Acquiescence Is Defence Available In Action For Infringement Of Copyright: SC Affirms Stay In Passing-Off Dispute Involving Liquor Labels

A two judge Bench of Justice Abhay S. Oka and Justice Rajesh Bindal held that “It is a well settled law that acquiescence is a defence available in action for the infringement of copyright.”

The appellant is engaged in selling country liquor with the label "Tango Punch," while the respondent (defendant) sells country liquor with the label "Two Punch Premium." The appellant claimed copyright in the artistic label displayed on its liquor bottles and sought a permanent injunction to prevent the respondent from infringing this copyright or engaging in passing-off.

The District Judge had decreed the suit in favor of the appellant, granting a permanent injunction against the respondent for copyright infringement and passing-off. The decree also awarded damages and ordered the destruction of labels used by the respondent.

Advocate Rahul Chitnis appeared for the Appellant and Advocate Suhaskumar Kadam appeared for the Respondent.

The appellant's counsel argued that the Single Judge of the High Court erred in giving too much weight to the rejection of the appellant's interim relief application during the suit's pendency. They asserted that since a decree was issued in the appellant's favor after a full trial, it should not have been stayed. They also argued that withdrawing objections to the respondent's labels before the Commissioner for State Excise should not affect the appellant's copyright and trademark rights.

On the other hand, the respondent's counsel contended that the appellant failed to provide sufficient evidence of their brand's market establishment, and there was no similarity between the labels. They argued that the appellant's long delay in filing the suit after withdrawing objections amounted to acquiescence.

The Supreme Court considered the submissions and discussed the legal aspects of passing off actions, goodwill, and acquiescence. The appellant claimed that the labels used on their country liquor bottles and the respondent's labels were similar, leading to confusion in the market. The Court noted that in a passing-off action, the plaintiff needs to establish three key elements: 1) that they have acquired a reputation or goodwill, 2) that there was misrepresentation by the defendant to the public, and 3) there is or is likely to be a loss.

The Court also emphasized the importance of proving the volume of sales and the extent of advertising and promotion expenditures to establish goodwill in a passing-off action.

The Court referred to a decision in Toyota Jidosha Kabushiki Kaisha, which stated that passing-off actions based on the rights of the prime user generating goodwill remain unaffected by any registration. The Court also cited the House of Lords' triple test in Reckitt & Colman Products Ltd for passing-off actions, emphasizing the need to establish a reputation connected with the goods.

The Court noted that the appellant in this case presented limited evidence to establish their reputation or goodwill. While they produced statements of sales and advertising expenses certified by a Chartered Accountant, they failed to prove the contents of these statements adequately. The Court added, “For establishing goodwill of the product, it was necessary for the appellant to prove not only the figures of sale of the product but also the expenditure incurred on promotion and advertisement of the product. Prima facie, there is no evidence on this aspect. “

The Court said that this lack of evidence supports the High Court's decision to grant a stay on the passing-off action. The Court held, “Even assuming that the allegation of deceptive similarity in the labels used by the respondent was established by the appellant, one of the three elements which the appellant was required to prove, has not been proved. Therefore, we find that the High Court was justified in staying that particular part of the decree of the Trial Court by which injunction was granted for the action of passing­off.”

Regarding the infringement of copyright, the Court noted that acquiescence is a valid defense. The appellant had raised objections but later withdrew them without any conditions. This suggested acquiescence by the appellant, and the Court found no fault with the High Court's decision to grant a stay on the infringement of copyright claim. The Court said, “Therefore, it is very difficult to find fault with the impugned interim order of the High Court which will be operative till the disposal of the substantive appeal preferred by the respondent.”

The Court also commented on the disturbing conduct of a member of the Bar during the trial, emphasizing the importance of cooperation and fairness among lawyers and the need to avoid unnecessary objections that can delay court proceedings.

In conclusion, the Supreme Court dismissed the appeal, upholding the High Court's decision to grant a stay on the execution of the decree pending the final disposal of the appeal. However, it clarified that the observations made in both the impugned judgment and its own judgment should not influence the pending appeal's outcome.

Cause Title: Brihan Karan Sugar Syndicate Private Limited v. Yashwantrao Mohite Krushna Sahakari Sakhar Karkhana, [2023INSC831]

Click here to read/download Judgment