Microsoft Corporation & Anr v. Mr. Jayesh & Anr

RAJIV SAHAI ENDLAW, J FEBRUARY 21, 2014 'AG'

IN THE HIGH COURT OF DELHI AT NEW DELHI % Date of decision: 21st February, 2014. + CS(OS) 1067/2007 MICROSOFT CORPORATION & ANR .....Plaintiffs Through: Ms. Jaya Negi, Advocate. Versus JAYESH & ANR ..... Defendants Through: None CORAM: HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW 1. The right of the plaintiffs to restrain the defendants from selling or distributing unauthorized importations of the plaintiffs' XBOX gaming consoles, within the meaning of Section 30(4) of The Trade Marks Act, 1999, is the question for adjudication in the present case. 2. The case of the plaintiffs as laid out in the plaint is: I. that the plaintiff No. 1 Microsoft Corporation is a company organized and existing under the laws of the State of Washington, USA and is the developer/owner of the XBOX gaming console and XBOX games; II. that the plaintiff No. 2 Microsoft Corporation India Private Limited is the wholly owned marketing subsidiary of the plaintiff No. 1 having its office at Nehru Place, Delhi and provides marketing and promotion, anti-piracy awareness campaigns and actions, and channel development support to the plaintiff No. 1; III. that as a result of widespread business activities of the plaintiffs world over and in India and the roaring success of its products, the consumers and members of trade in India are well familiarized with the plaintiffs' trade mark/trade name Microsoft and trade mark XBOX, and as such the aforesaid trade marks are recognized and identified as the source indicator of the goods, services and business of the plaintiffs alone; IV. that the plaintiffs are also the registered proprietors of the aforesaid trade marks in various jurisdictions of the world and their trade marks have acquired the status of well-known and famous trade marks; V. that the plaintiffs have also registered the trade marks Microsoft and XBOX ('X' design) in India with respect to software, electronic goods and components; VI. that the plaintiff No. 1 is also the owner of copyrights in the XBOX DVD games by virtue of the same being a 'computer program' and 'literary work' under the Copyright Act, 1957; VII. that the XBOX gaming consoles are packaged and earmarked to be exclusively sold in various countries under strict warranty guidelines and policies for the benefit of the consumers; VIII. that an 'unauthorized import' (also known as a Gray Market Product) is a genuine, non-counterfeit product which escapes the authorized channel of shipment, distribution and sales of the manufacturer/IP Owner and reaches another country/territory for which it was not earmarked or authorized to be sold or distributed; IX. that such unauthorized imports being goods sold in a market where they are not authorized to be sold, entail repercussions for: (a) the seller – since the unauthorized trader uses his own distribution network, the goods are susceptible to damage and impairment during transport, handling and storage, (b) the consumer – since they are unable to avail of any warranties or after-sales support on such goods, and, (c) the Government – which loses taxes and custom collection on account of such goods being often smuggled or under-invoiced at entry ports; X. that though the doctrine of 'exhaustion of rights' embodied in Section 30(3) of the Trade Marks Act postulates that the legal monopoly of the intellectual property rights owner is confined to the first sale only and thereafter his rights are exhausted qua subsequent dealings of the same product, Section 30(4) of the Act nevertheless permits the proprietor to oppose further dealings in the goods, in particular, "where the condition of the goods has been changed or impaired" after they have been put on the market; XI. that plaintiffs in April 2007 received information that the defendant No. 1 Mr. Jayesh as sole proprietor of defendant No. 2 M/s Stop Shop is infringing the plaintiffs' trade mark rights by carrying on business of selling gray market / unauthorized importations of the XBOX gaming consoles; XI