The Turning Point Cases – Part I

We are pleased to bring to you a two-part guest post by Eashan Ghosh on the recent Delhi High Court’s judgment in Turning Point Institute v. M/s Turning Point. Eashan graduated as a gold medalist from NLSIU, Bangalore and with distinction honours from the University of Oxford. He has been in practice as an intellectual property advocate and consultant in New Delhi since 2011, and has taught intellectual property law at NLU Delhi and NLSIU, Bangalore. He has published articles in international journals including the European Intellectual Property Review, World Trademark Review, the Journal of Intellectual Property Law & Practice and the Queen Mary Journal of Intellectual Property. He has also written on Indian intellectual property issues for the Journal of Intellectual Property Rights, Indian Journal of Law & Technology and the NUJS Law Review. Eashan has guest blogged for us in the past as well, see here and here.

The Turning Point Cases – Part I

Eashan Ghosh

Do trademark cases really turn on Plaintiffs digging up two decade old delivery vouchers for gas cylinders as proof of use? Can a 12-year registrant of a well-known trademark get injuncted by an unregistered trademark proprietor? And what does it all have to do with a television show aired on Doordarshan in the 1990s?

Introduction

Mr. Justice Sanghi of the Delhi High Court on August 11 returned an interim injunction finding in favour of the Plaintiffs in Turning Point Institute v. M/s Turning Point. It is a decision that raises some important questions on the prior use inquiry in Indian trademark law.

Claiming a cause of action against the Defendants in April 2015, the Plaintiffs filed suit in August 2015. The Defendants cross-sued in October 2015, claiming trademark infringement over the trademark ‘TURNING POINT’, used by both parties in relation to private educational prep institutes.

The trademark originated, per the Plaintiffs, in March 1994, taking inspiration (and title) from a weekly science TV show of the same name — hosted by a rotating cast of theatre and film personalities including Girish Karnad, Naseeruddin Shah, Mallika Sarabhai and Mahesh Bhatt — which ran on India’s national broadcaster Doordarshan during the 1990s. The Plaintiffs’ use claim pegged the launch of their institute at April 1994 in New Delhi, and the incorporation of a company by them employing the Turning Point name in March 2001.

As against the Plaintiffs’ unregistered trademark, the Defendants secured registration for their trademark in November 2005, claiming use since July 1998. (A minor factual disagreement regarding the subsistence of the registration was summarily resolved by Mr Justice Sanghi in favour of the Defendants.) The Defendants’ company was incorporated in October 2002.

A considerable factor in the Defendants’ favour was the judicial recognition by the Delhi High Court in KK Aggarwal v. NIIT of the Defendants’ registered trademark as a well-known mark under the Trade Marks Act. This, they contended, put the Plaintiffs to general notice of the Defendants’ business — a consideration around which the Defendants fashioned their defence of acquiescence.

These were unsuccessful before Mr Justice Sanghi’s willingness to look past the Defendants’ well-known mark status and judge the interim relief applications on the evidence presented. There is little discussion in Turning Point on the consequences of permitting interim injunctions against registered proprietors of well-known trademarks. What it does emphasise, however, is the brittleness of a well-known trademark designation secured in litigation.

Prior Use

In support of their prior use claim, the Plaintiffs set out a remarkably detailed array of evidence and rebuttal. On rebuttal, the Plaintiffs claimed that the Defendants’ proof of use in terms of party-specific documents such as fee receipts and advertisements only stretched as far back as 2004, and not 1998, as the Defendants had claimed. (One advertisement, admitted the Plaintiffs, went back to 1999, but made no mention of the trademark.)

Similarly, the Plaintiffs’ case regarding the Defendants’ public documents — including IT returns, service tax registrations, utilities bills, phone bills, and bank statements — was that these, too, were inconsistent with the 1998 use claim and could, at best, support a use claim of the year 2000, in addition to being under the names of individuals/entities other than the first Defendant.

The Plaintiffs set out positive evidence that was even more exhaustive. In the order that they are discussed by Mr Justice Sanghi, these include affidavits by the claimed creator of the trademark, 2 ex-teachers at the Plaintiff’s institute covering a combined period between April 1994 and February 1997, a painter who painted the signboard for the institute in February 1995, and 17 students covering a period between June 1992 and 2000.

The Plaintiffs also produced two sets of rent receipts from May 1995 to March 2001, one of which bore the Plaintiffs’ trademark. (These were judicially discarded owing to apparent inconsistencies in the rent amounts disclosed by the receipts.) They dug out a telephone bill from 1996 and question papers run by their institute, ostensibly of the same vintage, which bore in the letterhead the very telephone number to which the bill related. (These were considered unreliable because the question papers were undated.)

Eventually, the Plaintiffs’ prior use claim turned on two further documents. The first was a delivery voucher from September 1996 for a gas cylinder delivered to the Plaintiffs under the name ‘Turning Point Institute’ at their address. The second was an original flyer from April 1995 notifying a shift in premises of the Plaintiffs’ place of business from their original address. These are set out in a manner that suggests that they are the only two pieces of evidence that speak to uncontroverted use by the Plaintiffs. By exclusion, this means that Mr Justice Sanghi does not believe that the — count them — twenty-one affidavits entered into evidence by the Plaintiffs, each attesting to the use of the trademark by the Plaintiffs in some capacity, support the Plaintiffs’ prior use claim. (It’s slightly incidental to the plot here but this scattergun approach to the documents presented before the Court asks a fundamental question about how use claims are evaluated under Indian evidence law. Is it permissible to award prior use claims to parties where some of their evidence presents grave objections that would disqualify, neuter or taint reliance on it at trial? Does the interim relief system incentivize turning evidence of use claims into a crapshoot in the hope that one of multiple bits of evidence will somehow stick? Should judges even consider it evidence of use if the amount of reliable use demonstrated is so meagre, Toshiba notwithstanding?)

As such, the judge finds prima facie use since at least the April 1995 date mentioned on the flyer. This means that the Defendants’ own best case from this point forward regarding their adoption and use of the trademark from July 1998 cannot alter the prior use finding. (The judge finds, separately, that the Defendants’ own use appears only to have been established from 1999 onwards.) Going by the Supreme Court decision in Satyam Infoway, the judge holds that a passing off claim can, without anything further, be decided as a straightforward prior use battle.

This ostensibly reduces the inquiry to two simple questions — whether the Defendants’ use of the trademark is defensible on substantive grounds, and whether an injunction order is warranted at equity.

The Jif Lemon Factors

It is at this stage that the structure of Mr Justice Sanghi’s 63-page opinion starts to disintegrate. Instead of addressing the remaining queries in order, the judge commences the process of checklisting the facts before him against the three Jif Lemon ingredients of a pure passing off action.

In doing so, he first finds that there has been misrepresentation because the Defendants’ services cater to the exact same sub-category of customers as the Plaintiffs, and because the customer base “comprises of young and
gullible students”. The basis for this characterization isn’t explained and Indian precedent advancing a characterization to the contrary, though not binding, finds no engagement.

Second, he finds that goodwill from the Plaintiffs’ standpoint must be seen from the date when the Defendants commenced the activities complained of. He interprets this to mean that the only goodwill relevant to this passing off inquiry is the goodwill acquired by the Plaintiffs prior to the Defendants’ first use of the trademark, i.e. between April 1995 and 1999. Once again, it isn’t clear why this window alone, as opposed to goodwill acquired from first use to bringing the claim, is considered germane. The judge’s reliance on Narayanan’s text to advance this point is odd, given that Jif Lemon itself makes no mention of such a restriction.

Further, Jif Lemon requires goodwill to be measured by a substantial number of the purchasing public associating the trademark specifically and exclusively with the Plaintiffs’ services. However, the judge, fixated on the establishment of sufficiency of goodwill prior to the Defendants’ entry into the market as opposed to the degree to which this sufficiency of goodwill is to be established, departs for an answer to the former issue.

He finds that private educational prep institutes can rapidly build goodwill based on their customers’ performances in competitive examinations. The publication of these results frequently gain acreage in national dailies and, therefore, “even [so soon after their own establishment] in 1999, the [Plaintiffs] would have earned goodwill”. He also assesses goodwill from the ex-students’ affidavits, and from the Plaintiffs’ continuity, increasing turnover and advertising budget. He concludes that there is “sufficient prima facie material on record” to establish the Plaintiffs’ goodwill.

While it is reasonable to simply set aside this section of the opinion as being superfluous to the issues at hand, Mr Justice Sanghi then presents two points on less certain footing. He says, first, that the Defendants’ own goodwill in the market is later in time and, second, that their adoption of the trademark appears to be dishonest. He says so in a manner that suggests that these factors mitigate the Defendants’ claim to goodwill. However, not only is this not a requirement under the Jif Lemon trinity, goodwill isn’t intended to be a comparative evaluation under Jif Lemon either. The relevance of these two factors is thus difficult to compute.

Finally, the likelihood of confusion, the third of the Jif Lemon questions, is cast by the judge in terms of damage caused. He holds, correctly, that there is no need for proof of actual damage at the interim stage, and that the likelihood of damage would suffice.

However, looking at the parties’ most recent annual turnover figures — approximately Rs. 6.9 million for the Plaintiffs and Rs. 15 million for the Defendants — the judge concludes that this is a case of actual damage. At para 70, he notes:

“[The] annual turnover of the Plaintiffs’ business has become almost stagnant, while the Defendants’ business under the impugned trademark has zoomed past eight figures. The reason behind the upsurge in revenue figures of the Defendants, prima facie, appears to be because of the subsequent dishonest adoption of the identical mark by the Defendants for the same services.”

It is hard to stand behind this kind of speculation. It is harder still, considering that, by the judge’s own admission, the question of whether there has been actual damage is irrelevant. The other question, located within the judge’s application of Jif Lemon, is of why damage is being estimated on the back of turnover numbers over the last 5 years even as established goodwill has been measured at a point before the entry of the Defendant into the market. It is a question which this decision does not answer.

Finally on this subject, Mr Justice Sanghi goes on to admit that there is a possibility of reverse confusion in this case because the Defendants’ business is bigger than the Plaintiffs’ business. He says, further, that this possibility ought not ordinarily deny an interim injunction but it may act to mitigate damages.

This is uncomfortably contradicts the ‘actual damages’ diagnosis at para 70. Greater turnover by the Defendants in recent years can either set up a claim of actual damages or mitigate it—surely it cannot be both.