Justice Gupta,departing from the decision of the Delhi High Court in Time Incorporation v.Lokesh Srivatava, refused a punitive damage award in the case Christian Louboutin SAS v. MR. PawanKumar & Ors. In this case, the plaintiff, with a trademark ofdistinctive nature was recognised by the Trade Mark Office all around theworld, which gained immense international recognition and trans- borderreputation in India. The defendants, who are in the business of selling women’sshoes and accessories, which also carry business through social mediaplatforms, used the Trade Mark of the plaintiff in selling their ladies shoes,which was confirmed through further investigation. Plaintiff prayed forpermanent injunction, restraining the defendants from, manufacturing, selling,offering for sale or directly or indirectly dealing with the same goods bearingthe plaintiff’s Trade Mark which is identical or deceptively similar to theplaintiff mark.The plaintiff contendedthat, their Trade Mark, that is, shoe with a red sole clearly identifies theproduct of the plaintiff and distinguishes it from the goods of every otherperson and thus became the signature of the plaintiff.
They also pointed outevidences to substantiate its claim that its Trade Mark is distinctive andwell-known.The Delhi High Court bytaking into consideration the facts and circumstances of the case, restrainedthe defendants from using the plaintiff’s impugned Trade Mark. The Court decidingex parte, observed that, since the Trade Mark of the plaintiff enjoyssubstantial Goodwill and Trans- border reputation, it can be considered as awell- known trade mark.
The Court also made reference to a plethora of cases inorder to arrive at whether to or not to grant punitive damages against thedefendants. And by relying upon the decision of the same Court in Hindustan Unilever Ltd v. Reckitt BenckiserIndia Ltd, the Court concluded that, it is not reasonable to grant punitivedamages in the matters of Intellectual Property. Rather by taking into consideration3 categories of compensations under Rooks v. Barnard and 5 principles in Cassel& Co. v.
Broome, exemplary or punitive damages has to be granted. Relyingupon the above reasons, and taking into consideration the turnover of thedefendant, the Court award for a compensation of 2.08 Lakhs against two sets ofdefendants in general or compensatory damages plus another 8.
63 Lakhs in courtfees.Well-known Trade Marks,as defined under the Trade Mark Act means a mark which has become so to thesubstantial segment of the public which uses such goods or receives suchservices. Initially, no such provision as to the protection of well-known trademark exists and so reliance was upon the common law remedy of passing off. Thefirst case, which emerged in this respect, was Daimler Benz v. Hybo Hindustan,wherein, this Court considered the Plaintiff mark to be well known on accountof Trans- border reputation and Goodwill. On the same ground was Whirlpool Co.& Anr. V.
Later, following the requirement in GeneralAssembly on Trade & Tariff (GATT), new laws for the protection of well-knownmarks and related issues were enacted. With regard to the newly enactedprovisions, the Delhi High Court decided the case Indian Shaving Products Ltdv. Gift Pack & Anr, by taking into consideration the factors determining reputationof mark, that is, duration, extent and geographical area of any use of thetrade mark. On similar grounds, this Court decided the case, Manico Ltd v.Madhu Gupta. The next aspect consideredwas with regard to award of punitive damages. Affirming the decision of thisCourt in Hindustan Unilever Ltd v. Reckitt Benckiser India Ltd, Delhi HighCourt refused to award punitive damages, against the reasoning of the sameCourt in Time Incorporation v.
Lokesh Srivastava. Damages, being one of the formsof relief, the general rule in the fixing the compensation amount to be givenshould be near to that amount which will put the injured party in the sameposition as he would have been, if he had not sustained the wrong for which heis getting compensation. It is granted at the discretion of the Court, from theusual practice of compensatory damages and it is awarded in addition to thecompensatory damages. A breakthrough in thefield of awarding punitive damages happened in the case, Time Incorporation v.Lokesh Srivastava, where Court awarded both compensatory and punitive damages.Upholding this decision, came a plethora of decisions, mainly by this Court,thereby the justification laid in this case became the ‘vertebrae’ for thegrant of punitive damages in IP related issues.
Some of those decisions such asMicrosoft Corptn v. Deepak Raval and Hero Honda Motors Ltd v. Shres Assuranji, reflectedupon the motive behind granting punitive damages.
In all these decisions, thepoint highlighted was that, the justification for granting punitive damages isto deter the wrong doers and the like-minded so that in such cases they would,not only be liable to reimburse the aggrieved party but would also be liable topay punitive damages, which may spell financial disaster to them. Subsequently, came thedecision of the same Court in Hindustan Unilever Ltd. V. Reckitt BenckiserIndia Ltd, departing from the decision of the Time Incorporation v. LokeshSrivastava. The propositions made by this Court in the aforesaid case were asfollows:· Punitive damages are that damages whichcan be awarded in addition to the general compensatory damages and cannotsubstitute it.· It expressly overruled the decision ofTime case, that, punitive damages would more effectively be awarded in civilcases and that, otherwise, would over burden the criminal system. Itacknowledges that, IP statutes includes within it, criminal punishmentincluding fines and if a civil award travels beyond by awarding punitivedamage, it would not happen, in cases where the plaintiffs are unable to provegeneral damages, but the Court, in the absence of a Criminal Conviction,determines that it wants to curb actions that involve a criminal propensity.
· The basic objective in such cases is toavoid ad hoc judge centric award of damages without deciding and compensatingfor the injury caused by the plaintiff. Theaforesaid reasoning was affirmed by this Court once again in this case. Such adecision was much needed in order to restore the balance of Delhi High Court in awarding damages.
However, such adecision has not entirely shut the entire doors of granting punitive damages.Rather, it emphasised upon the circumstances under which exemplary damages canbe awarded, thereby clarifying that, such damages cannot be granted for theviolation of IP rights as IP laws do not provide for grant of such damages. Thus,it can be concluded that, Court consider trans-border reputation, spill overeffect, honest and concurrent use, extensive use and concurrent use, extensiveuse and advertisement etc.
to determine a particular mark as well-known and theenactment of such provisions led to considerable change in the nature of Indianmarket, as many foreign big brands get attracted to the foreign policiesadopted in this respect. And that in case of an infringement of a well- knowntrademark or for that matter, of any IP related issues, it would beunreasonable to grant punitive damages without the aggrieved party gettingcompensated.