India: Delhi High Court Grants Injunctive Relief To Montblanc But Denies Damages, In Online Counterfeit Case

Last Updated: 2 February 2017
Article by S.S. Rana & Co. Advocates

 In its recent decision dated January 04, 2017 in Montblanc Simplo GmbH V. Gaurav Bhatia & Ors., CS (OS) 2563/2013, Hon'ble Ms. Justice Deepa Sharma of the Delhi High Court has restrained an e-commerce website going by the name WWW.DIGAAZ.COM from manufacturing, selling, advertising and directly or indirectly dealing in Montblanc's writing instruments, wallets, watches, leather goods, jewellery or any other goods bearing the trademark of the company.

Brief Background

The Plaintiff, Montblanc Simplo GmbH is a company incorporated under the laws of Germany having its registered office at Hamburg. It is engaged in the manufacture, distribution and sales of writing instruments under the trademarks MONTBLANC, MEISTERSTUCK and variations thereof. The Plaintiff's trademarks also include 'the Star Device' which is a white stylized six-pointed star with rounded edges, and the 'Three Ring Device' comprising of three metallic bands around the circumference of the pen which are located near the middle of the body of the pen cap. The Plaintiff is the registered proprietor of these trademarks and others in India as well as in other countries across the world.

In July 2013, the Plaintiff came to know through its sales/service team in India that the Defendants were selling counterfeit products of the Plaintiff's writing instruments on their website www.digaaz.com at discounted rate of 75% representing the products as original products of the Plaintiff, although the Plaintiff had never sold its products at discounted rate. Hence, the present suit.

Plaintiff's Submissions

  1. Plaintiff purchased a writing instrument, namely, the MEISTERSTUCK CLASSIQUE from the Defendants' website, which was being sold at 75% discount and wrongly represented as a product of the Plaintiffs. Upon inspection and examination by Plaintiff, the product was found to be a counterfeit.
  2. The price of original MEISTERSTUCK CLASSIQUE is INR 30,000 (Approx. USD 440*) whereas the Defendants were selling knock-offs of the same for INR 6,860 (Approx. USD 100.61*) on their website. Further, the color combination of the Defendants' instrument was different than that of the original product. Also, the tip of the refill of the Defendants' writing instrument had a plastic ball which is different than that of the Plaintiff's original product and the quality of the Defendants' product was much inferior to the Plaintiff's original. The serial numbers on the product were also fabricated by the Defendants.
  3. Plaintiff claimed that due to sale of Defendants' counterfeit products, Plaintiff suffered loss in business and is also losing reputation and confidence and trust of their clients. Plaintiff claimed damages worth INR 2,005,000 (Approx. USD 29,405*).

Defendants filed their Written Statement however, subsequently, stopped appearing in Court and were proceeded ex-parte.

Court's Observations:

  1. Plaintiff's brand MONTBLANC is a widely recognised luxury brand and Plaintiff has a goodwill and reputation in the brand. It is also proved on record that the public identifies Plaintiff's products from its trade dress which includes the 'Star device' and the 'Three Ring device'. Plaintiff is also the registered proprietor of the trademarks MONTBLANC, MEISTERSTUCK, Three Ring Device and others.
  2. Plaintiff also proved on record its cautionary notice published in India, and extracts from the Defendants' website displaying the counterfeit products of Plaintiff's trademarks, alongwith invoice of purchased counterfeit products and photographs of the counterfeit products and warranty cards.
  3. Court also considered some of the consumer complaints filed against the Defendants including of one customer who had purchased counterfeit watches from them and had subsequently lodged a complaint before the Cyber Crime Cell of the Chandigarh Police under Sections 406, 420 of the Indian Penal Code and Section 66A of the Information Technology Act. The Police had also seized a good number of counterfeit products from the Defendants, and Defendant nos. 1 and 2 (directors of Defendant no. 5 company, Digaaz e-Commerce Pvt. Ltd.) were also arrested by the Cyber Cell.
  4. The Court finally observed that the Plaintiff had proved that the Defendants were counterfeiting its goods and thereby, infringing its trademarks.

Held:

In view of the above, the Court granted relief of permanent injunction against the Defendants as sought by the Plaintiff and also restrained them from passing off their counterfeit products as that of the Plaintiff. However, the Plaintiff's claim for damages amounting to INR 2,005,000 (Approx. USD 29,405) was rejected with the observation that the Plaintiffs have not produced sufficient evidences to show the extent of actual damages suffered by them due to the act of Defendants. The said judgment of the Delhi High Court is available here.

[*@ 1 USD = INR 68.18]

Concluding Remarks

It is no secret that the Indian market is home to large number of counterfeit goods. The most popular counterfeit markets are clothing, shoes, watches, leather goods, jewellery, mobile phones and hardware like pendrives and speakers etc. Popular international brands like Louis Vuitton, Gucci, Burberry, Tiffany, Prada, Hermes, Chanel, Dior, Yves St. Laurent and Cartier are frequently pirated. In the past, brands like Hermes, Cartier, Gucci and Louis Vuitton have also taken legal recourse to battle counterfeiting.

Reportedly, the fake luxury goods market in India is increasing at a rate of 40-45% annually. There is much speculation that underground mafia connected with terrorism, women and child trafficking get most of their funding through the counterfeit market. Hence, this is an issue not to be taken lightly.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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