Introduction
In the dynamic world of intellectual property law, the case of Levi Strauss & Co. v. Rajesh Agarwal stands as a pivotal judgment that reinforces the sanctity of trademark rights and the procedural mechanisms designed to protect them. Decided by the High Court of Delhi on January 3, 2018, this case addresses critical issues of trademark infringement, passing off, and the evidentiary value of a Local Commissioner's report. The dispute centers around the unauthorized use of the globally renowned "LEVI'S" trademark by a small-scale merchant in Hyderabad, highlighting the tension between established brand owners and local traders. This case study delves into the factual and procedural intricacies, the legal issues at play, the arguments presented, the judicial reasoning, and the broader implications of the decision for trademark law in India.
Detailed Factual Background
Levi Strauss & Co., a globally recognized apparel company, has been using the "LEVI'S" and "LEVI STRAUSS" trademarks since 1850, particularly for its iconic jeans. The company is the registered proprietor of these trademarks in India, with registrations in Class 25 for apparel, as evidenced by trademark registration numbers 352692, 382357B, 290954, 350738, 317649B, and 270875B. The plaintiff claimed that its brand is synonymous with quality and enjoys significant goodwill, supported by substantial sales and advertising expenditures, including over Rs. 25 crores in sales and Rs. 4.7 crores in advertising in India in the year prior to the suit's filing in 2001.
The defendant, Rajesh Agarwal, operated a small retail shop in Hyderabad, where he was found selling apparel bearing logos and devices identical to those of Levi Strauss. The plaintiff alleged that these products infringed their registered trademarks and constituted passing off by misleading consumers into believing they were purchasing genuine Levi's products. The infringing goods were discovered during an inspection by a court-appointed Local Commissioner, who seized 57 pairs of jeans bearing the infringing marks. The defendant's actions prompted Levi Strauss to file a suit for permanent injunction, damages, and other reliefs to protect its intellectual property rights.
Detailed Procedural Background
The suit was initially filed in 2001 before the original side of the Delhi High Court, seeking a permanent injunction to restrain trademark infringement, copyright violation, and passing off. On October 3, 2001, the court granted an ex-parte ad-interim injunction in favor of Levi Strauss and appointed a Local Commissioner to inspect the defendant's premises in Hyderabad. The Commissioner conducted the inspection on October 6, 2001, and filed a detailed report on October 12, 2001, confirming the presence of infringing goods. The seized items were handed over to the defendant on superdari (custody pending legal proceedings).
The defendant initially appeared in the suit and filed a written statement but subsequently stopped participating, leading to ex-parte proceedings against him on two occasions. Due to an increase in the pecuniary jurisdiction of the district courts, the case was transferred to the Additional District Judge, who dismissed the suit on November 28, 2006. The trial court cited two primary reasons for dismissal: the plaintiff's failure to examine the Local Commissioner as a witness and the absence of evidence showing an assignment of trademarks to Levi's Strauss India Pvt. Ltd., the plaintiff's Indian affiliate.
Aggrieved by the dismissal, Levi Strauss filed an appeal (RFA 127/2007) before the Delhi High Court. The respondent could not be served despite repeated attempts, leading the court to order service by publication in the Indian Express, Hyderabad edition, on May 28, 2007. The publication was completed, but the respondent did not appear. The appeal was admitted on October 23, 2007, and the interim injunction from 2001 was continued. The matter was finally heard on January 3, 2018, with no appearance from the respondent.
Issues Involved in the Case
The case presented several critical legal issues for adjudication:
Whether the trial court erred in dismissing the suit on the ground that the Local Commissioner was not examined, despite the Commissioner's report being part of the record.
Whether the plaintiff was required to prove an assignment of its trademarks to its Indian subsidiary, Levi's Strauss India Pvt. Ltd., to establish its rights and usage in India.
Whether the defendant's use of identical logos and devices constituted trademark infringement and passing off.
Whether the plaintiff was entitled to a permanent injunction and costs, given the evidence of infringement and the defendant's non-participation.
Detailed Submission of Parties
Appellant's Submissions
Counsel for Levi Strauss, led by Mr. Pravin Anand, argued that the trial court's dismissal was fundamentally flawed. On the issue of the Local Commissioner's report, they relied on Order 26 Rule 10(2) of the Code of Civil Procedure (CPC), which stipulates that a Commissioner's report and the evidence collected form part of the suit's record and are admissible without the Commissioner's examination. They cited two judgments to bolster this position: Misrilal Ramratan & Ors. v. A.S. Shaik Fathimal & Ors. (1995 Supp (4) SCC 600) and Harbhajan Singh v. Smt. Shakuntala Devi Sharma & Anr. (AIR 1976 Delhi 175). These cases establish that a Commissioner's report cannot be rejected merely because the Commissioner was not examined, especially when no party challenges its contents.
Regarding the assignment issue, the appellant contended that Levi Strauss & Co., as the registered proprietor of the trademarks, was not required to assign its marks to its Indian subsidiary. The plaintiff and its affiliates, including Levi's Strauss India Pvt. Ltd., operated as a single economic entity, a concept supported by the Delhi High Court's decision in George V. Records, SARL v. Kiran Jogani & Anr. (2004 (28) PTC 347 (Del)). The counsel emphasized that the trademarks were owned by Levi Strauss globally, and their use by affiliates under license or permission did not necessitate a formal assignment. Evidence of sales (over Rs. 25 crores) and advertising (Rs. 4.7 crores) in India, certified by a Chartered Accountant (Exhibit PW1/4), and advertisements in prominent magazines like Filmfare and Elle (Exhibits PW1/6) demonstrated the extensive use and reputation of the marks in India.
The appellant further argued that the Local Commissioner's report, which documented 57 pairs of jeans with infringing marks, conclusively proved infringement and passing off. The scanned copies of the infringing labels showed identical copying of the plaintiff's trademarks, violating their proprietary rights and misleading consumers.
Respondent's Submissions
The respondent, Rajesh Agarwal, did not appear during the appeal, and his participation in the trial court was limited to filing a written statement before being proceeded ex-parte. In the written statement, the respondent admitted to being a small-scale businessman operating a retail shop with no manufacturing unit. He relied on the Local Commissioner's report to argue that the seized goods were not manufactured by him but purchased from an unknown local businessman in Hyderabad. He claimed the goods were "waste damaged pieces" kept under a table for return to the seller, not for sale. The respondent disputed the deceptive similarity of the logos, asserting that the goods differed in color, monogram, and labels. He argued that his actions did not meet the definition of trademark infringement or passing off, as he was a petty merchant, not a manufacturer, and sought exemplary costs for the plaintiff's pursuit of the suit against him.
Detailed Discussion on Judgments Cited by Parties and Their Context
The appellant relied on three key judgments to support their arguments, each addressing specific aspects of the case:
Misrilal Ramratan & Ors. v. A.S. Shaik Fathimal & Ors. (1995 Supp (4) SCC 600): This Supreme Court decision was cited to argue that a Local Commissioner's report is part of the suit's record and cannot be rejected merely because the Commissioner was not examined. The court held that the report is admissible evidence, and non-examination is not a valid ground for dismissal unless a party raises specific objections. In the context of this case, the judgment was directly relevant, as the respondent did not challenge the Commissioner's report, and the trial court's insistence on examination was erroneous.
Harbhajan Singh v. Smt. Shakuntala Devi Sharma & Anr. (AIR 1976 Delhi 175): This Delhi High Court ruling reinforced the principle that a Commissioner's report is evidence under Order 26 Rule 10(2) of the CPC. The court clarified that examination of the Commissioner is not mandatory unless required for clarification or challenged by a party. The appellant used this precedent to argue that the trial court's dismissal for non-examination was contrary to established law, given the respondent's reliance on the report without objection.
George V. Records, SARL v. Kiran Jogani & Anr. (2004 (28) PTC 347 (Del)): This Delhi High Court decision was pivotal in addressing the assignment issue. The court recognized the concept of a "single economic entity," where a parent company and its subsidiaries or affiliates are treated as one for trademark protection purposes. The appellant argued that Levi Strauss & Co., as the registered proprietor, did not need to assign its marks to its Indian subsidiary, as the subsidiary's use was under the parent's authority. This precedent supported the plaintiff's claim that their global business structure did not undermine their trademark rights in India.
The respondent did not cite any specific judgments in his written statement, relying instead on factual assertions about his status as a petty merchant and the nature of the seized goods.
Detailed Reasoning and Analysis of Judge
Justice Prathiba M. Singh delivered a comprehensive judgment that systematically addressed the trial court's errors and upheld the plaintiff's trademark rights. The reasoning focused on three main aspects: the evidentiary value of the Local Commissioner's report, the assignment issue, and the substantive issue of infringement and passing off.
Evidentiary Value of the Local Commissioner's Report
The judge found the trial court's dismissal for non-examination of the Local Commissioner to be legally untenable. Citing Order 26 Rule 10(2) of the CPC, the court noted that a Commissioner's report and accompanying evidence are part of the suit's record and admissible without the Commissioner's testimony. The Supreme Court's ruling in Misrilal Ramratan clarified that rejecting a report for non-examination is a "specious plea" unless specific objections are raised. Similarly, the Delhi High Court's decision in Harbhajan Singh affirmed that examination is not compulsory, particularly when the report is unchallenged.
In this case, the respondent's written statement relied on the Commissioner's report to argue that no manufacturing unit existed and the goods were not for sale, without disputing the report's authenticity or contents. The judge emphasized that the respondent's failure to challenge the report obviated the need for examination. The Local Commissioner's detailed report, filed on October 12, 2001, documented 57 pairs of jeans with infringing marks, supported by scanned copies of the labels. The court held that the trial court's insistence on examination was erroneous and contrary to settled law.
Assignment and Single Economic Entity
The trial court's second ground for dismissal—lack of evidence of assignment to Levi's Strauss India Pvt. Ltd.—was equally flawed. The judge accepted the appellant's argument that Levi Strauss & Co., as the registered proprietor of the trademarks, did not need to assign its marks to its Indian subsidiary. The court relied on the Delhi High Court's decision in George V. Records, which recognized that a parent company and its affiliates operate as a single economic entity for trademark purposes. The plaintiff provided evidence of trademark registrations (Exhibit PW1/9) in its name, confirming its proprietary rights.
The judge further noted that the sales and advertising figures (Exhibits PW1/4, PW1/5, PW1/6) submitted by the plaintiff, though pertaining to the Indian subsidiary, were relevant to establish the marksVestive use and reputation of the trademarks in India. The court held that requiring an assignment to the subsidiary was unnecessary, as the subsidiary's activities were under the plaintiff's authority. The concept of a single economic entity ensured that the plaintiff's global business structure did not prejudice its trademark rights, aligning with the fundamental purpose of trademarks as source identifiers.
Infringement and Passing Off
The court found that the respondent's use of identical logos and labels constituted a "classic case of identical copying." The scanned copies of the infringing labels showed misuse of the plaintiff's name and accompanying devices, violating their registered trademarks and constituting passing off. The judge emphasized that the trust consumers place in a brand transcends the entities selling the products locally, reinforcing the need to protect trademarks as source identifiers.
Final Decision
The High Court set aside the trial court's judgment dated November 28, 2006, and decreed the suit in favor of Levi Strauss. The plaintiff was granted a permanent injunction restraining the respondent from infringing the "LEVI'S" and "LEVI STRAUSS" trademarks, as prayed in clauses (i), (ii), and (iii) of the plaint. The appellant did not press the claim for damages. The court awarded costs of Rs. 14,750, comprising Rs. 7,400 in suit court fees and Rs. 7,350 in appeal court fees, reflecting the modest scale of the infringement (57 pairs of jeans). The appeal was allowed, and all miscellaneous applications were disposed of as infructuous.
Law Settled in This Case
This case settled several important principles in Indian trademark law:
A Local Commissioner's report is admissible evidence under Order 26 Rule 10(2) of the CPC and does not require the Commissioner's examination unless specifically challenged by a party.
A parent company and its subsidiaries or affiliates are treated as a single economic entity for trademark protection, eliminating the need for formal assignments to local entities when the parent is the registered proprietor.
The use of identical logos and labels constitutes trademark infringement and passing off, particularly when it misleads consumers about the source of the goods.
Courts must protect trademarks as source identifiers, recognizing their role in signifying quality and consumer trust, irrespective of the business entities involved.
Disclaimer: The information shared here is intended to serve the public interest by offering insights and perspectives. However, readers are advised to exercise their own discretion when interpreting and applying this information. The content herein is subjective and may contain errors in perception, interpretation, and presentation.
Written By: Advocate Ajay Amitabh Suman, IP Adjutor [Patent and Trademark Attorney], High Court of Delhi
