N.R. Dongre & Ors. v. Whirlpool Corporation & Anr.

Supreme Court of India | J.S. Verma & K. Venkataswami JJ. | 30 August 1996 1996 SCR (5) Supp 369 | Civil Appeal No. 10703 of 1996

Background

Whirlpool Corporation (Plaintiff No. 1) is a multinational company incorporated in the USA and TVS Whirlpool Ltd. (Plaintiff No. 2) is an Indian company incorporated as a joint venture in which Plaintiff No. 1 holds a majority stake and is licensed to use the trade mark “WHIRLPOOL.” Whirlpool Corporation had been the successor to the trade mark “WHIRLPOOL” since 1937 and by 1957 it was a leading mark in the USA and Canada for washing machines. The mark was registered in India from 1956–57 in respect of clothes dryers, washers, dishwashers and certain other electrical appliances. However, the Indian registrations lapsed in 1977 due to failure to apply for renewal. In 1987 the joint venture with TVS was formed and on 15 July 1988 applications were moved to the Registrar of Trade Marks for fresh registration of “WHIRLPOOL” in India. In India, washing machines were being marketed by Plaintiff No. 2 under the TVS brand using the phrase “in collaboration with Whirlpool Corporation.” The mark continued to be used worldwide and was advertised in international magazines circulating in India.

The defendants trustees of Chinar Trust and Mansarovar Trust trading as USHA-SHRIRAM and Usha International Ltd. had applied for registration of the trade mark “WHIRLPOOL” on 6 August 1986. The application was advertised in the Trade Marks Journal on 16 October 1988. Plaintiff No. 1 filed a notice of opposition on 16 January 1989. On 12 August 1992, the Registrar dismissed the opposition and allowed the defendants’ application for registration on the ground of proposed user only not actual user. A registration certificate was granted to the defendants, backdated to 6 August 1987. Plaintiff No. 1 appealed against the Registrar’s order and also filed a rectification petition in the Delhi High Court under Sections 46 and 56 of the Trade and Merchandise Marks Act, 1958. Both proceedings were pending.

In July 1994, the plaintiffs came across an advertisement by the defendants soliciting dealers for “WHIRLPOOL” washing machines. The present suit was filed on 4 August 1994 as a passing off action, seeking to restrain the defendants from manufacturing, selling, advertising or using the trade mark “WHIRLPOOL” or any deceptively similar mark in respect of their goods. The learned Single Judge of the Delhi High Court granted a temporary injunction on 31 October 1994, which was affirmed by the Division Bench on 21 April 1995. The defendants appealed to the Supreme Court by way of special leave.

Issues for Determination

Whether a passing off action is maintainable against a registered proprietor of a trade mark on the basis of a prior user’s common law rights.
Whether the plaintiffs had established a prima facie case of trans-border reputation in India sufficient to support the grant of a temporary injunction in a passing off action, despite the lapse of their Indian registration since 1977 and the absence of direct retail sales of “WHIRLPOOL” branded goods in India.
Whether the defendants could resist the injunction on the ground of their registered trade mark or on grounds of delay, acquiescence, laches or abandonment by the plaintiffs.
Whether the Supreme Court, sitting in second appeal, had grounds to interfere with the concurrent exercise of discretion by the Single Judge and the Division Bench in granting the temporary injunction.

Key Holdings of the Court

Passing off action maintainable against a registered trade mark owner. It was conceded by counsel for the appellants and affirmed by the court that a passing off action based on common law rights is maintainable even against a registered owner of the trade mark. The defendants’ registration was therefore not a bar to the suit.
Trans-border reputation established prima facie. The plaintiffs established a prima facie case that the mark “WHIRLPOOL” had acquired trans-border reputation and goodwill extending to India through long prior user since 1937, prior registration in India from 1956–57, worldwide marketing and continuous advertisement in international magazines circulating in India even without actual retail sales of the goods in India under that mark.
Defendants’ registration on proposed user carries limited weight. The defendants’ registration was granted solely on the ground of proposed user, not actual user and was subject to a pending appeal and rectification petition. No reliable evidence of actual marketing of their washing machines under the “WHIRLPOOL” mark for any considerable period was produced by the defendants.
No abandonment, acquiescence or laches by the plaintiffs. The plaintiffs had consistently opposed the defendants’ registration, filed an appeal, filed a rectification petition and filed the suit none of which supported an inference of abandonment of the mark or acquiescence in the defendants’ use.
Balance of convenience and irreparable injury favour the plaintiffs. The defendants could remove the small metallic strip bearing the “WHIRLPOOL” mark and continue selling their machines under their existing names (USHA-SHRIRAM, USHA-LEXUS). The plaintiffs, on the other hand, would suffer irreparable injury to their reputation and goodwill if the defendants’ allegedly inferior-quality machines were sold under the same mark.
No ground for appellate interference. The Supreme Court found no basis to interfere with the concurrent findings of the Single Judge and the Division Bench, which were a reasonable conclusion on the material available and the exercise of discretion was in accordance with settled principles governing the grant of interlocutory injunctions. The appeal was dismissed with costs of Rs. 10,000.

Statutory Provisions Involved

Sections 46 and 56, Trade and Merchandise Marks Act, 1958 invoked by the plaintiffs in a rectification petition filed before the Delhi High Court seeking expungement of the defendants’ registered trade mark.
Section 27(2), Trade and Merchandise Marks Act, 1958 provides that a passing off action against a registered user of a trade mark is maintainable at the instance of a prior user of the same, similar or identical mark. The court affirmed that an interim injunction is available to make such a remedy effective.

Reasoning of the Court

The Supreme Court examined whether the concurrent exercise of discretion by the trial court and the Division Bench in granting the temporary injunction was in accordance with settled legal principles, relying on the standard set out in Wander Ltd. & Anr. v. Antox India P. Ltd. that an appellate court will not interfere with a trial court’s discretion unless it was exercised arbitrarily, capriciously or perversely or in ignorance of settled principles of law.

The court affirmed the key finding that the mark “WHIRLPOOL” was a non-derivative word mark not a descriptive term drawn from the nature of the product and that such a mark points distinctly to its source. Long prior user of the mark globally since 1937 and prior registration in India until 1977 gave Whirlpool Corporation the stronger claim to the mark’s identity and origin. The court accepted that the plaintiffs’ trans-border reputation in India was built through worldwide trade and continuous advertising in international magazines available to the upper and upper-middle income sections of Indian society the very class that purchases washing machines.

On the defendants’ side, the court found their adoption of the mark “WHIRLPOOL” unexplained and suspicious, given that they had previously operated in the washing machine market under other names such as USHA-SHRIRAM and USHA-LEXUS. The absence of any plausible explanation for the switch, combined with the fact that their registration was based only on proposed user, supported an inference of an attempt to derive unfair advantage from the plaintiff’s established reputation. The court also accepted the trial court’s finding that the defendants’ machines priced at less than one-third of the plaintiffs’ were not of the same engineering standard, making the risk of reputational damage to the plaintiffs real and irreparable.

Doctrinal Significance

Trans-border reputation doctrine firmly established in Indian trademark law. This case is among the most cited authorities for the proposition that a foreign mark owner can acquire protectable goodwill and reputation in India even without actual sales of goods in the Indian market, provided the mark has attained reputation here through international advertising and commercial presence in international publications circulating in India.
Passing off as a common law remedy independent of statutory registration. The court reaffirmed that passing off is a species of unfair trade competition grounded in common law, actionable independently of statutory trade mark rights. A passing off action based on prior user can therefore succeed and an injunction can be granted even against a registered proprietor of the mark.
Non-renewal of registration does not amount to abandonment. The judgment establishes that the lapse of a registered trade mark due to non-renewal does not, by itself, constitute abandonment of the mark if the owner continued to use and assert it globally and in India and actively opposed subsequent registration attempts by third parties.
Advertisement as constructive use of a trade mark. The court accepted that advertising a mark even without actual retail sales in a particular jurisdiction can constitute use sufficient to establish reputation and goodwill in that jurisdiction for the purposes of a passing off action.
Scope of appellate interference in interlocutory injunction matters restated. Following Wander v. Antox, the court reaffirmed the narrow standard for appellate intervention in discretionary injunction orders, reinforcing that concurrent findings of two courts on such matters deserve significant deference in second appeal.