10 period of business being August 2022 until
July 2023.
6.5 I was informed that there were some operational
delays in opening the first store of BHPC in India and
based on the information made available to me by
Counsel, the first sale for BHPC in India, took place in
December 2013. The comparison of sales from
December 2013 until July 2014 (8 months), with the
sales envisaged in the TLA from 01 January 2013 until
31 July 2014 (19 months), would not be comparable.
st
6.6 Therefore, the 1 period of actual business of BHPC
in India would be from December 2013 until July 2015,
nd
2 period of actual business from August 2015 until July
th
2016 (BY 2015- 16), 5 Period of actual business from
th
August 2018 until July 2019 (BY 2018-19) and the 10
period of actual business being August 2023 until July
2024 (BY 2023-24). Accordingly, I compare the sales as
per Clause 4.2 of the TLA with the corresponding period
of actual business of BHPC in India. This has been
explained in detail in Section 7.6 to Section 7.11 of My
Report.
6.7 The TLA contained the annual information
th
regarding the "Minimum Sales" until the 5 Period.
Further, the TLA also sets out the quantum of Minimum
Sales of USD 25 .00 Million to be achieved until the 10th
year of business i.e., BY 2023-24.”
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G4. Evidence of PW-4 – Mr. Arvind Dhingra
73. PW-4 is an independent expert engaged by the Plaintiffs to assess the
impact of the Defendants’ alleged infringing activities on the business
performance of BHPC. He has deposed that the infringing activities of the
Defendants resulted in a significant decline in the business of BHPC in India.
In his evidence, he concludes as under:
• The fundamental business parameters of the Beverly Hills Polo Club
brand, such as pricing and product quality, remained unchanged during
the period under review. Accordingly, he deposes that the decline in
business performance of the Plaintiffs after the first year, cannot be
attributed to any internal factors and would be attributable to the
infringing activities of the Defendants.
• In his testimony he stated that the drop in sales between July 2015 and
July 2020 was directly linked to the availability of deeply discounted
infringing products in the online marketplaces, particularly on Amazon,
a dominant e-commerce platform with extensive reach.
• The case represents a classic instance of brand sabotage , where a
market giant has disrupted an emerging brand, despite the latter having
strong business fundamentals. In his deposition, he states that this
damage may have been caused intentionally or unintentionally, but the
effect remains the same, i.e., detrimental harm to the Plaintiffs’
business.
• Based on the above factors, PW-4 deposes to state that he has no doubt
that the infringing activities of the Defendants were directly responsible
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for the significant decline in the Plaintiffs’ business under the Beverly
Hills Polo Club brand.
• The relevant extracts from the evidence affidavit of PW-4 are set out
below:
“xxx xxx xxx
24. Therefore, quite clearly, there were external forces
that were responsible for this decline in business,
given that the fundamentals of the business, i.e., the
pricing and quality of the products sold under the
Beverly Hills Polo Club Brand, remained largely
constant.
25. The decline in sales numbers for the Beverly Hills
Polo Club Brand in India for the period July 2015 to
July 2020 was quite obviously caused by the
availability of the deeply discounted Impugned
Products in the market, and that too, on a platform
as omnipresent as Amazon .
26. I state that the case represents one of the classis
sabotage of brands - where a giant of the market has
torn apart an upcoming brand that had all its
fundamentals going strong, either intentionally or
unintentionally.
27. Therefore, with this, and the above reasons in
mind, I have no doubt that the infringing activities
are directly responsible for causing decline in the
Plaintiffs' business under the Beverly Hills Polo
Club Brand .”
G5. Evidence of PW-5 – Mr. Gavin Rawling
74. PW-5 is also an independent expert who has 30 years of experience in
branded fashion business. He has deposed about his experience in this
business and how during his tenure as a Consultant with TKMAXX Stores,
he gained first-hand knowledge of both e-commerce as also the concept of
selling branded apparel, accessories, footwear both at original and discounted
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prices. He also had experience in dealing with counterfeit products. He
acknowledges the shift in dynamics of brand building strategies with the
advent of e-commerce. PW-5 states that the four factors that result in damage
to brands in online platforms are:
i) Sale of Fake/counterfeit products;
ii) Aggressive promotion and discounting strategies by
brand/licensee;
iii) Grey market trading;
iv) Copying of established brands, trademarks and styles.
75. PW-5’s also states that there can be detrimental impact on luxury brands
due to deep discounting. He emphasizes that discounting of branded products,
whether by the brand itself or by authorized retailers, can lead to severe brand
erosion and, in some cases, extinction. Drawing from his experience with G-
Star Raw, a premium denim brand, he explains that indiscriminate discounting
significantly reduces perceived brand value, making it difficult for luxury
brands to sustain their premium market positioning. According to him, deep-
discounting of branded products could lead to enormous damage and even to
extinction of brands.
76. With regards to the impact of copying of brands/trademarks, PW-5
provided a specific example of a popular high street fashion brand, which
suffered significant dilution due to large-scale imitation of its trademark and
distinctive design elements. He notes that rampant, large-scale infringement
can erode a brand’s exclusivity and diminish its aspirational appeal, which is
critical for maintaining the prestige of premium and luxury brands.
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77. Insofar the BHPC brand is concerned, PW-5 sets out the information
which he has learnt from the Plaintiffs. He deposes that the Horse and Polo
Player logo of BHPC is identical to the logo used by the infringing products,
which leads to consumer confusion and brand dilution. According to PW-5,
the use of nearly identical logo in the infringing products which are being sold
at less than 10% of the original price leads to skewing of the FQPB (Fashion,
Quality, Price, and Brand) quotient, which is a key metric used to assess brand
positioning and market perception. The relevant paragraphs from his affidavit
are set out below:
“119. For starters, one does need to be Sherlock
Holmes to conclude that the "horse-and-polo player"
device on the Impugned Products is identical to the
"horse-and-polo player" device of the Beverly Hills
Polo Club Brand. Therefore, for the purpose of my
opinion, I would consider that these two marks would
be found to be nearly identical to each other, although
I do not express any opinion on that point, which
would be for the lawyers to show. Once apparel
products bearing such near identical logos are
available to consumers, the market for the original
products at full price is lost.
120. Therefore, as soon as a consumer would start
relating the Impugned Products with the genuine /
original products of the Plaintiffs under the Beverly
Hills Polo Club Brand, it would immediately ring the
‘death-knell’ for the Beverly Hills Polo Club Brand in
India. Clearly, if the genuine apparel under the
Beverly Hills Polo Club Brand in India was being sold
in the range of Rs.3,000 and Rs.4,000, and the
Impugned Products were being sold in the price band
of Rs.375, almost an 80% to 90% cut, you can consider
the original brand as destroyed. The 'FQPB' (the level
of Fashion, Quality, Price and Brand) quotient of the
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Beverly Hills Polo Club Brand becomes totally skewed
in a negative manner.
121.1 would consider the problem to stand aggravated
when I consider that an Amazon-entity (Amazon
Technologies) was carrying out these activities on a
platform owned by the same platform along with
assistance from local subsidiary Amazon Seller
Services Private Limited. This is because the traction
and leverage that products of Amazon entities get on
Amazon ecommerce platforms is second to none. This
would have led to higher visibility of the Impugned
Products to end-consumers, and heightened the
possibility and extent of damage that the Impugned
Products could have caused to the Beverly Hills Polo
Club Brand in India. A parallel can clearly be drawn
between the paid services offered by Google on its
search-engine platform. The decline in sales numbers
for the Beverly Hills Polo Club Brand in India for the
period July 2015 to July 2020 evidence that such
damage did occur and that the impact of such
activities was severe. I have no doubt that such decline
in sales was caused by the availability of the Impugned
Products in the market.”
78. PW-5 further deposes to state that the visibility of deep-discounted
infringing products on a dominant e-commerce platform like Amazon
exacerbates the damage. He drew parallels to paid search advertising on
Google, emphasizing that platform-owned brands or preferred listings gain
disproportionate consumer traction, thereby amplifying the extent of harm
caused to established brands like BHPC. PW-5 concludes to state that the
decline in sales figures for BHPC in India from July 2015 to July 2020 is clear
evidence of the severe damage caused by the Defendants’ infringing activities,
leaving no doubt that the availability of counterfeit and deeply discounted
products directly impacted the Plaintiffs’ business. PW-5 also states that the
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goodwill of the Plaintiffs has gotten eroded on account of deep-discounting
by Amazon, with the use of the infringing logo by Amazon a direct attack on
the Plaintiffs brand.
H. Findings
79. The Court has perused the pleadings, the documents placed on record
and the evidence led by the Plaintiffs. As already discussed above, the
Defendant No.1 has failed to contest the suit though it has complete
knowledge of the proceedings of the suit. In fact, counsel for Defendant no.2
had appeared for Defendant no.1 and made submissions before the Court.
Thus, the pendency of the suit is well within Defendant no.1’s knowledge.
The infringing products were being sold in India and thus this Court is a Court
of a competent jurisdiction. Defendant No.2 and Defendant No.3 are the
retailers and the platforms respectively who have already suffered a
permanent injunction. Defendant No.2 has in fact suffered a decree of
monetary damages and has complied with it by depositing the said amount in
th
the Court. As is evident from the order dated 5 September, 2022, Defendant
Nos.1 and 2 are connected as Defendant No.2’s Counsel represented
Defendant No.1 in the said hearing and stated in no uncertain terms the
Defendant No.1 is willing to suffer a permanent injunction. In the absence of
any defence or challenge to the ownership of the brand and the infringing
conduct complained of, the Court could have in fact pronounced judgment
even without evidence in terms of the provisions of Order VIII Rule 10 CPC
as also Rule 27 of the Delhi High Court Intellectual Property Division Rules,
2022 (hereinafter ‘ IPD Rules ’). As per Rule 27 of the IPD Rules, this Court
was empowered to pass a summary judgment, without the requirement of
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filing a specific application seeking summary judgment on principles similar
to that of Order XIII-A, CPC as amended by Commercial Courts Act, 2015.
80. The Plaintiffs have, however, claimed damages in the present suit and
considering the sheer expanse of Amazon’s activities globally and in India,
the Plaintiffs have chosen to lead evidence in the matter for quantifying actual
damages. The evidence of all the five witnesses has been summarized above
by this Court. On behalf of the Plaintiffs, two witnesses i.e., PW-1 and PW-2
have deposed - both of whom had personal knowledge as to vital aspects such
as reputation of the plaintiffs’ brand, their consumer base, licensing models,
trademark registrations and sale figures etc. They have deposed in respect of
the activities of the Plaintiffs, the rights owned by the Plaintiffs, the
agreements entered into and the claim for damages. A perusal of the infringing
marks and products shows that this is a case where the ‘TRIPLE IDENTITY
TEST’ for determining if a trademark has been infringed, has been satisfied:
• The horse device logo is almost identical.
Plaintiffs Device Mark Mark used by the
Defendant
• The goods are identical -- apparel.
• The consumers/trade channels are also identical.
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nd
The Court has already held vide order dated 2 March, 2023 that the Plaintiffs
are entitled to permanent injunction against Defendant No.1 from using
BHPC logo in any manner whatsoever. Thus, the suit is liable to be decreed
qua Defendant no.1, in terms of paragraph 64(a), (b) and (c) of the plaint.
81. Insofar as the aspect of damages is concerned, this Court has given
considerable thought to this aspect. With the advent of e-commerce platforms,
selling of goods and services in the traditional manner has almost been
disrupted. Consumers prefer to buy from the comforts of their homes. The
emphasis is on quick reviewing, ordering and delivery. As time is at a
premium, sales through e-commerce platforms have not merely risen but
grown to astronomical limits. One of the biggest players in the e-commerce
industry globally is Amazon. Defendant No.1 – Amazon Technologies Inc.
has its headquarters at Seattle, U.S.A. but runs its e-commerce businesses in
several countries of the world including in India. In most major markets, the
Amazon platform runs on a country-based website through its subsidiaries,
associate companies or group companies. The platform www.amazon.in like
other e-commerce platforms would be selling at least two kinds of products
on its website i.e.,
i) Products belonging to third party retailers who are no way
connected with any of its group or associate companies,
ii) Products which are retailed under brands belonging to the
principal company – Amazon Technologies Inc. or group
companies or associate companies or subsidiaries.
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82. In the present case, the Defendants have failed to disclose the exact
relationship between each other despite specific orders. However, the
admitted position is that the brand ‘Symbol’ belongs to Defendant No.1. It
was licensed to Defendant No.2 under the Amazon Brand License and
Distribution Agreement. Defendant No.3 is also a company which is part of
the Amazon group.
83. The use of the impugned logo/mark is not in dispute. Defendant No.2
and Defendant No.3 have already suffered a permanent injunction. This Court
has also injuncted Defendant No.1. The question is whether Defendant No.1
would be liable to pay damages for such blatant infringement on the e-
commerce platform which can also be termed as e-infringement , as it was the
entity which was responsible for the infringing conduct of Defendant No.2 on
Defendant No.3’s platform. The answer is clearly in the affirmative.
I. Assessment of Damages
84. It is the settled position in law that whenever infringement is proved,
the Plaintiffs are entitled to damages. The fundamental principle underlying
the grant of damages is to compensate the Plaintiff for the economic loss
suffered on account of the unauthorized use of its trade mark. Under Section
135 of the Trade Marks Act, 1999, the Plaintiffs have the option of claiming
either damages or rendition of accounts of profits, ensuring that they are
adequately compensated for the unlawful exploitation of their trademark. The
said provision reads as under:
“135. Relief in suits for infringement or for passing
off.—(1) The relief which a court may grant in any
suit for infringement or for passing off referred to in
section 134 includes injunction (subject to such
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terms, if any, as the court thinks fit) and at the option
of the plaintiff, either damages or an account of
profits, together with or without any order for the
delivery-up of the infringing labels and marks for
destruction or erasure.
(2) The order of injunction under sub-section (1) may
include an ex parte injunction or any interlocutory
order for any of the following matters, namely:—
(a) for discovery of documents;
(b) preserving of infringing goods, documents or
other evidence which are related to the subject-
matter of the suit;
(c) restraining the defendant from disposing of or
dealing with his assets in a manner which may
adversely affect plaintiff’s ability to recover
damages, costs or other pecuniary remedies which
may be finally awarded to the plaintiff.
(3) Notwithstanding anything contained in sub-
section (1), the court shall not grant relief by way of
damages (other than nominal damages) or on
account of profits in any case—
(a) where in a suit for infringement of a trade
mark, the infringement complained of is in relation
to a certification trade mark or collective mark; or
(b) where in a suit for infringement the defendant
satisfies the court—
(i) that at the time he commenced to use the
trade mark complained of in the suit, he was
unaware and had no reasonable ground for
believing that the trade mark of the plaintiff
was on the register or that the plaintiff was a
registered user using by way of permitted use;
and
(ii) that when he became aware of the
existence and nature of the plaintiff’s right in
the trade mark, he forthwith ceased to use the
trade mark in relation to goods or services in
respect of which it was registered; or
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(c) where in a suit for passing off, the defendant
satisfies the court—
(i) that at the time he commenced to use the
trade mark complained of in the suit, he was
unaware and had no reasonable ground for
believing that the trade mark for the plaintiff
was in use; and
(ii) that when he became aware of the
existence and nature of the plaintiff’s trade
mark he forthwith ceased to use the trade mark
complained of.”
85. In Titan Industries v. Nitin P. Jain and Ors., MANU/DE/2590/2005 ,
a ld. Single Judge of this Court has highlighted that in trademark infringement
suits, instituted either under the Trade Marks and Merchandise Act, 1958 or
the Trade Marks Act, 1999, Plaintiffs have the option to claim either damages
or an account of profits. The said judgment also reiterated that damages are a
matter of right, whereas an account of profits is an equitable remedy, granted
at the Court’s discretion. The relevant extract of the said judgment reads is set
out below:
“17. The aforesaid principles laid down by the English
Courts on the claims for damages and/or account of
profits are based on common law principle applicable in
torts. Section 106 of the Act and its equivalent provision
contained in Section 135 of the Trade Marks Act, 1999,
are nothing but the legislative mandate to the aforesaid
common law principles. Therefore, once this provisions
states that the plaintiff can claim relief either for
damages or relief for account of profits , reading the
aforesaid principles into this provision it is also to be
held that both the reliefs can be claimed in the
alternative with right to the plaintiff to make an
informed election between damages and profits in the
course of trial in the light of information revealed on
discovery and the evidence at the trial.”
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86. In the present case, the Plaintiffs have initially prayed for both damages
and rendition of account of profits. However, the Plaintiffs have led evidence
only in respect of damages and do not press the relief of rendition of account
of profits. Moreover, since Defendant No.1 has not filed its defence or
submitted its sales figures, the accounts of profits are not determinable.
Accordingly, this Court shall assess damages based on the financial harm
suffered by the Plaintiffs, rather than conducting an inquiry into the
Defendant’s profits. The general principles for assessment of damages have
th
been set out succinctly in Kerly’s Law Trade Marks and Trade Names (15
ed.) . The relevant portion of the same is set out below:
“20-139 The basic principles for the assessment of
damages in a patent case were considered by Jacob J.
in Gerber v Lectra. The following principles are
applicable to trade mark infringement:
(1) Damages are compensatory only, to put the
claimant in the same position he would have
been in had the wrong not been sustained.
(2) The burden of proof lies on the claimant, but
damages are to be assessed liberally.
(3) Where the claimant has licenced his right, the
damages are the lost royalty.
(4) It is irrelevant that the defendant could have
competed lawfully.
(5) Where the claimant has exploited his right by
his own sales, he can claim lost profit on sales
by the defendant he would have made otherwise,
and lost profit on his own sales to the extent that
he was forced by the infringement to reduce his
own price.
20-140 Jacob J. also held as part of principle (5)
that a claimant who obtains damages for sales by
the defendant which he has proved would have been
made by him in the absence of the infringement, will
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be entitled to damages on the basis of a reasonable
royalty for all the other infringements. With regards
trade mark cases it has been doubted whether this
particular principle applies to all types of trade
mark cases. However, in a recent Patents County
Court trade mark infringement case damages were
awarded on a user basis (i.e. notional royalty fees
were awarded) in circumstances where the trade
mark proprietor had licensed others to use the trade
mark and charged for its use.
20-141 It is important to note that in assessing
damages for lost sales on a usual compensatory
basis, it will be necessary for the court to determine
what proportion of the defendant's customers have
been confused (as opposed to assessment on a user
basis). On this basis the claimant is not entitled to
damages for sales to persons who have not been
misled, since he has suffered no loss in respect of
them, and, arguably, no actionable wrong has been
committed in respect of sales to them. If he were to
recover damages in relation to such persons, he
would be over-compensated.
OTHER HEADS OF DAMAGE
20-142 In general, the only injury which is done by
an infringement is that the defendant's goods or
services are sold instead of those of the claimant,
and the sale of the latter is, in some degree,
diminished in consequence. But it may appear that
further damage has been done, for instance, where
spurious goods are so inferior to the genuine as to
injure the trade reputation of the claimant, or where
the stress of the competition compels the claimant
to lower his prices and thus suffer loss.
20-143 The cost of advertisements to counteract the
effect of the defendant's conduct may be taken into
account . Further, the legal costs of putting on notice
foreign manufacturers of infringing materials have
been held recoverable.
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20-144 In the area of damages for patent
infringement it has been held that, provided
causation is shown, and subject to the normal rules
as to remoteness of damage, it is possible to recover
damages for items sold as a result of an infringing
sale, even if such ancillary items do not themselves
infringe. There appears no reason why this
principle should not apply to trade mark
infringement in appropriate circumstances. ”
87. Then the next question would be what should then be the quantum of
damages—i.e., what should be the appropriate measure of compensation?
Damages can be broadly classified into three kinds:
i) Notional damages,
ii) Compensatory damages,
iii) Punitive damages.
88. Notional damages are awarded where infringement is proven but direct
evidence of financial loss is unavailable. Compensatory damages are intended
to restore the plaintiff to the position it would have been in but for the
infringement, often assessed based on lost profits or reasonable royalty rates.
Punitive damages serve as a deterrent in cases of egregious or wilful
infringement.
89. The Delhi High Court Intellectual Property Rights Division Rules,
2022, under Rule 20, lays down the relevant factors for determining the award
of damages, based on settled principles of law. Rule 20 specifically outlines
the methodology for assessing damages:
“20. Damages/Account of profits A party seeking
damages/account of profits, shall give a reasonable
estimate of the amounts claimed and the foundational
facts/account statements in respect thereof along
with any evidence, documentary and/or oral led by
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the parties to support such a claim. In addition, the
Court shall consider the following factors while
determining the quantum of damages:
(i) Lost profits suffered by the injured party;
(ii) Profits earned by the infringing party;
(iii) Quantum of income which the injured party
may have earned through royalties/ license
fees, had the use of the subject IPR been
duly authorized;
(iv) The duration of the infringement;
(v) Degree of intention/neglect underlying the
infringement;
(vi) Conduct of the infringing party to mitigate
the damages being incurred by the injured
party; In the computation of damages, the
Court may take the assistance of an expert
as provided for under Rule 31 of these
Rules.”
90. The law on damages in trade mark infringement matters, has been well
settled by the ld. Division Bench of this Court in Hindustan Unilever Limited
(Supra). Given that a significant portion of the submissions in this matter have
been directed towards the request for the grant of punitive damages, this Court
shall also review the legal framework for punitive damages as given in
Hindustan Unilever Limited (Supra). The relevant portions of the said
judgment is set out below:
“Correctness of the approach of the Single Judge as
to damages
61. In this section of the judgment, this court
proposes to discuss the correctness of award of
damages by the learned Single Judge in the
impugned judgment. As noticed previously, the
Single Judge felt that the plaintiff, Reckitt had been
unable to prove the damages suffered on account of
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disparagement; yet award of punitive damages were
called for. The defendant, HUL questions the grant
of punitive damages whereas the plaintiff Reckitt
complains that general or compensatory damages
ought to have been awarded.
62. It is an accepted principle in English law that
general damages are "at large" in the case of
defamation, including disparagement, slander, etc.
This was first stated in South Hetton Coal Company
Limited v. North-Eastern News Association Limited,
[1894] 1 QB 133 that "if the case be one of libel-
whether on a person, a firm, or a company-the law is
that damages are at large. It is not necessary to prove
any particular damage; the jury may give such
damages as they think fit, having regard to the
conduct of the parties respectively, and all the
circumstances of the case. " It is important that a
successful plaintiff is allowed to recover such
damages as would compensate for the loss of its
reputation. […]
63. In the present case, the plaintiff (Reckitt) has been
able to prove, successfully, that HUL telecast the
impugned 30 second advertisement on a large
number of occasions (2763 times, to be precise,
according to Ex. PW-1/19). The innuendo was
cleverly designed to suggest that Reckitt's Dettol
Original caused damage to the skin. The advertiser,
i.e. HUL, was conscious that it was crossing the
boundary between permissible "puffing" and what
was prohibited in law. The evidence on record, in the
form of HUL's witnesses' testimony, is that Rs. 2.5
crores was spent in July 2007 alone for advertising
its product. HUL also admitted during the trial that
the Dettol Original brand was worth Rs. 200 crores.
Such being the case, this Court holds that the Single
Judge's reluctance to award general damages was
not justified. It would be necessary to mention in this
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context that it may not be possible for an otherwise
successful plaintiff, in a disparagement or slander of
goods action to always quantify the extent of loss;
there would necessarily be an element of dynamism
in this, because of the nature of the product, the
season it is sold in, the possible future or long term
impact that may arise on account of the
advertisement, etc. Therefore, courts the world over
have resorted to some rough and ready calculations.
64. In view of the evidence presented before this
Court (i.e. the number of times the advertisement
was telecast, the quantum of advertisement
expenses of HUL, the amount spent by Reckitt, to
advertise its product, etc) this Court is of opinion
that the plaintiff is entitled to recover general
damages to the tune of Rs. 20 lakhs. The impugned
judgment and order is modified to that extent, and the
cross objection by Reckitt, is consequently allowed in
these terms.
xxx xxx xxx
67. In India, the Supreme Court has affirmed the
principles in Rookes (supra) and Cassel (supra).
Interestingly, however, the application in those cases
has been in the context of abuse of authority leading
to infringement of Constitutional rights or by public
authorities (ref. Ghaziabad Development Authority
v. Balbir Singh, (2004) 5 SCC 6; Lucknow
Development Authority v. M.K. Gupta, 1994 SCC (1)
243). As yet, however, the Supreme Court has not
indicated the standards which are to be applied while
awarding punitive or exemplary damages in libel,
tortuous claims with economic overtones such as
slander of goods, or in respect of intellectual
property matters. The peculiarities of such cases
would be the courts ‟need to evolve proper
standards to ensure proportionality in the award of
such exemplary or punitive damages. The caution
in Cassel that “[d]amages remain a civil, not a
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criminal, remedy, even where an exemplary award
is appropriate, and juries should not be encouraged
to lose sight of the fact that in making such an
award they are putting money into a plaintiff’s
pocket….” can never be lost sight of. Furthermore
– and perhaps most crucially –the punitive element
of the damages should follow the damages assessed
otherwise (or general) damages; exemplary
damages can be awarded only if the Court is
“satisfied that the punitive or exemplary element is
not sufficiently met within the figure which they
have arrived at for the plaintiff’s solatium”. In other
words, punitive damages should invariably follow
the award of general damages (by that the Court
meant that it could be an element in the
determination of damages, or a separate head
altogether, but never completely without
determination of general damages).
68. This court is of the opinion that the impugned
judgment fell into error in relying on the decision
in Times Incorporated v. Lokesh Srivastava 116
(2005) DLT 569. A Single Judge articulated, in his
ex parte judgment in a trademark infringement
action, as follows:
“This Court has no hesitation in saying that the
time has come when the Courts dealing actions
for infringement of trade-marks, copyrights,
patents etc. should not only grant compensatory
damages but award punitive damages also with
a view to discourage and dishearten law
breakers who indulge in violations with
impunity out of lust for money so that they
realize that in case they are caught, they would
be liable not only to reimburse the aggrieved
party but would be liable to pay punitive
damages also, which may spell financial
disaster for them. In Mathias v. Accor Economy
Lodging, Inc. reported in 347 F.3d 672 (7th Cir.
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2003) the factors underlying the grant of
punitive damages were discussed and it was
observed that one function of punitive damages
is to relieve the pressure on an overloaded
system of criminal justice by providing a civil
alternative to criminal prosecution of minor
crimes. It was further observed that the award
of punitive damages serves the additional
purpose of limiting the defendant’s ability to
profit from its fraud by escaping detection and
prosecution. If a to tortfeasor is caught only half
the time he commits torts, then when he is
caught he should be punished twice as heavily
in order to make up for the times he gets away.
This Court feels that this approach is
necessitated further for the reason that it is very
difficult for a plaintiff to give proof of actual
damages suffered by him as the defendants who
indulge in such activities never maintain proper
accounts of their transactions since they know
that the same are objectionable and unlawful. In
the present case, the claim of punitive damages
is of Rs.5 lacs only which can be safely
awarded. Had it been higher even, this court
would not have hesitated in awarding the same.
This Court is of the view that the punitive
damages should be really punitive and not flee
bite and quantum thereof should depend upon
the flagrancy of infringement.”
With due respect, this Court is unable to subscribe to
that reasoning, which flies on the face of the
circumstances spelt out in Rookes and later affirmed
in Cassel. Both those judgments have received
approval by the Supreme Court and are the law of
the land. The reasoning of the House of Lords in
those decisions is categorical about the
circumstances under which punitive damages can
be awarded. An added difficulty in holding that every
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violation of statute can result in punitive damages
and proceeding to apply it in cases involving
economic or commercial causes, such as intellectual
property and not in other such matters, would be that
even though statutes might provide penalties, prison
sentences and fines (like under the Trademarks Act,
the Copyrights Act, Designs Act, etc) and such
provisions invariably cap the amount of fine,
sentence or statutory compensation, civil courts can
nevertheless proceed unhindered, on the assumption
that such causes involve criminal propensity, and
award “punitive” damages despite the plaintiff‟s
inability to prove any general damage. Further, the
reasoning that “one function of punitive damages is
to relieve the pressure on an overloaded system of
criminal justice by providing a civil alternative to
criminal prosecution of minor crimes” is plainly
wrong, because where the law provides that a crime
is committed, it indicates the punishment. No statute
authorizes the punishment of anyone for a libel- or
infringement of trademark with a huge monetary
fine-which goes not to the public exchequer, but to
private coffers. Moreover, penalties and offences
wherever prescribed require the prosecution to prove
them without reasonable doubt. Therefore, to say
that civil alternative to an overloaded criminal
justice system is in public interest would be in fact to
sanction violation of the law. This can also lead to
undesirable results such as casual and unprincipled
and eventually disproportionate awards.
Consequently, this court declares that the reasoning
and formulation of law enabling courts to
determine punitive damages, based on the ruling in
Lokesh Srivastava and Microsoft Corporation v.
Yogesh Papat and Another, 2005 (30) PTC 245
(Del) is without authority. Those decisions are
accordingly overruled. To award punitive damages,
the courts should follow the categorization indicated
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in Rookes (supra) and further grant such damages
only after being satisfied that the damages awarded
for the wrongdoing is inadequate in the
circumstances, having regard to the three categories
in Rookes and also following the five principles in
Cassel. The danger of not following this step by step
reasoning would be ad hoc judge centric award of
damages, without discussion of the extent of harm or
injury suffered by the plaintiff, on a mere whim that
the defendant’s action is so wrong that it has a
“criminal” propensity or the case merely falls in one
of the three categories mentioned in Rookes (to quote
Cassel again – such event “does not of itself entitle
the jury to award damages purely exemplary in
character”).”
91. In the above decision, the Division Bench has held that the principles
laid down by the House of Lords in the decisions in Rookes v. Barnard,
[1964] 1 All E. R. 367 and Cassell & Co Ltd v Broome, [1992] AC 1027
govern the award of punitive damages. In Rookes (supra) , the House of Lords
laid down that aggravated or punitive damages could be granted in the
following three circumstances:-
a) Oppressive, arbitrary or unconstitutional action by any of the servants
of the government;
b) Wrongful conduct by the defendant which has been calculated by him
for himself which may well exceed the compensation payable to the
claimant; and
c) Any case where exemplary damages are authorised by the statute.
92. In view of the decision in Hindustan Unilever Limited (supra)
discussed above, punitive damages can be awarded only under certain
circumstances. However, there is no bar on award of notional damages and
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compensatory damages in case of infringement of a brand or a logo. The
award of damages has to be on the basis of evidence which shows the extent
of damage and the same can also be in approximate terms. In Story
Parchment Co. v. Paterson Parchment Paper Co., reported at 51 S.Ct. 248 ,
a decision which the Division Bench in Hindustan Unilever Limited (supra)
has considered. The relevant observations in Story Parchment are as under:
“Where the tort itself is of such a nature as to preclude
the ascertainment of the amount of damages with
certainty, it would be a perversion of fundamental
principles of justice to deny all relief to the injured
person, and thereby relieve the wrongdoer from
making any amend for his acts. In such case, while
the damages may not be determined by mere
speculation or guess, it will be enough if the evidence
show the extent of the damages as a matter of just
and reasonable inference, although the result be only
approximate. The wrongdoer is not entitled to
complain that they cannot be measured with the
exactness and precision that would be possible if the
case, which he alone is responsible for making, were
otherwise... The risk of the uncertainty should be
thrown upon the wrongdoer instead of upon the
injured party… Difficulty of ascertainment is no
longer confused with right to recovery.”
Thus, damages can be awarded on an approximate basis on reasonable
inference.
93. In Strix Ltd v. Maharaja Appliances Limited, 2023:DHC:7695 , this
Court reaffirmed the settled legal position of law on damages in IP
infringement suits In Strix Ltd. (supra) relying on the decision of the UK
Court of Appeal in Gerber Garment Technology Inc. v. Lectra Systems Ltd.,
[1997] R.P.C. 443 , this Court held that in respect of patent infringement suits,
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if the patentee cannot prove their losses on actual basis, it is permissible to
assess the same on a reasonable royalty basis. The relevant extract of the
judgment of this Court in Strix Ltd. (supra) is set out below:
“74. A perusal of the aforementioned decisions as
also IPD Rules shows that various aspects such as
sales made by the Defendant, market share of the
Defendant, royalty which the Defendant would have
to pay if the infringing product had to be a licensed
product, have to be considered before awarding
damages.
75. Further, as per the landmark decision of the UK
Court of Appeal in Gerber Garment Technology Inc.
v. Lectra Systems Ltd., [1997] R.P.C. 443, if the
patentee cannot prove the loss, it is permissible to
assess the same on a reasonable royalty basis. Where
the patentee is a manufacturer of the patented
product, reasonable profit that the patentee would
have had earned if the infringing products were in
fact sold by the patentee would be reasonable
measure. It is further clarified that, once
infringement is established, the Court can infer that
reasonable invasion of the patentee’s monopoly
would cause damage to the patentee and accordingly,
a fair and reasonable measure can be adopted by the
Court for computing the damages.
76. Reverting to the facts of this case, the Plaintiff’s
witness has not given any evidence of damages and
the Defendant’s sales or profits are not disclosed on
record. The Defendant has chosen to stay away from
the proceedings and cannot be given an advantage.
In a case where the evidence is not led, the damages
have to be notional and are to be considered on a
reasonable/fair basis. In such a case, the Court can
only make a broad assessment of profits, on the basis
of the evidence on record.”
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94. In Kerly’s Law on Trade Marks and Trade Names , it has been
recognised that the guidance on calculation of damages provided by Lord
Justice Robin Jacob in Gerber Garment Technology Inc. (supra) can also
be used for determination of damages in trademark infringement suits.
95. In contrast to the factual matrix in Strix Ltd. (supra) , where the Court
had to rely on a broad assessment due to the absence of quantifiable evidence,
in the present case, financial data has been provided by the Plaintiffs. The
Plaintiffs have led specific evidence through PW-3 , who has quantified the
financial losses suffered by the Plaintiffs. This enables the Court to have an
actual assessment of the economic harm caused by the Defendant’s infringing
activities. Given the availability of such evidence, the determination of
damages in this case does not rest on presumptions but on a factual evaluation
of the losses incurred, ensuring appropriate redressal for the plaintiff.
96. The discussion in Strix (supra) establishes that while assessing
damages, the Court can take into consideration various factors. The ultimate
object of the enquiry on damages would be to compensate the Plaintiffs for
the harm that it has suffered and to ensure that they do not incur economic
losses on account of the infringing actions of the Defendant. Accordingly, for
the determination of the compensation payable to the Plaintiffs as Damages,
this Court shall take into account the following factors:
• The actual loss suffered by the Plaintiffs due to the infringement;
• The means by which the Plaintiffs can be restored to their original
market position, including potential claims for lost royalties.
Furthermore, where infringement is deliberate, mala fide , mischievous, or
dishonest, and the Defendant chooses to remain absent from legal
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proceedings, it cannot be placed in a better position than it would have been
had it actively participated. This has also been affirmed by ld. Single Judges
of this Court in M/s Inter Ikea Systems BV Anr v. Imtiaz Ahamed & Anr.,
2016:DHC:6431 and Cartier International AG & Others v. Gaurav Bhatia
& Ors., 2016:DHC:0026. Accordingly, in such cases, the Court may take a
stricter approach in awarding damages, ensuring that the Defendant does not
benefit from its own wrongful conduct and its non-participation in legal
proceedings.
97. The Plaintiffs have led the evidence of three independent witnesses
who have deposed on various aspects which have been summarized above.
The Division Bench of this Court in Hindustan Unilever Limited (supra) has
recognised that if the Defendant’s conduct is mala fide, higher damages can
be awarded. The said position has also been reaffirmed by this Court in
Whatman International Limited vs P Mehta & Ors., 2019:DHC:676 . The
relevant extract from the said decision is set out below:
“68. Insofar as the Plaintiff‟s case for damages is
concerned, applying the judgment in Hindustan Unilever
Limited v Reckitt Benckiser India Limited RFA (OS) 50/
2008, Decided on 31st January, 2014, the Defendants are
liable to compensate the Plaintiff in damages as also
punitive damages.
69. The conduct of the Defendants makes them liable for
exemplary damages inasmuch as they have been both
selling counterfeit WHATMAN paper as also lookalike
filter paper under various marks with identical packaging,
colour combination and get up. Going by even one seizure
made when the Local Commissioner visited the premises,
the stock that they possessed would have yielded them
10% commission i.e. to the tune of approximately Rs.45
lakhs. They have continuously conducted business since
1992 and are liable to pay damages to the Plaintiff.”
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98. Applying the above stated principles to the present case, this Court shall
now examine the extent and nature of the infringement, the degree of
culpability of the Defendants, and the quantification of damages necessary to
adequately compensate the Plaintiffs. Some of the important aspects that this
Court now considers in the enquiry on damages are as under:
i) The mark- Symbol, which is owned by Defendant No.1, and the fact
that it has along with Defendant No. 2 used a logo which is nearly
identical to BHPC’s logo of the Plaintiffs. The images of the same are
set out below:
Plaintiffs Device Mark Mark used by the Defendant
Plaintiffs’ Product Defendant’s Product
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ii) The Defendant No.1 is well-aware of the exclusive rights of the
Plaintiffs in the BHPC mark and logo as it has been involved in
1
litigation with the Plaintiffs multiple jurisdictions, including the UK .
99. Defendant No.1 is also in the apparel trade by owning the mark
‘SYMBOL’ under which the garments are sold. The infringing horse logo was
used on ‘Symbol’ branded apparel. It is a known fact that Defendant No.1 is
one of the most dominant players in the e-commerce space. Consequently,
Defendant No.1 possesses ways and means to utilize its dominant presence in
the e-commerce space to promote its own products as also products which it
might otherwise wish to promote. Defendant No.1 also has the leverage
through its own platforms to dilute Plaintiff’s brand/logo by indulging in
deep-discounting of its own products which compete with the Plaintiff by
using a similar mark/logo. In the present facts, the Defendant is placing
products priced at 10% of the Plaintiffs’ product cost. Further, it is also evident
that Defendant No.1 is engaging in a deliberate strategy of obfuscation,
pretending to wear different hats—one as an intermediary, one as a retailer,
and one as a brand owner - all in an attempt to shift responsibility and evade
liability for trademark infringement. However, it is well known reality that all
three Defendants belong to the Amazon Group of Companies and operate as
a cohesive commercial entity. Defendant No.1 has selectively chosen when to
appear and not appear before the Court. At a time when the Court directed
th
vide order dated 20 April, 2022 to explain the exact relationship between the
three Defendants, it agreed to suffer a permanent injunction, thereby evading
scrutiny. Thus, the clear attempt is to not disclose the exact relationship
1
Lifestyle Equities CV and another (Respondents) v Amazon UK Services Ltd and others (Appellants), [2024]
UKSC 8
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between the said three Defendants to this Court. Accordingly, in the opinion
of this Court, this is not a bona fide conduct of a party before the Court and
the conduct of the Defendant clearly demonstrates that there is an intent to
withhold crucial information from the Court, rather than engage in bona fide
conduct as expected of a party before a judicial forum.
100. Defendant No.1 also chose not to even file its defence before the Court.
It is not disputed that it owns the `Symbol’ brand which it has permitted
Defendant No.2 to use. Some of the trademark registrations of the mark
SYMBOL are set out below:
S. No.
Application
Class Date Registered Proprietor Mark
No.
1 3284491 25 14/06/2016 AMAZON
TECHNOLOGIES,
INC.
2 3284490 18 14/06/2016 AMAZON
TECHNOLOGIES,
INC.
3 5758052 18 10/01/2023 AMAZON
TECHNOLOGIES,
INC.
101. The agreement between Defendant No.1 and Defendant No.2 reveals
that Defendant No.1 retains control over the trademark usage, licensing, and
distribution of the infringing mark, thereby making it directly liable for the
unauthorized use of the Plaintiffs' mark. This agreement is demonstrative of
the direct commercial and operational nexus between the Defendants, making
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it evident that Defendant No.1 cannot escape liability under the guise of being
a mere intermediary.
102. Apart from the above factors which exhibits the conduct of Defendant
No.1, there are some further factors which are also required to be considered
while computing damages in a case of this nature:
i) The infringing conduct is on an e-commerce platform where the
consumer tends to order by looking at the image rather than the actual
product;
ii) The consumer does not feel the product or the quality thereof and
goes by the prominence of a logo which is almost identical to the
Plaintiffs’ BHPC logo;
iii) The differences in the logo are almost non-existent and are not
assessable by the naked eyes especially on a computer screen or an
electronic device like a phone or tablet;
iv) The Plaintiffs’ logo is the prominent feature of the registered trade
marks of the Plaintiffs and thus use of an identical or deceptively
similar logo or device results in infringement of the Plaintiffs’ mark;
v) The products are identical; the class of consumer is identical and the
logos are nearly identical. Thus, this is a case of triple identity;
vi) The pricing of the Defendants’ products is not merely diminishing
the Plaintiff’s brand value but is meant to erode the brand equity of
the Plaintiffs completely;
vii) PW-5 who was an independent expert has given specific examples
as to how online counterfeiting has led to destruction of brands. PW-
5 goes to the extent of saying that such infringement can lead a brand
to the brink of extinction;
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viii) Sale of products on huge discounts could completely lead the
consumer to start de-testing the brand as it could lead to negative
social impact linked with law quality and low price.
103. The factors set out above led this Court to conclude that the Plaintiffs
are entitled to damages both as compensation as also on lost sales and royalty.
Unlike in most other cases where the Court is expected to make estimates of
such amounts, in the present case the Trade Mark License Agreement between
the Plaintiffs and major brands which was the licensee for the Indian and
neighbouring markets gives sufficient basis to calculate the damages that
ought to be awarded. The relevant clauses of the Agreement read:
104. The clause relating to royalties is relevant and is set out below:
“Section 4 – Royalties
“4.1a - Licensee shall pay Earned Royalties to Licensor
equal to 7.5% of Net Sales of Licensed Merchandise.
Earned Royalty Reports shall set forth the price and units
sold in the applicable period by merchandise category and
store location. 4.1b In addition to Eared Royalties,
Licensee will be obligated on yearly basis period defined
in Minimum Royalty Schedule to report on and to pay,
within 45 days of the end of the reporting season, a
BONUS ROYALTY tied to the following schedule: If the
annualized sales per sq ft rises above $600 per sq ft, and
the Gross margin of the BHPC business is at least 64%,
than Apparel group will pay a bonus of an additional 2%
royalty on those additional sales above $600 per sq.ft
which means total royalty of 9.5% on those additional
sales above $600 per sq.ft. If the annualized sales per sq
ft rises above $750 per sq ft and the Gross margin on the
BHPC business is at least 64%, than Apparel Group will
pay a bonus of an additional 2.5% royalty on those
additional sales above $600 per sq.ft, which means total
royalty of 10% on those additional sales above $600
per sq.ft. It is clarified and agreed between the parties
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64% is end gross margin after markdowns and discounts
and calculated as % ((Net Sales Minus Landed cost)
divided by Net Sales)).
4.2. Licensee shall pay to Licensor the Earned Royalty for
each Quarter during the term, payable within 20 days of
the end of the Quarter, in addition to submitting the
Sales/Earned Royalty Report. Except that the Minimum
Royalty for the first Year shall be paid as follows: (i) $
85,000 shall be paid on execution of this License
Agreement., $ 85,000 ON JANUARY 1, 2013,, and
$80,000 when the first store is opened (no later than
August 1, 2013).
The balance of the minimum royalty for the first year shall
be paid quarterly and divided equally in each quarter, due
on October 31, and than January 31 ,April 30 and July31.
Royalty payments and reports due quarterly for
subsequent years are for sales beginning August 1 thru
July31 of that year. Each year, Licensee agrees to pay a
Minimum Annual Royalty divided equally into each
quarter of that year and due on October 31, January 31,
April 30 and July 31.
Period Business
Plan Sales
Minimum
Sales
Minimum
Royalty
01-01-2013 TO
31-07-2014
$6,557,500 $4,590,250 $491,813
01-08-2014 TO
31-07-2015
$14,703,250 $10,292,275 $1,102,744
01-08-2015 TO
31-07-2016
$24,460,143 $17,122,100 $1,834,511
01-08-2016 TO
31-07-2017
$32,636,029 $22,845,220 $1,71,392
01-08-2017 TO
31-07-2018
$41,267,756 $28,887,429 $2,166,557
4.2. B. It is agreed between the parties that if Minimum
Net Sales are achieved for the first term then Renewal of
second term will happen automatically but renewal of the
rd
3 term will happen subject to on achievement of
th
Minimum Net Sales of USD 41 Million for the 10 year..
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Other Terms and conditions will remain same. If in any
particular year minimum sales are not achieved by
Licensee then Licensor will give Six (6) months notice of
cure and if difference of minimum sales is achieved within
the cure period then it shall not be considered as breach
by Licensee”
th
105. As per the said agreement dated 08 November, 2012, the agreement
was for an initial term and three terms for renewal. The initial term
commenced in 2013 and the renewal terms was a three successive five-year
st
term commencing from 01 August, 2018 after the initial term of five years.
Thus, the total contemplated period of term of the agreement was;
st st
• Initial term 01 January, 2013 to 31 July, 2018.
st
• Renewal term – every five years commencing on 01 August, 2018
st
finally to terminate 31 July, 2033.
106. The agreement also provides that one of the reasons for termination
could be if annual minimum sales are not achieved as per Clause 8.1. It has
come in evidence that in the first year, the sales achieved were beyond what
was prescribed in the agreement.
107. However, from the second year onwards i.e., 2015 onwards, the sales
started to plummet. Though the Plaintiffs detected the online infringement in
2020, it has now come on record that the Defendants were using the infringing
logo/mark since 2015.
108. The evidence also points out that the sales made by the Defendants
under the infringing logo were at extremely low prices, thereby eroding the
brand value of the Plaintiffs. Thus, without even going into the complicated
analysis as to how to quantify damages, one of the simplest ways in which the
damages can be assessed in this case is by quantifying the lost royalties to the
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Plaintiffs. If the same is taken at the minimum in terms of the license
agreement with the bonus royalties as per Clause 4.1(b), the Plaintiffs have
lost a substantial amount of royalties. The expert who has given evidence i.e.,
PW-3 has quantified the same for a period of ten years i.e., 2015 to 2024. He
has quantified the same in the following manner:
Computation of Economic damages based on Minimum Sales as on the
Valuation Date
Period of
Discounting
(B)
Period
of
Business
Business
Year
Lost
Royalties
based on
Minimum
Sales (A)
Discounting
Factor @
12.64%
(C=1/(1+12.
64%)^ B)
Economic
damages as on
the Valuation
date (AC) *
nd
2
Period
BY
2015-16
146,306 (4.50) 1.71 250,029
rd
3
Period
BY
2016-17
309,200 (3.50) 1.52 468,949
th
4
Period
BY
2017-18
648,441 (2.50) 1.35 873,082
th
5
Period
BY
2018-19
1,005,961 (1.50) 1.20 1,202,440
th
6
Period
BY
2019-20
1,195,353 (0.50) 1.06 1,268,459
th
7
Period
BY
2020-21
1,198,197 0.50 0.94 1,128,404
th
8
Period
BY
2021-22
1,291,032 1.50 0.84 1,079,373
th
9
Period
BY
2022-23
1,390,715 2.50 0.74 1,032,216
th
10
BY
1,497,708 3.50 0.66 986,864
Period
2023-24
2
TV 20,577,130 3.50 0.66 13,558,614
Total 29,260,043 3.50 21,848,431
2
Total Value
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109. The said quantification is based on minimum sales. However, on the
basis of business plan sales, PW-3 has quantified the same as under:
Computation of Economic damages based on Business Plan Sales as on the
Valuation Date.
Period of
Business
Business
Year
Lost
Royalties
(Table 24)
(A)
Period of
Discounting
(Table 19)
(B)
Discounting
Factor @
12.64%
(Table 19)
(C)
Economic
damages as
on the
Valuation
Date (AC) *
nd
2 Period BY 2015-
301,522 (4.50) 1.71 515,286
16
rd
3 Period BY 2016-
17
559,271 (3.50) 1.52 848,220
th
4 Period BY 2017-
18
1,029,388 (2.50) 1.35 1,386,000
th
5 Period BY 2018-
19
1,540,957 (1.50) 1.20 1,841,929
th
6 Period BY 2019-
20
1,775,697 (0.50) 1.06 1,884,296
th
7 Period BY 2020-
21
1,827,732 0.50 0.94 1,721,270
th
8 Period BY 2021-
22
1,973,929 1.50 0.84 1,650,312
th
9 Period BY 2022-
23
2,131,496 2.50 0.74 1,582,038
th
10
Period
BY 2023-
24
2,301,279 3.50 0.66 1,516,351
3
TV 31,617,466 3.50 0.66 20,833,274
Total 45,058,737 33,778,976
3
Total Value
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110. Considering the fact that the Defendants have indulged in deliberate
and wilful infringement as also the various factors which are set out herein
above, the royalties that the Plaintiffs would have earned based on their
business plan which they clearly achieved in the first year is a reasonable
measure of damages in the present case in order to compensate the Plaintiffs.
In fact, a perusal of the TLA would show that if the required sales are not
achieved, the same could even lead to termination of the agreement. The
consequences of online infringement which the Defendants have indulged in,
is in the opinion of this Court totally immeasurable. The erosion of the brand
value and the unseen profits that the Defendants may have earned due to their
own sales under the brand SYMBOL and other competitors of the Plaintiff,
who also sought to benefit due to the present infringement would in the
opinion of this Court also entitle the Plaintiffs to punitive damages. However,
since the said figures are not available, the Court merely restricts its inquiry
based on the exhibited documents on record i.e., the Trademark Licensing
Agreement.
111. The Plaintiff’s claim for damages as filed with the written submissions
is as under:
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“106. A snapshot of the damages claim that the Plaintiffs are asserting is as
follows:
Head of Claim for Compensatory Damages Amount
Compensatory damages for lost royalties based on
Business Plan Sales
USD 33.78 Million
Compensatory damages for lost profits of Apparel
Group India based on Business Plan Sales.
USD 44.92 Million
Compensatory damages for lost opportunity for
royalties from Bangladesh, Sri Lanka and Nepal
based on Business Plan Sales
USD 16.89 Million
Compensatory damages for lost enterprise value
from the proposed joint venture with Apparel
Group India.
USD 50 Million
Compensatory damages on account of increased
marketing budget.
USD 5 Million
Compensatory damages on account of loss of its
goodwill and reputation.
USD 5 Million
TOTAL COMPENSATORY DAMAGES USD 155.59 Million
Or
INR 1,260 crores
EXEMPLARY DAMAGES Two times the compensatory damages
awarded
112. Plaintiffs have also demonstrated through PW-1’s testimony that they
were compelled to increase their marketing expenditures to counteract the
adverse effects of infringement by the Defendants. According to PW-1, the
need for enhanced advertising and promotional efforts to restore consumer
confidence in the BHPC brand was a direct and foreseeable consequence of
the trademark infringement by the Defendants. As held by the Division Bench
in Hindustan Unilever Limited (supra) , damages on account of increased
advertising and promotional expenses are liable to be granted as relief,
particularly in cases where the wrongful act has had a direct impact on the
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brand’s market perception and necessitated remedial advertising efforts.
Accordingly, this Court holds that additional compensatory damages on
account of increased advertising and marketing expenses to the tune of USD
5 million are liable to be granted in favour of the Plaintiff.
113. The Plaintiffs have also claimed damages on account loss of goodwill
and reputation. The claim for damages on account of dilution, tarnishment,
and loss of goodwill, though significant, remains speculative and cannot be
precisely computed based on the evidence presented. The Plaintiffs have
sought compensation amounting to USD 5 million as compensation for the
alleged diminution of goodwill and reputation resulting from the infringing
activities of the Defendant. However, while damage to brand reputation is
indeed be a foreseeable consequence of infringement, the Plaintiffs have not
provided concrete evidence to establish the quantifiable financial impact of
such dilution on their business. As recognized in Hindustan Unilever Limited
(supra) , damages must be grounded in provable loss, and speculative claims
cannot form the basis of monetary relief. Consequently, apart from the
awarded compensatory damages, no further amounts are being granted.
114. The Plaintiffs have also claimed USD 50 million as compensation for
the loss of opportunity to enter into a joint venture and launch an Initial Public
Offering (‘ IPO ’). However, such claims are contingent upon multiple external
market variables, including investment conditions, regulatory approvals, and
business negotiations. Damages ought to be compensatory and arising out of
some reasonable basis, and cannot be speculative or remote in nature. The
alleged lost opportunity to launch an IPO and secure windfall gains is
inherently uncertain and does not constitute direct compensable loss
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attributable to the Defendants’ infringement. Accordingly, this claim would
not appear to be merely compensatory and is therefore not awarded.
115. The dilution and tarnishment to the brand are presently not computed
and can only be an estimate. On the basis of pleadings, documents and
evidence on record, this Court is of the opinion therefore that the Plaintiffs are
entitled to compensatory damages for lost royalties based on business plan
4
sales i.e., USD 33.78 million equivalent to ₹ 292,70,37,000/- ) .
116. In view of the above discussion, this Court finds that the Plaintiffs are
entitled to
a) Compensatory damages amounting to USD 33.78 million equivalent
to ₹ 292,70,37,000/- for lost royalties as also;
b) Compensatory damages amounting to USD 5 million equivalent to
₹43,32,50,000/- to compensate for increase in advertising and
promotional expenses.
The said compensatory damages are totaling to USD 38.78 million ,
equivalent to ₹336,02,87,000/- i.e. Rs. Three Hundred Thirty-Six Crore
Two Lakh Eighty-Seven Thousand Rupees Only as on date.
J. Costs of Proceedings
117. Commercial litigation entails significant legal expenses, and in cases of
IP infringement, the legal costs incurred by IP rights holders in enforcing their
legal rights can be substantial. Recognizing this, the Supreme Court in Uflex
Limited v. Government of Tamil Nadu & Ors., (2022) 1 SCC 165 , has
emphasized the need for awarding realistic costs in Commercial Suits. In the
th
4
As on 24 February, 2025, $1= ₹ 86.65
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said decision, the Supreme Court has held that costs should ordinarily follow
the event, meaning that the unsuccessful party shall bear the litigation costs
of the successful party. It has also been highlighted that costs serve multiple
purposes, including indemnification, deterrence, encouraging early
settlement, and ensuring access to justice. Accordingly, the present being a
commercial suit, in terms of the judgment of the Supreme Court in Uflex
Limited (supra) actual costs ought to awarded in favour of the Plaintiffs. The
relevant extracts of the decision in Uflex Limited (supra) are set out below:
“ Costs
53. The costs following cause is a principle which is
followed in most countries. There seems to be often a
hesitancy in our judicial system to impose costs,
presuming as if it is a reflection on the counsel. This is not
the correct approach. In a tussle for enforcement of rights
against a State different principle apply but in commercial
matters costs must follow the cause.
54. The aspect of awarding the costs has received
consideration of the Law Commission of India in its
Report No. 240, specifically in relation to civil litigation.
The trigger for this were the observations of the Supreme
Court in Ashok Kumar Mittal v. Ram Kumar Gupta [Ashok
Kumar Mittal v. Ram Kumar Gupta, (2009) 2 SCC 656 :
(2009) 1 SCC (Cri) 836] and Vinod Seth v. Devinder Bajaj
[Vinod Seth v. Devinder Bajaj, (2010) 8 SCC 1 : (2010) 3
SCC (Civ) 212] . The judicial pronouncements took note
of the levying meagre costs in civil matters which did not
act as a deterrent to vexatious or luxury litigation borne
out of ego or greed or resorted to as a “buying time”
tactic. These two judicial pronouncements were followed
in Sanjeev Kumar Jain v. Raghubir Saran Charitable Trust
[Sanjeev Kumar Jain v. Raghubir Saran Charitable Trust,
(2012) 1 SCC 455 : (2012) 1 SCC (Civ) 275] . In the said
proceeding the Law Commission also presented its views.
It is in that context that this Court observed that
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appropriate changes in the provisions relating to costs
contained in the Report of the Law Commission of India
should be followed up by Parliament and the respective
High Courts.
55. We may note that the common thread running through
all these three cases is the reiteration of salutary
principles: (i) costs should ordinarily follow the event;
(ii) realistic costs ought to be awarded keeping in view
the ever-increasing litigation expenses; and (iii) the costs
should serve the purpose of curbing frivolous and
vexatious litigation. [ Report No. 240 of the Law
Commission of India.]
56. We may note that this endeavour in India is not unique
to our country and in a way adopts the principle prevalent
in England of costs following the event. The position may
be somewhat different in the United States but then there
are different principles applicable where champerty is
prevalent. No doubt in most of the countries like India the
discretion is with the court. There has to be a
proportionality to the costs and if they are unreasonable,
the doubt would be resolved in favour of the paying party
[ UK Civil Procedure Rule 44.2.]. As per Halsbury's Laws
of England, the discretion to award costs must be
exercised judicially and in accordance with reason and
justice. [ Vol. 10, 4th Edn. (Para 15).] The following
principles have been set out therein:
“In deciding what order (if any) to make about
costs, the court must have regard to all the
circumstances, including:
(i) The conduct of all the parties;
(ii) Whether a party has succeeded on part of
his case, even if he has not been wholly
successful; and
(iii) Any payment into court or admissible offer
to settle made by a party which is drawn to the
court’s attention.
The conduct of the parties includes:
(a) Conduct before, as well as during, the
proceedings and in particular the extent to
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which the parties followed any relevant pre-
action protocol;
(b) Whether it was reasonable for a party to
raise, pursue or contest a particular allegation
or issue;
(c) The manner in which a party has pursued or
defended his case or a particular allegation or
issue; and
(d) Whether a claimant who has succeeded in
his claim, in whole or in part, exaggerated his
claim.”[10th Vol. 4th Edn. (Para 17).]
57. We may add that similar principles are followed in
Australia, Hong Kong and Canada largely based on the
common law principle. In fact in Canada, the Manitoba
Law Commission Report analysed the “Costs Awards in
Civil Litigation” and referred to six broad goals as under:
(a) indemnification — successful litigants ought to at
least be partially indemnified against their legal costs;
(b) deterrence — potential litigants should carefully
assess the merits of the claim and should refrain from
taking any unnecessary legal actions;
(c) rules should be made decipherable and simple to
understand;
(d) early settlement of disputes should be encouraged;
(e) the costs regime should facilitate access to justice;
and
(f) there should be flexibility in rules to ensure that
justice can be done. [Report No. 240 of the Law
Commission of India.]
58. We have set forth the aforesaid so that there is
appreciation of the principles that in carrying on
commercial litigation, parties must weigh the commercial
interests, which would include the consequences of the
matter not receiving favourable consideration by the
courts. Mindless appeals should not be the rule. We are
conscious that in the given facts of the case the
respondents have succeeded before the Division Bench
though they failed before the learned Single Judge. Suffice
to say that all the parties before us are financially strong
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and took a commercial decision to carry this legal battle
right up to this Court. They must, thus, face the
consequences and costs of success or failure in the present
proceedings.”
118. In line with these principles, Rule 2 of Chapter XXIII of the Delhi High
Court (Original Side) Rules, 2018, mandates that the Court must award costs
guided by actual expenses borne by the successful party. The rule provides for
the consideration of actual legal fees, witness expenses, expert fees,
commission execution, and other legitimate litigation costs, ensuring that the
prevailing party is adequately compensated. Additionally, Sections 35-A and
35-B of the Code of Civil Procedure, 1908, empower courts to impose
compensatory and exemplary costs in cases involving vexatious or
unnecessary litigation. The said Rule 2 of Chapter XXIII of the Delhi High
Court (Original Side) Rules, 2018 is set out below:
“2. Imposition of actual costs. - In addition to imposition
of costs, as provided in Rule 1 of this Chapter, the Court
shall award costs guided by and upto actual costs as
borne by the parties, even if the same has not been
quantified by parties, at the time of decreeing or
dismissing the suit. In this behalf the Court will take into
consideration all relevant factors including (but not
restricted) the actual fees paid to the Advocates/ Senior
Advocates; actual expenses for publication, citation etc.;
actual costs incurred in prosecution and conduct of suit
including but not limited to costs and expenses incurred
for attending proceedings, procuring attendance of
witnesses, experts etc.; execution of commissions; and all
other legitimate expenses incurred by the party, which the
Court orders to be paid to any party.”
In addition to imposition of costs as above, the Court may
also pass a decree for costs as provided in Sections 35-A
and 35-B of the Code or under any applicable law.”
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th
119. In the present suit, vide order dated 29 May, 2024, this Court had also
directed the Plaintiffs to file the affidavit of costs incurred in the present suit.
st
The requisite affidavit of costs has been filed by Plaintiffs vide index dated 1
July, 2024. The said affidavit has been duly signed and verified by Mr. Sidhant
Goel, ld. Counsel representing the Plaintiffs in the present suit. The Court has
perused the said affidavit, and also the documents filed along with the
affidavit of costs. The total costs that have been quantified in the said affidavit
are coming out to Rs. 3,23,10,966.60/- i.e. Rupees Three crore twenty-three
lakh ten thousand nine hundred sixty-six rupees and sixty paise only .
Accordingly, in line with the judgement of the Supreme Court in Uflex
(supra) and Rule 2 of the Original Side Rules, costs of Rs. 3,23,10,966.60/-
are awarded in favour of the Plaintiffs.
120. The Plaintiffs shall deposit the additional Court Fee payable on account
of the damages awarded by this Court within four weeks.
K. Relief
121. The suit is accordingly decreed as under in favour of Plaintiffs and
against Defendant No.1 in the following terms:
(i) A decree of permanent injunction is granted in terms of
paragraphs 64(a), (b) and (c) of the plaint.
(ii) A decree of damages to the tune of $38.78 million , as on date
equal to ₹336,02,87,000.00 /- is granted in favour of the Plaintiffs
against Defendant No.1. If the said amount is paid within three
months, no interest would be liable to be paid. However, if the
same is not paid by the Defendant No.1, interest @ 5% per
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annum would be payable, from the date of this judgment until
the full realization of the said amount.
(iii) A decree of costs to the tune of ₹ 3,23,10,966.60/- along with the
Court Fee.
122. The details of the relief granted are summarized below:
5
S. No.
Decree Details Amount / Terms
1 Compensatory Damages
1A Lost Royalties USD 33.78 million (₹292,70,37,000.00/-)
1B Increased Advertising &
USD 5 million (₹43,32,50,000.00/-)
Promotional Expenses
1C Total Compensatory
USD 38.78 million (₹336,02,87,000.00/-)
Damages
2 Costs ₹3,23,10,966.60/- along with the Court
Fee.
3 Grand Total
(Damages + Costs)
₹ 339,25,97,966.60/- + Court Fee
123. Decree sheet be drawn up in the above terms.
124. The suit along with all pending applications, if any are disposed of.
PRATHIBA M. SINGH
JUDGE
th
FEBRUARY 25 , 2025
dj/Rahul
5
$1= ₹ 86.65
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