$~6 * IN THE HIGH COURT OF AT NEW DELHI + CS(COMM) 107/2019 LIMITED ..... Plaintiff Through: Mr. Dayan Krishnan, Senior Advocate with Mr. Rohan Ahuja, Ms. Sonali Dhir, Mr. Aadhar Nautiyal, Mr. Sanjeevi and Mr. Siddharth Mahajan, Advocates.

versus

MASALA KING EXPORTS TRADING PVT. LTD. & ORS..... Defendants Through: Mr. Amit Bansal, Advocate with Mr. Aman Rewaria, Advocate for Defendant No. 14.

CORAM: HON'BLE MR. JUSTICE SANJEEV NARULA

ORDER % 18.03.2019

CS(COMM) 107/2019

1. Pursuant to the order dated 26th February 2019, Mr. Amit Bansal, learned Senior Standing Counsel appearing on behalf of the Defendant No. 14, on instructions, states that the Customs Authorities do not have a mechanism to monitor the export of the items in question that are the subject matter of the present suit. He further explains that, at the time of the export, the brand names are not disclosed, and therefore, he is unable to verify whether Defendant Nos. 1 to 13 are indeed exporting Plaintiff’s products.

CS(COMM)107/2019 Page1of14 2. Issue summons to the Defendant No. 1 to 12 through all modes upon filing of Process Fee including through email.

3. The summons to the Defendant No. 1 to 12 shall indicate that written statement to the plaint shall be positively filed within 30 days from date of receipt of summons. Along with the written statement, the Defendants shall also file an affidavit of admission/denial of the documents of the Plaintiff, without which the written statement shall not be taken on record.

4. Liberty is given to the Plaintiff to file a replication within 15 days of the receipt of the written statement. Along with the replication, if any, filed by the Plaintiff, an affidavit of admission/denial of documents of the Defendants, be filed by the Plaintiff, without which the replication shall not be taken on record. If any of the parties wish to seek inspection of any documents, the same shall be sought and given within the timelines prescribed under the Delhi High Court (Original Side) Rules, 2018.

5. List before the Joint Registrar for marking of exhibits on 23rd April 2019. It is made clear that any party unjustifiably denying documents would be liable to be burdened with costs. List before Court on 16th May, 2019.

I.A No. 2959/2019 (u/o XXXIX R.1 & 2 CPC) 6. The Court has heard Mr. Dayan Krishnan, Learned Senior Counsel appearing on behalf of the Plaintiff at considerable length.

CS(COMM)107/2019 Page2of14 7. Learned Counsel submits that the Plaintiff is a Company established in the year 2006 and is a leading manufacturer and marketer of herbal, nature based products and herbal medicines under the trade mark “PATANJALI” work and device both in Hindi and English along with part of its logo comprising of lines/strokes in green and orange colour. The products of Plaintiffs are available globally through its authorized distribution channels. The Plaintiff Company manufactures and sells wide variety of FMCG products in and abroad. In short span since 2006, Plaintiff has set up an extensive warehouse and distribution network comprising of over 47,000 retail counters, 3500 distributors in 18 states. The sales and advertisement expenses of the Plaintiff have been stated in para 10 of the plaint which shows that the sales in year 2016-17 was 10,000 Crores. The Plaintiff has got registration of "PATANJALI" word in various classes. Besides the trademark "PATANJALI" has also been granted protection in several classes and countries and is claimed that its mark enjoys Trans border reputation and goodwill.

8. The grievance of the Plaintiff is that pursuant to a market research, it has come to the knowledge of the Plaintiff that Defendant No. 1 to 13 have been procuring the goods of the Plaintiff Company which are meant exclusively for sale in the domestic market and have been illegally exporting them without any authority from the Plaintiff and resultantly also infringing the exclusive right to use the registered trade mark of the Plaintiff. To prevent such illegal export, the Plaintiff has also issued letters to Custom Authorities, however the illegal exports have continued. Plaintiff has also lodged complaints with Commissioner of customs. However, the Customs

CS(COMM)107/2019 Page3of14 authorities have stated that the Intellectual Property rules do not apply to exports and no action has been taken on the complaint of the Plaintiff.

9. Learned Senior Counsel has explained that the Plaintiff Company presently does not have any authorised channel for export of its products and the entire export is being done solely by the Plaintiff Company itself through its own IEC No. 0506062686. Further he states that the packaging of the products that are meant for domestic sale is completely different from those that are meant for export.

10. Elaborating on this submission, he explains that the products which are to be exported are packaged by complying with metrological standards of the country where the products are required to be exported. Exports made illegally which do not comply with legal requirements create grave risk to the goodwill and reputation of the company and also impacts the sale and exports of the Plaintiff's product. The illegal exports using registered trade mark without any license, permission or authority infringes the said trademark. He further submitted that the Plaintiff Company has also come across instances where the Plaintiff's goods have been tampered or altered, whereby creating a risk towards the quality of the goods and the reputation of the Plaintiff attached with them. The averments made in para 49 show that the packaging of the product is materially altered by affixing stickers on the same for the purposes of export. To substantiate the said averment, the Plaintiff has annexed a picture of an “Atta” packet of the Plaintiff and one that is being illegally exported by the Defendants. It is apparent from the pictures that on the original packet it was duly printed that it was to be

CS(COMM)107/2019 Page4of14 consumed within four months. However, there was another sticker placed over the details printed on the packet that stated that the “Atta” is good for nine months. Therefore, the Defendants, by such acts are defrauding the general public into believing that the product is exported by the Plaintiff and since the product mentions an expiry date of way over four months, the consumers fall at a risk of consuming “Atta” that is no longer fit for consumption. This in turn will tarnish the reputation of the Plaintiff and put the products of the Plaintiff in bad light. Following are the pictures of the Plaintiff’s product which are stated to have been illegally exported:

CS(COMM)107/2019 Page5of14 11. He further referred to several pictures of the products explaining the differences. It is noted that for the products which are meant for domestic sale words “intended for sale in Indian subcontinent only” appear on the packaging. In contrast, the products meant for export have the words “export only” printed on them. The difference in the packaging is explained by way of illustration in respect of the Plaintiff's toothpaste and facewash. These products when sold in international market not only have a detailed ingredient list but the packaging of the product is also distinctly different from that of domestic products. The comparison is evident from the following:-

CS(COMM)107/2019 Page6of14 NAME OF EXPORT DOMESTIC THE PRODUCT 1. PATANJALI Calcium carbonate, Aqua, Chamomile, Neem, TOOTHPASTE Sorbitol, Glycerin, Silica, Babool, Tomar, Pudina, Sodium Lauryl Sulphate, Clove, Pepper, Flavour/aroma, Sodium Vajradanti, Saccharin,Sodium Bakul, Vidang, Carboxymethyl cellulose , Turmeric, Polyethylene glycol 400,Zinc Meswak,Oak citrate , Menthol, Sodium benzoate, Chamomile, Tomar, babool, neem, pudina, turmeric,clove,long pepper, meswak, bakula, Trisodium Phosphate, Potassium Alum, Trachyspermum 2.PATANJALI Myristie Acid, Glycerin, Aqua, Aloe vera. Orange peel, FACE WASH Potassium Hydroxide, Neem, Tulsi, Vitamin-A, Propylene Aqua, soft soap base. Glycol, Stearic Acid, Decyl Vitamin-A, Vitamin-E, glucoside, Laurie Acid, Honey, Fragrance Ethylene Glycol Distearate, Glyceral monostearate, Poluquatemium, Sodium Hydroxide, Diazolidenyl urea and IDBC, Di-sodium- EDTA, Retanyl palmitate, Honey Perfume, Orange peel. Vitamin E,Neem, Tulsi

CS(COMM)107/2019 Page7of14 DESCRIPTION FOR EXPORT FOR DOMESTIC MARKET PATANJALI DANT KANTI (FRONT VIEW)

PATANJALI DANT KANTI (BACK VIEW)

CS(COMM)107/2019 Page8of14 PATANJALI TULSI BODY CLEANSER (FRONT VIEW)

PATANJALI MINT TULSI BODY CLEANSER (BACK VIEW)

12. Mr. Krishnan submits that as per the requirement of Food and Drug Administration (FDA), the description of the products is far more detailed. In case the indications on a particular product are not in compliance with the regulations of the FDA, the products are put in an import “Alert list” and as a result the import of such products gets impaired.

13. Learned Senior Counsel further submitted that the Plaintiff has received

CS(COMM)107/2019 Page9of14 queries from persons who have purchased its products from the local shops in Illinois, USA and has got alerted to the fact that it’s products are being exported through unauthorized channels. He thus submits this is on account of the acts of Defendant No. 1 to 13 and such other entities who have led to creation of unattended grey market which exposes the Plaintiff to unwarranted legal risks in those jurisdictions as the buyers of such product would purchase the products believing them to be lawfully imported products.

14. The learned Senior Counsel has also referred to the judgments of this Court in Kapil Wadhwa & Ors v. Samsung Electronics Co. Ltd & Anr. 2012 SCC OnLine Del 5172 and urged that the said judgment would not be applicable to facts of the present case. He also relied upon the decision of this court in Philip Morris Products S.A. v. Sameer & Ors, (20145) 4 High Court Cases (Del) 35.

15. I have carefully perused the above mentioned judgements. No doubt, the case of Kapil Wadhwa (supra) deals with Section 30(4) of the Trade Marks Act, 1999 however the facts of the case are entirely different. The relevant part of the judgement reads as under:

"67. With reference to sub-section 4 of Section 30 of the Trade Marks Act 1999 it would be relevant to note that further dealing in the goods placed in the market under a trade mark can be opposed where legitimate reasons exist to oppose further dealing and in particular where the condition of the goods has been changed or impaired. With respect to physical condition being changed or impaired, even in the absence of a statutory provision, the registered proprietor of a trade mark would have the right to oppose further dealing in those goods inasmuch as they would be the same goods

CS(COMM)107/2019 Page10of14 improperly so called, or to put it differently, if a physical condition of goods is changed, it would no longer be the same goods. But, sub-section 4 of Section 30 is not restricted to only when the conditions of the goods has been changed or impaired after they have been put on the market. The section embraces all legitimate reasons to oppose further dealings in the goods. Thus, changing condition or impairment is only a specie of the genus legitimate reasons, which genus embraces other species as well....

72. It is not the case of the respondents that the appellants are changing the condition of the goods or impairing the goods which are put in the foreign market by respondent No. 1 or its subsidiary companies abroad. What is pleaded is that the physical features of the printers sold abroad are different from the features of the printers sold in India. But this is irrelevant as long as the goods placed in the International market are not impaired or condition changed....." (Emphasis supplied)

16. It is thus pertinent to note that in the case of Kapil Wadhwa (supra), the products were not being impaired. Per Contra, the products in the present case are being completely altered which is evident from the manner in which the product meant for domestic sale are being altered by affixation of a sticker on the reverse for exporting the product.

17. The facts as noted in the case of Philip Morris (supra) and the ratio of the said judgment would get attracted as the same pertains to case a where the Defendants acquired the impugned goods from unauthorized channels/ sources. The relevant part of the judgement reads as under:

"40. In the present case, unlike the Kapil Wadhwa case, plaintiffs are manufacturing the "Marlboro" cigarettes in India, which are sold by the authorised channels in the local Indian market. The impugned packs which the defendants are selling are not the 'made in India' cigarettes but are cigarettes made abroad which are earmarked for sale outside India or only in duty free Indian market. So, these are not the cigarettes meant for sale in the local Indian market. Nevertheless, if the impugned packs, which are genuine products of the plaintiffs meant for sale outside India/in duty free

CS(COMM)107/2019 Page11of14 Indian market, have been lawfully acquired from the said market by a person and thereafter sold in the local market by him or others representing him or purchasing them from him, it would not amount to infringement of plaintiffs trademarks by virtue of section 30(3)(b) of the Act.

41. But in the present case, no defence has been raised by the defendants. There is no material whatsoever to indicate that the defendants acquired the impugned goods from the market through legitimate sources. Before the local commissioners, they had rather vaguely conceded that the impugned material possessed by them was from unknown supplier or a gift from a friend or given by foreign tourists. In any of these cases, the goods could have been, at best, used personally but not dealt with in the manner that the defendants did. Therefore, in the circumstances of the case, protection of section 30(3) is not available to the defendants because they have failed to show that the impugned cigarettes were lawfully acquired by them from the market. Having said that, there is no need to examine whether the objections raised by the plaintiffs with respect to difference in packaging, quality, prescribed tar content, warning labels etc constitute 'legitimate reasons' under sec 30(4) for opposing further dealing in plaintiffs' products. Thus, the sale of the impugned cigarettes by the said defendants amounts to infringement of plaintiffs' rights in the suit trademarks under section 29(1) read with 29(6) of the Act. Consequently, the plaintiffs are entitled to injunctive reliefs."

18. In view of the categorical stand taken in the suit that the Plaintiff Company does not authorise any dealer to carry out the export of its product, the acquisition of the products for the purpose of export could only be done through the Plaintiff. The goods that are being exported are meant only for domestic sale. Thus export of such products would conflict the rights of the Plaintiff and prima facie, it would also be an infringement under Section 29 (1) read with Section 29 (6) of the Act. It also prima facie appears that in case the Defendants No. 1 to 13 are permitted to alter the product in question, in the manner which is alleged to have been done, it would attract the provisions of Section 30(4) of the Trade Mark Act 1999. The doctrine of fist sale which cuts off trade mark owner's rights after its products are first

CS(COMM)107/2019 Page12of14 sold would be limited to selling the branded item in the same condition when it was first sold. The acts complaint of, like affixing stickers and altering the entire list of ingredients/nutritional facts amounts to "materially" changing the product made by the trademark owner. This would certainly put the image of the company in peril and thus would contravene Section 30 (4) of the Trade Mark Act,1999 .

19. Learned Senior Counsel also clarifies that he is confining the prayer in the interim application for seeking injunction in respect of export of the Plaintiff's products in the international market only.

20. In view of the material placed on record, it appears that the Plaintiffs have made a strong prima facie case for grant of ex-parte ad-interim injunction against the Defendants. Balance of convenience is in favour of the Plaintiff and irreparable harm will be caused if, the Defendants are not restrained from continuing the illegal export of the Plaintiff's product in international market. Defendant no. 13 has been shown as Ashok Kumar following the John Doe Orders. Accordingly, for the present, till the next date of hearing, the Defendant No. 1 to 12, their employees, servants, agents, representatives, assignees, dealers, distributors, retailers through themselves and through assigns and representatives and all other servants, agents, stockiest, acting for and on their behalf are restrained from exporting, (online/offline/directly or indirectly), Plaintiff’s goods in the international market bearing the trademark/artistic design/logo PATANJALI/PATANJALI AYURVED LIMITED or any other trade mark, as may be identical with or deceptively/ confusingly similar to Plaintiffs

CS(COMM)107/2019 Page13of14 trademark "PATANJALI/PATANJALI AYURVED LIMITED". Compliance of Order XXXIX Rule 3 CPC be made within two weeks.

21. It is made clear that the Defendants No. 1 to 12 may continue to sell Plaintiff's product in the domestic market.

22. Issue Notice for date fixed to Defendant No. 1 to 12 through all modes upon filing of the Process Fees.

22. Mr. Bansal, learned Standing Counsel accepts notice on behalf of the Defendant No. 14 and seeks four week’s time to file the reply.

SANJEEV NARULA, J

MARCH 18, 2019 ss

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