India: Carlsberg Breweries v Som Distilleries And Breweries Ltd: Delhi High Court Upholds The Maintainability Of Composite Suit For Design Infringement And Passing Off

Introduction

In a recent judgment dated December 14, 2018, a five-judge bench of Delhi High Court has ruled that a plaintiff can join two causes of action: one of infringement of the registered design of the plaintiff and the second of the defendant passing off its goods, against one defendant in a composite suit. Through this judgment, the court has effectively overruled the three-judge full bench judgment of Delhi High Court Mohan Lal v. Sona Paint and Hardwares¹.

The suit in question was filed, complaining of infringement of a registered design as well as passing off (of the plaintiff's trade dress) in respect of the bottle and overall get up of the "Carlsberg" mark. The defendant objected to the frame of the suit, pointing out that per Mohan Lal,the two claims (for passing off and reliefs regarding design infringement) could not be combined in one suit. The question was sent to Delhi High Court for reference which constituted a special bench to decide the issue.

The issue in front of the court was to decide whether in one composite suit, there can be joinder of two causes of action, one cause of action being of infringement by the defendant of a design of the plaintiff which is registered under the Designs Act, 2000 and the second cause of action being of passing off by the defendant of his/its goods/articles as that of the plaintiff.

Joinder of Causes of Action in a Composite Suit

Joinder of two causes of action is governed by Order II Rule 3 of the Code of Civil Procedure.

Rule 3(1) reads as:

"Save as otherwise provided, a plaintiff may unite in the same suit several causes of action against the same defendant, or the same defendants jointly; and any plaintiffs having causes of action in which they are jointly interested against the same defendant or the same defendants jointly may unite such causes of action in the same suit."

Erroneous Application of Precedents in Mohan Lal

In Mohan Lal, the court differentiated a claim of design infringement from that of passing off. It opined that "fundamental edifice of a suit for infringement under the Designs Act would be the claim of monopoly based on its registration, which is premised on uniqueness, newness and originality of the design. Whereas, the action for passing off is founded on the use of the mark in the trade for sale of goods and/or for offering service; the generation of reputation and goodwill as a consequence of the same".² Having reached this conclusion, the court relied upon the Supreme Court's ruling in Dabur India Limited v. K.R. Industries³ ('Dabur') and M/S. Dhodha House v. S.K. Maingi⁴ ('Dhodha House') to hold that different causes of action cannot be combined in one suit. Therefore, in order to understand the court's position, we must carefully examine both Dabur and Dhodha House judgments.

In Dhoda House, the court was faced with jurisdictional questions over a composite suit of copyright infringement and trademark infringement.The court did not consider the maintainability of the composite suit but it rightfully affirmed that Order II Rule 3 contemplates uniting of several causes of action in the same suit and even if the causes of action have no common nexus, the suit can be joined. However, the court in its judgment acknowledged that Order II Rule 3 would not ipso factoconfer jurisdiction upon a court in respect of a cause of action on which it originally did not have jurisdiction. That is to say, Order II Rule 3 would only apply to cases where the court has jurisdiction in respect of both the causes of action. Applying this interpretation to the facts of the case, the court held that the two causes of action had been incorrectly joined.

Supreme Court in Dabur examined the Dhodha House judgement and concluded that the issue of composite suit was never takeninconsideration in that case. It further clarified that the court in Dhodha Househad never ruled that two suits having different causes of action can be clubbed together as a composite suit.

However, similar to Dhodha House, the facts before the Supreme Court in Daburwere that a composite suit was filed with respect to two causes of action, where for one cause of action the court in which the suit was filed had territorial jurisdiction, and for the other cause of action the court had no territorial jurisdiction. Unlike Dhodha House, the court in Dabur considered the question of composite suit. It held that a composite suit can be filed for two causes of action where the second cause of action is essentially a right incidental to or supplemental to the main relief arising out of the main cause of action.⁵ It even clarified that besides an incidental power, a supplemental power can also be exercised.⁶

Judgment of the High Court in Carlsberg Breweries v Som Distilleries and Breweries Ltd

After examining both the cases, the court held that Mohan Lal has erroneously applied the precedent set in Dabur and Dhodha House. It reasoned that none of the two cases concerned with joinder of causes of action in one composite suit of infringement of registered design and passing off.⁷ The court also stated that Mohan Lal had failed to appreciate that the ratio of a case is facts dependent.

The court also negated the second ground of the Mohan Lal judgment which statedthat a claim of infringement was fundamentally different from that of passing off; and since no common questions of law and facts would arise between the two claims, a composite suit cannot be filed joining such claims.

The court went ahead to interpret the general law on joinders to ascertain whether there would arise common questions of facts and law in the two causes of action of infringement of registered design and passing off so that these two causes of action can be joined under Order II Rule 3 of the Code.

The court placed reliance on Prem Lata Nahata v. Chandi Prasad Sikaria⁸ where Supreme Court had ruled that the main purpose of joining two suits was to save cost, time and effort and to make the conduct of several actions more convenient by treating them as one action.

It was said in the same case that "the jurisdiction to consolidate arises where there are two or more matters or causes pending in the court and it appears to the court that some common question of law or fact arises in both or all the suits or that the rights to relief claimed in the suits are in respect of or arise out of the same transaction or series of transactions; or that for some other reason it is desirable to make an order consolidating the suits".⁹ Hence, the ultimate question for decision in all the suits is the nature of the transactions that were entered into between the parties and whether the evidence in those transactions would be common.

The court made use of law laid down in Prem Lata Nahata and opined that "if the substantial evidence of two causes of action would be common, then there can be a joinder of causes of action under Order II Rule 3 CPC". Likewise, if the evidence is for the most part different of the two causes of action, then there cannot be a joinder of causes of action.

The court also interpreted the term 'cause of action'. To do this, the court visited the Supreme Court's ruling in case of Kusum Ingots & Alloys Ltd. v. Union of India¹⁰ where the term was interpreted to mean "every fact which would be necessary for the plaintiff to prove, if traversed, in order to support his right to the judgment of the Court".¹¹

The court finally applied the Delhi High Court judgement in M/s. Jay Industries v. M/s. Nakson Industries¹²concerning the joinder of two causes of action: first of infringement of plaintiff's trademark and second of the plaintiff's claim to a copyright in a label of the plaintiff. The court, in that case, had ruled that both the causes of action resulted from the single transaction of sale by the defendant and hence both causes of action could be joined.

The court applied the aforesaid judgment to the facts of the present case and opined that where the claims of infringement of a registered design and passing off arise from the same transaction of sale, the two causes of action will have common questions of law and facts. Hence, the evidence of the two causes of action will also be common. In such a situation, to avoid multiplicity of proceedings there should take place joinder of the two causes of action of infringement of a registered design and passing off against the same defendant in one suit, otherwise multiplicity of proceedings will result in a waste of time, money and energy of the parties and also of the courts.

Conclusion

With this judgment, the court has cleared the fog over maintainability of a composite suit of infringement of design as well as passing off. The approach taken by the court in Mohan Lal had been disregarded by Bombay High Court in 2017 in the case of Cello v Modware¹³ where both the design infringement and passing off actions were maintained simultaneously in the same suit. However, Mohan Lal was, until now, still effective and binding in the jurisdiction of Delhi High Court.

The judgement upholds the fundamental rationale behind the provision of joinder of causes of action i.e. avoiding needless multiplicity of suits. The judgment has also affirmed that Remedy for passing off for a registered design can be brought if the said design is not functioning as a trademark and if the remedy of passing off is claimed for trade dress infringement or any other similar infringement. With ever escalating cost of IP litigation, the ruling in respect to the maintainability of the court, in particular, will bring massive relief to the plaintiffs. Composite suits for design infringement and passing off will also promote convenient disposal of such disputes.

Footnotes:

1 AIR 2013 Del 143.

2 ibid, para 24.

3 Dabur India Limited v KR Industries, (2008) 10 SCC 595, para 34.

4 (2006) 9 SCC 41.

5 Dabur India Limited v KR Industries (2008) 10 SCC 595, para 25.

6 ibid, para 34.

7 Carlsberg Breweries v Som Distilleries and BreweriesLtdC.S.(COMM) 690/2018 & I.A. No.11166/2018.

8 (2007) 2 SCC 551

9 ibid, para 18.

10 (2004) 6 SCC 254.

11 ibid, para 6.

12 AIR 1992 Del 338.

13 Suit (L) No. 48 of 2017.

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