India – Appellate Court Upholds Restraining Order Against Name That Capitalises On Trademark And Goodwill Of Other Coaching Institutes.
The present order arises out of the appeal filed in Emerge Classes Pvt Ltd vs Kashmir Institute of Excellence & Ors (Order dated June 7, 2024) against the order dated May 16, 2024 passed by the Additional District Judge, Srinagar, on an application filed by the respondents against the appellant, restraining them from using trademark including the logo and device “EMERGE- INFINITY and BEYOND”, “KIE”, “Emerge – KIE HOPE MISSIONe- Infinity and Beyond” and any combinations or variants of these words.
Background of the Matter
The respondents in the instant appeal were the plaintiffs before the trial court and enjoy a good reputation as coaching institute(s) for various competitive exams. More particularly, Plaintiff No. 1 has been the registered owner of the trademark KIE, i.e. “Kashmir Institute of Excellence,” also used as their brand name since 2013. Plaintiff No. 2 imparts coaching to students under “Mission e Coaching Classes” and owns the trademark registration for their brand name “Mission e”. Plaintiff No. 3 operates as Hope Classes. All these three plaintiffs came together to constitute Plaintiff No. 4, named “EMERGE KIE HOPE MISSIONE PVT LTD”, to start operations together in January 2024.
This new entity applied for the registration of the trademark “EMERGE” with the intent to operate the coaching classes as a combined entity and not pursue teaching activities through their erstwhile individual coaching institutes. Thus, they were collectively using the name “EMERGE – KIE HOPE MISSIONe – Infinity and Beyond.” There was considerable interest in the media and the student community, and around 4000 students enrolled for the Scholarship test conducted for seeking admission to the new Institute, which enjoys the goodwill and reputation of its constituent erstwhile coaching institutes.
In April 2024, the plaintiffs became aware of coaching classes started in Srinagar under the name “EMERGE Infinity and Beyond- powered by KIE”. Thus, it was evident that the intent of this Institute was to use the same name to create an impression that it was operating under the aegis of the company floated by the plaintiffs. They were also using identical logos to mislead students and even started a social media page by the name EMERGE SRINAGAR to mislead students while also adding the words “Powered by KIE” to capitalise on the goodwill of KIE. The plaintiffs, therefore, filed a suit before the ADJ, Srinagar, to restrain the respondent from using the marks of the plaintiffs for similar services, i.e. coaching classes and to claim damages for the loss being caused by the activities of the defendant.
The defendant, on his part, without filing any written statement, chose to only reply to the application seeking injunction by stating that plaintiffs 1, 2 and 3 had constituted the new entity, Plaintiff No. 4 and were no longer using their individual marks, and therefore, KIE could be used by them. The defendant further argued that there was no exclusivity granted to the plaintiffs in respect of the word EMERGE, so there was no reason for preventing the defendant from using the same.
The trial court examined the documents on record and the averments made by both parties and concluded that the plaintiffs had successfully demonstrated that they were the prior users of the marks that were being blatantly copied by the defendants. Vide order dated May 16, 2024, the trial court restrained the defendant from using the marks, logos and devices that were under dispute in the suit during the pendency of the proceedings.
Aggrieved by this order, the defendant appealed before the High Court of Jammu and Kashmir at Srinagar. In the appeal, the appellant highlighted the fact that the respondent’s company, EMERGE KIE HOPE MISSIONE PVT LTD, was registered only on April 10, 2024, and as such, their business was still in the inception stage. Thus, the claims to prior use and goodwill could not be substantiated as the erstwhile constituents of this new entity had ceased to operate independently. As such, they found the injunction passed by the trial court unjustified. Further, since the service was being rendered to students who were educated, there was no likelihood of confusion and, therefore, craved indulgence of the appellate Court for vacating the injunction granted by the trial court.
Analysis by the Court
The Hon’ble Judge took note of the fact that since both the appellant and the respondent entity were newly constituted, the trademarks in question were not registered in their respective names. Therefore, as per Section 27(2) of the Trade Marks Act, a case for passing off was applicable as the services of both parties were identical. Relying on the Supreme Court Judgment in S. Syed Mohideen vs P. Sulochana Bai (2016) 2 SCC 683, it was held that the rights of the prior user were superior to rights granted by registration. The same was affirmed in N.R. Dongre vs Whirlpool Corporation (1996) 5 SCC 714.
The Learned Judge further observed that goodwill in the business is the deciding factor in passing off. If the goodwill is compromised by the use of a deceptively similar trade name, logo, device, etc., then the right of the prior user must be protected. Examining the instant case, the learned Judge reviewed the advertisements and opined that the appellant started operating only in April 2024. In contrast, the respondents had been operating since 2013 and had formed the amalgamated entity in January 2024. While the amalgamated entity may have come up only a few months ago, the collective goodwill of the constituent coaching institutes was advertised by the parties and led to 4000 students appearing for the scholarship test for registration with the newly amalgamated Institute.
Thus, the trial court was right in concluding that prima facie, goodwill existed in the respondents. The two brand names and logos also looked similar, with the same words used in an almost similar manner, thus making them deceptively similar. The use of the words “powered by KIE” also gave the impression of affiliation with KIE, which was registered by Plaintiff No. 1 in 2013.
Decision by the Court
The plaintiffs claimed to have assigned their goodwill and trademarks to the new entity, so using their erstwhile names by the new entity was justified. However, it cast doubt as to the intention of the appellant in using a name that is an amalgam of the names of the three plaintiffs and the new entity they have formed. As such, all ingredients of passing off were met, and the trial court was justified in granting a temporary injunction against the appellant.
The Court also highlighted the settled law that if the trial court has not taken an arbitrary or capricious stand, there is no reason for the appellate Court to interfere with the order. The appeal was accordingly dismissed, and the restraint order of the trial court was upheld.
