Delhi HC drives International fashion brand Zara’s trademark troubles away

 (This post is a case summary of the recent order passed by the Delhi High Court, granting an ad interim injunction in Industria De Diseno Textile Sa v. Oriental Cuisines Pvt. Ltd. And Ors restraining the defendants from the use of the plaintiff’s mark ZARA as a part of the defendant’s own mark, ZARA TAPAS BAR)

Facts

The plaintiff, Industria De Diseno Textile Sa, the owner of the world-famous ZARA trademark, is an internationally known company originally established in Spain, engaged in the manufacture, design and sale of fashion and lifestyle products under various classes of the International Classification of Goods and Services. In India, the plaintiff operates by virtue of a joint venture with Trent Limited of the Tata Group under the name Inditex Trent Retail India Private Limited. It also features in the top 50 brands among 100 most valued trademarks in the world as per the Interbrand rankings.

The defendant is Oriental Cuisines PVT Limited, a leading chain of restaurants that was running a Spanish restaurant by the name of ZARA TAPAS BAR in Chennai and Kolkata. By 2003, when the Defendants opened the ZARA TAPAS BAR, the Plaintiff had already opened its stores in 44 countries, and having an annual turnover of over 3 billion Euros by that time. The plaintiff sought an ad interim injunction against the defendants to prevent them from infringing, passing off and diluting its trademark by freely trading on ZARA’s reputation and goodwill as a globally-renowned brand.

Plaintiff’s Contentions

The Plaintiff asserted that it coined the name ZARA in 1975 and opened the first shop 38 years ago in A Coruna, Spain. The plaintiff averred that in April 2005, the plaintiff first came across the defendant’s trademark application for registration of ZARA TAPAS BAR under Class 16 and filed an opposition to it before the Registry in Chennai, which is still pending. In April 2012 the plaintiff discovered more applications filed for the registration of ZARA TAPAS BAR., and filed oppositions against all of them.

The plaintiff also contended that the name, ‘TAPAS’ which is the name attributed to snacks in the Spanish cuisine bears no connection to the use of ZARA, because the latter itself has nothing to do with Spanish culture at all. The plaintiff believes that the ZARA word has been used with generic extensions only to trade on the popularity and goodwill of the plaintiff’s trademark., and prayed for four injunctions aimed at restraining the use of the word ZARA in the defendant’s trademark, to be passed in favour of the plaintiff :

“(a) restraining Defendants by themselves, their partners, directors, employees, agents and others acting on their behalf from offering any type of services, manufacturing, marketing, selling and offering for sale, products and/or restaurant or hospitality services or any other allied and cognate products and/or services bearing the mark “ZARA”, “ZARA TAPAS BAR” and from using the mark ZARA as a trademark, trade name, corporate name, domain name or in any other manner whatsoever which may cause infringement of Plaintiff‟s registered well known trademark ZARA;

(b) restraining Defendants by themselves, their partners, directors, employees, agents and others acting on their behalf from manufacturing, marketing, selling and offering for sale products, offering restaurant services or any allied or cognate products/services bearing the mark “ZARA”, “ZARA TAPAS BAR” and from using the mark ZARA as a trademark, trade name, domain name or in any other manner whatsoever which may cause confusion and likelihood of association amounting to passing off their goods and services as that of Plaintiffs;

(c) restraining Defendants by themselves, their partners, directors, employees, agents and others acting on their behalf from using the mark ZARA on the website more specifically on http://www.zaratapasbar.in or on other social media websites which may create an impression to the public at large that the said mark ZARA is the internationally recognized mark from Spain, which is seriously detrimental to the interest of Plaintiff and causes passing off on the Internet; and

(d) restraining Defendants by themselves, their partners, directors, employees, agents and others acting on their behalf from using the mark ZARA in relation to eating/dining establishment or bars/pubs or in any other way which causes dilution of Plaintiff‟s registered and I.A No.11760 /2013 in CS (OS) No. 1472/ 2013 Page 8 of 42 well known trademark ZARA, which is seriously detrimental to its distinctive character and repute.”

Defendant’s Contentions

The defendants on the other hand, asserted that the plaintiff had approached the court with unclean hands. It stated that the plaintiff had tried to conceal from the court the fact that there are currently several parties in India as well as abroad using the trademark ZARA or ZARA formative marks, co-existing with the plaintiff’s ZARA trademark, and that the plaintiff’s trademark had been challenged under several jurisdictions including the EU.

They further contended that all the applications filed by the plaintiff except those under classes 25, 3 and 18 were on a proposed-to-be-used basis, and only two months after the Defendant’s application for registration of the ZARA TAPAS BAR trademark. Further, it was averred that the plaintiff had caused a major delay in filing the suit, which amounted to acquiescence. The defendant stated that the plaintiff ought to have filed the suit much earlier as the defendant had obtained a bar license in 2002, with advertisements being put up from 2003 and the trademark application being published in 2005.

Issues

 (i)Whether there is any deceptive similarity between mark ZARA of the Plaintiff and ZARA TAPAS BAR of the Defendants;

The Court considered the plaintiff’s contention in the plaint that by operating through the www.zaratapasbar.in website, the defendants were attempting to project that they were in the business of offering Spanish-styled products and services under the name ZARA. The defendants had asserted that they were not using the mark ZARA per se, but only ZARA TAPAS BAR or ZARA, the Tapas Bar and Restaurant for a different class of goods which by itself differentiates their mark from the ZARA mark. However, quite ironically, screenshots from the defendant’s account plainly revealed that in every picture, the word ZARA was found to be made rather unwarrantedly prominent, while TAPAS BAR was barely legible. The Court noted that the ZARA word appeared to be all most ten times larger than all the other words in the advertisement, as if seeking to project not ZARA TAPAS BAR, but merely ZARA as its brand name.

The Court acknowledged that there did exist deceptive similarity between the two marks considering the manner in which the defendants were using the word ZARA all over their restaurant advertisements.

(ii) Whether the adoption of the mark ZARA TAPAS BAR was dishonest or fraudulent or it is an honest adoption and Defendant no.1 is entitled to concurrent user of the mark;

Considering the rather wild explanations that the defendant gave in their efforts to establish the independent existence and relevance of the name ZARA, it becomes rather evident that they were looking desperately to scramble out of that rather tight corner they had gotten themselves into by pulling out any evidence of a remote connection that the word ZARA might have to as many cultures as possible. For instance, they stated that in Hindi, the word means ‘some’ or ‘little’. In Urdu, it means dawn and is a popular name for a girl. In Arabic, it is (according to the defendant) the equivalent of the word zahrah which means blossoming flower. It then, rather slyly, tried to establish a link between North African Islamic culture and Spanish culture to justify its claims of the linkage of Zara to Spain – and gave several other far flung examples as well.

However, the Court then made a reference to the press article brought to its notice of the Court by the plaintiff, stating, “Thanks to Mahadevan, who came across the concept in Paris, Chennai has India’s first Tapas bar ZARA Tapas Bar…” which pretty much kick started the process of bringing the defendant’s case to its knees.

The Court finally acknowledged that “if the Defendants did not want to ride on the Plaintiff‟s reputation, they would have not used the word ZARA prominently in the words ZARA TAPAS BAR or ZARA, the Tapas Bar and Restaurant”.

(iii) Whether the mark ZARA is used by many entities and has become publici juris;

The defendants brought the attention of the court to the Hearst Communications, Inc.v. Dinesh Varyani & Anr., ILR (2009) 4 Del. 799 case where it was held that a common English word cannot be the basis of a passing off action. However, the tricky part here is that the defendants were yet to establish the generic-ness of the word ZARA so far as its Spanish connections are concerned. Further, the Court noted that while the Plaintiff established its XARA mark’s protection in several international jurisdictions, it was unfortunate that the defendant had to rely on third party registrations – most of which were frivolous, irrelevant and bore little or no connection/similarity to the plaintiff’s ZARA mark. The Court noted the falsity of the defendants’ claim and its inability to show similar third party registrations.

(iv) Whether there is a great delay in filing the suit and whether it amounts to acquiescence on the part of the Plaintiff;

The Court held that although discussions to reach an amicable solution between the plaintiff and defendant were being held atleast since February 2011 while the instant suit was filed only in 2013, the three year delay cannot amount to acquiescence and thereby, the plaintiff shall not be disentitled from seeking relief through an ad interim injunction if a case can be established on its merits. The Court referred to N.R. Dongre & Ors. v. Whirlpool Corp. & Anr., AIR 1995 Delhi 300 on this point, where it was held that delay without prejudice is not a good defence. In the Whirlpool case mentioned, in the absence of a satisfactory explanation given by the defendant for adopting and using the WHIRLPOOL mark, irrespective of the delay, the order of injunction granted in the plaintiff’s favour was upheld.

(v) Whether there is suppression/concealment of material facts so as to disentitle the Plaintiff to the discretionary relief of injunction;

The defendants stated that the plaintiff’s contention that they had come to know of the defendant’s activities only through a letter addressed to them in 2011 by the defendants who were then seeking to reach an agreement to allow the co-existence of both the marks was contrary to what was stated in the affidavit in by Mr. Antonio Abril Abadin in 2008. The Court acknowledged that while a party seeking an ex parte ad interim injunction must make full disclosure of facts, but as in the present case both parties are before the court and the case is being heard on its merits, the mere misstatement of certain facts unless mala fide, will not invalidate the plaintiff’s right to seek the relief of injunction.

(vi) Whether the Plaintiff’s mark ZARA is a well known trademark and had trans-border reputation or in the alternative the Defendants are entitled to use the mark ZARA TAPAS BAR in relation to class 25 or for that matter hospitality restaurant business co-extensive with the Plaintiff.

The Court held that since the Defendant adopted the ZARA TAPAS BAR mark in 20013, prevailing trans-border reputation of the plaintiff’s ZARA mark is irrelevant. It noted that several documents, including news articles had been produced by the plaintiff to establish that it was a well known trademark within the ambit of Section 2 (1) (zg) of the Trade Marks Act, 1999, having trans-border reputation. The Court observed that although there existed no ZARA store in India until 2010, it had been registered under Class 25 since 1993, and had also been getting fabrication work done from various exporters in India, and acknowledged ZARA’s trans-border reputation.

Ruling

As expected, the Court ultimately held that the defendant’s mark, ZARA TAPAS BAR had been adopted dishonestly and fraudulently, and that irreparable loss would be caused to the plaintiff’s mark if it is not protected and the defendant is permitted to carry on business under the ZARA TAPAS BAR name. Accordingly, an ad interim injunction was granted in favour of the plaintiff.