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Corporate Case Brief – State of UP v. Renusagar Power Co

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Facts:

Renusagar was a 100% subsidiary of Hindalco, wholly owned and controlled by Hindalco. The agreement between Renusagar and Hindalco indicated this was not a normal sale-purchase agreement between two independent persons at arm’s length. The price of electricity was determined according to the cash needs of Renusagar. It was thus contended that Renusagar must be treated as alter ego of Hindalco, i.e., own source of generation. ‘Own source of generation’ is an expression connected with the question of lifting or piercing the corporate veil.

Appellant’s Contention:

  • The appellants contended that in this case there was no ground for lifting the corporate veil, urging that there was no warrant either in law or in fact to lift the corporate veil and treat Renusagar’s plant as Hindalco’s own source of generation.
  • Appellants also contended that HC order was in violation of principles of natural justice.

Held:

  • The person generating and consuming energy were the same and the corporate veil should be lifted.
  • Hindalco and Renusagar were inextricably linked up together. Renusagar had in reality no separate and independent existence apart from and independent of Hindalco.
  • Must be treated as one concern and the consumption of energy by Hindalco must be regarded as consumption by Hindalco from own source of generation.
  • The Government did not act in violation either of the principles of natural justice or arbitrarily or in violation of the previous directions of the High Court.
  • Appeal dismissed.

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Corporate Case Brief – Solomon v. Solomon & Co. Ltd.

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Facts: Mr Salomon had incorporated his long standing personal business of shoe manufacture into a limited company. He held 20,001 shares and the other 6 members of his family each got one share making a total of 20,007 shares. The company failed after sometime. The debentures in the company were held mainly by Broderip and Mr Salomon himself. Upon liquidation of the company, Broderip got back his share of debenture money. The rest was taken up by Mr. Salomon himself as he was the next big secured debenture holder. Therefore the minor unsecured creditors got nothing from the liquidation.

Issue: Should the amount that was paid to Mr Salomon, the major debenture holder, be paid back to the company and distributed amongst the minor unsecured creditors?

Holding:

  • High Court – Company is an agent of Mr. Salomon. He should pay the Company’s debt.
  • Court of Appeal – Agreed with the HC. Decision upheld.
  • House of Lords – The Company was a separate legal entity and a distinct independent corporation. A majority shareholder does not own the Company. The Company will not lose its identity to the majority shareholder.

Ratio:

  • The Company is a separate legal entity.
  • The creditors of a company cannot sue the company’s shareholders to pay the company’s debts.

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Corporate Case Brief – In re The Kondoli Tea Estate

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Facts:

A certain Tea Estate was transferred to a company by a group of 8 people who were the sole shareholders of the company. The consideration for this exchange was £43,320, the said consideration being payable in shares and debentures of the company taken at par. However, the shareholders of the company refused to pay the ad valorem duty, payable on every conveyance on such transfer of the property and hence this case. The shareholders’ reason for not paying the tax was that since they were the only shareholders of the company, therefore the transfer of the property was from them to themselves under another name.

Issue: Whether the document carrying out a particular transfer is a conveyance?

Ratio:

Whoever the shareholders in the Kondoli Tea company were, the Kondoli Tea Company, Limited, was a, separate person, a separate body, and a conveyance to the Kondoli Tea Company, Limited, of property which was the property of the sharers in their individual capacity, was just as much a conveyance, a transfer of the property as if the shareholders in the Company had been totally different persons.

The Kondoli Tea Company, Limited, is a separate body, although the conveying parties here were the shareholders of the Company, there was just as much a sale and transfer of the property and a change of ownership as there would have been if the shareholders had been different persons.

Holding:

The Court held that the Kondoli Tea Company was a separate legal entity and therefore ordered the shareholders to pay the ad valorem duty on the said transfer of property from them to the company.

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Corporate Law Case Brief – In Re: Stanley (1906) 1 Ch. 131

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Facts –

A testator empowered the trustees of his will to invest moneys in the parliamentary stocks or public funds or in Government securities of Great Britain or India or any British colony or dependency or any foreign country or State, or upon freehold, copyhold, leasehold or chattel real securities in Great Britain……….or in the stocks, funds and securities (not payable to bearer) of any corporation or company, municipal, commercial or otherwise

Issue –

Whether trustees can invest money in the stocks, funds or securities of

  1. any corporation or company formed or registered in the United Kingdom, but carrying on business abroad, and
  2. any corporation or company formed or registered outside the United Kingdom.

Held –

According to BUCKLEY J. no reason occurs, why a corporation or company formed or registered in the United Kingdom should not be within the words “any corporation or company, municipal, commercial or otherwise,” merely because it carries on its business abroad.

The word ‘company’ has no strictly technical meaning. It involves two ideas–namely, first that the association is of persons so-numerous as not to be aptly described as a firm; and secondly, that the consent of all the other members is not required to the transfer of a. member’s interest.The words “corporation or company” here means, an incorporated body or an unincorporated body which is “municipal, commercial or otherwise,” and which is of such a kind as not to be what is commonly called “a firm.”

Therefore, that the trustees are at liberty to invest in the stocks, funds and securities (not payable to bearer) of any corporation or company, notwithstanding the fact that it is not formed or registered in the United Kingdom.

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Corporate Law – Case Briefs

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Trademark Case Brief – Venugopal v Ushodaya

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Citation – (2011) 4 SCC 85.

Facts:The appellant is the sole proprietor of a firm carrying on business inter alia as manufacturers of and dealers in incense sticks (agarbathis) in the name and style of Ashika Incense Incorporated at Bangalore and adopted the mark ‘Ashika’s Eenadu’. According to the appellant the word `Eenadu’ in Kannada language means `this land’. In Malayalam and Tamil language it conveys the same meaning. In Telugu language it means ‘today’.
The respondent company (i.e. Ushodaya Enterprises) was engaged in the business of publishing a newspaper in Telugu entitled as ‘Eenadu’. The respondent company in the year 1999 filed a suit for infringement of copyrights and passing-off trade mark. The respondent company therein claimed that they have been in the business of publishing a newspaper, broadcasting, financing and developing a film city.

Procedural History:The Second Additional Chief Judge, City Civil Court, Hyderabad had granted an ex-parte ad interim injunction restraining the appellant from using the expression `Eenadu’. Thereafter, the appellant, aggrieved by the said order, moved the High Court of Andhra Pradesh at Hyderabad. The High Court suspended the interim injunction. The appellant was not injuncted from using the words `Eenadu’ in the entire country other than in the State of Andhra Pradesh by the Trial Court. Aggrieved by the said order of the learned Single Judge, the respondent company filed Letters Patent Appeals before the Division Bench of the High Court. The High Court allowed its appeal.

Issues:
1)Whether the defendant is passing off the product of the plaintiff by deceiving and causing confusion among the minds of the consumers by using the Mark Eenadu.
2) Whether Eenadu is a common word with generic interpretation literally meaing `Today’ in Telugu and `this land/our land’ in Kannada, Tamil and Malayalam?
3) Whether the Mark is Suggestive or Descriptive and has it acquired distinctiveness?
4) Whether the use of mark Eenadu by the defendant would affect the goodwill of respondent company as they both are involved in entirely different business.

Holding:The Court found that the respondent company’s mark `Eenadu’ has acquired extraordinary reputation and goodwill in the State of Andhra Pradesh. The respondent company’s products and services are correlated, identified and associated with the word `Eenadu’ in the entire State of Andhra Pradesh. `Eenadu’ means literally the products or services provided by the respondent company in the State of Andhra Pradesh. In this background the appellant cannot be referred or termed as an honest concurrent user of the mark `Eenadu’.
The adoption of the words `Eenadu’ is ex facie fraudulent and mala fide from the very inception. By adopting the mark `Eenadu’ in the State of Andhra Pradesh, the appellant clearly wanted to ride on the reputation and goodwill of the respondent company. The Court has clearly ruled on the basis of dilution of the trademark “Eenadu” registered to the respondent. A trademark is diluted when its uniqueness is lost owing to its unauthorised use in relation to products that are not identical or similar to the product of the trademark owner.
Use of similar words by a competitor coupled with dishonest intentions and bad faith would empower a court to restrain such user to do justice to the aggrieved party. The protection qua common fields of activity has now been expanded and been interpreted to mean other product lines than what is manufactures by plaintiff and hence common field of activity is not restricted to same products. No one can be allowed to encroach upon the goodwill of other parties.

Applying the TWO STEP TEST to decide whether mark is descriptive of suggestive:
1) How much imagination does it takes by consumer about qualities, characteristics, effects, purpose or ingredients of the products or source is there.
§ More the imagination, more chances that the mark is suggestive.
Here, people in Andhra Pradesh are well aware about the relation between Eenadu Daily newspaper and Eendau Margadasi Group. Eendau daily simply concludes that this may be a news service only.
2) Whether sellers of similar products/services are likely to use or actually do use a term in connection with their goods and services.
§ Yes, it is likely to be used other sellers ex: AP Eenadu, Eenadu weekly, Eenadu’s Exclusive, Real Eenadu, etc.
Hence it’s a descriptive mark
But, in our case, mark ‘Eenadu’ has acquired distinctiveness. It has acquired a secondary meaning during the course of plaintiff’s business practice as the word Eenadu became the household name among the people of Andhra Pradesh and the Telugu speaking public in the other States and the rest of the world.

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Trademark Case Brief- Reckitt & Colman v Borden

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Citation – [1990] 1 ALL E.R. 873 (House of Lords)

Facts: Reckitt and Colman Products Limited, the Plaintiff (hereinafter referred to as “P”), was a lemon juice manufacturer and sold it in yellow containers having an appearance similar to a natural lemon and having a removable cap at one end. The product was generally known as “Jif Lemon Juice” and attached to this container was a loose paper label of green colour with “Jif” and other statutory information written on it in yellow, held in place by the cap. P did not have any of its marks registered as Trademark (T.M.), but had a monopoly in selling lemon juice in such containers since more than 40 years in U.K.
Borden Inc., the Defendant (hereinafter referred to as “D”), started selling lemon juice with the name “ReaLemon” in containers similar to that of the Respondent (i.e. lemon shaped and colored). D produced three different versions of plastic lemon containers with minor changes in size, colour of the cap, and colour pattern of the labels. Owing to D starting to sell lemon juice in containers similar to that of P, P filed a suit for passing-off seeking to restrain D from selling.

Procedural History: P approached the Trial Court, which ruled in P’s favor. D approached the Court of Appeals, which also ruled in P’s favor. D has now approached the House of Lords.

Issues:
1)Does the public associate lemon-shaped containers filled with lemon juice exclusively with P?
2) Does the get-up under which D propose to market their lemon juice amounts to a representation that the juice which they sell is “Jif” lemon juice?
3) If D is not restrained, will a substantial amount of public be misled into purchasing D’s lemon juice in the belief that it is the P’s “Jif” juice?

Holding: Yes, D’s selling of lemon juice in lemon shaped containers constituted passing-off. A permanent injunction was imposed on D from selling lemon juice in such containers.

Rationale:
The House of Lords applied the Three Part Test (Goodwill; Misrepresentation; Damage) to find out whether D was passing-off its product as that of P. Each issue was dealt with separately as explained below:
1) The House of Lords held that since P was the only player in the lemon-juice market who was selling it in lemon-shaped containers, and since P had been exclusively doing it for more than 40 years, such containers for lemon juice had become something people associate exclusively with P.
2) The House of Court held that since lemon-shaped containers were exclusively associated with P by the public, if D wanted to sell its product in similar containers, it should make sure that people will not confuse its products with that of P. The Court held that the change in color of label will not eliminate the confusion as the label is taken off once the product is bought and therefore, the product is unadorned for the most part it is in use with the customer. Therefore, an innocent customer will not remember how the label looked like when he/she goes to buy it again and will only remember the shape and the label us hardly paid any attention.
The court further held that a small change in the colour of the cap is not distinctive enough to alarm the customer that the product they are buying is not “Jif Lemon Juice”, therefore each of the get-ups proposed by D was just an immaterial variant of Jif Lemon and would amount to misrepresentation.
3) D contended that people will eventually figure out that P was no longer the only player in the lemon juice market with lemon-shaped containers and will start paying attention to the labels and colour of caps. The House of Lords did not accept this argument and held that the number of people who will be initially misled before realizing this could be huge and probably running into millions. Therefore if D is allowed to sell such products, it would cause a substantial harm to P.
Thus, since all the three parts of the three-part test are met, the House of Lords held that the Trial Court and the Court of Appeals was right in restraining D from selling lemon juice in containers similar to that of P.
Rule: Passing-off: This rule essentially means that no person is to sell his/her goods under the pretence that they are the goods of another person and applies in cases of unregistered trademarks.
Three-Part Test: The Courts have developed a three-part test to find out if an action constitutes as passing-off i.e. reputation and goodwill, misrepresentation, and damage. To establish a claim under passing-off, the Plaintiff must prove:
1) that his goods/services have acquired a particular goodwill or reputation in association with the “get-up” of the goods/services;
2) that the Defendant’s representation of his/her products is (or is likely to) mislead the people who wish to buy Plaintiff’s product into buying Defendant’s product/service.
3) that he/she will suffer damages if the Defendant is allowed to continue with such a representation.

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Trademark Case Brief- Bollinger v Costa Brava Wine Co Ltd

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Citation – [1961] 1 W.L.R. 277

Facts: There were 12 plaintiffs duly incorporated in France, who carried on the business of producing wine in the Champagne district of France, and supplied this wine to England and Wales. The wine that came from these vineyards were sold under the name “Champagne”, and there was immense goodwill attached to this name and its brand of wines. This wine was made through a detailed process, and was placed at a high standard in the United Kingdom, and was mainly associated with celebratory occasions.
The defendants are a company incorporated in England, and were importing and selling a wine named, “Spanish Champagne”. This Wine was alleged to possess some characteristics of the “Champagne” produced in France. However, the Wine sold by the defendants was produced in Spain, and is not associated in any way with the Champagne district of France. Consequent to the common usage of the word “Champagne” in both products, a dispute arose between the two parties.

Issue: Whether the Defendants’ usage of the Name or Mark intended to deceive or mislead the public, thereby by amounting to passing off?

Rationale:
§ The Defendants’ primary contention was that the wine they sold was “Spanish” champagne, and therefore it could not have been mistaken for “Champagne” produced in France.
§ Although this was plausible, the Court recognized that this argument would accommodate only the educated class of people, who are well versed with wines and are generally accustomed to buying different products.
§ In addition, the Court considered a large amount of evidence that concerned the term “Champagne” in England. Most of the evidence obtained, suggesting that “Champagne” in England is always associated with the product of the plaintiffs and nothing else. The evidence further suggested that the term “Champagne” in England is not generic, and is related only to the Plaintiff’s product.
§ On assessing whether the Defendants’ product “Spanish Champagne” was deceiving – The Court opined that the resemblance between the two products was deceiving. As a result, the usage of the word “Spanish” could not be used to deem both products different.
§ In addition, the Court opined that it is not easy for individuals to assess and have enough knowledge about different types of wines and their origins. The Court stated that these classes of individuals might have to make such decisions only when it comes to celebratory occasions (wherein the Plaintiff’s product was more sought after). The evidence, in this regard, suggested that not everyone was accustomed to different types of wine. Therefore, it was stated that there is a likelihood of individuals being misled by “Spanish Champagne” as “Champagne”.
§ The Court also stated that the Plaintiffs had satisfied their burden of proof of showing that the Defendants’ product reflects untrue statements.
§ More importantly, the Respondents’ product was deceiving, as the Defendants’ product was sold in Spain as “Perelada” and not “Spanish Champagne”. This created a serious doubt as to why the Name was changed to “champagne” in the British Market, where the Plaintiff’s product was widely recognized as “Champagne”. Additionally, the Defendants’ brochure was blatantly trying to “secure the sale of the Plaintiff Company”, as it stated, “Giving a Champagne Party”.

Rule: For the actions to be deceptive, a substantial portion of the public must be likely to be misled by the defendants’ product “Spanish Champaign”.

Holding: It was held that this was not a case of innocent passing off, and the Defendants try to attract the goodwill of the plaintiff’s company in a deliberate and dishonest manner.

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Trademark Case Brief- Dongre v. Whirlpool

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Citation – 1996 (16) PTC 583 (SC)

Facts: The respondents (initially plaintiffs) are the original and earlier users of trademark “WHIRLPOOL” for their electrical goods including washing machines since the year 1937. They got their trademark registered in the year 1956-57 in India. These registrations were renewed periodically. However, in 1977, the registrations in India lapsed on account of failure to apply for renewal. Later in the year 1988, the appellants (initially defendants) applied with the Registrar of Trade Marks for registration of the trademark ‘WHIRLPOOL’ for certain goods including washing machines. Post this application, information was released by advertising in the trademark journal and accordingly the respondents filed an objection. The registrar dismissed the objection and allowed the plaintiff’s application for registration on the grounds of the proposed user. The respondents filed an action for passing off and grant of an interlocutory injunction.

Procedural History  :  After the grant of registration to the appellants in the year 1992, the respondents filed an action for passing off and grant of an interlocutory injunction. A temporary injunction was granted by the learned Single Judge of the Delhi High Court in an original suit by order dated 31st October 1994, which has been affirmed on appeal by the Division Bench by its order dated 21.04.1995. Hence, aggrieved by the decision, the appeal was filed in the Supreme Court.

Issue:Whether interlocutory injunction can be granted in a passing-off action even against the proprietor of a registered trade mark?

Analysis:  The Court noted that Whirlpool Corporation had been the prior user of the trademark and were associated with it since the year 1937 whereas the appellants only applied for it in the year 1988. The concept and principle on which passing off action is grounded is that a man is not to sell his own goods under the pretense that they are the goods of another man. The Court further observed that since the year 1937, Whirlpool Corporation has registered itself in 65 countries and has a large scale business. It was further noted that though Whirlpool products were only sold in US embassy and few other United States offices in India but the brand ‘Whirlpool’ had been frequently advertised in leading international magazines having circulation in India and as a result the brand was gaining reputation not just in the United States but throughout the world including India. As a result, Whirlpool Corporation acquired trans-border reputation and goodwill throughout the world and people began associating washing machines and other electronic goods with the trademark ‘Whirlpool’. It further noted that buyers were likely to be deceived or confused as to the origin and source of the goods with appellants selling their goods marked as ‘Whirlpool’ and as a result the respondents are likely to suffer irreparable injury as the products sold by appellants were not of the same engineering standards and did not give the same quality of performance as the respondents’ machines.

Conclusion: The Court affirmed the order of the Division Bench of the High Court and dismissed the appeal. It noted that the decision of the trial court and the High Court was based on settled principles of law. Therefore there was no ground to interfere with the grant of an interlocutory injunction.

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Trademark Case Brief- Pepsi Co., Inc. v. Hindustan Coca Cola Ltd.

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Citation -2003 (27) PTC 305 (Del)

Facts: The appellants, in this case, were Pepsi Co Inc and they were suing the respondents, Hindustan Coca-Cola Ltd (henceforth Coca-Cola) over a series of advertisements carried out by the respondents. In some of these advertisements, a drink with the word PAPPI on its label with a mark similar to the Pepsi’s globe mark was used in comparison to the respondent’s own drink. The adverts proceeded like so: a child was asked by the protagonist to name his favourite drink, to which the child responds saying that his favourite drink is Pepsi. At this point, the audio is bleeped out though, from the movement of the child’s lips it is evident that he is uttering the word Pepsi. The child is then asked to perform a blind tasting of the two drinks and pick his favourite out of the two. On making his selection, it is shown that the child picks the respondent’s drink and the other drink is revealed to be PAPPI with a mark similar to that of Pepsi. When asked for the reasons behind his choice, the child remarks that PAPPI is too sweet and is something that only children would want to drink and shows embarrassment on learning that he once called that his favourite drink. The adds also contained the lead actor saying “Wrong choice baby” when the child initially states that Pepsi (bleeped out) is his favourite drink and uttering the phrase “Yeh Dil Maange No More.”
The appellants alleged, that in another advertisement the respondents had copied a roller coaster commercial that they had launched earlier and sought to receive an injunction on the alleged copy. They also claimed that the use of the globe design and the phrase “Yeh Dil Maange No More” amounted to trademark infringement while the nature of the respondent’s adverts amounted to the disparaging of the appellant’s products.

Issues:
1) Whether prima facie the respondents have disparaged the products of the appellants;
2) Whether the globe devise and the phrase “Yeh Dil Maange More” is copyright-able and if so whether this copyright has been infringed by the respondent;
3) Whether the essence of the roller coaster has been copied by the respondents and if so the effect of the same.

Rule: Comparative advertising is permitted as long as it doesn’t discredit or denigrate the trademark or trade name of the competitor. Mere puffing of goods is not actionable. Tradesman can say his goods are best or better. But by comparison, the tradesman cannot slander nor defame the goods of the competitor nor can call it bad or inferior. To decide the question of disparagement following factors have to be kept in mind
(1) Intent of commercial
(2) Manner of the commercial
(3) The storyline of the commercial and the message sought to be conveyed by the commercial.

Holding:  With regards to the first issue, the Court found that the respondent’s advertisements did, in fact, disparage the appellant’s products. In deciding this, the Court looked into the following factors:
(i) Intent of commercial
(ii) Manner of the commercial
(iii) Storyline of the commercial and the message sought to be conveyed by the commercial.
They reasoned that even though the word Pepsi had been censored in the commercial, a viewer could make out the word from the movement of the actor’s mouth. Further, the use of the word PAPPI and the symbol similar to Pepsi’s globe, clearly pointed to Pepsi as they were the only cola brand in the market that aligned with these descriptions. The Court reasoned that the adverts amounted to disparage as they clearly sent out the message that the appellant’s drink was an inferior one as it was too sweet and something only children would drink as this affected the appellant’s market of adolescent and adult consumers. Further, the actor’s apparent embarrassment in finding out that the sweet drink is what he had initially claimed to like also indicates that being fond of the appellant’s drink is something to be ashamed of. It is because of this negative portrayal of the competitor that the adverts were not passed off as mere puffing and disparagement was held.

With regards to the second issue, the Court ruled that the nature of both the phrase and the globe had to be deduced from the manner in which they are used. By this, both are trademarks of the appellant and infringement, if any, has to be measured accordingly. Here the Court ruled that there was no infringement as the respondents had not used either of these marks in the course of their trade and, in that, were not in contravention with section 29(1) of the Trade Marks Act.
With regards to the final issue, the Court applied the test laid down in R.G. Anand v. Deluxe Film and found that apart from minor embellishments and changes, the essence of both the adverts was the same. Hence, the respondents had violated the copyright of the appellants.
Therefore, the court granted the injunction with regards to the publication and screening of this advertisement.

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