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Written by Aashlin Maria Alex, Legal intern and verified by Sunil Jose, Managing Attorney, Suns Legal.
Yahoo Inc. v. Omkar Cottage Industries, 2024 SCC OnLine Del 7404
In a recent case filed by Yahoo! Inc. (“plaintiff”) against Omkar Cottage Industries (“defendant”) for using the name YAAHOO for their mouth freshener, the Delhi High Court passed an order of permanent injunction against the defendant, restraining them from using the plaintiff’s trademark. The case illustrates the legal protection of well-known trademarks and how wrongdoers are made to pay punitive damages for evading legal proceedings.
Yahoo! Inc. is an American multinational technology company with a significant presence in India. They provide technological services and have collaborated with sports organizations and food companies through licensing and co-branding their trademark for t-shirts, jackets, caps, baseball, food seasonings, sauces, and more. The plaintiff has invested in promotional activities through advertisements and sponsorship programs. In Yahoo Inc v Akash Arora (1999) 19 PTC 201 Del, the Delhi High Court recognized the mark as a well-known trademark. Additionally, the Indian Trademark Registry has included the trademark in its list of well-known trademarks.
In September 2022, Yahoo discovered Omkar Cottage Industries’ product “YAAHOO! Mouth Freshner” on the Indiamart platform. This prompted Yahoo to conduct a private investigation, which confirmed that Omkar Cottage Industries was producing mouth fresheners and marketing the product through various e-commerce platforms, including Indiamart and Justdial, under the names “Yaahoo mouth freshner,” “Yaahoo khajoor mouth freshner,” and “Yaahoo saunf mouth freshner.” Yahoo then sought legal remedy, arguing that using a nearly identical trademark was a deliberate attempt to capitalize on Yahoo’s established reputation.
The plaintiff has put forward the following contentions:
Trademark Infringement: Yahoo argued that Omkar Cottage Industries’ use of “YAAHOO!” for mouth fresheners infringed its registered and well-known trademark. Yahoo provided evidence that Omkar Cottage Industries had copied not only the name but also the stylization of the “YAHOO!” trademark, causing an intentional imitation of the well-known trademark. They claimed that this similarity created a likelihood of confusion and dilution of Yahoo’s distinctive mark.
Unfair Advantage and Confusion Among Consumers: Yahoo asserted that they were involved in the food market through co-branding, and the defendant’s actions would mislead customers by imitating an association with the “YAHOO!” brand. Ordinary consumers might believe such an association exists, giving the defendants an unfair market advantage due to the well-known features and goodwill that Yahoo has enjoyed over decades. Yahoo argued that this usage constituted passing off and unfair competition.
Transborder Reputation: Yahoo argued that its trademark enjoys a well-known status globally, demonstrated by the broad spectrum of products and services under the ‘YAHOO!’ brand, including clothing, food products, and sports goods. The ‘YAHOO!’ trademark is extensively used in India, with localized services and significant investments in brand promotion and publicity, further solidifying its transborder reputation.
Yahoo’s Vigilant Enforcement of Its Trademark: Yahoo provided examples of previous legal actions taken globally to protect its trademark, establishing that the company has a history of actively defending its intellectual property. This includes YAHOO! INC v. Sanjay Patel, 2016 SCC OnLine Del 4988, Yahoo Inc v. Mr. Rinshad Rinu and Ors, 2017 SCC OnLine Del 8949, and Yahoo Inc v. Akash Arora, (1999) 19 PTC 201 Del.
Refusal of Trademark Registration: Yahoo stated that the defendants had applied for registration of the mark “YAAHOO!” in 2013, but the Indian Trademark Registry refused the application, citing similarity with Yahoo’s trademark as a conflict. Yahoo argued that the continued use of the mark by Omkar Cottage Industries, despite the refusal, demonstrated a disregard for the law and the well-known status of Yahoo’s trademark. Thus, they prayed for a permanent injunction and damages against infringement and passing off by the defendants.
Omkar Cottage Industries did not appear in court to defend against the allegations, leading to ex-parte proceedings where only Yahoo’s arguments and evidence were considered. Consequently, the court issued an interim order of permanent injunction against the defendants.
In this case, the court referred to judicial precedents and the evidence presented by Yahoo Inc., demonstrating the brand’s recognition among the general public. It acknowledged the well-known status and public reputation of the Yahoo! trademark.
The court agreed that the defendants had infringed upon Yahoo’s trademark by using “YAAHOO!”, which was likely to confuse or deceive the public. It found that Omkar Cottage Industries’ use of the mark constituted trademark infringement and passing off, as they took unfair advantage of the plaintiff’s reputation to commercialize their product.
The court criticized the defendants for intentionally deceiving the public for their benefit. It stated that, given the plaintiff’s mark is well-known globally, any prudent person would abstain from imitating the mark for their product. Here, the defendants blatantly chose a similar name for their product.
Since Omkar Cottage Industries did not appear before the court in any of the proceedings, the court inferred that the company deliberately avoided the proceedings to escape the legal consequences of its actions. The court criticized this behaviour, noting that allowing a party to evade proceedings would set a poor precedent in the judicial system and undermine the rights of plaintiffs who actively seek legal remedy.
The court compared this case to instances where defendants actively defend their case. Omkar Cottage Industries chose to disregard the proceedings to avoid legal liability. This behaviour could encourage other defendants to avoid court, which would undermine the rules of justice. To address this, the court referred to judicial precedents such as Inter Ikea Systems BV v. Ikea Furniture Pvt. Ltd. [CS(OS) 523/2008] and Times Incorporated v. Lokesh Srivastava 2005(30) PTC3(DEL). These rulings highlighted the need to grant damages in ex-parte cases to prevent defendants from evading responsibility. They state that compensatory and punitive damages must be awarded to show that evading court proceedings does not absolve one from financial and legal responsibilities. The court emphasized that the judicial process must not be taken lightly by any party.
The judgment reinforced that the legal framework has effective mechanisms to address non-compliance and that awarding damages in ex-parte cases protects both the plaintiff’s interests and the credibility of the courts.
Finally, the court found in favour of the plaintiff, Yahoo Inc., and awarded compensatory damages of 27 lakhs, based on evidence and the estimated losses presented by Yahoo. Additionally, the court ordered the defendants to pay litigation costs of Rs 8,92,451 to the plaintiff.
Conclusion
This is a landmark case where the honorable court once again prevented trademark infringers from taking unfair advantage by creating confusion in the minds of consumers. Additionally, the court made them pay substantial damages, thus upholding the rights of the plaintiffs who have been using the trademark in the market. The judgment set an example by curbing the evasion of legal liability through non-appearance by the wrongdoer. By awarding both compensatory damages and litigation costs, the court clearly communicated that infringing parties would face severe financial repercussions even if they refused to engage with the court. The judgment reinforced that the legal and judicial frameworks have effective mechanisms to address non-compliance and that awarding damages in ex-parte cases protects both the plaintiff’s interests and the credibility of the courts.