VBM Medizintechnik Gmbh vs Geetan Luthra (2022)

Facts Of The Case

VBM was founded by Mr. Volker Bertram in 1981 in Germany. It’s a company involved in the manufacturing and marketing of Medical equipment under the mark “VBM”. The plaintiff has been using the mark “VBM” since 1981 and had a reputation across many countries.

In the year, 1992, the plaintiff entered into a Distributor Agreement with International Surgico Industries, (ISI) which happened to be the firm of the Defendant’s father, wherein ISI was appointed as a Distributor to distribute VBM products in India. Wide agreement dated October 26, 1994, and May 15, 2007, ISI was made the sole distributor of the plaintiff’s equipment within India.

In the meanwhile, in 2002, the defendant formed a company named VBM India Co (VBMIC) without the permission of the Plaintiff and the Plaintiff was not aware of its existence until the Plaintiff and the defendant entered into a fresh Distributor Agreement on 13 January 2013. The Plaintiff and the Defendant again entered into the Distributor Agreement on April 2020. As per the Clauses of both the Agreements, the title and ownership of all the intellectual property including the Trademark “VBM” was retained by the Plaintiff only.

Despite that, the defendant applied for the registration of the trademark “VBM” (device) without seeking permission from the Plaintiff and sought registration in December 2016 in Class 10 for “Medical Equipment”.When the plaintiff objected to registering the mark “VBM” instead of “VBM India” the defendant replied that it was purely a professional decision.

Plaintiff directed the defendant to change its logo as it was deceptively similar to the logo of Plaintiff and also asked the defendant to not sell the products that are manufactured by others in the name of the “VBM” Umbrella.

On, 14^th April 2021, Plaintiff terminated the Distribution Agreement by citing violation of the terms of the agreement and repeated refusal to transfer the ownership of the non-authorised trademark “VBM”. The plaintiff had also initiated a rectification proceeding for the cancellation of the registered trademark “VBM” under Section 57 of the Act to which the Defendant pleaded that they are the Prior User of their mark and that the Initials refer to the divine trinity of “Vishnu Brahma Mahesh”.

Issues

Whether the defendant is entitled to the benefit of Section 33 of the Trademarks Act, 1999?

Whether the Defendant liable for Trademark infringement?

Whether the Defendant’s act amounts to Passing off?

Summary Of The Arguments

Arguments submitted by the Plaintiff

1)     The Plaintiff argued that they are the Prior User of the mark “VBM” as they have been using it since year 1981 based on the name of its founder Volker Bertram.

2)     Plaintiff argued that the formation of VBMIC by Defendant in 2002 without permission of Plaintiff was a violation of Plaintiff’s intellectual property.

3)     The plaintiff alleged that the use of the mark “VBM” by the Defendant for the goods not manufactured by the Plaintiff would lead to confusion in the minds of the Purchasing public.

4)     The Plaintiff argued that the use of the “VBM” mark by the defendant as its corporate name, domain name, and website ID amounts to passing off.

5)     The defendant adopted the domain name www.vbmmedical.com without prior approval of the Plaintiff and continued using it even after the termination of the agreement in 2021.

6)     The Plaintiff claimed the registration of the mark “VBM” without any permission is a violation of the agreement.

7)     The plaintiff claimed that even after the termination of the agreement, the defendant continued to portray itself as the authorized distributor of the Plaintiff.

8)     The plaintiff also argued that, earlier, when the plaintiff objected to the registration of the mark “VBM” instead of “VBM India” the defendant had replied that it was just a professional decision. When the defendant asked the defendant to transfer the mark, the defendant refused to transfer the registered trademark to the plaintiff on the ground that it is owned by VBMIC which is an independent legal entity, and the mark “VBM” is based on the acronym for “Vishnu Brahma Mahesh”.

 Arguments submitted by Defendant

1)     The defendant argued that they are the prior users of the mark VBM as VBMIC was formed in 2002 and has been selling the equipment of various third parties since then. It argued that ISI and VBMIC are two independent entities. The Defendant entered into an agreement with the plaintiff in the year 2012 only.

2)     Defendant also argued that they adopted the mark “VBM” as an acronym for “Vishnu Brahma Mahesh”.

3)     The defendant claimed that based on the communication between the parties, the Defendant has changed its “VMB” logo.

4)     The defendant contended that the plaintiff acquiesced to the use of the mark “VBM” by the defendant.

 Judgement Of The Case

The suit was filed seeking the interim injunction to restrain the defendant from using the mark “VBM” or any other deceptively similar mark for similar or allied goods/services.

The Plaintiff also sought a Mandatory injunction directing the defendant to delete the alleged domain name, to remove references to the impugned marks “VBM” from all physical and virtual sites, and from representing it as distributor of the Plaintiff.

Acquiescence as per Section 33 of the Trademarks Act

The principle of Acquiescence acts as a defence for the Subsequent user against the validity of the registration of their trademark. As per Section 33 of the Act, the Requirements to claim Acquiescence by the Registered subsequent user of the mark are:

(a)There must be an Earlier trademark.

(b) The earlier trademark or the mark of the Prior user should be Unregistered.

(c) The subsequent trademark or the mark of the Subsequent user must be registered.

(d) The Subsequent user must have adopted the said mark in Good Faith.

(e) The prior user must have knowledge about the use of the mark by the subsequent user and must have acquiesced to it.

Meaning of Acquiescence

The Trademarks, Act 1999, does not define Acquiescence, therefore, in the present case, the Hon’ble High Court referred the judgment of H.S. Sahni v. Mukul Singhal[1] wherein it was held that: “..it is settled law that acquiescence cannot be inferred by mere inaction on the part of the proprietor of a registered trademark.

It must be established that the proprietor’s conduct had, either tacitly or by positive acts, encouraged the use of the allegedly infringing trademark.”The court also acknowledged the judgments inPower Control Appliances v. Sumeet Machines Private Limited[2] and Ramdev Food Products (P) Ltd. v. ArvindbhaiRambhai Patel[3] for explaining the definition of Acquiescence.

The Hon’ble Court held that to take the defence of Section 33, the adoption of the mark by the subsequent user must be in good faith. However, in the light of the facts and circumstances of the present case, it was held that the defendant’sadoption and registration of the alleged mark was not in good faith. The court referred the judgment in Sanjay Chadha Trading v. U.O.I.[4]wherein it was held that:

Infringement And Passing Off

The court observed that the defendant’s conduct was intended to create confusion in the mind of the public between the goods of the Plaintiff and the other goods sold by the Defendant under the “VBM” umbrella. However, there is no infringement of Trademark in the present case as the Plaintiff holds no registration in India.

The court further held that Defendant intended to Pass Off the other products sold by it as the goods of Plaintiff. It was noted that the defendant adopted a trade name and a trademark, and also, sold the goods manufactured by others as that of the Plaintiff’s products. The Hon’ble Court relied on the judgment in Laxmikant V. Patel v. Chetanbhai Shah[5] as to facts and law, wherein the ad-interim injunction was granted.

The court underscored that “Vishnu Brahma Mahesh’s explanation is too facile to pass legal muster, besides being unsupported by any corroborative documentary evidence.”

The Hon’ble Court granted ex-parte ad interim injunction and restrained the defendants and all the others from using the “VBM” wordmark/logo as a corporate name, or trademark in respect of medical equipment or other related goods/services. The court also directed that any stock lying at the defendant’s premise of any other manufacturer shall not be sold in the name of the “VBM” mark.

Conclusion

In conclusion, this case highlights one of the very important features of the Principle of Acquiescence that is – the adoption and registration of the trademark by the Subsequent user must be in good faith. In the present case, the defendant was the Distributor of the Plaintiff.

It adopted and used the plaintiff’s mark as a corporate name, and domain name and it sold the goods manufactured by others in the name of the plaintiff’s mark. It also sought registration of the plaintiff’s mark without prior permission from the Plaintiff. Therefore, the court held that all these acts of the defendant were done to ride over the goodwill of the Plaintiff and the court granted an ad interim injunction.

Footnotes

[1]298 (2023) DLT 390 (DB)

[2] (1994) 2 SCC 448

[3](2006) 8 SCC 726

[4]295 (2022) DLT 217 (DB)

[5](2002) 3 SCC 65

This article has been contributed by Gargi Joshi, a student at Symbiosis Law School, NOIDA.