This article is written by Yash Kapadia and Abhi Bansal is pursuing Law from OP Jindal Global University. This article analyses the case of Starbucks Corporation vs Sardarbuksh Coffee Co. 

Introduction

Starbucks Corporation, the global coffee giant, had filed a case against a homegrown company Sardarbuksh Coffee Co. alleging trademark infringement of its famous logo of the two-tailed mermaid. However, before discussing the case we shall at the outset, give a brief about trademark infringement.

What is trademark infringement?

When we speak of trademarks, some of the most famous ones we can relate to are Apple, Mcdonalds, Gucci, Coco-Cola, Nike (Just do it!). When we say these names we associate them with a definite combination of words and a logo. 

In layman terms, when an individual or an unauthorized person uses a trademark that is identical or even deceptively similar to an already registered mark, it is known as an infringement. Section 29 of the Trademark Act, 1999 provides a detailed overview of the same. As per Indian law, trademark infringement is a cognizable offence and criminal proceedings can be initiated against the infringers. Such enforcement mechanisms are one of the catalysts that boost the protection of trademarks in India and reduce the infringement and flouting of trademarks.

It is pertinent to note that as per Section 103 of the Trademark Act, 1999, the offence of trademark infringement is punishable with imprisonment for a term which shall not be less than six months but which may extend to three years and a fine which shall not be less than Rs. 50,000/- but may extend to Rs. 2,00,000/-.

In this article, we shall discuss how Starbucks, the massive multinational chain of coffeehouses and roaster reserves with an operative income of around $26.5 Billion, filed a trademark infringement suit against one small Indian company, Sardarbuksh Coffee Co. in the Hon’ble Delhi High Court seeking interim reliefs. 

Starbucks Corporation v. Sardarbuksh Coffee & Co. & Ors. 

Background

Starbucks Corporation filed its trademark in India long back in 2001 consisting of the famous word “Starbucks” along with a logo of a “crowned maiden with long hair”. 

Sardarbuksh on the flip side began its business in the year 2015. A private limited company in the name of “Sardar Buksh Private Limited” was incorporated and they had been operating Sardarbuksh Coffee Co. under it. 

It is pertinent to note here that both the parties offered the same goods and services and moreover Sardarbuksh’s logo depicted a man in a turban with a beard along with wavy lines towards the edges of the logo behind him and the company name embedded on the upper side of the circular logo (similar to how Starbucks logo is). 

In fact, in the year 2017, Starbucks sent a demand notice to Sardarbuksh asking them to change their logo as the same was deceptively similar to the Starbucks logo. Sardarbuksh complied with the said demand notice and modified its logo and started operating. 

Facts of the case

Be that as it may, Starbucks Corporation (hereinafter referred to as “Petitioner”) filed a suit [Starbucks Corporation v. Sardarbuksh Coffee & Co. & Ors., (2018)] against Sardarbuksh Coffee Co. (hereinafter referred to as “Defendant”) on August 1, 2018, before the Hon’ble Delhi High Court (hereinafter referred to as “the Court”), for copying their company name as well as their renowned logo which was too close to the Petitioner’s famous 2-tailed mermaid & made use of it illegally for the promotion of their products and scaling of their business.

The Defendant had already opened 5 coffee outlets in Delhi with a broad menu of coffee, shakes and snacks. It is pertinent to mention that the Petitioner had already penetrated into the Indian market after collaborating with Tata Group in 2012 currently having 125 outlets PAN India. 

The legal standpoint behind filing of this trademark infringement lawsuit was the “deceptively similar” analogy more particularly stated in Section 2(1)(h) which asserts “A mark shall be deemed to be deceptively similar to another mark if it so nearly resembles that other mark as to be likely to deceive or cause confusion” read along with Section 11(1)(b) which states that if there exists a similarity with an existing trademark along with the similarity of goods and services and there exists a confusion amongst the general public with an earlier trademark then it relatively becomes a ground for refusal of trademark registration. 

Issues and previous judicial dictums

The Hon’ble Delhi High Court was posed with the question “If there is any deceptive similarity of the Sardarbuksh trademark with the original Starbucks, phonetically or even visually?”

There are various judicial dictums wherein various courts have determined the deceptively similar analogy referred to above. These include the test of likelihood, goodwill and confusion. 

In the case of National Sewing Thread Co. Ltd. vs. James Chadwick and Bros, (1953), it was held by the Hon’ble Supreme Court that the dispute of the concept of deceptively similar can only be decided by putting yourself in the shoes of the purchaser who is considered to be a man with not abundant but only ordinary intelligence. If the identification and distinguishing of two brands cause confusion to the purchaser then it is absolutely right to say that they are deceptively similar.

In the case of M/S. Lakme Ltd. vs M/S. Subhash Trading And Others, 1996, the plaintiff herein as we all know sells cosmetic products under the Lakme trademark and the defendant used the LikeMe trademark for the same class of products. It was held that there was a strong similarity between the two words and that the words were also phonetically similar. Therefore, an injunction was granted as “in the mind of the buyer, there is every possibility of deception and confusion to be caused.

In the case of Mahendra and Mahendra Paper Mills Ltd. V. Mahindra and Mahindra Ltd. (2001), the Hon’ble Supreme Court ruled that, on the basis of phonetic similarity, the name “Mahendra & Mahendra” infringed the early trade name “Mahindra” which had already been in use for around five decades and had built a tremendous goodwill through it and had thus acquired a distinctive and secondary meaning thereby showcasing the test of goodwill being affected of a prior/original trademark through deceptive similarities of another brand.

How ‘deceptively similar’ back kicks Sadarbuksh?

Penalties come along when; domestic Companies use names of big brands in a funnier manner to promote their product. This time it is a coffee company, SardarBuksh, that sound deceptively similar to the very famous Starbucks. Started with a business from cart and now after opening five outlets throughout Delhi the brand SardarBuksh now have to pull it all back and change it to Sardarji-Buksh in order to make it distinctively separate from Starbucks as per an interim order of Delhi High Court.

The real issue behind the whole controversy is; whether trademark of Sardarbuksh is deceptively similar to Starbucks trademark phonetically or visually?

The analogy behind deceptively similar stems from Section 2(1)(h) read with Section 11 of the Trademarks Act, 1999 that states; when two marks are placed beside each other causes confusion or deceive the spectators it would be deceptively similar and hence cannot be registered.

As the Trademark Act do not set out fixed criteria for the concept of deceptive similarity, the plethora of judgments by Supreme Court and High Court does.  According to judgments several principles are to be considered for deciding the scope of deceptive similarity such as Principle of phonetic and visual similarity, rule of entirety, test of likelihood and confusion, goodwill etc. are some of the important tests. Also in the cases of Polaroid Corporation vs. Polarad Electronics Corporation 287 F.2d 492 (1961) and National Sewing Thread Co. Ltd. vs. James Chadwick and Bros AIR 1953 SC 357 it was held that the controversy of deceptively similar can only be decided by stepping in the shoes of purchaser, who is considered to be a man with ordinary intelligence. If the identification of two brands causes confusion to the purchaser then it would be right to say they are deceptively similar.

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Putting these tests on the image above it would make Sardarbaksh deceptively similar to Starbucks without any doubt. As Starbucks is a globally recognized trademark registered across borders compared to trademark Sardarbuksh dealing in similar products, it would be unfair on Starbucks if such trademarks are allowed.

Although in cases, where the business or products dealt under trademarks are distinct the Supreme Court seems to have no problem, such as in the case of  M/s Nandhini Delux v. M/s Karnataka Co-operative Milk Producers Federation Ltd. CIVIL APPEAL NO. 2943-2944 OF 2018 where due to difference in the variety of products traded and difference in visuals of both companies the Court opined trademarks ‘NANDINI and NANDHINI’ to be non-infringing.

As the registration of deceptively similar names are prohibited as per Section 11 of the Trademarks Act 1999. By looking at the name Starbucks and SardarBuksh it might sound a little bit different but not entirely, leaving a room for confusion. While deciding the issue related to ‘deceptively similar’, usage of names or logos, the Courts tend to delve deep to figure out the class of products dealt and the quantity of harm on the market of either company or unfair competition in the market. Although, figuratively looking at the opinions of Apex and High Courts stands clear that usage of such deceptively similar trademarks are prohibited and will be taken down if it causes confusion.

Leaving the legality of the trademarks aside and talking about the effect of such deceptively similar trademarks on the market would be an identical stance. Starbucks having a more global image compared to SardarBuksh would affect not only the image of Starbucks in India but also globally. Taking Pakistan as an example, there already exist Sattarbucks café with a different logo, poses a threat to Starbucks sale if it decides to start a business their. According to the sources the name of SattarBucks Café was changed on receiving a notice from Starbucks of an infringement. It would not be wrong to say that Sardarbuksh have entered in a economies of scale by sounding similar to Starbucks. As the company that started with a coffee on cart in 2015 now expects to open almost 20 outlets all over Delhi, it must have saved allot by branding its product familiar to a global brand.

Similar discussion happened in the recent past, about burgers, where Mr. Singh Burger King (domestic) and Burger Kind (Global brand) came across tables. Burger King brought a law suit against Mr. Singh Burger King being deceptively similar phonetically and visually. Mr. Singh Burger King by an order of Court had to change its name to Mr. Singh Food King. Well it would not be wrong to say that domestic entrepreneurs are honest concurrent user but when a global brand have registered their trademark prior to domestic user preferences will be given to the global brand. Also it cannot be denied also that several domestic entrepreneurs register their trademark similar to that of global brand to get market attention rapidly. Although, Starbucks first came in 2012 to India (Mumbai), Sardarbuksh entered the market in 2015 from Delhi (India) where more than 20 plus outlets already which would have got Sardarbuksh’s attention. Also looking at the circular logo and the writing style on Sardarbuksh products would stand similar to Starbucks to an ordinary person with sound mind.

As the products that will be served at Sardarbuksh and Starbucks belong to similar classes it would confuse the consumer as if Starbucks is trying to come up with another concept. The social media platform also takes hit over these issues and spread it across the globe rapidly resulting in injuring the prolonged repo of Starbucks. Also looking at the online platforms where both the products are sold such as Zomato, UberEats etc. the two branding are similar along with similar products. Starbucks might face a global loss, for such a tricky branding from domestic companies, as many people globally might take this as a business tactic to promote their products initially and when sued change it to something else.

Ultimately, the two companies have employed there best resources to get a winning deal but, it is tougher to convince the court that using deceptively similar trademarks would not effect the other companies market. Through an interim order the court opined in favor of Starbucks by making changes in SardarBuksh to Sardarji-Buksh for any future business.

Judgment 

The Court passed an interim order on 1st August 2018 that the Defendant would be permitted to carry on business in their twenty other outlets but under the trademark of “Sardarji-Bakhsh” along with a revised logo not being similar to that of the Plaintiff’s. Furthermore, the Court permitted the Defendant to operate his two stores which are under dispute under the same name till a final order. 

On the next date of hearing i.e. 27th September 2018, both parties to this suit handed over settlement terms and placed the same on record. Both the parties consented that if the mark “BAKHSH” is used by any third party then the Defendant would have the right to file a suit against that particular violator. 

Moreover, the Plaintiff also prayed for a refund of the court fees paid by it and the Court while citing Aya Singh Tirlok Singh Vs.Munshi Ram Atma Ram, (1968), laid reliance on the para which stated “It must, however, be clarified that it is not every excess payment of court-fee which must be refunded as a matter of course. Apart from the mandatory provisions, the Court, in order to exercise its inherent power, has to consider the facts and circumstances of each case and come to a judicial determination whether or not the cause of justice requires refund.”

Therefore, the Court directed the concerned Registry to issue a certificate authorizing to refund to the counsel of the Plaintiff half the amount of court fees that was paid. It is pertinent to note that the refund was passed in the name of the counsel as the Plaintiff was a multinational company based in the USA. 

Point of view/opinion

It is very vital for a small-time homegrown company in India to take a bird’s eye view of the repercussions they may face if they are trying to operate a business in an industry that is already dominated by a distinguished monolith organisation. The giant companies have abundant resources and manpower which is used to strong-arm the smaller companies from expanding. The small company should have a strong “Why” of doing business in that field and not only come with a malicious motive to use the goodwill of another company to make its way forward. All of this can be taken care of by hiring a team of lawyers who can safeguard all your interests and keep you mindful of any pebbles in the way to your company’s/ organisation’s success. 

In drawing things to a close, the correct method of resolving such trademark infringement issues is to independently study the design, keeping in mind the original registered trademark and to ascertain whether the design would create an impression in the mind of an ordinary customer that he was buying an article bearing the original registered trademark. It is to be made sure that the essential features of the original trademark are not to be found in that used by the new company/ organisation.

Conclusion

In connection with the present case, the marks being deceptively similar would have led to financial ramifications on the Plaintiff herein. Starbucks is a global giant of a brand having goodwill that has been accumulated over a substantially long period of years. It can be said or opined that the Defendant herein may have had the knowledge of the international repute that Starbucks has and further wanted to exploit that image to get recognition in the market within a significantly short period of time. If people less conversant with or people who could not afford the prices of Starbucks would flock towards the Defendant, there would be extensive loss of revenue to Starbucks and much more to ascertain. What can be concluded from this case in consonance with various other judicial dictums stated above is that there is no cast-iron rule to lay down a universally accepted test to determine the similarity between two marks. When the class of buyers is an educated and rich lot, the test to be applied is different from the one where the product would be purchased by the illiterate and poor. The test to be applied in a developing country (India in this case) may be different from the test in developed countries like the United States of America, England or Australia. 


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2 COMMENTS

  1. This Article is written by Abhi Bansal (Graduate of OP Jindal Global University) not in capacity of Legal Trainee at Nishith Desai Associates. Apologies for the inconvenience. There is no relation of Nishith Desai Associates with the Article above.

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