Alfred Henry Lionel Leach, C.J.
1. The suit out of which this appealarises was instituted by the appellants on the original side of this Court for a declaration that they were entitled exclusively to the use of a certain trade mark and for a perpetual injunction restraining the respondents from using a similar mark. The defence was threefold. In the first place it was said that the respondents had the right to use the mark complained by reason of concurrent user. In the second place it was said that the appellants had in any event lost the right to exclusive user by reason of their acquiescence in the respondents using the marks now complained of. The third plea was that the appellants had abandoned any rights they might have had in the mark. The learned trial Judge (Gentle, J.) held that the use by the respondents of the mark complained of was an infringement of the rights of the appellants, but the appellants had acquiesced in the course of conduct pursued by the respondents and therefore they were not entitled to relief. On this ground he dismissed the suit but without costs. The appellants challenge the finding of the learned Judge that they acquiesced in the use of the mark by the respondents and the respondents support the judgment on the grounds advanced by them at the trial. They further contend that the learned Judge should have allowed them their costs.
2. The appellants are piecegoods merchants carrying on business in Bangalore and the respondents are piecegoods merchants carrying on business in Madras. The parties do not, however, confine their businesses to these places. The appellants deal in long cloth, shirtings and twill of Indian manufacture. Except for one shipment of goods in 1930 they have never dealt in piecegoods manufactured in England. The respondents do not deal in piecegoods of Indian manufacture, but import from England longcloth shirtings, twill and similar goods. The goods dealt in by the respondents are admittedly of superior quality to those dealt in by the appellants and command considerably higher prices. The learned Judge found as a fact that the business of the respondents caused no financial loss to the appellants and it is manifest that anybody who applied to the respondents for cloth would not get an inferior, but a superior article.
3. The mark of which the appellants claim the exclusive right of user consists of a figure of a baby sitting on four pieces of cloth and holding a rattle in the right hand. Above the figure is the word 'baby' in English, and at the sides the same word in Nagiri, Urdu, Kanarese and Tamil. The mark complained of consists of the figure of a baby kneeling with its hand upon a single piece of cloth, partly unrolled, and underneath are the words 'Baby Brand' in English, and the word 'Baby' in Nagiri, Urdu, Telugu and Tamil. It is conceded by the respondents, as it must be, that if the appellants are entitled to the exclusive use of their mark, the mark adopted by the respondent will constitute an infringement of the appellants' right. According to the plaint the appellants adopted their mark in the year 1927, but this has not been proved. Despite the allegations of acquiescence and abandonment advanced by the respondents no one from the appellants' firm has ventured to go into the witness box. Therefore it has not been proved that the appellants adopted the mark in 1927, but the respondents have admitted that the appellants used it in 1929 and. for the purpose of this case it may be taken that it was adopted by the appellants in that year. The respondents decided to use the mark which they now claim as theirs in the early part of 1930 and they used it on goods imported into this country in August of that year. It was conceded by the appellants in the course of the hearing of the appeal that in instructing their suppliers in England to mark their goods with the mark complained of the respondents acted in good faith and in entire ignorance that the appellants had already adopted the mark of a baby. Further, it was accepted that the respondents have never used their mark on piecegoods of Indian manufacture, but that they have confined it exclusively to goods manufactured in and imported from England.
4. In the course of his judgment the learned Judge has observed that it would appear at one time that piecegoods merchants in India were under the impression that if a trade mark were registered in England this would result in protection in India. That there was this impression is shown from the conduct of the parties in this case. On the 25th September, 1930 the respondents wrote to their suppliers in Manchester asking them to obtain the registration of the mark in suit as their own trade mark. The suppliers took steps to carry out their instructions, but it was discovered that other merchants were using a 'Baby' trade mark and that the appellants had themselves applied for registration in England of their mark. It was also ascertained that the appellants' application had not been granted and the mark claimed by them had been placed on the 'Refused list'. In a letter dated 5th February, 1931, the suppliers wrote to the respondents stating that by allowing their mark to go on the 'Refused list' no one could obtain registration of a similar mark and if they continued to use it for two or three years they might make an application for it to be put on the registered trade mark list, this privilege being given as the result of user of the mark. There was lengthy correspondence between the respondents and their suppliers with regard to registration in England and letters also passed between the respondents and a firm of trade mark agents from whom the respondents sought and obtained advice at the suggestion of their suppliers. The result of the advice was that the respondents decided not to proceed with their application for registration in England and not to expend money in advertising their claim to the mark in India, but to continue to use the mark on the goods imported by them. The appellants were confining the use of their mark to goods of Indian manufacture and in following the course which they did I am of the opinion that the respondents considered that they were acting within their rights.
5. On the 18th April 1931 the appellants legal adviser wrote to the respondents complaining of the infringement of their Trade mark. The respondents were called upon to refrain from using the mark, to withdraw all goods bearing the mark from the market and to pay Rs. 5,000/- by way of damages. On the 28th April, 1931, the legal adviser of the respondents replied to this letter and denied that the mark had in the minds of the public become associated with the appellants goods. It was asserted that the respondents were merely using the mark on English goods and that if a suit were filed it would be defended. The appellants took no further steps in the matter and the business of the respondents in the goods bearing the mark complained of continued to increase greatly year by year. From 14th August, 1930 to 31st December, 1935, the total value of the goods imported by the respondents bearing this mark amounted to nearly Rs. 17,000,00, or over 127,000. In addition to the capital which the respondents had to provide for the shipments they expended Rs. 20,000 in advertising and in other ways in popularising their goods. That the appellants knew of this cannot be doubted for a moment and they were content to allow the respondents to use the mark on the imported goods until the 27th July, 1935, when they filed the present suit. For the purpose of stamping the goods which the appellants imported from England in 1930 they sent a block to their suppliers. On the 30th March, 1931, a few, months after they had imported their one and only lot of English manufactured goods, they wrote to the suppliers to return to them the block, which clearly indicated their intention not to deal any more in goods of this class made in England.
6. At this stage it will be convenient to inquire how the doctrine of acquiescence has been applied in trade mark cases. For the appellants it has been contended that before this doctrine can be applied all the conditions stated by Fry, J., in Willmott v. Barber (1880) 15 Ch. D. 96 , must be complied with. That case did not relate to a trade mark, but to an agreement for the lease of land. After stating that a man is not to be deprived of his legal rights unless he has acted in such a way as would make it fraudulent for him to set up those rights, Fry, J., stated in the following words the elements or requisites necessary to constitute fraud of this description:
In the first place the plaintiff must have made a mistake as to his legal rights. Secondly, the plaintiff must have expended some money or must have done some act (not necessarily upon the defendant's land) on the faith of his mistaken belief. Thirdly, the defendant, the possessor of the legal right, must know of the existence of his own right which is inconsistent with the right claimed by the plaintiff. If he does not know of it he is in the same position as the plaintiff, and the doctrine of acquiescence is founded upon conduct with a knowledge of your legal rights. Fourthly,-the defendant, the possessor of the legal right, must know of the plaintiff's mistaken belief of his rights. If he does not, there is nothing which calls upon him to assert his own rights. Lastly, the defendant, the possessor of the Legal right, must have encouraged the plaintiff in his expenditure of money or in the other acts which he has done, either directly or by abstaining from asserting his legal right. Where all these elements exist, there is fraud of such a nature as will entitle the Court to restrain the possessor of the legal right from exercising it, but, in my judgment, nothing short of this will do.
7. These observations relate to a situation in which the plaintiff has in good faith expended money on another's land. They cannot apply in their entirety to an action for passing off where the defence is acquiescence. It is here not a case of the plaintiff being mistaken as to his legal rights and having expended money on the faith of his mistaken belief; the defendant is not the possessor of the legal right, and it cannot matter whether the defendant knows that the plaintiff has a mistaken belief as to his rights. To support a plea of acquiescence in a trade mark case it must be shown that the plaintiff has stood by for a substantial period and thus encouraged the defendant to expend money in building up a business associated with the mark. In Rowland v. Michell 13 R.P.C. 464, Romer, J., observed:
If the plaintiff really does stand by and allow a man to carry on business in the manner complained of, to acquire a reputation, and to expend money, he cannot then after a long lapse of time, turn round and say that the business ought to be stopped.
8. In the same case, but on appeal Lord Russell, C.J., said Rowland v. Michell 14 R.P.C. 37
Is the plaintiff disentitled to relief under that head by injunction because of acquiescence? Of course it is involved, in the consideration of that, that the plaintiff has a right against the defendant, and that the defendant has done him a wrong, and the question is whether the plaintiff has so acted as to disentitle him from asserting his right and from seeking redress from the wrong which has been done him. Cases may occasionally lay down principles, and so forth, which are a guide to the Court, but each case depends upon its own circumstances.
9. Dealing with the question of standing by in Codes v. Addis and Son 40 R.P.C. 133 , Eve, J., said:
For the purpose of determining this issue I must assume that the plaintiffs are traders who have started in this more or less small way in this country, and have been continuously carrying on this business. But I must assume also that they have not, during that, period, been adopting a sort of Rip Van Winkle policy of going to sleep and not watching what their rivals and competitors in the same line of business were doing. I accept the evidence of any gentleman who comes into the box and gives his evidence in a way which satisfies me that he is speaking the truth when he says that he individually did not know of the existence of a particular element or a particular factor in the goods marketed by his opponents. But the question is a wider question than that: Ought not he to have known : is he entitled to shut his eyes to everything that is going on around him, and then when his rivals have perhaps built a very important trade by the user of indicia which he might have prevented their using had he moved in time, come to the Court and say : 'Now stop them from doing it further, because a moment of time has arrived when I have awakened to the fact that this is calculated to infringe my rights'. Certainly not. He is bound, like everybody else who wishes to stop that which he says is an invasion of his rights, to adopt a position of aggression at once, and to insist, as soon as the matter is brought to his attention, or as soon as, in the opinion of the Court, it ought to have come to his attention, to take steps to prevent its continuance; it would be an insufferable injustice were the Court to allow a man to lie by while his competitors are building up an important industry and then to come forward, so soon as the importance of the industry has been brought home to his mind, and Endeavour to take from them that of which they had legitimately made use; every day which they used it satisfying them more and more that there was no one who either could or would complain of their so doing. The position might be altogether altered had the user of the factor or the element in question been of a secretive or surreptitious nature; but when a man is Openly using, as part of his business, names and phrases, or other elements, which persons in the same trade would be entitled, if they took steps, to stop him from using, he gets in time a right to sue them which prevents those who could have stopped him at one time from asserting at a later stage their right to an injunction.
10. In McCaw Stevenson & Orr Ltd. v. Lee Bros. 23 R.P.C. 1, acquiescence for four years was held to be sufficient to preclude the plaintiff from succeeding. In 1897 the plaintiffs in that case registered the word 'Glacier' as a trade mark in respect of transparent paper as a substitute for stained glass. As the result of user the word had become identified with the plaintiffs' goods. Irr 1900 the defendants commenced to sell similar goods under the name 'Glazine'. In 1905 the plaintiffs commenced an action for infringement. The defendants denied that the use of the word 'Glazine' was calculated to deceive and also pleaded acquiescence. A director of the plaintiff company admitted that he had known of the use of the word 'Glazine' by the defendants for four years - he would not say it was not five years. It was held that the plaintiffs failed on the merits and by reason of their delay in bringing the action.
11. Delay simpliciter maybe no defence to a suit for infringement of a trade mark, but the decisions to which I have referred to clearly indicate that where a trader allows a rival trader to expend money over a considerable period in the building up of a business with the aid of a mark similar to his own he will not be allowed to stop his rival's business. If he were permitted to do so great loss would be caused not only to the rival trader but to those who depend on his business for their livelihood. A village may develop into a large town as the result of the building up of a business and most of the inhabitants may be dependent on the business. No hard and fast rule can be Laid down for deciding when a person has, as the result of inaction, lost the right of stopping another using his mark As pointed out in Rowland v. Michell 14 R.P.C. 37 , each case must depend on its own circumstances, but obviously a person cannot be allowed to stand by indefinitely without suffering the consequence.
12. I consider that in this case there is ample material to support the finding that the appellants have lost their right of action against the respondents by reason of their acquiescence in the respondents use of the mark complained of. During a period of four years the respondents built up a very large business and it has not been suggested, indeed it would be idle to do so, that the appellants did not know of all that was going on. In addition to the capital sunk in their business the respondents spent during this period Rs. 20,000 in popularizing the mark. There is no question of the respondents having the intention to steal the appellants' trade. They were dealing in a better class of goods and as I have already stated it was admitted by the appellants in this Court that the respondents adopted the 'Baby' mark in ignorance of the fact that the appellants were using it.
13. On the 27th August, 1934, a Madras piecegoods merchant named K.R. Narayana Ayyar wrote to the appellants stating that he desired to use the 'Baby' mark on piecegoods and asked whether they had any objection to this course. It was pointed out to the appellants that the respondents were using this mark on their goods and it was suggested that he should be allowed the same privilege. The letter concluded,
If, however, you have any objection to my using 'Baby' brand on my goods, kindly let me know of same immediately on receipt of this letter and also let me know as to the reason for your having allowed Messrs. Alathur Abboy Chetty and Company, Madras, to use 'Baby' brand. I have addressed this letter to you because I understand that you are the prior user of 'Baby' brand and not Messrs. Alathur Abboy Chetty and Company.
14. On the 4th September, 1934, the appellants replied as follows:
You should know that we have long registered our 'Baby' trade mark and running in all the markets. Any colourable imitation of our marks will make you liable under law for penalty for 'infringement of trade marks' which kindly note.
15. No reference was made in this letter to the fact that the respondents had been using the mark. K.R. Narayana Aiyar wrote again the next day to the appellants as no reference was made to the position of the respondents in the appellants' reply. In this letter he said:
As stated in my letter of the 27th ultimo Messrs. Alathur Abboy Chetty and Company, Madras, have been using 'Baby' brand and I am very much surprised to see that since you say that you have long registered your 'Baby' trade mark, they, the said Messrs. Alathur Abboy Chetty and Company, Madras also should be using 'Baby' brand. How is this? I am advised that any trade mark used by more than one is a common property, to say plainly, it is not the exclusive property of any one, and can therefore be used by others also. Having regard to the fact, that 'Baby' brand is being used by you and also by Messrs. Alathur Abboy Chetty and Company, Madras, I have no hesitation in saying that the said 'Baby' brand is a common property and can therefore be used by me and others also. If you alone had been using 'Baby' brand and not anybody else, then it is different matter altogether, but now there is also another person using the 'Baby' brand.
16. The reply to this letter was sent on the 13th September, 1934 and consisted of these words:
In reply to your letter dated the 10th instant, we wish to refer you to our letter No. 1973, dated the 4th September, 1934.
17. There is here a deliberate evasion of K.R. Narayana Aiyar's pointed question with regard to the respondents' user of the mark and the next day he wrote to the appellants a letter in which he said:
Unless you give me a satisfactory reply to the points raised in my letter of the 5th September, 1934, I am advised that you are not the exclusive owner of the 'Baby' brand, because it is also being used by another party Messrs. Alathur Abboy Chetty and Company, and you have therefore no right to prevent me or anybody else from using 'Baby' brand on piecegoods.
18. To this letter no reply at all was sent and the present suit was not launched till some ten months later. Obviously the appellants were unable to give an effective reply to these pointed questions because they knew that the respondents had built up a very large business by the use of this mark.
19. No one from the appellants' firm has ventured to go into the witness box to explain why they stood by for this long period and allowed the respondents to build up this large business associated with the 'Baby' mark. The appellants have also failed to give any indication of the size of their business. In these circumstances and bearing in mind that the respondents' goods are of better quality and higher in price there is ground for the contention raised by the learned Advocate for the respondents in argument that this suit has not been filed bona fide, but for the purpose of enabling the appellants to take advantage of successful efforts made by the respondents to popularize the mark. In my opinion, it would certainly involve grave injustice to the respondents if the appellants were allowed to step in at this late stage and stop a business which, has been built up openly as the result of the energy of the respondents and the expenditure by them of large sums of money.
20. As the appellants' suit fails by reason of their acquiescence in the use of the mark by the respondents I agree with the learned Judge that it is unnecessary to decide whether the respondents' pleas of abandonment and user are well founded.
21. With regard to the memorandum of cross-objections I consider that the respondents should have their costs in the Court below. That they adopted the mark in ignorance of the fact that it was being used by the appellants is not disputed, and in answer to a question put by the Court, Mr. Nugent Grant, on behalf of the appellants, made it clear that the appellants were not suggesting that the respondents had continued to use this mark in order to seal the appellants' business. Where a plea of acquiescence or abandonment succeeds, especially where the defendant has taken the trade mark of another in ignorance and has used it in the mistaken belief, but sincerely entertained, that he is acting within the law it would be wrong to deprive him of his costs. I would dismiss the appeal with costs and allow the cross-objections with costs. There will be a certificate for two counsel in both Courts.
22. I agree.