Delhi High Court: While dealing with a suit for infringement of trademarks, copyrights and passing off, preferred by Yves Saint Laurent (‘YSL’), the bench of Sanjeev Narula, J., restrained defendant no.1 from using YSL marks or any other mark alike, till the pendency of the suit.
Controversy
YSL is a multinational global luxury group having stores across the world including Delhi. It entered into a Franchise Agreement in 2019 with Beverly Luxury Brands Limited (‘Beverly’) / defendant no. 2 who was allowed to operate under the “Saint Laurent” Boutique (‘Boutique’) at DLF's The Chanakya Mall, New Delhi. Subsequently, the agreement was terminated, however, the Boutique was still operational under YSL's brand name which was under the occupation of Brompton Lifestyle Brands Private Limited (‘Brompton’) / defendant no. 1. It was the contention of Brompton that it had heavily invested in the Boutique as a ‘sub-franchise’ under Beverly and accentuated the fact that YSL, all throughout was aware and actively consented to its involvement in the operation of the Boutique. Accordingly, Brompton claimed to be an ‘authorised operator’ of the Boutique which was strongly refuted by YSL.
Issue
Whether the asserted rights of Brompton to operate the Boutique and use of YSL marks as an ‘authorised operator’ maintainable?
Court's Analysis and Findings
The Court noted an irrefutable fact that the Boutique in question was set up under the Franchise Agreement to which only YSL and Beverly were parties and Brompton was clearly not a signatory to the said agreement. Yet it continued to operate as an authorised store by prominently displaying YSL marks at the entrance of the Boutique.
The Court placing reliance on the rights and obligations of the parties stipulated in the Franchise Agreement, stated that YSL had granted Beverly, a non-transferable right to use its ‘Trademarks’ and ‘Concepts’ for promotion and sale at Boutique of ‘Saint Laurent Products’. The said Franchise Agreement subsequently stood terminated, a fact not in controversy and clearly admitted by Brompton as well as Beverly.
While referring to the ‘Supply Agreement’ executed between Beverly and Brompton, the Court noted that the said agreement does not unconditionally transfer or convey any right, title or interest to Brompton. The rights conveyed were restricted and circumscribed with Beverly's rights. Brompton fully aware of its limitations, willingly and knowingly entered into the Supply Agreement, agreeing to use YSL marks till such time the Franchise Agreement was in force. Thus, the license granted in favour of Brompton to use YSL marks, stood terminated, given the unconverted fact that the Franchise Agreement was terminated.
The Court observed that “The recitals and clauses of Supply Agreement make it abundantly clear that rights qua YSL marks in favour of Brompton, being limited as they are, stem from rights secured by Beverly under Franchise Agreement”. The Court was of the view that the Franchise Agreement granted limited rights only to Beverly to use the YSL marks and not to Brompton. In furtherance to this, the Court also stated that that the Franchise Agreement specifically prohibited transfer of franchise's rights, title or interest under the said agreement directly or to any other person or entity, in whole or in part, without the prior consent of YSL.
Therefore, the crux of Brompton's claim of being an ‘authorised operator’ as relying on Supply Agreement did not sustain, consequent to which no legal basis persisted to allow Brompton to use YSL marks.
Furthermore, the Court stated that Brompton's claim of YSL being aware of such operations of the Boutique was not corroborated by any documents on record. The Court observed that
“The written agreements on record – Franchise Agreement and Supply Agreement clearly and unambiguously set out rights and obligations of the parties. No other understanding as asserted by Brompton can be inferred or implied”. By the same token, the Court was of the view that neither Brompton nor Beverly obtained consent from YSL for grant of alleged ‘sub-franchise’ nor informed it about the execution of the Supply Agreement.
In addition to this, the Court stated that “since Brompton was well-aware that Beverly had no ability to grant any ‘sub-franchise/ sub-license’ without Plaintiff's prior written consent, which was also never obtained, in order to overcome this embargo, the arrangement was described as a “Supply Agreement” and not a ‘Sub-Franchise Agreement”
Concluding the judgment, the Court said that there was no written authorisation in Brompton's favour to use the YSL marks in relation to the Boutique, the goods offered from the Boutique and otherwise. Thus, the Court held that Brompton could not be considered as a “permitted user” of the YSL mark, and use thereof would amount to infringement under S. 29(1) of the Trademarks Act, 1958. The balance of convenience lay in favour of YSL, hence, till the disposal of suit restrained Brompton from using YSL marks and any mark similar to any of the YSL marks, including as (or as part of) a trademark, trading name, style, domain name, corporate name or as part of packing, artwork, get-up, layout (including on façade of the Boutique) or any other manner whatsoever; passing off its goods as those of the Plaintiff, including by using the YSL marks or any marks similar thereto, and product catalogue and other literary material relating to the products under the YSL marks.
[Yves Saint Laurent v. Brompton Lifestyle Brands Pvt. Ltd., Civil Suit (Commercial) 789 of 2022, decided on 13-12-2022]
Advocates who appeared in this case :
For the Petitioner- Senior Advocate Akhil Sibal;
Advocate Nirupam Lodha;
Advocate Shivangi Narang;
Advocate Gautam Wadhwa;
Advocate Asavari Jain;
Advocate Sanya Kumar;
For the Defendants- Senior Advocate Sandeep Sethi;
Advocate Nikhil Kohli;
Advocate Gaurav Gupta;
Advocate Akshaya Ganpath.