Supreme Court affirms Stay in Copyright Infringement and Passing-Off in Dispute Involving Liquor Labels

LI Network

Published on: 15 September 2023 at 13:20 IST

The Supreme Court upheld the decision of the High Court to grant a stay on the execution of a decree in a legal dispute centered around alleged copyright infringement and passing-off issues related to labels used on country liquor bottles.

Also Read: The Copyright Act – Ownership and Infringement – Law Insider India

The case, titled “Brihan Karan Sugar Syndicate Private Limited v. Yashwantrao Mohite Krushna Sahakari Sakhar Karkhana,” involved the appellant’s (original plaintiff) claim of copyright infringement and passing-off against the respondent (defendant), concerning the labels affixed to their respective country liquor products.

The Supreme Court found that the appellant failed to provide adequate evidence to substantiate its reputation or goodwill in the market, and the withdrawal of objections to the respondent’s labels was deemed as acquiescence.

The legal battle began when the appellant, engaged in selling country liquor under the label “Tango Punch,” sought a permanent injunction against the respondent’s use of the label “Two Punch Premium,” alleging copyright infringement and passing-off.

Initially, the District Judge ruled in favor of the appellant, granting a permanent injunction against the respondent, along with damages and the destruction of labels. However, the High Court intervened and issued a stay on the execution and operation of the District Judge’s judgment, leading to the appellant’s appeal before the Supreme Court.

The appellant’s counsel argued that the High Court’s decision to stay the execution was flawed, especially since the District Judge had already ruled in their favor after a comprehensive trial. Additionally, they contended that withdrawing objections to the respondent’s labels before the Commissioner for State Excise should not have impacted the appellant’s copyright and trademark rights.

On the contrary, the respondent’s counsel argued that the appellant had failed to provide sufficient evidence of their brand’s market establishment and highlighted the lack of similarity between the labels. They further asserted that the appellant’s considerable delay in initiating the lawsuit after withdrawing objections amounted to acquiescence.

The Supreme Court carefully examined the arguments and delved into the legal aspects of passing-off actions, goodwill, and acquiescence.

To establish a passing-off action, the Court stressed the importance of proving three key elements:

1) acquisition of reputation or goodwill,

2) misrepresentation by the defendant to the public, and

3) actual or potential loss.

The Court also emphasized the necessity of presenting evidence related to sales volume and advertising expenditures to establish goodwill effectively.

In this case, the appellant provided limited evidence to establish their reputation or goodwill, particularly regarding the promotion and advertisement expenses incurred.

The Supreme Court upheld the High Court’s decision to grant a stay on the passing-off action, emphasizing that one of the necessary elements had not been adequately proven.

Regarding the copyright infringement claim, the Court noted that acquiescence serves as a valid defense. The appellant initially raised objections but later withdrew them without imposing any conditions, indicating acquiescence.

Therefore, the Supreme Court found no fault with the High Court’s decision to grant a stay on the copyright infringement claim, asserting that it was justified.

In conclusion, the Supreme Court dismissed the appeal and affirmed the High Court’s stay on the execution of the decree, pending the final resolution of the appeal. However, it underscored that the observations made in both the impugned judgment and its own judgment should not prejudice the outcome of the pending appeal.

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