Delhi High Court ruled that global goodwill is not enough for trademark protection in India. VIP Industries lost rights over ‘Carlton’ for luggage due to lack of Indian goodwill.
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NEW DELHI: The Delhi High Court gave an important decision on trademark law in India. It said that if a company wants protection under “passing off” action, it must prove that it has goodwill in India, especially for the specific product category it is selling.
Just having a global reputation is not enough unless there is proof of goodwill and reputation inside India.
A Division Bench of Justices C Hari Shankar and Ajay Digpaul made this clear while deciding a case between Carlton Shoes Limited (CSL) and VIP Industries Ltd.
The Court said:
“Worldwide goodwill is irrelevant unless accompanied by evidence of territorial goodwill and reputation.”
The judges passed this decision while upholding an interim injunction (temporary ban) that stopped VIP Industries from using the name ‘CARLTON’ for travel bags. VIP had claimed it got trademark rights through a UK company and had a strong international reputation. But the Court rejected this argument.
“The existence of goodwill and reputation has to be shown to exist in India and worldwide or global goodwill and reputation, sans any evidence of territorial goodwill and reputation, will be insufficient to succeed in a claim of passing off,”
-the Court made it clear.
The fight started between CSL, which registered the “Carlton” brand in India in 1994 for footwear, and VIP, which bought international rights of “Carlton” in 2004 and used it for luggage between 2004–2006.
Both CSL and VIP had legal rights over the “Carlton” trademark in Class 18, but since both had registrations, neither could use the regular trademark infringement law under Section 28(3) of the Trade Marks Act, 1999. So, the matter had to be decided under common law principles of passing off.
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In 2019, VIP sent a legal notice to CSL saying CSL’s plan to expand into luggage was a misuse of VIP’s goodwill. In reply, CSL filed a lawsuit for a permanent injunction to stop VIP from using “Carlton”. VIP also filed a counter-case.
The single-judge bench gave an interim order in favor of CSL and stopped VIP from selling Carlton-branded luggage in India. VIP challenged this decision in the Division Bench.
The Court ruled that VIP could not prove that Carlton had goodwill in India before CSL’s use.
The Court explained:
“Mere priority of user in India may not be sufficient to sustain a claim of passing off unless the plaintiff ascertaining the claim is able to establish that such prior user has resulted in accumulation of goodwill and reputation in the mark that it seeks to assert.”
The Court also referred to the Supreme Court case Toyota Jidosha Kabushiki Kaisha v Prius Auto Industries Ltd.
It said VIP’s old promotional material from the 1980s–1990s had no proof that it was circulated in India. VIP’s sales invoices only started from 2006 and did not even use the Carlton brand name.
It became clear that VIP’s first documented sale in India came after CSL had already been using the name since 1994. So, VIP’s claim based on international use was weak.
The Court also added that in trademark law, goodwill is linked to the name or mark itself, not just to a product category:
“Though, in every case, the name or mark would undoubtedly be used for providing goods are rendering services, the goodwill has to reside in the name or mark per se,”
-the Court held.
VIP argued that since CSL used “Carlton” for shoes, they should not stop VIP from using it for bags. But the Court rejected that, saying:
“Goodwill either exists or it does not exist.”
There is no partial goodwill or goodwill divided by category.
CSL proved its Indian goodwill with documents from over 20 years—including sales invoices from 2003–2005, revenue reports from 1993–2018, VAT registrations, and media mentions.
The Court observed:
“Carlton, on the other hand, is ‘first in the Indian market’ in respect of bags and allied goods falling under class 18 sold under the trademark CARLTON,”
-based on the records submitted.
CSL also showed its retail presence in 24 locations and shared customer complaints from 2016 which proved there was confusion between CSL and VIP products.
After reviewing all the facts, the Court dismissed VIP’s appeal and upheld the interim injunction. Now, VIP cannot use the ‘Carlton’ brand for selling bags in India.
APPEARANCES-
VIP: Senior Advocate Akhil Sibal with advocates Nishad Nadkarni, Ankur Sangal, Ankit Arvind, Aasif Navodia, Khushboo Jhunjhunwala, Shaurya Pandey, Rakshita Singh and Ridhie Bajaj from Khaitan & Co.
Carlton: Senior Advocate Sandeep Sethi and advocates Peeyoosh Kalra, CA Brijesh, Ishith Arora, Sumer Dev Seth and Simranjot Kaur.
CASE TITLE:
VIP vs Carlton
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