Indian Company hammered over use of ‘Morgardshammar’ Trademark

The Delhi High Court has recently brought the hammer down a company in India for trying to use the trademark and trade name mark of Morgardshammar AB of Italy, even though the latter had revoked the trademark licensing agreement earlier granted to the former. In the matter of Morgardshammar AB V/s Morgardshammar India Ltd., a Division Bench of the Delhi High Court has, in an order dated 19.09.2012, ruled against the company in India, being a joint venture between Morgardshammar AB of the Danieli Group, Italy and the U.K. Modi Group, restraining the joint venture company from using the Trademark and name, ‘Morgardshammar’.

The decision was given an appeal from the decision of a Single Judge of the Delhi High Court, who had granted the same protection to Morgardshammar AB. After going through an exhaustive narration of the facts of the case, the sequence of events and several case laws, Their Lordships Justice Pradeep Nandrajog and Justice Manmohan Singh found “no infirmity in the judgment and decree passed by the learned single judge on January 2, 2012” and that “The appeal is totally without any merit…”

To briefly state the facts, a company today known as Volvo Lastvagnar Komponenter (‘Volvo’ for short and yes, they make the Volvo trucks) had entered into a Collaboration Agreement with the U.K. Modi Group for setting up a joint venture company for manufacture of rolling mill guide equipments as well as spare parts for rolling mills, accessories thereof, etc. A new Joint Venture Company was accordingly set up and was given the name Morgardshammar India Ltd. Following the collaboration, a separate Trademark licensing agreement was entered into between Volvo and the JV company and Volvo provided technical know-how and its trademarks, including the mark ‘Morgardshammar’, to the JV company. The stake of Volvo was 40% of the shareholding in the JV company. A condition of the technology and technical know-how transfer was that if the shareholding of Volvo ever reduced to below 25%, Volvo could terminate the Technology Transfer Agreement by which it had granted ‘permissive rights of use’ to the JV company. Later, Volvo’s shares, business and assets including all its patents, registered designs, trademarks, copyrights and other intellectual property, including those licensed to the Indian JV company, were bought out by Morgardshammar AB. There were certain disputes in respect of registration of Morgardshammar AB as a 40% shareholder in the JV company, and the shareholding of Morgardshammar AB in the JV company was reduced from 40% to 8%. Morgardshammar AB on coming to know of this reduction of its share holding, immediately terminated the Technology Transfer Agreement. This was challenged by the JV company in the Delhi High Court, and a Single Bench as well as the Division Bench above named held in favour of Morgardshammar AB.

An important observation was made by the Single Bench of the Delhi High Court in the matter between the same parties (the Single Bench judgment was appealed against to the Division Bench). The Single Judge held that the law of limitation per se does not apply to passing off and infringement actions. Referring to the Supreme Court judgment in Bengal Waterproof Limited v. Bombay Waterproof Manufacturing Company & Anr. (1997) 1 SCC 99, the Single Judge concluded that every time a person passes off his goods as those of another he commits an act of deceit. Similarly, whenever and wherever a person commits breach of a registered trade mark of another he commits a recurring act of breach of infringement of such trade mark giving a recurring and fresh cause of action at each time of such infringement to the party aggrieved. Since this aspect was not challenged in the Appeal or set aside, it continues to hold good.

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One comment

  1. […] Passing off, though not defined in the Trademarks Act has been inculcated through Section 27 of the Act. The intended motive of this section is to prevent a person from misrepresenting his goods or services as that of another’s. In various English cases the broad rules laid down with respect to Passing Off were that, in order to establish Passing Off, the Plaintiff has to prove false representation (intentional or otherwise) by the Defendant with an aim to make the general public believe that goods/services of the Defendant are that of the Plaintiff’s. Likelihood of causing deception/confusion and/or actual ongoing deception/confusion must be proved by the Plaintiff. Furthermore there must be an aural, visual and conceptual similarity between both the marks. The Hon’ble Supreme Court of India has defined passing-off in Cadila Healthcare Ltd v. Cadila Pharmaceuticals Ltd (2001) SCL 534 as the species of unfair trade competition or of actionable unfair trading by which one person, through deception, attempts to obtain an economic benefit of the reputation, which the other has established for himself in a particular trade or business. Further analysis on passing off has been blogged about here and here. […]

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