Pratibha Bonnerjea, J.
This is an application by the petitioner under Section 46 of the Trade & Merchandise Marks Act 1958 for removal of the marks 'Pepsi Cola' 'Pepsi' and 'Pepsico' from the Register and for rectification of the Register. The respondent No. 1 is the registered proprietor of the said marks the particulars whereof are set out below:--
Trade MarkDatePlace of Registration
(a)Pepsi Cola
Registered No. 8155311.6.1943Calcutta Trade Mark Registry Office.(b)Pepsi
Registration No. 1732808.5.1957-- do --(c)Pepsico
Registration No. 2407408.3.1967New Delhi Trade Marks Registry.
The petitioner claims to be a manufacturer of ingredients and salts etc. for manufacture of non-alcoholic beverages, aerated water under the mark 'Pepsi'. The petitioner also claims to be selling beverages under the said mark and labels and the respondent No. 3 Pepsi Soda Water Co. is one of the franchise holders of the petitioner and as such Pepsi Soda also manufactures salts, beverages under the mark 'Pepsi'. The case of the petitioner is that the respondent No. 1, Pepsico Inc., a company, incorporated under the appropriate laws of Delaware, in the United States of America, the registered proprietor of the aforesaid trade marks, did not make bonafide use of the trade marks in relation to goods within the meaning of Section 46(1)(b) of the Act and as such the trade marks are liable to bo removed from the Register for non-user.
The defence taken is two-fold. First, there was bonafide use within the statutory period as required under Section 46(1)(b) of the Act and, secondly, non-user, if any, was due to the special circumstances prevailing throughout the period and without any intention to abandon or not to use the trade marks in relation to the goods under Section 46(3) of the Act.
The respective case of the petitioner and the respondent No. 1 and the law relating thereto will be dealt with in details later on.
(1) Jurisdiction
Out of the three trade marks, one was registered at Delhi. The respondent No. 1 has taken the point that this Court has no jurisdiction to adjudicate in respect of the trade mark 'Pepsico' which was registered at Delhi. On this point, the counsel for the respondent No. 1 cited : AIR1962Mad214 (Sri Chamundeswari Weaving and Trading Co. Pvt. Ltd. v. The Mysore Spinning and .) a decision of the Division Bench holding at page 216, paragraph 4 :--
'On this principle, an application for rectification can be filed only in the High Court within whose jurisdiction the Trade Marks Registry is situate or in that High Court within whose jurisdiction the owner of the marks resides or carries on business'.
The petitioner is not disputing this legal proposition. Hence the mark 'Pepsico' should be treated as excluded from the scope of the present application.
(2) The scope and requirements of Section 46 of the Act of 1958
Section 46 of the Trade & Merchandise Marks Act 1958 provides that a person aggrieved can make an application to a High Court or to the Registrar for taking off from the register a registered trade mark on the following grounds. The relevant provisions of Section 46 are set out below :--
Section 46(1)
(a) 'That the Trade Mark was registered without any bonafide intention on the part of the applicant for registration that it should be used in relation to those goods by him .....................and that there has, in fact, been no bonafide use of the trade mark in relation to those goods by any proprietor thereof for the time being upto a date one month before the date of the application; or
(b) that upto a date one month before the date of the application, a continuous period of five years or longer had elapsed during which the trade mark was registered and during which there was no bonafide use thereof in relation to those goods by any proprietor thereof for the time being.'
Section 46(3) 'An applicant shall not be entitled to rely for the purpose of Clause (b) of Sub-section (1) or for the purposes of Sub-section (2) on any non-user of a trade mark which is shown to have been due to special circumstances in the trade and not to any intention to abandon or not to use the trade mark in relation to the goods to which the application relates'.
It is clear from the provisions of Section 46(1)(a) that it attracts the case where a registered proprietor of a trade mark got his mark registered without any bonafide intention to use the same in relation to those goods and has not, in fact, made any bonafide use of the mark in relation to the goods since its registration upto the date one month before the date of the application.
The facts of this case will not attract the provisions of Section 46(1)(a) inasmuch as it is not disputed that since the date of registration of the marks 'Pepsi Cola' and 'Pepsi' in Calcutta in 1943 and 1957 respectively, the respondent No. 1 had made bonafide use of these marks in relation to the goods during the period between 1956 and 1960 when Pepsicola used to be bottled and sold by the respondent No. 1 through Messrs. Jagjit Distilleries & Allied Industries Ltd., the permitted user of the said trade marks.
Although, in the petition, the petitioner has relied on both Section 46(1)(a) and 46(1)(b), during the hearing, Section 46(1)(a) was not pressed. This application was really fought out under Section 46(1)(b) and Section 46(3) of the Act. The petitioner's case is that since 1961 upto one month prior to the date of the present application which is 4th September 1985, the respondent No. 1 did not make any bonafide use of the mark in relation to those goods and these facts fulfil all the requirements of Section 46(1)(b) of the Act. Hence the marks are liable to be taken off the register. In answer to these allegations of the petitioner, the respondent No. 1 alleges that in 1961 the Government of India imposed import restrictions on the consumer goods. Due to this trade restriction, it was not possible for respondent No. 1 to import the ingredients and to manufacture or sell its products under these trade marks in the overt market to the general public in India. But the respondent No. 1 made bonafide use of these marks in relation to these goods during this period in the available limited market, viz., to the bonded warehouses, foreign embassies, missions, diplomats and U. N. Agencies in India. Therefore, Section 46(1)(b) has no application on the facts and circumstances of this case. The truth and the legal effects of these allegations would be considered later.
(3) How the proprietary right over the mark is acquired
On behalf of the petitioner, it is contended that these restricted sales, if any, to the missions, diplomats and U. N. Agencies are not commercial sales. The words 'bonafide use thereof in relation to those goods' appearing in Section 46(1)(b) are crucial for adjudication of this application. According to the petitioner, a trade mark to be capable of being the subject matter of 'property' is required to be distinctive. It has to be recognised by a purchaser of the goods to which the mark is affixed to be of the same origin and whose quality had engendered goodwill. Therefore, the property in the trade mark can only be acquired by public use of it and is lost by its disuse. In an action for infringement of a trade mark, the proprietor has to prove his title by adducing evidence of public use of the mark. In support of his contention, the petitioner's counsel cited 'G. E. C.--v.--G. E. Company Ltd.' reported in (1972) 2 All E. Reports, 507 at 520. The counsel for the respondent No. 1, on the other hand, submitted that in (1972) 2 All E. R. 507 the Court was considering the history of the trade mark as it was under the common law of trade mark in England prior to the law being modified. He also relied on the same case and invited this Court's attention to page 520 where it had been clearly observed :--
'The principal defects in law of trade mark as it had developed by 1875 were first, that in any action which he brought for infringement of his trade mark the proprietor had to prove his title to the mark afresh by adducing evidence of his public use of it; and, secondly, that there was no easy way in which a trader who wished to adopt a particular mark to distinguish his own product could find out whether its use would infringe proprietary rights in that mark already vested in some other trader by virtue of his public use of it. The evident purpose of the 1875 Act was to provide a practical remedy for those defects without changing the main characteristics of trade marks at common law.'
At page 523 it was observed :--
With the passing of 1905 Act the law of trade marks assumed what is substantially its modern form. The basic change effected by the Act was that registration of a person as the proprietor of a trade mark became the source of his title to the exclusive right to the use of the mark and not mere evidence of a title acquired at common law by actual public use of the mark ............. The Act also authorised registration of marks prior to their actual use ............... butit contained express provisions for removal of a mark from the register for non-use.'
Therefore, acquisition of proprietary right over a trade mark is no longer dependent of the public use of the mark. The title of ownership over a trade mark is acquired by a person by getting his name registered as the proprietor of the mark concerned in the Register of Trade Marks in the Registry Office. Section 28(1) of our Trade & Merchandise Marks Act 1958 provides :--
'Subject to the other provisions of this Act, the registration of a trade mark in part A or part B of the Register, shall, if valid, give to the registered proprietor of the trade mark the exclusive right to the use of the trade mark in the manner provided by the Act.'
Sections 31 and 32 of 1958 Act provide that registration of a trade mark is prima facie evidence of its validity which becomes conclusive proof after seven years of registration. It is no longer necessary to adduce evidence of public use to establish title over a trade mark.
(4) How the proprietary right over the mark is lost
Under Section 46(1)(a) of 1958 Act, ownership over the mark is lost if the mark was registered without any bonafide intention to use it and if there was no bonafide use of the mark since the date of its registration upto one month before the date of the application made for removal of that trade mark from the register. Under Section 46(1)(b), the mark will be taken off the register and the right of ownership over the mark will be lost if for a continuous period of five years or longer ending with the date one month prior to the date of the application for rectification of the register, there is no bonafide use of the mark by the proprietor in relation to those goods. These are questions of facts to be established on evidence before the Court.
(5) Statutory period of non-user
According to the counsel for the respondent No. 1, if for five years and one month prior to the date of the application for rectification of the Register, there is continuous non-user of the mark in relation to the goods by the owner thereof, the mark is lost and is liable to be removed. But if there is one or two bonafide users during this statutory period, then the mark would be saved. It is not necessary that there should be continuous bonafide use of the mark throughout the whole statutory period. In support of his contention, he relied on The Trade Mark of Columbia Gramophone Co. reported in 49 R.P.C. 621 at page 628 lines 25 to 30.
'.. .the five years immediately preceding the application are not to be taken as a duration during which there must have been continuityof user, but it is a span of time. If the respondents to the application can show that during the span there has been a bonafide user of the trade mark, although it may not be for a very long time ......... they would have complied with the terms under whichthey can still justify the retention of the terms of registration; but it is a span of time during which evidence must be forthcoming as to bonafide user.'
The counsel for the respondent No. 1 also relies on several other decisions in support of his contention that five years' span of time is crucial. In this connection, he relied on :
(i) In re : Trade Mark of James Green (1921) 38 R.P.C. 155. This case also was cited on behalf of the petitioner. It was held at at page 161 lines 36 to 39:--
'...the material period of five years for the purpose of that section is in this case the period from 3rd March, 1915 to 2nd March 1920, which was the date of Notice of Motion to rectify.'
(ii) 'Nodoz' Trade Mark (1962) R P C 1. In this case an application was made for removal of the mark. It was held at page 5 lines 6 to 14 :--
'.. .it was necessary, therefore, for the applicant to show that for a period of 5 years or five years and one month, before the date of the filing of the application,............... there was no bonafide use of the mark in relation to the goods by any proprietor for the time being'.
(iii) In Hermes Trade Mark (1982) R.P.C. 425 the Court also held the same view. So in the other cases.
It should be noted here that the provisions of Section 46(1)(b) of the English Trade Mark Act of 1938 and our Section 46(1) (b) of Trade & Merchandise Marks Act 1958 regarding the span of time are identical. Non-user during this crucial statutory period has to be proved by the applicant for obtaining order for removal of the mark. If bonafide use of the mark within the statutory period is proved, then non-user for a longer period prior to the statutory period will not help the applicant. The petitioner is in agreement with the respondent No. 1 regarding the span of time and the evidence required for removal of the mark and the petitioner is also relying on the cases referred to above on this point.
(6) Whether, in this case, there was any bonafide use of the mark during the statutory period
According to the respondent No. 1, during the statutory period, that is, between September 1980 to August 1985 (present application was taken out on 4th September 1985), Pepsicola was sold in India. Documentary evidences of such sales are contained in Annexure to the supplementary affidavit of Joseph J. Joyce, affirmed on 1.12.86 and the supporting affidavit of M. L. Mehra affirmed on 20.11.86 including its Annexures 'A' and 'B', being part of Joyce's said affidavit which corroborate this statement made on behalf of the respondent No. 1. M. L. Mehra is the Managing Partner of M/s. Mohanlall & Co., Connaught Place, New Delhi and has disclosed documents proving sale of Pepsicola by the respondent No. 1 during the statutory period. Another supporting affidavit affirmed on 27.11.86 has been filed by one Khanna, the Managing Director of Embassy Stores, Lala Lajpat Rai Road, New Delhi, stating that Pepsicola was imported and sold during the statutory period in India to Embassies. High Commissioners, Consulates, Diplomats. International Organisations and U. N. Agencies. This affidavit is also included in Joyce's aforesaid supplementary affidavit. Documentary evidences in support of sales are also found in Annexure 'H' to the affidavit of David Hughes. Consul (Commercial) U.S. in Bombay, affirmed on 25.11.86 which is a part of the said affidavit of Joyce.
The counsel for the respondent No. 1 has submiited that if within the span of time allowed by the statute a single bonafide sale can be proved by the respondent No. 1 the mark must be saved. In support of Ms contention, the counsel for the respondent No. 1 replied on 48 Halsbury's Laws of England, 4th Edn. paragraph 111 at page 80 where the author observed regarding bonafide user :--
'First, whether there has been use and secondly whether the use was bonafide. The better view seems to be that even a single act of sale properly proved will suffice to constitute use'.
In Nodoz's Trade Mark (1962) R.P.C. 1 page 2 it was held in lines 37 - 40 :
'It may well be, of course, that in a suitable case, one single act of user of the trade mark may be sufficient, I am not saying for a moment that it is not so, but in a case, where one single act is relied on, it does not seem to be that such act ought to be established by, if not conclusive proof, at any rate, overwhelmingly convincing proof.'
It is, therefore, clear that quantity or volume and/or the number of sales of the goods bearing the trade mark are not the object or purposeof enquiry under Section 46(1)(b) of the Act. The scope of enquiry is whether there was any bonafide use of the mark in relation to the goods in course of trade during the said span of time. It is submitted on behalf of the respondent No. 1 that what is necessary is the proof of the use of the mark within the statutory period which must be a genuine use of the mark. He relied on Electrolux Ltd. v. Electrix Ltd. (1953) 71 R.P.C. 23, cited on behalf of the petitioner where at pages 36-37, it was held that the word 'Bonafide' was not used in contradiction to 'malafide' but the use must be judged by genuine commercial standard. In 46 Halsbury's Laws of England, 4th Edn., Para, 111 page 80, it was observed that if the primary purpose was not trade under the mark but merely to use the same to validate the registration, the use would not be bonafide. It is, therefore, submitted on behalf of the respondent No. 1 that the test is whether there was a commercial use of the mark during the statutory period. Any use of the mark that passes the commercial test would do and be deemed bonafide--even if it be a single transaction during the entire statutory period. It is contended on behalf of the respondent No. 1 that in the present case there are overwhelming documentary evidences commercial sale of Pepsi cola by the respondent No. 1 to M/s. Mohanlall & Co., and Empire Stores, both in New Delhi and to the embassies and other organisations which will prove that there were bonafide users of the mark during that period.
The sales of Pepsi cola to the privileged persons as proved by the respondent No. 1 are not disputed by the petitioner. But it is the petitioner's contention that these sales would not pass commercial test. The bonafide use of the mark in relation to the goods must be in course of trade, namely, sale in the open market. The petitioner's counsel relies on the definition of Trade Mark in Clause (v) of Section 2(1) of the Act. This clause contains the words 'marks used in relation to goods ... .in the course of trade'. According to the petitioner, the aforesaid words clearly bring out the requirement of public use of the mark. Hence supply to the privileged persons will not amount to trading with the public in India. These sales were not held 'in the course of trade'. The public in India did not have any trading access to these goods during the crucial period. Such sales are irrelevant for the purpose of Section 46(1)(b) of the Act. The petitioner's counsel also relied on the definition of 'goods' in Section 2(g) of the Act.
''goods' means anything which is the subject of trade or manufacture.'
He submitted that this definition envisages that the goods must be 'subject of trade'. In support of his contention, he further cited several authorities.
(a) Artistoc Ltd. v. Rysta Ltd. 62 R.P.C. 65.
(b) Electrolux Ltd. v. Electrix Ltd. and Anr. 71 R.P.C. 23.
(c) 'Daiquiri Rum' Trade Mark--1966 R.P.C. 582.
(d) 'Hospital World' Trade Mark--1967 R.P.C. 595.
(e) American Steel Foundries v. Thomas E. Robertson--70 U. S. Report L. Ed. 317.
(f) 'Budwieser's' case, 1984 Fleet Street Reports 412.
(g) General Electric Co. v. The General Electric Co. Limited. 1972 (2) All E.R. 507 at 518.
He invited this Court's attention to Aristoc's case in 62 RP.C. 65 where it was held at page 80 first para :--
' Trade' is no doubt a wide word but its meaning must vary with and be controlled by its context. A connection with goods in course of trade, in my opinion, means in the definition section an association with the goods in the course of their production and preparation for the market. After goods have reached the consumer they are no longer in the course of trade. The trading in them has reached its objective and its conclusion in their acquisition by the customer.'
It would be significant to note that the words 'in course of trade' will include the stages when the goods are in course of their production and preparation for the market--that is from the stage of their manufacture until they are put on the market. The meaning of the word 'trade' would also vary and be 'controlled' by its context. In (Hospital World) reported in 1967 R.P.C. 595 at p. 599 lines 5.15 it was held :--
'..But I do not think that the free distribution can be regarded as trading in the goods within the context of the definition of a Trade Mark. The goods are not being put on the market for people to buy as a matter of choice in preference to some one else's publication'.
In (Daiquiri Rum) reported in 1966 R.P.C. 582 lines 7-11 at page 594. it was held :--
'During the five year period ...... there had been no goods inexistence in relation to which the trade mark could be used. Entries in trade Directories and painting on the vans cannot ...... be sufficient in absence of goods.'
In Budwieser's case, 1984 F.S.R. 412 it was held at page 469. 5th para. :--
'I confess that for my part I am quite unable to treat this sporadic and occasional sales as constituting in any real sense the carrying on by the plaintiffs of a business in this country'.
This finding in the Budwieser's case was made in a passing off action. The plaintiff. An American brewer, manufactured beer in the trade name 'Budwieser', which used to be imported into the United Kingdom and supplid only to U.S. bases. The plaintiff sued the defendant in U.K. for passing off and injunction. Two amongst other questions to be decided in that case were (i) whether the plaintiff's activities constituted carrying on business in U.K. and (ii) whether the defendant's actions were capable of damaging plaintiff's goodwill. The plaintiff proved that large quantity of beer in the name of 'Budwieser' used to be sold in American bases and it was sought to be proved that thereby the plaintiff had acquired goodwill in U.K. and was entitled to succeed in its action. The plaintiff lost in the first Court and preferred an appeal. The appeal was also dismissed holding that the plaintiff had only acquired reputation in the U.K. recognizing that the plaintiff has acquired goodwill in America for extensive sale of its beer 'Budwieser' and did not prove that the plaintiff had acquired goodwill in U.K. for its business in U.K. At page 470 it was held -
'What we have here, namely, sales on a closed and separate market to a particular section of the public only having the qualification of belonging to ...... United States services. At page 476 it was held --'sales in American bases were made under very special arrangements in a very special and deliberately limited market.' But the question in a passing off action is whether by sale of its goods to the general public in open market the plaintiff had acquired a goodwill. It is contended that the sale of the plaintiff's beer to American bases would only prove the existence of an extended American market and not a market with the public in the United Kingdom. The plaintiff's sporadic and occasional sales of beer in the U.K.'s military and diplomatic establishments could not in any real sense be described as the carrying on a business in U.K. It was held in that case that the plaintiff could not claim to have acquired goodwill by carrying on business in U.K.'
It is, therefore, clear that the issues to be decided in a passing off action are totally different from that of the question to be decided in an action for taking off the mark from the register for non-use under Section 46 of 1958 Act. In a passing off action, the plaintiff has to prove that he has been carrying on extensive business with his goods in the market open to the general public and in course of his business, he has acquired goodwill in respect of his goods. Acquisition of the goodwill in course of trade in the open market In the country is essential to maintain an action for passing off in that country. Whereas in an action under Section 46 of the Act, the petitioner has to prove that there was no bonafide use of the mark by the respondent within the statutory period in course of trade. In the last mentioned action, if the respondent successfully proves a single genuine and/or bonafide user within the statutory period, the petitioner's application will fail. In the opinion of this Court, the Budwieser's case is helping the respondent No. 1 to the extent that in that case the appellate court has held that sale under special arrangement in a very special and deliberately limited market to the diplomatic establishment is nevertheless sale in a 'limited market' and sale to a particular section of the public ..... employees of the United States of America. The question whether such sale of goods in a limited market' should be considered as commercial sales or bonafide use in course of trade or not will be considered later on. It will suffice to record that sale of goods in relation to its marks in a foreign country to the diplomatic personnel was held to be a sale in a limited market to a Particular section of the public, although the purchasers were the employees of the United States of America.
(7) Whether the word 'use' of the mark CONTEMPLATES ACTUAL SALE OF goods in overt market
The counsel for the respondent No. 1 submitted that the requirements of Section 46(1)(b) of 1958 Act regarding the bonafide use of the mark may be fulfilled if the mark is used either in course of trade in a free and open and/or in a restricted or a limited or a controlled market whatever is available to the registered prporietor. The Section does not require or indicate that actual sale of goods in relation to the mark has to be made in open, free or unrestricted market to the public at large. Moreover, use of the marks may be of two kinds :--
(i) Physical use of the mark on goods by stamping the mark on the goods, container or packing etc. as held in Spillers Ltd.'s application reported in (1954) 71 R.P.C. 234/241.
(ii) Use of the mark not on goods but 'in other relation to goods', namely, shipping documents, bill of lading, consignment notes as well as use of the mark in publicity materials, trade literature, advertisement which do not constitute sale of goods but are offers, invitations to sell. Such publicity materials to constitute use of mark must currently be backed by goods obtainable in the market or about to be put in the market or under manufacture.
The counsel for the respondent No. 1 relied on Hermes case reported in (1982) R.P.C. 425 in, support of his contention that the words 'in other relation to goods' as in Section 2(2) of the 1958 Act include bona-fide use of the mark even if the goods are not in existence concurrently with the advertisement of the goods. He relied on page 430 lines 9:20 where it has been held 'I agree with the observation of Mr. Myall, the Assistant Registrar in the Review Trade Mark (1979) R.P.C. 27 where he said 'I do not, however, think that it is necessary that the goods must exist concurrently with the advertisement.' If the mark is used only in the advertisement before the goods are manufactured or put on the market for introducing the goods in the market, the advertisement would amount to use of the mark. He invited my, attention to Section 2(2)(b) of 1958 Act which is as follows :--
'to the use of the mark in relation to goods shall be construed as ...... the use of the mark upon or in any physical or in any otherrelation whatsoever to such goods'.
He submitted that by the provisions of Section 2(2)(b) of 1958 Act the concept of the word 'use' has been enlarged to include documents containing the mark relating to the goods. According to him, the use of the mark may take place from 'the stage of manufacture of goods, its publicity until it reaches the ultimate consumer. It includes a long chain of preparation, production, advertisement, distribution by way of offer for sale and sale in fact. It is therefore clear that the concept of 'use' of a trade mark has been changed during the course of 19 years from the decision in Hospital World Trade Mark case, reported in (1967) R.P.C. 595, where it was held--use of periodicals distributed free of charge was not use of a trade mark and the application for registration of the mark was refused on that ground. Hermes case decided in 1982 (supra) was an application for rectification of the Register by deleting the mark Hermes. The proprietor of the mark, the respondent in that application, had admitted that there was no actual sale of the materials under the trade name. The application under Section 26(1)(b) of English Act was rejected on appeal holding that the words 'mark in relation to goods' will include advertisements, invoices, etc. The mark may be used in various other ways and is not confined to actual sale of the goods containing the mark in open market to the public at large as contended by the petitioner. The Hermes case has brought about a very significant wide change in the concept of 'use of the mark'. It is no longer necessary to prove actual sale of the goods in open market for acquisition of distinctiveness of the mark by use of the goods by the general public.
(8) Whether 'use' of the mark in a limited market amounts to use of the mark in course of trade
The counsel for the respondent No. 1 submits that the concept of 'market' also has undergone a drastic change to the extent that sales made under very special arrangements to a limited privileged class of persons are considered to be sales in course of trade in a deliberately limited market. He has further submitted that the concept of 'limited market' was introduced and recognised as recently as in 1984 in Budwieser's case (supra) which was strongly relied on by the petitioner.
According to, this decision, such sales to the American bases in U.K. were sufficient for the proprietor of the mark to acquire reputation for its beer 'Budwieser in U.K. but that was not sufficient for acquisition of 'goodwill' in U.K. so as to entitle the proprietor thereof to maintain an action for passing off in U.K. If so, the specially arranged sale of Pepsicola to the privileged persons in India, viz., Embassies, U. N. Organisations, etc. are sufficient for the respondent No. 1 to acquire reputation for the sale of its goods in India in a limited or specially arranged restricted market. Unless the sales in the limited market are sales in course of trade to a particular section of the public the question of acquisition of reputation would not arise. According to him, sales of the goods containing the mark in specially arranged limited market would be sufficient to establish that bonafide use of the mark has been made by the proprietor thereof provided the sales are held within the period fixed by the statute. The counsel for the respondent No. 1 submits that other instances of 'limited market' are the controlled market where goods are sold to the customers after complying with the formalities specially arranged in accordance with the Government's policy of controlling the trade in the goods concerned. Such goods cannot be offered to the general public freely in the overt market because the sales of these goods are to be made in the restricted market to the restricted customers. Questions arose whether these restricted sales were 'sales' within the meaning of Central/State Sales-tax Acts. The cases on this point are A 1968 S.C. 478 (Indian Steel Wire Products Ltd. v. The State of Madras) A 1972 S.C. 87 (Salar Jung Sugar Mill v. State of Madras). A 1978 S.C. 449 (Vishnu Agencies Pvt. Ltd. v. Commercial Tax Officer and Ors.) and A 1986 S.C. 1760 (Madras Marine & Co. v. State of Madras). In these cases, the Supreme Court held that the concept of sale must be viewed in the light of the present day planned economy. By parity of reasoning, it is submitted on behalf of the respondent No. 1 that sale of Pepsi cola to the privileged persons is 'sales' in the market restricted by the Government of India's trade policy. In these cases, the concept of sale must be viewed in the light of the present trade policy of the Government of India. When such sales are considered to be actual saleof goods, then they must amount to bonafide use of the mark within the meaning of Section 2(2)(b) of the Act. These sales have been held within the statutory period as evidenced by the documents, invoices, bill of lading, etc. disclosed in this proceeding. In Orkin Exterminating Co. Inc. v. Pestoo Co. of Canada, decided in 1985 in (50) Ontario Report 726, the plaintiff who did not at all carry on business in Canada but had intended to expand his business there, was held to have acquired both reputation and goodwill for his goods in Canada, in a passing-off action instituted by the plaintiff and it got the decree. On appeal by the defendant, the appeal was dismissed. On the basis of the decisions in Budwieser's case and 50 Ontario Report 726, the counsel for the respondent No. 1 submitted that actual sale of goods in relation to the mark in open market is not necessary for acquiring reputation or goodwill. That can be acquired in a country even when, there is no sale of goods in course of trade by the plaintiff. The idea that the 'goodwill' is generated as the result of sale of the plaintiffs goods in open market in course of trade whereby the goods or the marks acquire distinctiveness has been changed. Now the goodwill can be acquired in a country without having any trading activities there by the plaintiff himself. Therefore, the concepts of the words 'trade', 'goodwill', 'market' and 'public' used in connection with the Trade and Merchandise Marks Act all have undergone radical changes by various judicial pronouncements throughout the world. In a Calcutta High Court decision dated 30.7.79, passed in Matter No. 106 of 1979 (Munchen v. Mohan Meakin) it was held that sale of the beer manufactured by a famous German brewery through the bonded warehouses to foreign embassies in India constituted sale of such beer in India. This Court humbly agrees with that view. This decision is, however, now under appeal.
On behalf of the petitioner, it is submitted that the case decided under Central/State Sales-tax Act will be of no help to the respondent No. 1 because in those cases what was decided was the question whether the transactions concerned amouted to 'sale' within the meaning of that Act. The Courts did not have to consider the transactions from the point of view of Section 2(2)(b) of the 1958 Act. Moreover, the sales to embassies, diplomats, bonded warehouses would not amount to bonafide use of the mark in course of trade in India. The petitioner did not dispute the documents relied on by the respondent No. 1 in support of its contention that it had been selling the goods in the limited market to these privileged persons. It is not disputed that these transactions are regulated and affected by the Reserve Bank of India Exchange Control Manual, Customs Act 1962 and the rules framed thereunder and Import (Control) Order 1955. The R.B.I. Exchange Control Manual lays down an elaborate scheme and machinery for importation of provisions by Warehousemen for sale to the embassies. Warehouses are permitted to import the provisions for supplies to embassies without any import licence. It also permits the embassies concerned to bring foreign exchange in India through normal banking process which is converted to Indian rupee to be kept in a separate account known as 'Diplomatic Bond Store Account'. The bonded warehouses are to be paid from this account for purchase of provisions' for the consumption of the diplomatic personnel. Periodic statements are required to be submitted by the embassies or the authorised dealers through whom the accounts are operated by the Reserve Bank of India. According to the petitioner, the goods imported by the warehousemen directly to the warehouse were not considered by the Supreme Court as an import to Indian soil as held in A 1958 S.C. 341 (The Central India Spinning and Weaving & Manufacturing Co. v. The Municipal Committee, Wardha), Hence these cannot be treated as sale of goods in India in course of trade because the goods have not been put upon the market for sale to the public and as such the requirements of Section 2(2)(b) have not been fulfilled. This Court is unable to accept the submission of the petitioner. The authority relied on by the petitioner has no application on the facts of this case and is irrelevant. Moreover, the phrase 'fconafide use of the mark' is not confined to sale of the goods containing the mark only. The words 'fconafide use of the mark in relation to goods have been construed by the highest authorities throughout the world to include the 'use of the mark' in advertisements, invoices, publicity materials when the goods are not in existence and are in the process of manufacture for the purpose of putting them in the market in near future. Hence making the goods available to the general public in open market is not the only requirement to constitute the word 'use' of the mark. Actual sale is no doubt use of the mark but the concept of 'use' is much wider than the actual sale. It is true, as pointed out by the petitioner's counsel that the sale by the bonded warehouses to the emphasies has to be made after complying with all the special procedures laid down by the Government of India in its import restriction policy and, international trade policy, restricting the market for the goods concerned as well as, its customers. But if actual sales of the goods are held in India under those restricted circumstances for which statements regarding these sales are to be submitted by the consumer embassies to the authorised dealers in India to enable them to receive payment in Indian currency by the Reserve Bank of India from a special account kept for that purpose, why that sale should not constitute use The concepts of the words 'use', 'sale' and 'market' all have undergone considerable changes by judicial pronouncements made by the Courts in recent years throughout the world including India. It is, therefore, no longer possible to hold that 'use' of a mark can only be made by putting the goods in the open market and making it available to the general public as contended by the petitioner's counsel. The language used in Section 2(2)(b) of theAct is also to be noted to find out what the words 'use of a mark' mean. It provides :
'to the use of a mark shall be construed as a reference to the use of the mark upon, or in any physical or in any other relation whatsoever, to such goods'.
The 1958 Act does not contemplate that the word 'use' should mean actual sale of goods in the open market to the general public. In the opinion of this Court, in view of the changes brought about in the concepts of the words,--'use', 'public', 'goodwill', 'market' and 'trade' the meaning of the phrase 'in course of trade' should also be construed in the light of these recent decisions. Particularly one has to keep in mind, while construing this phrase 'in course of trade', the present international trade and import policy of this country as well as the planned economy of the Government concerned. As otherwise, it would be impossible to give any harmonious construction of the provisions of the statute concerned. This Court, therefore, is unable to accept the submissions made by the petitioner's counsel on this point that 'use' of the mark is confined to actual sale of the goods in overt market making the goods available to the general public.
(9) Special Circumstances
The respondent No. 1 has also pleaded the special circumstances under Section 46(3) of the Act as an alternative defence. It is the case of the respondent No. 1 that since 1961 the Government of India imposed a total ban on the importation of consumer goods; as a result, Pepsicola--either in bottles or in cans--could not be imported to India for sale to the general public. In the Import Policies for April 1980 to March 1981, April 1981 to March 1982, April 1982 to March 1983, April 1983 to March 1984, April 1984 to March 1985. April 1985 to March 1986, there was complete ban on importation of flavouring essences, mixture of odoriferous substances and resinous which are the basic ingredients for the manufacture of concentrate for soft drinks including Pepsicola. Hence, it was not possible for the respondent No. 1 to manufacture Pepsicola in India. The customs and import duties in excess of 100% also rendered the import of goods in India and sale of those goods in Indian market commercially unviable. Under Section 29 of the Foreign Exchange Regulation Act, a foreign company has to take permission of the Reserve Bank of India to carry on or establish any place of business in India. Even if the permission could be obtained, still Pepsico Inc., the respondent No. 1 could not have used its mark under Section 28 of FERA or permit others to use the same without the permission of the Reserve Bank. By Notification No. GSR dated 19.4.75, the Reserve Bank declared its policy to allow a foreign company to use or permit others to use its marks provided such goods were for export to outside India only. By another Notification No. Ad Circular No. 31 dated 15.3.37, the Reserve Bank gave permission to the persons residing outside India or foreign citizens residing in India and foreign companies to use their marks provided such use was restricted to life-saving drugs, pesticides and other chemicals only. Under the circumstances, the respondent No. 1 could not use its mark in India due to aforesaid special circumstances. The counsel for the respondent No. 1 in support of his contention relies on A 1969 Cal. 43 (Aktiebolaget Joukoping Vulcan v. V. S. V. Palanicharny Wader), A 1973 Bombay 191 (M/s. Plaza Chemical Industries v. Kohinoor Chemical Co.), A 1986 Delhi 145 (Philip Morris Belgium v. Golden Tobacco Co. Ltd.), Ball T.M. 1966 R.P.C. 387 and Poiret v. Inlee Poiret Ltd. 37 R.P.C. 177 where it has been held that non-user must be a kind of special circumstances for all the trade in those particular goods. The non-user must be due to certain external forces, such as, war, prohibitive tariff import restriction by the Government, etc. and continues so long as importation of goods remains impracticable in a business sense. Such circumstances would constitute special circumstances within the meaning of Section 46(3) of the Act. In Bulova's T. M. reported in (1967) R.P.C. 229 it was held that peculiar or abnormal circumstances making international trade impracticable would amount to special circumstances within the meaning of Section 46(3) of the Act. The respondent No. 1 has disclosed various documents for establishing special circumstances the genuineness of which is not disputed by the petitioner. It is, however, submitted on behalf of the petitioner that the respondent No. 1 did not disclose what were the ingredients required for manufacture of Pepsicola in India. Unless those particulars are disclosed, it is not possible to come to any finding whether import of those ingredients were totally banned or prohibited. It seems that the petitioner expected that the respondent No. 1 would disclose its know-how in this proceeding and will make it public as to how Pepsicola is manufactured. This Court does not think that for the purpose of establishing special circumstances the respondent is required to disclose its know-how. According to the petitioner, the respondent No. 1, if it wanted to manufacture Pepsicola in India with the ingredients indigenously manufactured it could set up its own plants and other facilities for manufacture of Pepsicola for its sale in India. According to the petitioner, a foreign company with the permission of the Reserve Bank can use its foreign brand name. The respondent No. 1 could have carried on business by obtaining necessary permissions. The respondent never applied for permission to the R. B. I. or to the Government of India. At least nothing has been placed before the Court to show that any effort was made on the part of the respondent No. 1 to carry on business in India. The allegation of the respondent No. 1 that it had endeavoured to make commercial sale of Pepsicola or Pepsi in India cannot be accepted as the said allegations are unsupported by any documentary evidence. Referring to the cases cited on behalf of the respondent No. 1 on the point of special circumstances mentioned above, the petitioner's counsel submits that the ratio from these judgements is that in order to succeed on the defence of 'special circumstances' it must be shown that the circumstances were such as to affect the entire trade in respect of that particular type of goods. If non-user is due to any personal reason of the proprietor, that will not help the proprietor. In support of his contention on this point, the counsel for the petitioner relied on Trade Mark of James Crean & Sons Ltd. reported in 38 R.P.C. 155 and in the matter of Trade Mark of Columbia Gramophone Co. Ltd. reported in 49 R.P.C. 621. It is further argued on behalf of the petitioner that assuming that there were special circumstances, but the respondent's duty does not end by merely showing the existence thereof, he will further have to show in addition to that, that the non-user was not due to any intention to abandon or hot to use the mark. The petitioner alleged that non-user of the mark by the respondent No. 1 was intentional inasmuch as since 1961 the respondent No. 1 did riot want to invest money in India and refused to set up a concentrate plant in India unlike Coca Cola Export Corporation, another American company, who carried on business in India during this period. It is only due to fierce competition between the two, Pepsico Inc. the respondent No. 1 herein and Coca Cola, that it discontinued manufacturing its product and sold the plant and machinery to the competitor itself, viz., Pure Brinks, New Delhi, the franchise holder from the said Coca Cola Export Corporation. Even if this submission of the petitioner is correct, the fact remains that ultimately Coca Cola also had to leave India in 1978 due to severe import restriction and the trade policy of the Government of India. The fact that Coca Cola could not survive in the Indian market is an important piece of evidence which proved that there were special circumstances affecting the entire trade for which foreign companies could not continue its business activities in India in their brand name. In support of its contention of special circumstances, the Respondent No. 1 relied on the guidelines to entrepreneurs issued by the Government of India pursuant to notifications dated 19.4.75 and 15.3.76 whereby the entrepreneurs, who are seeking collaboration with the foreign firms to set up business in India, where debarred from using foreign brand names as would be evident from Clause 4(vii) of the Guidelines for Industries (Jan.-1982) annexed to the supplementary affidavit of Joyce dated 1.1256. The same prohibition against use of foreign trade mark also appears in earlier Guidelines for Industries 1973-74 which is also annexed to the same supplementary affidavit. The said prohibition was as follows :--
'There should be no provision for the use of foreign brand names on the product for internal sales, although no objection to their use on products to be exported.'
The respondent No, 1 also relies on Guidelines for Industries, para 1, policy and procedure, January 1982 annexed to the said supplementary affidavit of Joyce, declaring its policy not to allow any foreign collaboration, financial or technical, in regard to certain industries including consumer goods which will include Pepsi Cola as will be evident from item 17 of the said annexure. It is submitted on behalf of the respondent No. 1 that on account of all these restrictions, it became commercially impracticable and impossible to import or produce Pepsicola since 1961 upto the statutory period. To this, the answer of the petitioner was that many foreign companies, such as, Max Factor, Nivea, Ponds, Rothman's, Colgate, Lux, etc. had been manufacturing and marketing their products using their foreign marks. But these are consumer goods of different nature and character from that of Pepsi Cola or Coca Cola. What are the ingredients necessary for manufacture of these cosmetics, cigarettes, soaps, etc. mentioned above and whether the import of these ingredients were totally banned or not under the import restriction policy of the Government of India are not clear from the records of this case. Whether above named companies were facing the same difficulties as that of the respondent No. 1 or not cannot be found out from the records of this case. Therefore, it is not possible to compare and to hold that respondent No. 1 also could have continued its business in India as the other foreign companies mentioned above are doing. The petitioner is not disputing that the. Government's international trade policy allowed a foreign company in India to use their foreign brand name for the purpose of export only. Under what circumstances and on what basis, Max Factor, Ponds, etc. are allowed to continue their business in India using their respective brand names have not been disclosed in this proceeding and as such it is not possible for the Court to accept the submission of the petitioner on this point without having any material evidence in support of that. It is contended that there is no evidence that the respondent No. 1 had applied to the Reserve Bank for permission to use its trade mark Pepsi Cola or Pepsi. But the question of obtaining permission would have arisen if it was possible for the respondent No. 1 to manufacture its products in India for the purpose of marketing in India or for exporting the same. If the situation was such whereby carrying on business in India became commercially impracticable, impossible or unviable there would be no occasion for obtaining any permission from R.B.I. In A 1969 Cal. 43 and in A 1973 Bom. 191 (supra) it has been specifically held that import restriction by the Government constitutes special circumstances within the meaning of Section 46(3) of the Act, The fact that Coca Cola struggled hard to survive in the Indian market but could not and was constrained to leave this country supports the case of the respondent No. 1 that there were special circumstances affecting this trade during the entire period. The restriction was liberalised for the first time in 1984 when the respondent No. 1 tried to reintroduce its Pepsicola in Indian market but without any success. The records of this case proved that, the respondent No. 1 tried to re-enter the Indian market prior to February 1985. The present petition was affirmed on 26.8.85. It is therefore clear that within the statutory period of 5 years and one month, prior to the date of the present application, the respondent No. 1 -did try to re-enter into the Indian market in late 1985 or early 1986 but could not succeed which again supports the existence of special circumstances at the relevant time. That the respondent No. 1 made an attempt to come back will be evident from the annexures to the supplementary affidavit of Joyce affirmed on 1.12.86. The petitioner is not correct in its contention that the respondent No. 1 tried to re-enter Indian market for the first time after the present petition was taken out. The allegation of the petitioner is that the contention of the respondent No. 1 that it attempted to come back to India in 1985/86 should not be believed as it has not disclosed any document in support of this contention. It is true that no correspondence between the respondent No. 1 and the Government of India has been disclosed in this proceeding on this point but this attempt by the respondent No. 1 has been flashed in the newspapers. Unless such an attempt was made by the respondent No. 1, the press would not have given so much coverage of this news. One of the news items, annexure 'F' to Joyce's affidavit dated 1.12.86 is from 'Business' dated 15.2.86. The genuineness of the news is not disputed by the petitioner. In the opinion of this Court, assuming that the sales in the restricted or limited market in India did not amount to 'use' of the marks within the meaning of Section 46(1)(b) of the Act then the further facts established in this case certainly constituted special circumstances and it continued from 1961 until the span of time limited by the Statute during which period the respondent No. 1 could not, use the mark. Therefore, the mark is protected due to the provisions of Section 46(3) of the Act.
(10) Intention to abandon the mark
The petitioner contended that the respondent No. 1 abandoned the use of the mark intentionally. How the intention to abandon the mark is to be proved has been laid down in Law of Unfair Competition and Trade Mark by Harry Nims, Vol. 2, 4th Edn., Article 403 where it has been started that abandonment results in a forfeiture and must be strictly proved and the burden of its establishment is upon the party affirming it. Abandonment is purely a question of intent..'When conduct is consistent with the intention to retain trade mark rights, or when acts unexplained might explain abandonment, are answered by affirmative proof that there was an intention to keep the right claimed, the abandonment is not established'
'...but mere discontinuance of use is not sufficient evidence of intentional abandonment. The circumstances surrounding the discontinuance determine whether abandonment has taken place.'
The petitioner's counsel invited Court's attention to page 1265 of the book mentioned above.
'intentional abandonment may be inferred from circumstances; but the facts must be adequate to support the finding of intent'. He also relied on the observation at page 1266.
'If a trader not only has discontinued the use of the trademark for a considerable time, but also has allowed others to use it and to build up business on the supposition that he has abandoned it, he may be estopped from showing that he did not intend to abandon.'
The petitioner alleges that since 1961 the respondent No. 1 for over 25 years did not use its mark in India in relation to its goods and has allowed about 500 other persons to use the marks. During this period, the mark 'Pepsi' has been used by these manufacturers in relation to beverages, non-alcoholic drinks, aerated waters and other related products and those manufacturers have built up their business on the supposition that the respondent No. 1 had abandoned its mark. Hence the respondent No. 1 is estopped from proving that it had no intention to abandon the mark.
The petitioner also relied on the following passage from Nims at page 1267:
'intentional abandonment may be found to have taken place in spite of denial to abandon and despite the existence of a purely subjective 'intent' on the part, of the user to re-engage in the business and reserve the use of the mark or name at some indefinite time in the future'.
According to the petitioner, the respondent No. 1 has not given any positive proof that it did not abandon the mark. The allegation of the respondent No. 1 that it wanted to resume business in India is a purely subjective intent and is not sufficient to establish that it intended to retain the right over the mark. But it should not be overlooked that inference of abandonment from the surrounding circumstances must be based on adequate facts. In Article 408 of Nims' book it has been specifically observed :--
'The circumstances surrounding the discontinuance determine whether abandonment has taken place. These circumstances are more important than the length of the period of disuse.'
Therefore, to come to a finding whether mark has been intentionally abandoned by the owner of the mark or not, the surrounding circumstances have to be very carefully scrutinised and unless the surrounding facts adequately establish an intention to abandon, no such finding could be arrived at merely on the basis of the length of the period of disuse. In that view of the matter, the submission on behalf of the petitioner that disuse of the mark for a substantial period of time viz. 25 years is sufficient evidence that there has been abandonment of the mark, cannot be accepted. If special circumstances are established, intention to abandon cannot be inferred from its non-use. It is submitted on behalf of the respondent No. 1 that in the present case, the respondent No. 1 made positive attempt to re-enter the Indian market in 1985-86--long before the present petition was taken out, but was not allowed to do so by the Government of India. This fact clearly proved that the respondent No. 1 had no intention to abandon the mark and had expressed its intention to keep its right over the mark within the statutory period. On this point, the respondent No. 1 relied on Jose Menendez et al vs. Robert S. Holt et al, U.S. Reports 32 L.E.D. 528. In this case, the plaintiff himself did not manufacture the goods containing his mark 'La favourita' but authorised some other persons to manufacture by using the mark. A few persons made use of this mark unauthorisedly and the plaintiff sued them for injunction. Two issues were framed for decision in this suit:
(1) Whether it is necessary for the plaintiff himself to manufacture the goods to maintain an action for injunction against the infringer of the mark and (2) whether the plaintiff had abandoned the mark. Both the issues were answered in favour of the plaintiff. The evidence was that the plaintiff had taken legal steps against the persons who were wrongfully using his mark. It is to be noted that this case laid down the law that even though the plaintiff did not manufacture himself, from that fact, abandonment of the mark cannot be inferred. It was also held in that case that the intentional use of another's trade mark is a fraud. Mere delay or acquiescence by the owner cannot defeat the remedy by injunction in support of the legal right unless the delay is so long that it defeat the right itself. It must be so because the essential condition to constitute abandonment is that the one having a right should consent to the dispossession as there cannot be abandonment in the judicial sense of the word. Therefore, the subjective 'intent' on the part of the owner to use the mark in future, will not amount to abandonment in all cases.
In Beech-Nut Packing Co. v. Lorillard Co., U.S. Reports, 71 U S R L. ED. 810, the plaintiff's products were food products whereas the defendant dealt with tobacco under the same trade name. The plaintiff filed a suit praying for injunction against the defendant for infringement of trade mark. The defendant alleged that he was entitled to use the mark for his product in tobacco as the plaintiffs business is different from that of the defendant. The plaintiff then raised the plea that the defendant had abandoned the mark. The evidence adduced proved that the defendant's business had dwindled because of the change in the popular tests for which the mark was not used for a long time. It was held that mere lapse of time did not destroy the right to use the mark. This case laid down the proposition that due to the fluctuation in market, if the owner of the mark voluntarily does not use the mark for a long period of time to avoid loss etc. that would not amount to intentional abandonment. The fact that the goodwill once associated with a trade mark has vanished does not end at once the preferential right of the proprietor to try it again upon goods of the same class, with improvements that renew his hope. The proof of subjective intent to use the mark in future is also a good evidence to controvert the inference of abandonment from non user for a long time.
In Orkin Exterminating Co. V. Pesto Co. Canada Ltd. (1985) 60 Ontario Reports 726, the plaintiff, an American Company, brought an action in Canada for passing off against the defendant, a Canadian Company and claimed injunction against it for carrying on business of Pest Control using the plaintiff trade name. The defence taken was that the American plaintiff company did not carry on business in Canada in its trade name which was an admitted fact. But evidence showed that Plaintiff's products had acquired reputation in Canada and its goods were sold in Canada. It was held that although the plaintiff himself did not carry on business or use its goods or mark in course of trade in Canada, still the plaintiff's goods had acquired goodwill and reputation and as such the plaintiff was entitled to have the relief prayed for in a passing off action. The law laid down in Orkin's case is that for the purpose of acquisition of reputation or goodwill for its goods, it is not necessary for the proprietor of the mark to sell its goods in that country in open market to the general public and/or to use the mark in that country in course of trade. There can be acquisition of goodwill or reputation for the mark by the proprietor thereof in a country without carrying on business in that particular country. The principle laid down in Budwieser's case that only reputation but not the goodwill can be acquired by the proprietor of the mark by selling the same in a limited market in U.K. for supply of the beer to American bases in U.K. has been relaxed and enlarged in Orkin's case. From the concept of 'use in a limited market', in Budwieser, Orkin enlarged the concept of 'use' without any sale at all in any market, either open or limited. A proprietor will acquire goodwill and reputation for his mark in a country, if somehow or other his goods arrive at the market of that country, irrespective of any attempt on the part of the proprietor to use the same in course of trade in that country, and the goods will acquire distinctiveness and the proprietor will be entitled to have legal protection of his mark against piracy or fraud by unscrupulous traders. This change in the concepts of 'use' and 'trade' has been necessitated for giving protection to the owners of the marks, considering the complicated practice and procedure of international trade and the keen competition in trade and commerce in the modern world. International policies on trade and commerce have become so restrictive and complicated that it has become impossible for proprietors of internationally famous marks to use their respective marks in foreign countries in course of trade. These proprietors will lose their ownership over the marks for no fault on their part if literal dictionary meanings of the words 'use', 'market', 'trade', 'abandonment' etc, are applied in relation to trade marks; The modern trend of judicial pronouncements is therefore to give them liberal meaning by widening their scopes and concepts. In this connection, Jennings V. Stephens (1936) 1 All. E.R. 409 at 412 should be noted where Lord Wright M. R. held :--
'Thus it is clear that by 'public' is meant in the words of Bowen, J. 'a portion of the public. The particular portion of the public which is meant may sometime be very small indeed' '.
The word 'public' does not mean only the inhabitants of the country, in any specific context; it may mean for practical purposes only those as would be interested in any particular matter as held in (1941) 2 K.B. 194. Thus it may be contended that sale in a limited market to the people of embassies or U. N. organisation is sale to the public in its limited sense. It seems that the courts in modern times, realising that all countries, for protection of its own trade and commerce are forced to impose trade restrictions of various types and to lay down restrictive trade policies, have found it necessary to take liberal views instead of taking technical and restrictive views in respect of the words mentioned above to do justice to the cases before them. These liberal views are more suitable and cogenial for protecting the lawful rights of the proprietors of the marks from infringement of their rights by rampant piracy and fraud. While this Court is not oblivious to the fact that in the 1958 Act, in many sections the words 'in course of trade' have been used, still this Court does not think that if liberal meaning is given to these words it would militate against the letters or spirits of this Act. Therefore, words 'sale in course of trade to the public' can be equated with sale in a limited market to a limited public. Hence the sale to the privileged persons in the embassies, U. N. Organisations, etc. will come within the purview of the phrase 'in course of trade'. In the opinion of this Court, if strict, and dictionary meanings of the words 'use', 'market'.
'trade', 'public' and 'abandonment' are adhered to by the law Courts, that will encourage the unscrupulous traders to make inroads in the international world of trade and commerce by indulging in piracy and fraud. This should be prevented and legal rights of the proprietor of the marks must be protected unless it is proved to the satisfaction of the Court that the proprietor concerned has voluntarily abandoned the mark with intention to abandon the same. When the question of abandonment arises, the intention to abandon by the proprietor of the mark must be proved by cogent evidence. Intention cannot be inferred merely from the fact of non-user for a long period of time. Non-user may be due to the special circumstances or due to the situation of the common market when the owner does not feel like placing his goods in the market considering the commercial feasibility or desirability. After all, business is done for earning profit and not for intentionally incurring losses. In L.R. (1884) 26 Ch. D. 398 (In Mouson v. Hoehm) it was held at page 406 :
'A man who has a trade mark may properly have regard to the state of the market and demand for the goods: it would be absurd to suppose he lost his trade mark by not putting more goods on the market when it was glutted.'
Another case on this point is Poiret V. Jules Poiret Ltd. 37 R P C 177. In this case, the plaintiff was a dress maker in Paris of great reputation. He had acquired reputation in U.K. for his goods. The defendant started business of dress maker in U.K. using the surname of the plaintiff Poiret'. The plaintiff sued the defendant for injunction. It was held that though the plaintiff had no place of business in U.K. he had not abandoned his right to carry on business in is own name by non-user in U.K. Injunction was granted.
According to the petitioner, the respondent No. 1 intentionally abandoned the mark. The respondent No. 1 could prove by disclosing its application to the Government of India for permission to enter the open market or application to the R.B.I, to use the foreign mark, expenses incurred for that purpose, statutory books, papers and documents or the minute books of the Board of Directors or report to the shareholders that it had endeavoured to carry on business in India. No advertisement was issued in the Indian Press or otherwise of the mark by the respondent No. 1. According to the petitioner, absence of ail these will establish beyond doubt the intentional abandonment of the mark by the respondent No. 1. These documents, papers or accounts, if produced, would have proved by positive evidence that the respondent No. 1 had tried to enter in Indian Market to make bonafide use of the mark. But merely on the ground of non-production and non-user, abandonment of the mark cannot be inferred. In the opinion of this Court, for proving that there was no intentional abandonment of the mark by the respondent No. 1, the respondent No. 1 is not required to establish by giving positive evidence of bonafide use of the mark in relation to the goods in course of trade. He has to explain the reasons for non-user during the period. To come to a finding whether there was intentional abandonment or not, this Court can take judicial notice of elaborate trade restrictions imposed by the Government of India since 1961 as a result whereof normal trade activities of the respondent No. 1 were virtually stopped. As soon as the policy was relaxed a little, immediately the respondent No. 1 tried to re-enter the Indian open market but was unsuccessful. The wide coverage of this fact in the Press, the genuiness of which is not disputed by the petitioner, is sufficient evidence to establish that the respondent No. 1 had no intention to abandon its mark as otherwise it would not have attempted to enter the Indian Market long before the present application was taken out and within the statutory period. It cannot be disputed that although the respondent No. 1 did not carry on business in India freely, still it had retained the international reputation of its marks in Indian market as otherwise, the petitioner would not have rushed to adopt this mark. The petitioner has also tried to argue that for a very long period the mark 'Pepsi' is being used by more than 500 persons in different trades. The respondent No. 1 never objected and never brought any action against these in fringers. The conduct of the respondent No. 1 would establish that the respondent No. 1 had abandoned the mark. It is also urged that the mark has also lost its distinctiveness due to extensive use of the mark by various manufacturers. Hence the mark is liable to be removed from the register. This argument is based on the provisions of Section 32(c) of the Act which is as follows :--
'that the trade mark was not, at the commencement of the proceeding, distinctive of the goods of the registered proprietor'.
It is true that distinctiveness of the mark may be lost by extensive piracy so that the mark becomes public juris. It was held in National Bill Co. V. Metal Goods Manufacturing Co. reported in A 1971 S.C. 868 that mere neglect to proceed against the infringers does not necessarily constitute abandonment if it is in respect of infringements which are not sufficient to affect the distinetiveness of the mark even if the proprietor is aware of them. When neglect by the owner of the mark to challenge the infringement is alleged, the character and the extent of the trade carried on by the infringers and their position in the commercial world have to be reckoned in considering whether the registered proprietor has lost his mark by such neglect. To establish the plea of common use, the use by other persons should be shown to be substantial. In the present case, there is no evidence regarding the extent of the trade carried on by the alleged infringers or their respective position in the trade. If the proprietor of the mark is expected to pursue each and every insignificant infringer to save his mark, the business will come to a standstill. Because there may be occasion when the malicious persons, just to harass the proprietor may use his mark by way of pinpricks. In answer to this allegation, the respondent No. 1 in Joyce's supplementary affidavit dated 1.12.86 stated that there was no whisper of this case of public use of the mark in the petition itself. This case has been set up for the first time in the affidavit-in-reply. Moreover, 'Pepsi' and 'Pepsicola' were registered as carbonated beverages, syrups and concentrates under Class 32 of the Fourth Schedule to the Trade and Merchandise Marks Act 1958. It is alleged by the petitioner that the mark 'pepsi' is being used by others in respect of ice, ice-cream or ice candies which come under class 30 of the said Fourth Schedule and the sealing machine manufactured in the name of Pepsi comes under Class 7 of the 4th Schedule relating to machine and machine tools. The alleged banners, stickers, danglers, etc. disclosed by the petitioner for establishing common use of the marks of the respondent No. 1 are not the type of goods for which the marks of the respondent No. 1 were registered. The use of the mark Pepsi on goods falling within Class 7 or 30 are wholly irrelevant for the purpose of this case. Moreover, the plea of common use must fail because for establishing that, it must be proved that the businesses carried on by the infringers are of similar nature and are extensive and substantial. The mere use of the name is irrelevant because a registered proprietor is not expected to go on filing suits or proceedings against infringers who are of no consequence. It has been submitted before this Court on behalf of the respondent No. 1 that if it is found that piracy in respect of the mark is going on substantially and in respect of the goods of the similar nature coming under class 32 of the Fourth Schedule, of the Act, the respondent No. 1 would certainly take action. Mere delay in taking action against the infringers is not sufficient to hold that the registered proprietor has lost the mark, intentionally unless it is positively proved that delay was due to intentional abandonment of the right over the registered mark. This Court is inclined to accept the submissions of the respondent No. 1 on this point. The facts of this case are not sufficient to hold that there was any intentional abandonment either due to non-use or for not taking steps against the so-called infringers. It is the petitioner who is trying to take advantage of the internationally famous trade mark of the respondent No. 1 knowing fully well the extent of reputation the respondent No. 1 has acquired for this mark in Indian market. The petitioner has no right to use the marks of which the respondent No. 1 is the registered owner. The respondent No. 1 did not lose its mark by not proceeding against insignificant infringers.
(11) Person aggrieved within the meaning of Section 46(1) of 1958 Act
The petitioner's allegation is that it manufactures ingredients and salts, etc. for manufacture of non-alcoholic beverages and aerated water under the mark 'Pepsi' and also sells the same under the same mark and label Pepsi. The respondent No. 3 is one of the franchise holders of the petitioner and as such it also manufactures; salts, beverages under the same mark. The petitioner has applied through the Registrar of Trade Marks, Bombay, for registration of the mark 'Pepsi' under class 32 of the Fourth Schedule to the 1958 Act in. relation to its products which is now pending. The petitioner has taken out the present application under Section 46 of the Act for taking off the register the marks 'Pepsi and 'Pepsicola' of which the respondent No. 1 is the registered proprietor. The ground for removal is that within the statutory period fixed and longer, the respondent No. 1 did not make any bonafide use of the mark under Section 46(1)(b) of the Act. It is submitted by the petitioner's counsel that on behalf of the respondent No. 1 it has been alleged that the petitioner has been set up by the Parle Group of manufacturers of soft drinks to prevent the respondent No. 1 to re-enter the Indian market to protect their own monopoly in the business. The petition is tainted with fraud. But these allegations are irrelevant for the purpose of this case. The petitioner relied on 48 Halsbury, 4th Edn., Art. 118 at page 83 :--
'In the exercise of the discretion the merits or demerits of the applicant for rectification are irrelevant'.
According to the counsel for the petitioner, the conducts of the applicant or the merits or demerits of the application are totally irrelevant for consideration whether the mark should be expunged or not. In support of his contention, he cites in re : Hill's Trade Mark, 10 R.P.C. 113 where it was held that the merits or demerits of the applicant are irrelevant to the question for expunging the trade mark because the question is between the public on the one hand and the respondent on the other. It is further submitted that the respondent No. 1 in support of its contention that the petitioner is not an aggrieved person, cited 'Nodoz' Trade Mark (1962) R.P.C. 1 and 'Revue' Trade Mark (1979) R.P.C. 27 but these two cases are helping the petitioner inasmuch as in these two cases it was held that the continuance of the respondent's mark on the Register would be a bar to the applicant's application for registration of its mark. In short, the continuance of the mark of the respondent No. 1 in the register is a bar to the petitioner's application for registration of its mark and as such the petitioner is a person aggrieved within the meaning of Section 46(1) of the Act. The petitioner's counsel also relied on Kerly's law of Trade Marka and Trade Names. Edn.. 1986, page 179, paras. 11-07 under the heading 'Who May Apply : Person Aggrieved'
'The persons who are aggrieved are, it is held all persons who are in some way or other substantially interested in having the mark removed ............................... .......... ............................................................................................................................. An allegedinfringer of a mark is always a person aggrieved by its registration'.
Reliance has also been placed on Powell's Trade Mark 10 R.P.C. 195 where Lord Herschell said that whenever it can be shown that the applicant is in the same trade as the person who has registered the trade mark and wherever the trade mark remaining on the register, would or might limit the legal right of the applicant, so that by reason of the existence of the entry on the Register, he could not lawfully do that which but for the existence of the mark upon the Register he could lawfully do he has a locus standi.
It is true that the case of respondent No. 1 is that the petitioner Express Bottlers is a subsidiary and/or associated of Parle Group of Industries and was incorporated in 1982. It commenced its business in March 1985 after the news that the respondent No. 1 was trying to re-enter the open market in India was widely reported in the press and the fact become public knowledge. The first act of the petitioner was to pirate the internationally famous trade marks, such as, 7 Up, Coke and Pepsi, all belonging to famous foreign firms. The alleged franchise holder of the petitioner, the respondent No. 3 Pepsi Soda Water Company, became a franchise holder by virtue of an agreement entered into between the petitioner and the respondent No. 3 on 15.3.85 but has not yet been able to obtain a trade licence and is not manufacturing soda at present. The petitioner is relying on four invoices all dated 1.7.85 and one dated 2.7.85 in support if its alleged extensive business of its products under the mark Pepsi but on enquiry it was revealed that such alleged sales were made to Parle Groups. In any event, it is impossible for any new business who had factually entered the market in March 1985 (although incorporated earlier) to acquire considerable goodwill and reputation for its product by August 1985 particularly when its franchise holder has not yet been entitled to carry on business lawfully in absence of a trade licence. No documents have been disclosed to show that the respondent No. 3 as the franchise holder is carrying on business using the mark Pepsi. These allegations have been made expressly in paragraph 8 of the supplementary affidavit of Joyce affirmed on 1.12.86. One Nav Ratan Goenka, a director of Express Bottlers, the petitioner, affirmed an affidavit on 20.1.87 dealing with the allegations in the supplementary affidavit filed by Joyce on 1.12.86. While dealing with the allegations made against the petitioner, Goenka admitted that the petitioner was incorporated in 1982 and did not dispute or deny that the petitioner commenced business in March 1985. According to him, date of commencement of the business is immaterial and irrelevant. But undoubtedly, the period of business activities and its extent, both are very material for the purpose of coming to the finding whether it was possible for the infringer of the mark to acquire considerable goodwill and reputation in respect of its product. Regarding the allegations made by Joyce against the respondent No. 3, Nav Ratan Goenka did not deny that the agreement between the petitioner and the respondent No. 3 was in March 1985 but he denied the allegations that the respondent No. 3 did not hold any trade licence or did not manufacture soda. He craved reference to relevant records belonging to the respondent NO. 3 without specifying the nature of the documents and, in fact, nothing was produced or shown to this Court at the time of hearing regarding the business activities of the respondent No. 3.
It would also be significant to note that after the supplementary affidavit of Joyce was filed on 1.12.86, the respondent No. 3, who appeared through its counsel and supported the petitioner, did not obtain any leave from Court to file an affidavit to deal with the allegation made by Joyce against it. Hence the said allegations are not denied or disputed by the respondent No. 3. As a matter of fact, the counsel for the respondent No. 3 did not produce any document nor did he make any submission that the respondent No. 3 did possess a trade licence and carry on substantial business. There is nothing before this Court on the basis of which the Court can come to a finding that the respondent No. 3, as the franchise holder of the petitioner, is engaged in substantial trading activities relating to the mark Pepsi. Therefore, it is submitted on behalf of the respondent No. 1 that the petitioner is not an aggrieved person within the meaning of Section 46(1) of the Act. The present application has been made by the petitioner for taking the marks Pepsicola and Pepsi off the Register of which the respondent No. 1 is a registered proprietor since 1943 and 1957 respectively. It has been held in Jose Menendez et al v. Robert S. Hold et al, U.S. Reports 32 L.E.D. 526 that the intentional use of another's trade mark is a fraud. Mere delay or acquiescence by the owner cannot defeat the remedy by injunction in support of the legal right unless it has been continued so long and under such circumstances as to defeat the right itself. On behalf of the respondent No. 1, it is submitted that petitioner has no legal right to use the mark belonging to the respondent No. 1 and as such this mark cannot limit or affect its any alleged 'legal right' to carry on the business with that mark. Reliance is also placed on Re Appollinaris T.M. (1891) 2 Ch. 186 on this point.
But it is clear from the more recent decisions reported in (1962) R.P.C. 1, (1979) R.P.C. 27 and Kerly's Trade Marks and Trade Names. 12th Edn. (supra) that the scope and meaning of aggrieved person' has been enlarged. If the mark lawfully registered continues to remain in the register it would be a bar to the applicant's right to apply for registration of his mark and he would be an aggrieved person. It is contended on behalf of the petitioner that continuation of the mark of the respondent No. 1 in the register is a bar to the petitioner's application for registration of his mark, Kerly in his Law of Trade Marks and Trade Names, 12th Edn. (supra) has gone to the extent of saying that an alleged infringer of a mark is always on aggrieved person.
This Court is not oblivious to the fact that the petitioner suddenly become alert after the news of the attempt made by the respondent No. 1 to enter the market in India in 1984/85 was flashed in the newspapers sometime in February 1985, the petitioner became active and started business using the mark Pepsi from March 1985. All its activities started on and from March 1985. But this Court is inclined to hold that the petitioner is an aggrieved person and has the locus standi to maintain the present application as an infringer of the trade mark Pepsi. In that view of the matter, it is immaterial to investigate whether the petitioner has been set up by Parle Group of Companies or not.
CONCLUSION :
On the basis of the materials before the Court and the reasons mentioned above, this Court holds that the respondent No. 1 throughout the statutory period and longer, has made bona fide use of its mark in the course of trade in the limited and/or restricted market available to it in India by selling its products to the privileged persons mentioned above and has acquired both goodwill and reputation and Us mark has not lost its distinctiveness.
The respondent No. 1 could not make bonafide use of its mark in the open market in India due to the special circumstances arising out of imposition of severe trade restrictions and the trade policy of the Government of India making it commercially impracticable and impossible for the respondent No. 1 to carry on business in India. The respondent No. 1 did not intentionally abandon its mark as otherwise it would not have endeavoured to come back to the Indian market as soon as the international trade policy of the Government of India was relaxed a little in 1984/85 and its said attempt clearly establishes that there was no intention to abandon the marks within the span of time fixed by the statute. For all these reasons, the application fails.
All interim orders are vacated. Mr. Bachawat appearing for the petitioner prays for stay of this order which is refused. In case the respondent No. 1 intends to assign the trade mark concerned, it will give seven days' prior notice to the Advocate-on-Record of the parties. This order will continue for one month from date.
Liberty to mention.