CAN CONTEMPT IN AN INTELLECTUAL PROPERTY DISPUTE PUT ONE BEHIND THE BARS?

The Bombay High Court, on May 16, 2019, passed a notable order through a single judge bench of Justice S.J. Kathawalla, in the case of Cargill India Pvt. Ltd. V/s M/s M.M. Oil Enterprises, wherein the Court imposed a sentence of 8 weeks simple civil imprisonment upon the proprietor of M/s. M.M. Oil Enterprises who was guilty of committing contempt of the orders of the Court. The facts of the case have been chronologically summarised in this article.

On March 15, 2017 Cargill India Pvt. Ltd. had filed a suit against M/s M.M. Oil Enterprises. The grievance of the Plaintiff was that the Defendant had committed passing off by adopting deceptively similar trademark “GENUINE-Refined Sunflower Oil” vis-à-vis the Plaintiff’s reputed “GEMINI-Refined Sunflower Oil”. It was also the Plaintiff’s case that the Defendant’s adoption of its deceptively similar trade dress, infringed its copyrights in its “GEMINI-Refined Sunflower Oil” product packaging.

On March 23, 2017, the Court granted ex-parte ad-interim relief to the Plaintiff by passing an order restraining the Defendants from infringing and passing off the copyright subsisting in its label mark/ trade dress. Subsequently, on March 24, 2017 the Court directed a court receiver to carry out a search, take an inventory and seal of the impugned products / packaging material found at the Defendant's other premises at Thane. Thereafter, following the search carried out on April 6, 2017 at the Defendant’s premises at Thane, the Receiver generated a report which was signed by the Defendant. Furthermore, the Defendant executed an Undertaking/ Indemnity Bond by which he undertook to preserve the material that has been sealed by the Receiver. On April 12, 2017, the Court through its order made the Plaintiff’s Notice of Motion absolute with Receivership of the sealed goods, continuing till disposal of the Suit. Furthermore, the Court noticed that the Defendant had been served.

In or around January 2019, it came to the knowledge of the Plaintiff from market sources and the same was confirmed by the Plaintiff through a market search that the Defendant had recommenced manufacturing, production, packaging and selling of the impugned product i.e. “GENUINE- Refined Sunflower Oil”. Upon purchasing the impugned products of the Defendant, the Plaintiff gathered that the products were manufactured in December 2018 which was well after the Notice of Motion passed by the Court on April 12, 2017.

On April 1, 2019 the Plaintiff moved the Court through the Notice of Motion under Order 39 Rule 2A of the Code of Civil Procedure, 1908, pointing out the breach committed of the order of the Court dated April 12, 2017 by the Defendant. The Court, thereafter, expressed its satisfaction that a case for the appointment of the receiver has been made out. Pursuant to the order, the Receiver carried out a search at the Defendant’s premises on April 4, 2019.

The search report of the Receiver disclosed three glaring facts:

i) that the finished goods with the impugned trade dress and mark were found on the premises;

(ii) that the Defendant without the Court’s leave removed the oil from the pouches as well as the cans;

(iii) the products seized and sealed by the Receiver pursuant to the Order passed by this Court dated 6th April, 2017 in Notice of Motion No. 968 of 2017, were disposed off by the Defendant, despite him having given a written undertaking to safeguard / preserve the said products which were custodia legis.

Upon enquiry, the Advocate of the Defendant made brazen statements such as the seized goods were destroyed/ eaten away by rats. The court satirically pointed out that the submission implied that rats have destroyed/ eaten away 9850 litres of oil, to which the counsel for Defendant conceded that he has only conveyed what was instructed to him by the Defendant. The Defendant also made various fallacious claims such as the erstwhile lawyer had not kept track of the matter, that pursuant to the earlier order, the Defendant had stopped manufacturing and selling the impugned goods since 2017. Upon interrogation, the submissions made by the Defendant were found contradictory to the surrounding facts and evidence. Thus, the Court recorded that the Defendant was in the habit of making false statements.

Thus, the Defendant was guilty of disobedience on two counts:

(i) The Defendant has admittedly sold goods under the impugned trade dress and mark after the Court’s Order of 12th April 2017, and

(ii) the Defendant has disposed off goods that were sealed by the Receiver on April 6, 2017, and which were consequently custodia legis and in breach of Court’s prohibitory orders dated April 12, 2017.

The Defendant tendered its apologies to the court taking the plea that he did not understand the purport and content of the Court’s order due its incompetency in understanding English and lack of proper communication with its Erstwhile Advocates. However, the court upon examining the merits of the case came to the conclusion that the submissions made by the Defendant were self-contradictory. On April 18, 2019, the Defendant again tendered an alleged sincere and unconditional apology, however, still justifying his breach on the same claim that he was unaware of this order. The Court remarked that the apology rendered was neither sincere nor unconditional. The timing of the apology too betrays the factum of it being a false statement of remorse and was only sought by the Defendant after making false statements on April 5, 2019.

The court held that “the Defendant’s apology lacks “penitence” and rings hollow. His apology has neither been made at the earliest opportunity, nor in good grace. It has only been made at this late juncture to avoid punishment. Though couched as ‘unconditional’, it is qualified by a claim (now found to be false) that the Defendant lacked knowledge and awareness of the Court’s Orders., It is a clear, cynical and desperate gambit by a litigant to escape penal liability for his wilful and wanton disobedience of the Court’s Order of 12th April, 2017. For these reasons, the Defendant’s apology fails to meet the law’s requirement, that it be a bonafide act of contrition. Consequently, it must be rejected.”

The Court opined that the lenient sentence in this case would mean and send a message to society at large that the Court is itself not outraged by the flagrant disregard shown by the Proprietor of the Defendant and is adopting a 'forgive and forget' policy. In doing so, the Court would be doing grave injustice to the Plaintiff, who for no fault of their own, have been put through a long and protracted round of litigation. It would further indicate that litigants can disobey the orders of the Court with impunity and still be shown mercy and forgiveness by the Court. Such a trend would destroy the very principle of deterrence, which punishments are intended to serve.

Thus, relying on the jurisdiction conferred upon the Court under Section 94 (c) read with Order 39, Rule 2 A of CPC, the Court sentenced the Defendant to eight weeks simple imprisonment in a civil prison.

This one is an exceptional judgement passed by the Court in the arena of Intellectual Property, setting a cherished precedent for the proprietors, endeavouring to achieve effective reliefs against offenders who habitually violate their intellectual property rights. This, further acts as a deterrence to the parties, not only in the field of intellectual property but in general who flagrantly defy the orders of the Court.