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Delhi High Court Delhi High Court Ellora Industries vs Banarsi Das Goela And Ors. on 19 October, 1979 Equivalent citations: AIR 1980 Delhi 254 Author: A B Rohatgi Bench: A Rohatgi JUDGMENT Avadh Behari Rohatgi, J. (1) This is a defendants' appeal from the order of the Additional District Judge dated July 10, 1967. (2) The plaintiffs are a partnership firm carrying on business under the name and style of M/s. Banaras'i Dass and Brothers at Chandni Chowk, Delhi since the year 1949. They are the registered proprietors of the trade mark 'ELORA' registered under number 175751 in class 14 as of the date August Ii, 1956 in respect of  watches, time-pieces, clocks and their parts. The trade mark has been renewed from time to time and is subsisting. The plaintiffs have been selling clocks with the trade mark 'ELORA' since 1955. (3) In October 1962 the plaintiffs found an advertisement issued by the defendants "ELLORA INDUSTRIES" with 'ELLORA' as the trade mark for time-pieces. By a notice in writing dated December 26, 1962 the plaintiffs called upon the defendants to desist from manufacturing, using, selling or offering for sale their goods under to mark 'ELLORA'. The defendants by their reply dated January 9, 1963, assured the plaintiffs that they were newcomers in the industry and did not want to quarrel over a name. They said they were prepared to stop using the name 'Ellora' and had chosen a new name for their time-pieces. (4) But the defendants continued using business name "Ellora Industries". The plaintiffs again called upon the defendants to desist from infringing their trade mark 'Elora' by using the same as part of their trading style. Some correspondence was exchanged but the defendants did not give up their trading name. (5) The defendants having refused to discontinue the use of the word 'Ellora' in their business name, the plaintiffs on December 2, 1964 commenced an action in the court of the district judge to restrain them. Two allegations were made in the suit. Firstly, that the use of the trade mark 'Elora' as the key portion of the trading style "Ellora Industries" was an infringement of the registered trade mark 'Elora' which was exclusive property of the plaintiffs, and secondly, that the use of the trade mark as a trading style was chosen deliberately and fraudulently in order to trade upon the reputation of the plaintiffs and to pass off the goods manufactured by the defendants as the goods of the plaintiffs. The plaintiffs asked for a decree for permanent Injunction to restrain the defendants from using the mark 'Elora' or any other similar mark which is an infringement of the plaintiffs' registered trade mark and to prevent them from passing off their goods as the goods of the plaintiffs. A decree for accounts of profits earned by the defendants was also sought. (6) The defendants contested the suit. They raised a number of pleas. On merits they contended that the use of the word "Ellora Industries" as their trading style 'did not amount to infringement of the plaintiffs' registered trade mark, that there had been no instance of deception or confusion in the mind of the public on account of the use of the words "Ellora Industries" in the course of trade, that the time-pieces manufactured by the defendants were being sold under the trade mark 'Gargon' which was a distinctive and conspicuous mark of the defendants' product. The allegations with regard to the passing-off were denied. (7) A number of issues were raised. After hearing evidence and arguments the Additional District Judge decreed the suit with costs. He granted a permanent injunction in so far as infringement of the registered trade mark was concerned. But the claim for passing off he dismissed. Nor did he grant decree for accounts. From his decision the defendants appeal to this court. The plaintiffs have filed cross-objections. Ellora Industries vs Banarsi Das Goela And Ors. on 19 October, 1979 Indian Kanoon - http://indiankanoon.org/doc/486152/ 1

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Delhi High Court

Delhi High Court

Ellora Industries vs Banarsi Das Goela And Ors. on 19 October, 1979

Equivalent citations: AIR 1980 Delhi 254

Author: A B Rohatgi

Bench: A Rohatgi

JUDGMENT

Avadh Behari Rohatgi, J.

(1) This is a defendants' appeal from the order of the Additional District Judge dated July 10, 1967.

(2) The plaintiffs are a partnership firm carrying on business under the name and style of M/s. Banaras'i Dass

and Brothers at Chandni Chowk, Delhi since the year 1949. They are the registered proprietors of the trade

mark 'ELORA' registered under number 175751 in class 14 as of the date August Ii, 1956 in respect of 

watches, time-pieces, clocks and their parts. The trade mark has been renewed from time to time and is

subsisting. The plaintiffs have been selling clocks with the trade mark 'ELORA' since 1955.

(3) In October 1962 the plaintiffs found an advertisement issued by the defendants "ELLORA INDUSTRIES"with 'ELLORA' as the trade mark for time-pieces. By a notice in writing dated December 26, 1962 the

plaintiffs called upon the defendants to desist from manufacturing, using, selling or offering for sale their

goods under to mark 'ELLORA'. The defendants by their reply dated January 9, 1963, assured the plaintiffs

that they were newcomers in the industry and did not want to quarrel over a name. They said they were

prepared to stop using the name 'Ellora' and had chosen a new name for their time-pieces.

(4) But the defendants continued using business name "Ellora Industries". The plaintiffs again called upon the

defendants to desist from infringing their trade mark 'Elora' by using the same as part of their trading style.

Some correspondence was exchanged but the defendants did not give up their trading name.

(5) The defendants having refused to discontinue the use of the word 'Ellora' in their business name, theplaintiffs on December 2, 1964 commenced an action in the court of the district judge to restrain them. Two

allegations were made in the suit. Firstly, that the use of the trade mark 'Elora' as the key portion of the trading

style "Ellora Industries" was an infringement of the registered trade mark 'Elora' which was exclusive property

of the plaintiffs, and secondly, that the use of the trade mark as a trading style was chosen deliberately and

fraudulently in order to trade upon the reputation of the plaintiffs and to pass off the goods manufactured by

the defendants as the goods of the plaintiffs. The plaintiffs asked for a decree for permanent Injunction to

restrain the defendants from using the mark 'Elora' or any other similar mark which is an infringement of the

plaintiffs' registered trade mark and to prevent them from passing off their goods as the goods of the plaintiffs.

A decree for accounts of profits earned by the defendants was also sought.

(6) The defendants contested the suit. They raised a number of pleas. On merits they contended that the use of 

the word "Ellora Industries" as their trading style 'did not amount to infringement of the plaintiffs' registered

trade mark, that there had been no instance of deception or confusion in the mind of the public on account of 

the use of the words "Ellora Industries" in the course of trade, that the time-pieces manufactured by the

defendants were being sold under the trade mark 'Gargon' which was a distinctive and conspicuous mark of 

the defendants' product. The allegations with regard to the passing-off were denied.

(7) A number of issues were raised. After hearing evidence and arguments the Additional District Judge

decreed the suit with costs. He granted a permanent injunction in so far as infringement of the registered trade

mark was concerned. But the claim for passing off he dismissed. Nor did he grant decree for accounts. From

his decision the defendants appeal to this court. The plaintiffs have filed cross-objections.

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(8) The plaintiffs registered trade mark is 'Eiora'. The defendants manufacture time-pieces with their

distinctive mark 'Gargon'. 'Gargon' is printed on the dial of the time-pieces. But on the card board container in

which the time-piece is sold the following is printed on two sides in bold letters :

"ELLORAINDUSTRIES Gargon (PUNJAB)".

On one side there is in addition, to these words a visual representation of a factoy with the words "Ellora

Industries" written in small letters. The defendants adopted this as their trading style in 1962.

(9) The plaintiffs' objection is mainly to the adoption of the word "Ellora' by the defendants. That the

defendants' business name is "Ellora Industries" under which they manufacture time-pieces is not denied. The

word 'Ellora' is used conspicuously by them in advertisements etc. as part of their business name.

(10) On the evidence produced, by the plaintiffs the learned judge came to the conclusion that the

infringement of the trade mark is established. On the question of passing off he was of the view that the

plaintiffs were not able to substantiate their case.

(11) In the appeal and cross-objections three questions arise for decision. These are : 1. Passing off; II.

Infringement of trade mark; and III. Enquiry into accounts of profits.

(12) 1. PASSING-OFF:The purpose of this tort is to protect commercial goodwill; to ensure that people's

business reputations are not exploited. Since business "goodwill" is an asset, and therefore species of property,

the law protects it against encroachment as such. The tort is based on economic policy, the need to encourage

enterprise and to ensure commercial stability. It secures a reasonable area of monopoly to traders. It is thus

complimentary to trade mark law which is founded upon statute rather than common law. But there is a

difference between statute law relating to trade marks and the passing off action; for, while registration of 

relevant mark itself gives title to the registered owner, the onus in a passing off action lies upon the plaintiff to

establish the existence of the business reputation which he seeks to protect. The asset protected is the

reputation the plaintiff's business has in the relevant market. This is a complex thing. It is manifested in the

various indicia which lead the client or customer to associate the business with the plaintiff; such as the nameof the business, whether real or adopted, the mark, design, make-up or colour of the plaintiff's goods, the

distinctive characteristics of services he supplies or the nature of his special processes. And it is around

encroachments upon such indicia that passing off actions arise. What is protected is an economic asset.

(13) The plaintiff must establish that his business or goods have acquired the reputation he alleges; that, for

example, "a particular name has become distinctive of his goods and that a reputation has attached to them

under the name in question", and this can be done by showing that a substantial proportion of people who are

likely to become purchasers of the goods of the kind in question associate the name with them. The weight of 

this burden must vary according to the facts.

(14) Take the present case. The words "Ellora Industries" which is the trading name of the dependents is

likely to mislead the public as to source of manufacture and to create a likelihood that customer of the

plaintiffs would be diverted to the defendants. In a passing off action all that need be proved is that the

defendants goods are so marked, made up or described by them as to be calculated to mislead ordinary

purchaser and to lead them to mistake the defendants' goods for those of the plaintiffs." [Reddaway v.

Benham, (1892) 2 Q.B. 639 (644)] (2), It is the tendency to mislead or confuse that thus forms the gist of 

action; and the plaintiff need not establish fraud, nor that any one was actually deceived, or that he actually

suffered damage. The tort is thus like libel) actionable per se. Indeed the forms of passing off, like the forms

of nuisances, are infinite. As Salmond puts it :

"THEgist of the conception of passing off is that the goods are in effect telling a falsehood about themselves,

are saying something about themselves which is calculated to mislead. The law on this matter is designed to

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protect traders against that form of unfair competition which consists in acquiring for oneself, by means of 

false or misleading devices, the benefit of the reputation already achieved by rival traders."

(Law of torts 17th ed. p. 401).

WINFIELDsays :

"THElaw of passing off arose to prevent unfair trading and protects the property rights of a trader in his goodwill..." (tort 9th ed. p. 485).

(15) The basic question in this tort turns upon whether the defendant's conduct is such as to tend to mislead

the public to believe that the defendant's business is the plaintiff's or to cause confusion between the business

activities of the two. Whether such a tendency to mislead or confuse is established can only be decided by

consideration of all the circumstances.

(16) Because the protection given is not for his reputation in general, but to the plaintiff's business goodwill, it

must be established that the defendant's activities are likely to compete with the plaintiff's. Where the parties

are engaged in common or "overlapping" field of activity the competition will take place. In this case this is a

useful test to apply. Both the plaintiffs and the defendants have a common field of activity. They are businessrivals. Plaintiffs sell clocks under their registered trade mark 'Elora'. The defendants manufacture timepieces

under their trading style "Ellora Industries". In fact the plaintiffs say that they intend to introduce time-pieces

the the market shortly. If the plaintiffs start manufacturing and marketing time-pieces under their registered

trade mark 'Elora' the use of the word 'Ellora' as a trading style by the defendants is bound to introduce

confusion in the trade.

(17) The element of confusion is essential. As Wynn-Parry J. said in Me Culloch v. May Ltd., (1947), 2 All

E.R. 845 (3) (851) :

"Iam satisfied that 'there is discoverable in all those cases in which the court has intervened the factor that

there was a "common field of activity in which, however, remotely. both the plaintiff and the defendant wereengaged and that it was the presence of that factor that grounded the jurisdiction of the court."

(18) The principal question revolves round the twin notions (1)that the defendants misstatement must be one

that would be taken as a reference to the plaintiff, and (2) that the plaintiff must be likely to suffer in

consequence. As to the first of these conditions the misstatement does not have to make out more than that the

plaintiff has some connection with the defendant's goods or business. And it is accepted that a reference to the

plaintiff as a trade source may be inferred in some circumstances where he is not known by the name, as for

instance where it is his trade mark that is known. If the customer is misled into thinking about the trade origin

or source of the goods it is a case of passing off. The second condition is fulfillled by showing that direct

competition will damage the plaintiffs goodwill by losing his customers. Loss of sales is not the only form of 

probable injury that will suffice, loss of reputation among distributors has been accepted as sufficient.

(19) Where the plaintiff and the defendant are engaged in a common field of activity the probability of 

damage is great. There is risk of confusion because they occupy same areas of the trade in question, e.g.

watches, as in this case. This is what was held in Me Culloch v. May (supra). I am aware that this case was

not approved of in Australia : Flemings says:

"TOdemand a 'common field of activity' would not only be incompatible with the growing trend towards

diversification in business, but also foist an unwarranted limitation on a tort based simply on the prejudice to

goodwill from practices that are actually calculated to confuse."

(FLEMINGThe Law of torts 5th ed. p. 702-703).

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(20) On the question whether there can be passing off if the fields of activity are different, opinions differ. But

everybody is agreed that if the line of business is same or allied there is an immense potential for confusion,

deception and temporal harm. The test of common field of activity comes handy. Both parties are in the same

trade. The plaintiffs sell clocks. The defendants sell time-pieces. And a time-piece is a portable clock, after all.

(21) Another reason for injuncting the defendants in their use of the word 'Ellora' in business name is that the

plaintiffs in their evidence said they wanted to introduce time-pieces. In ("Kodak" for cycles), one reason

given for protection was that the plaintiff company might want subsequently to extend their business into thedefendant's field. Same is the case here.

(22) The present case is one of 'cashing in' of the trade reputation of the plaintiffs. It is an attempt to climb on

another's goodwill. Goodwill is the result of a person's own labour and merit. One trader should not be

allowed to usurp the fruits of a competitor's labour. Law will protect against intrusion by the rival upon the

goodwill and other business values of another. This is "reaping without sowing". The court will issue

injunction in cases where the reaping without sowing element is most brazen and damaging. One trader

should not be expected to stand by and watch another reap the benefit of goodwill that he has built up or

expenditure that he has made. It takes years (sometimes generations) of patient and self-abnegating toil and

investment to develop and gain the advantage of goodwill. It is the invasion of this property right of goodwill

that constitutes passing off. The true basis of the action is that the passing off injures the right of property inthe plaintiff and that right of property being his right to the goodwill of his business.

(23) In recent times there have been extensions of passing off. It is an expanding business tort. The courts

have developed the concept of misappropriation. Law has thrown protection around all intangible elements of 

value. The view of Holmes and Brandeis Jj were indeed minority opinions in which the Supreme Court laid

foundations for a general tort of misappropriation of trade values. These are "property rights" and injunction

can be issued against the infringer. Predatory business practices and piracy of business rights are denounced

by commercial morality. So does law. Confusing customers as to source, as in this case, is an invasion of 

another's property rights. The unfairness arises from the fact that the purchasing public are likely to be misled.

The protection is afforded not for the deceived customer but the rival trader. It is to prevent "dishonest

trading", to use a phrase of Danckwerts J. The Australian court in Henderson's case recognised a form of wrongful appropriation of a "trade value". Evatt Cj and Myer J. said :

"THEwrongful appropriation of another's professional or business reputation is an injury in itself."

(24) In England Danokwerts J. in the "Spanish Champagne" case opened new horizons for the common law. J.

Bollinger v. Costa Brava Wine Co. Ltd. is a most forward looking case in recent times where Danckwerts J.

expanded the tort to protect misappropriation of business values. The champagne producers of France sought

an injunction to prevent the defendants from marketing their sparkling wine under the name "Spanish

Champagne". Danckwerts J. granted an injunction. Such a description as "Spanish Champagne" could not be

expected to deceive the connoisseurs or "lovers of wine" but it was found that there were many potential

customers who were much vague about what champagne was, some knowing it only as "the wine with the

great reputation". What they would want was the "real thing" without knowing whether that meant the

produce of a particular trade source or one having particular qualities. Champagne properly means French

Champagne, which is associated with being "drunk at the gayest parties and in distinguished circles" and it

was. therefore, wrong for the defendant to market his produce under the name "Spanish Champagne".

(25) The case related to the protection of a reputation which the word Champagne suggested. It is a word that

was valuable to a group of traders to preserve. It was held that the traders engaged in a field of business

activity had locus standi to obtain an injunction to restrain a competitive producer from making deceptive

statements as to the place of origin or similar falsehood.

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(26) Danckwerts J.'s decision in Bollinger's case was applied in ("Sherry" case) and (Scotch Whisky). In the

later "Sherry" case Cross J. said of the "champagne" case, "In truth the decision went beyond the well-trodden

paths of passing off in the unmapped area of 'unfair trading' or 'unlawful competition' ".

(27) In the present case the fact that the plaintiffs and the defendants are direct competitors is the most

obvious reason for inferring likelihood of injury. 'Elora' as a business name suggests associations with the

plaintiff's registered trade mark. It is suggestive of the fact that goods come from the same source. It imports a

reference to its 'origin' a trade connection with the registered proprietor 'Elora'. This is an untrue statement. Itis a false statement that is likely to mislead the public as to the origin of the goods. It is a commercial benefit

which is derived from usurpation of the fruits of a competitor's labour. The present case illustrates the misuse

of business names. It is an action against an imitator who is "reaping without sowing". See the illuminating

discussion in the article by W.R. Cornish "Unfair Competition, A Progress Report" Vol. Xii, 1972-73 Journal

of the Society of Public Teachers of Law p. 126

(28) The plaintiffs have produced watch dealers in evidence. They have also produced one Prem Prakash who

purchased a time-piece manufactured by the defendants under the impression that it was a product of the

plaintiffs. The dealers have deposed that though (here is no confusion in their minds about the clocks of the

plaintiffs and the time-pieces of the defendants the ordinary customer does enquire from them if the

time-pieces complained of are manufactured by the same people who manufacture Elora clocks.

(29) Counsel for the defendants argued that there was no confusion amongst the dealers in the market as the

evidence shows and, therefore, no case of passing off is made out. I do not agree. The mischief done by the

misleading designation adopted by the defendants is not merely that it is calculated to deceive immediate

purchasers from (he infringers, but that it puts "a weapon calculated to be fraudulently used by the

middlemen" into their hands, by which they may, intentionally or not, deceive the ultimate purchasers. The

dealers may not themselves be deceived but they can certainly use the instrument of deception to create

confusion in the trade or to mislead the purchasers. The representation need not deceive immediate purchasers

; the test is the likely impact on those members of the public who ultimately become purchasers.

(30) There is a misrepresentation for business purpose as to the origin of goods which the defendantsmanufacture in the course of their business. This is passing off. The defendants have no right to represent their

business as the business of the plaintiffs.

(31) Lord Halsbury defined the tort of passing off in Reddaway v. Benham, 1896 A.C. 199(13). He said that

the defendant shall not represent his goods or his business as the goods or business of the plaintiff. How do we

apply this principle here ? The plaintiffs do not manufacture time-pieces though they are registered for them.

This is an admitted case. How it is not always necessary that there must be in existence goods of that other

man with which the defendant seeks to confuse his own. As Lord Greene M.R. said :

"PASSINGoff may occur in cases where the Plaintiffs do not in fact deal in the offending goods".

(PROPERTYin this context has received an extensive denotation. Thus it includes not only property in the

strict sense but also name, per Cairns L.J. ; trade reputation, at 86-87, per Sargent LJ.; and, not merely the

exclusive right which in some cases the law may cc-nfer to engage in some further activity associated with

one's present activity, , but also the potential capacity which one may have, although as yet unrealised, to

engage in the future activities sufficiently closely associated and connected with those at present carried on,

Eastman Photographic. Alternatively these last mentioned cases may be viewed as cases in which the

plaintiff's proprietory right to his name and trade reputation is invaded by conduct of the defendant which

anticipates the plaintiff's exercise of that right in a field of activity which is sufficiently close to the plaintiff's

present activities and which he may wish at some future time to enter; here there are both a common field of 

activity and a real and tangible risk of damage.

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(32) In Farewell J. said :

"THEREmust be evidence either of damage already committed, or the circumstances must be such as that the

court can properly come to the conclusion that there is a serious risk, a real tangible risk, of damage in the

future."

(33) The action of passing off is essentially a cause of action arising out of confusion. The plaintiff is

identified by his personal name or some trade name or mark. If a person minded to obtain vendible goodswhich are identified in his mind with certain definite commercial source is led by the false statement to accept

goods coming from a different commercial source the tort is established , Prof. Morison points out that the

origin of passing off is lost in obscurity and that it is uncertain whether it had its origin as an action for deceit

or as an action for defamation. However, the action came to be regarded as an action for deceit, although it

was a variety of deceit in which the action was not by the person who was deceived but by the person whose

mark was used to deceive. (See W. B. Morison Unfair Competition and "Passing-Off" (1956) 2 Sydney Law

Review 50).

(34) In the present case there is an untrue representation. The plaintiffs' complaint in substance is that the

supposition that the defendants are connected with the plaintiffs will injure the reputation of the plaintiffs in a

way calculated to cause them financial loss. The purchasers are likely to think that the time-pieces come fromthe same source or through the same channel as docks and wrist watches. The purchasers are likely to be

misled in thinking that the defendants' firm has an "intimate connection" with the plaintiffs or that the

defendants' business is a branch of the plaintiffs or "somehow mixed up" with the plaintiffs' business. Even

"any connection" with the plaintiffs is misrepresentation sufficient to constitute the tort. (See Harrods Ltd.,

(supra),. The present case is an illustration of business misrepresentation and "unfair trading", to use an

expression of Danckwerts J.

(35) A typical commercial situation of business misrepresentation is neatly illustrated by Dwarkadas v.

Lalchand, Air 1932 Sind 222 (25), where it was held that the defendant represented his business as that of the

plaintiff.

(36) On passing off my conclusion is that the use of the word 'Ellora' by the defendants is indicative of a warm

intimacy with the plaintiffs. There is trustworthy evidence that the registered trade mark 'Elora' of the

plaintiffs is known to the trade and the word 'Elora' lurks and lingers in the mind of the customers minded to

obtain goods of clause

14. A word appeals to the ear more than the eye. There is a real and tangible risk of damage, the field of 

activity being common. The wrongful appropriation of trade reputation is an injury to the plaintiffs. That

injury and the acknowledged intention to continue to inflict it, is ample justification for the injunction which

was granted.

(37) II. Infringement Of Registered Trade Mark :A trade mark is the most obvious means of referring to a

trader's products. Trade mark registration is povided to simplify and enhance common law protection against

deception as to trade source. The registered proprietor has the "exclusive right" to use the trade mark in

relation the goods in respect of which it is registered. (S. 28 of the Trade and Merchandise Marks Act 1958

(the Act).

(38) It is unnecessary to prove an intention to deceive, at least to obtain an injunction. The representation must

be calculated to deceive, though no deception need actually have taken place, because "the very life of a

trade-mark depends upon the promptitude with which it is vindicated". It is worth noting that words can be

protected without proof of their distinctiveness if they have been registered as trade marks under s. 9 of the

Act

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(39) A mark is infringed by another trader if, even without using the whole of it upon or in connection with

his goods, he uses one or more of its essential features. Thus it has long been accepted that if a word forming

part of a mark has come in trade to be used to identify the goods of the owner of the mark, it is an

infringement of the mark itself to use that word as the mark or part of the mark of another trader, for

confusion is likely to result.

(40) The most common cases are those in which the defendant uses or imitates a trade mark under which the

plaintiff's goods have become known to the public. If the trade mark is registered for the goods concerned,any passing off is likely to involve infringement of the rights given by registration also. Both the statute law

and the common law employ a common conceptual device. The device is to find a "property right" in the

plaintiff which has been infringed. In this case the trade mark is registered for time-pieces also. It is a dear

case of infringement.

(41) The "exclusive right" is given by s. 28 of the Act. S. 29 is an appendage to s. 28, its function being to

widen the definition of infringement. The expression 'use of a mark in relation to goods' is defined in s.

2(2)(b). It includes the following types of cases: (1) use of the mark upon the goods, (2) use of the mark in

other physical relation to the goods, such as, use on a container, tin or wrapper or ticket attached to the goods.

(42) The defendants have caused a part of the plaintiffs reputation to be filched. They have annexed to theirbusiness name what is another men's property. The plaintiffs' trade mark 'Elora' is the core or the essential part

of the defendants' trading style, "Ellora Industries".

(43) One of the most common ways of unfair appropriation of the plaintiff's goodwill is by the imitation of the

plaintiff's trade mark to such an extent that the public is deceived thereby. The interest in the "exclusive right"

and use of trade marks is recognised by the law on grounds that are in part akin to the prevention of fraud and

in part the protection of property right. The law has provided for registration of trade marks and such

registration is conclusive as to priority of use.

(44) The function of the trade marks is to identify the source of manufacture of goods. It is an indicia of 

origin. With the expansion of markets and the development of large scale advertising, trade marks began toperform the additional function of an advertising and selling device. In the market the chief value of the

trade-mark is its power to stimulate sales. In law, the fundamental theory upon which the interest in the trade

mark is protected is that a trade mark identifies the goods coming from a particular source, and that an

infringing designation tends to divert customer from that source by falsely representing that other goods come

from it. This at any rate is the theory of sections 28 and 29 of the Act. Thus "EUora Industries" is an

'infringing designation', a misleading name and its use must be restrained by injunction so that the competitor

is prohibited from gaining an unfair advantage by confusing potential customers. "The tendency of the law,

both legislative and common, has been in the direction of enforcing increasingly higher standards of fairness

or commercial morality in trade."

(45) The appropriation of the plaintiffs' trade mark by the defendants as their own badge is as much a

violation of the "exclusive right" of the rival trader as the actual copy of his device. It is a misleading

designation. It creates a confusion as to source in the mind of the purchasing public. The words in the

defendants' trading style convey a misrepresentation that materially injures the registered proprietor of the

trade mark. Many and insidious are the ways of infringement. Sometimes "the falsehood is a little more

subtle, the injury a little more indirect", than in ordinary cases. [International News Service v. Associated

Press (supra) per Holmes J.].

(46) On this part of the case I endorse the finding of the learned judge.

(47) III. Accounts Of Profits :Counsel for the plaintiffs relies on s. 106 of the Act and claims that at their

option the plaintiffs have chosen to demand an enquiry into profits. I do not think I should grant this relief to

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the plaintiffs. My reasons are these.

(48) In the first place the plaintiffs have not so far manufactured time-pieces. They have confined themselves

to clocks and wrist watches.

(49) Secondly, the defendants' time-pieces are manufactured under the mark 'Gurgon' which is distinctly and

conspicuously printed on the dial as well as the carton.

(50) Thirdly, the courts order an account of profits on the theory that the defendant was constructively an

agent of the plaintiff in disposing of goods in a manner infringing the plaintiff's rights [Snell Principles of 

Equity (24th ed. 1954) p. 574]. The principle upon which the court grants an account of profits is that where

one party owes a duty to another, the person to whom the duty is owed is entitled to recover from the other

party every benefit which that other party has received by virtue of his fiduciary position if in fact he has

obtained it without the knowledge or consent of the party to whom he owed the duty (Kerly Law of Trade

Marks 10th ed. p. 344). This principle does not apply here because the plaintiffs were not manufacturing

time-pieces.

(51) Fourthly, there is no reasonable prospect that the inquiry would reach a positive result. Kerly says that

account of profits is an equitable remedy and the court has a discretion whether or not to grant it. Only incertain cases will the court grant an account of profits. I do not think this is one of those cases where I ought

to order an inquiry into profits.

(52) At the fag end of the case before me the defendants made an application (CM 962 of 1979) for additional

evidence. I do not think there is any ground to allow the application as none of the conditions of 0.41 rule 27,

Code of Civil Procedure is satisfied. The application, is accordingly dismissed.

(53) For these reasons the appeal is dismissed. Cross-objections are allowed to this extent that it is held that

the defendants-appellants, in addition to infringement of registered trade mark, are also guilty of the tort of 

passing-off. Cross-objections are dismissed in so far as the claim for accounts of profits is concerned. The

decree for injunction passed by the trial court is affirmed. The defendants are ordered to deliver up theoffending boxes, wrappers, letters heads for destruction. The defendants shall pay the costs of the suit and the

appeal. On the cross objections I make no order as to costs.

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