Delhi High Court Upholds Injunction In Favour Of Carlton | Prior User In India And Restrains VIP From Using Carlton Mark For Bags And Luggage | Goodwill Must Exist Within Indian Territory To Sustain Passing Off Claim
Sanchayita Lahkar
The High Court of Delhi Division Bench of Justice C. Hari Shankar and Justice Ajay Digpaul upheld an injunction restraining VIP Industries Ltd. from using the trademark “CARLTON” for bags, luggage, and allied goods falling under Class 18. The court directed that VIP Industries Ltd., its assigns, affiliates, licensees, franchisees, partners, representatives, distributors, employees, agents, and all other persons are prohibited from marketing, selling, or offering for sale products under the CARLTON trademarks, whether as a word mark, device mark, or any identical or deceptively similar variants. The Bench further directed Carlton Shoes Ltd. to maintain accounts of manufacture and sales of the products under the said trademarks and file the same on affidavit on a half-yearly basis before the court. The appeals filed by VIP Industries Ltd. challenging the orders of the learned Single Judge were dismissed in their entirety.
These appeals arose from a common judgment dated 17 July 2023 passed by the learned Single Judge of the High Court of Delhi in two cross suits filed by Carlton Shoes Ltd. (CSL) and VIP Industries Ltd. (VIP) against each other seeking permanent injunctions over the use of the trademark “CARLTON” in respect of goods under Class 18.
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Carlton Shoes Ltd. was incorporated in the United Kingdom in 1992 by Baljit Virk, who adopted the mark CARLTON based on his son’s name, Carljit Virk. In 1993, Carlton Overseas Pvt. Ltd. was incorporated in India. The trademark CARLTON was registered in India with effect from 6 May 1994 in Class 18 covering leather and imitations of leather, animal skins hides, trunks, travelling bags, umbrellas, parasols, walking sticks, whips, harness, and saddlery. CSL primarily used the CARLTON mark for shoes and footwear, although its registration covered bags.
VIP Industries Ltd. claimed proprietorial rights over the CARLTON mark by virtue of an Assignment Agreement dated 25 March 2004 executed between Carlton International PLC (CIPLC) and VIP. CIPLC, originally Raxvale Ltd., had adopted the mark DIPLOMAT CARLTON in 1980 and CARLTON in 1986. On 4 December 1989, Raxvale Ltd. changed its name to Carlton International PLC. CIPLC had registered the CARLTON mark in India under Class 18 with effect from 26 July 1995 for umbrellas, parasols, articles of luggage, briefcases, attache cases, suitcases, bags for campers and climbers, beach bags, game bags, handbags, rucksacks, school bags, school satchels, shopping bags, haversacks, wallets, purses, pouches, sling bags for carrying infants, tool bags, travelling bags, trunks, vanity cases, and articles of leather and imitation leather. VIP obtained its own registration for the CARLTON mark under Class 18 with effect from 21 April 2006 covering bags, suitcases, briefcases, carry-ons, and travelling bags.
On 10 October 2019, VIP issued a legal notice to CSL stating that it had learnt CSL was planning to use the CARLTON mark for bags and similar items. VIP asserted that it had been using the CARLTON mark for bags, suitcases, and allied goods since 2006 and claimed that CSL’s proposed use would amount to piggybacking on VIP’s goodwill and reputation in the said mark for bags and luggage. VIP called upon CSL to cease and desist from using the mark CARLTON in respect of goods covered under Class 18, particularly bags of any sort.
CSL responded to the notice on 16 October 2019 and 25 November 2019 stating that it was the registered proprietor of the CARLTON trademark in Class 18 since 6 May 1994, prior to VIP’s registrations and claimed user. CSL maintained that its intended use did not infringe VIP’s rights.
Subsequently, on 21 December 2019, CSL instituted CS (Comm) 730/2019 before the High Court of Delhi seeking a decree of permanent injunction restraining VIP from using the CARLTON mark in respect of any goods whatsoever. CSL pleaded that VIP’s use of the mark infringed CSL’s registered rights and amounted to passing off.
VIP filed CS (Comm) 52/2020 against CSL seeking a decree of permanent injunction restraining CSL from using the CARLTON mark for bags, handbags, travel luggage, and other similar goods, principally travel luggage. VIP alleged that CSL was seeking to capitalise on VIP’s goodwill in the CARLTON mark in relation to bags and luggage and asserted that CSL had never used the mark for bags despite registration coverage.
Both parties filed interim injunction applications. CSL filed IA 18443/2019 in CS (Comm) 730/2019 seeking to restrain VIP from using the CARLTON mark. VIP filed IA 1369/2020 in CS (Comm) 52/2020 seeking to restrain CSL from using the mark for bags, luggage, and similar goods.
In its suit, CSL contended that the CARLTON mark was adopted in the UK in 1992 and registered in India in 1994 in Class 18. It stated that the mark had been used in India since 1994, primarily for footwear. CSL placed on record invoices of sales dating from 2003 onwards from shops in Punjab, Haryana, and Rajasthan, and a list of 24 outlets across Delhi, Gurgaon, Noida, and Chandigarh with some sales invoices from 2003 to 2005. CSL also filed a certificate of sales figures and revenues under the mark CARLTON in India for the years 1993 to 2018, articles and advertisements in magazines and newspapers such as Cosmopolitan, Femina, Fashion Bloom, Apparel, Society, Outlook, The Tribune, The Pioneer, HT City, Business Standard, and The Hindu. Further, CSL submitted evidence of its presence on Indian e-commerce platforms like Myntra, Flipkart, and Amazon, master data of production under CARLTON marks from 2003 onwards, VAT registrations from 1993 onwards, and consumer complaints from 2016 onwards showing instances of confusion among consumers mistaking VIP’s products for Carlton’s products.
In its suit, VIP contended that it had used the CARLTON mark for luggage in India since 2004 or at least 2006. VIP filed promotional and advertisement materials, articles, sales invoices, price lists, and promotional brochures to support its claim. The earliest sales invoice placed on record by VIP was dated 11 August 2006, followed by invoices dated 26 October 2006, 31 October 2006, 29 January 2007, 30 January 2007, and subsequently from November 2012 onwards. VIP argued that goodwill for passing off must relate to the specific goods, and CSL had never used the CARLTON mark for bags, whereas VIP had over fifteen years of goodwill in luggage.
The learned Single Judge held that under Section 28(3) of the Trade Marks Act, 1999, where two parties are registered proprietors of identical or similar marks, neither can maintain an infringement action against the other, though each can sue third parties. Therefore, only the rival passing off claims required adjudication.
The Single Judge found that VIP failed to prove trans-border reputation or spillover of goodwill into India prior to 2004. It was held that CSL was the first in the Indian market with user dating back to 1993/1994, while VIP’s earliest proven use was from 2006 onwards. The court recorded that passing off requires existence of goodwill in India, misrepresentation, and damage, and CSL’s goodwill was demonstrated through its registration, sales invoices, promotional materials, presence in the market, and consumer confusion evidence. The Single Judge allowed CSL’s application, restraining VIP from using the CARLTON mark for bags and allied goods under Class 18, and dismissed VIP’s application seeking injunction against CSL.
VIP appealed, contending that it had priority of user for luggage since 2004 or at least 2006 and CSL never used the mark for bags. VIP further argued that handbags and purses are not allied or cognate to travel luggage and CSL’s evidence related primarily to footwear and leather goods. CSL opposed, asserting its priority of registration and user in India, and contended that goodwill must exist within India under the territoriality principle and trans-border reputation alone is insufficient. CSL submitted that VIP’s own Annual Reports showed that Carlton luggage was launched in November 2010 with a full collection rollout in April 2011.
The Division Bench observed that “the issue before us is therefore limited and no detailed allusion to facts would be necessary.” It recorded that the learned Single Judge had held that “as VIP and CSL have both registrations of the CARLTON mark in Class 18, neither can maintain an infringement action against the other, in view of Section 28(3) of the Trade Marks Act, 1999.”
The Single Judge found that “insofar as passing off is concerned, VIP had not been able to prove the existence of trans-border reputation of the CARLTON mark in India prior to 2004, when VIP commenced use of the CARLTON mark in India, so that the issue of passing off had to be decided on the basis of the goodwill and reputation of the respective marks of VIP and CSL after their use commenced in India,” and that “CSL, on the other hand, had proved the existence of goodwill of the CARLTON mark in India at least from 2003, which was prior to the commencement of use of the CARLTON mark by VIP in 2004.”
The Bench noted the Single Judge’s conclusion that “in the absence of proof of trans-border reputation of the CARLTON mark as used by VIP in India prior to 2004, priority of user in India of the CARLTON mark is of CSL” and that “CSL has provided enough material to establish existence of sufficient goodwill in India as would justify an action for passing off.”
Mr. Akhil Sibal, Senior Counsel for VIP, submitted that “goodwill has to be of the brand of the mark as used in respect of particular goods,” arguing that “even if CSL possess enviable goodwill for the CARLTON mark prior to 2004, it had never used the mark for bags,” while “VIP has admittedly been using the CARLTON mark for bags in India since 2004.” He argued that “the impugned judgment has resulted in a peculiar consequence. It has permitted CSL, who has no goodwill whatsoever for the CARLTON mark for travel luggage, to use the mark for travel luggage and has injuncted VIP, which has over two decades of goodwill for the CARLTON mark in respect of travel luggage, from further using the mark for travel luggage whatsoever,” and “even the gross illegality of such a consequence makes out a case for interference.”
Mr. Sibal further submitted that “handbags and purses could not be regarded as allied or cognate to travel luggage,” and even if they were presumed so, CSL had “not established the requisite goodwill in use by it of the CARLTON mark for ladies’ handbags or purses as is necessary to make out a case of passing off.” He pointed out that CSL averred in its plaint that it had sold “10,000 bags or accessories” over 27 years, amounting to “approximately 370 bags or accessories annually,” arguing that “such sale… could not be treated as representing the requisite goodwill.”
He submitted that “at the highest, CSL had been able to show prima facie prior user in India of the mark CARLTON only for footwear with miniscule use for handbags and purses,” and no priority for luggage. He argued that “to succeed in a case of passing off, based on prior use of the concerned mark for goods which were different from the goods in respect of which the defendant used the mark, the degree of goodwill which was required to be established by the plaintiff was much higher, and akin to the degree of goodwill envisaged by Section 29(4) of the Trade Marks Act.”
He submitted that “in as much as Raxvale was the first and prior adopter of the CARLTON mark worldwide, and VIP was the first and prior user of the CARLTON mark for travel luggage in India, it could not be said that there was any dishonest adoption by VIP,” and that “mere confusion in the market would be insufficient to justify injunction” as “any confusion, even if it existed, had to link itself to misrepresentation on the part of the defendant.”
He submitted CSL was “seeking to expand its business into the area of travel luggage to capitalise on VIP’s reputation” and that “CSL had sat back and allowed VIP to continue to use the mark for 15 years before seeking to capitalise on VIP’s reputation by itself venturing into the travel luggage segment,” amounting to a “dishonest attempt at taking advantage of the already established goodwill of VIP in the market.”
Mr. Sandeep Sethi, Senior Counsel for CSL, submitted that “CSL enjoyed, over VIP, priority both of registration and of use of the CARLTON mark,” being “registered proprietor of the CARLTON mark in Class 18 since 1994 and commercially exploiting the mark since 2003,” whereas VIP claimed user since 2004 with earliest invoice of 2006. He relied on VIP’s Annual Reports which stated “CARLTON has been introduced through soft launch in November 2010” and “complete collection of Carlton brand in India in April 2011,” arguing VIP’s claim of 2004 user was false.
Mr. Sethi submitted that CSL had filed Indian sale figures/revenues from 1993-2018 showing consistent growth, presence in 333 stores worldwide, operations across more than 30 online portals, and promotional articles including The Hindu stating “CARLTON LONDON has introduced Coordinated Bags and Shoes.”
He argued that “goodwill relates to the reputation of the business entity and may have nothing to do with either the goods manufactured or the services provided by the business,” and that “a case of passing off, in order to sustain, does not require establishment of reputation or goodwill of a great degree. The mere existence of reputation is sufficient.”
He submitted that “VIP has not chosen to challenge the finding” that no trans-border reputation of the CARLTON mark, as used by Raxvale or CIPLC, had been established, and that the Single Judge’s reliance on Toyota Jidosha Kabushiki Kaisha v Prius Auto Industries Ltd. was correct.
The Bench recorded the Single Judge’s holding that “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,” and “VIP has prima facie failed to establish spillover of trans-border reputation in India and/or prior user while Carlton is first in the Indian market and has shown formidable goodwill and reputation under the trademark CARLTON and its formative marks.”
The Division Bench concluded that “we do not find any submission which would serve to dent these findings of the learned Single Judge,” holding that “there is no factual or legal irregularity or illegality in the finding that, prior to 2004, the CARLTON mark, as used by VIP, did not have any reputation or goodwill in India,” and “the finding of CSL having proved the existence of goodwill and reputation of the CARLTON mark, as used by it for more than 13 years prior to the commencement of user of the CARLTON mark by VIP for travel luggage, therefore, does not brook interference.” It recorded that “balance of convenience lies in favour of CSL. CARLTON is the house mark of CSL and is the only mark used by it, while VIP has at least six other marks.”
The Division Bench directed that Carlton Shoes Ltd. shall be restrained from marketing, selling, or offering to sell bags and other allied goods falling in Class 18 under its trademarks CARLTON (word mark) and any other trademark identical or deceptively similar to CARLTON/CARLTON LONDON or any variants thereof, singularly or in conjunction with any other word, monogram, logo, or label, amounting to passing off. The court ordered that Carlton Shoes Ltd. shall maintain accounts of manufacture and sales of the impugned products under the marks CARLTON/CARLTON LONDON and file the same on affidavit on a half-yearly basis before this Court.
The Division Bench upheld the findings of the learned Single Judge, observing that there was no factual or legal irregularity or illegality in the conclusion that prior to 2004, the CARLTON mark as used by VIP did not have any reputation or goodwill in India. The court held that the finding of Carlton Shoes Ltd. having proved the existence of goodwill and reputation of the CARLTON mark as used by it for more than thirteen years prior to the commencement of user by VIP Industries Ltd. for travel luggage did not brook interference. It recorded that balance of convenience lay in favour of Carlton Shoes Ltd., noting that CARLTON is the house mark of Carlton Shoes Ltd. and is the only mark used by it, whereas VIP Industries Ltd. has at least six other marks. Accordingly, the Division Bench dismissed both appeals filed by VIP Industries Ltd.
Advocates Representing the Parties:
For the Appellant: Mr Akhil Sibal, Sr. Adv. with Mr. Nishad Nadkarni, Mr. Ankur Sangal, Mr. Ankit Arvind, Mr. Aasif Navodia, Ms. Khushboo Jhunjhunwala, Mr. Shaurya Pandey, Ms. Rakshita Singh and Ms. Ridhie Baja, Advs.
For the Respondents: Mr. Sandeep Sethi, Sr. Adv. with Mr. Peeyoosh Kalra, Mr. C.A. Brijesh, Mr. Ishith Arora, Mr. Sumer Dev Seth and Ms. Simranjot Kaur, Advs.
Case Title: VIP Industries Ltd. v. Carlton Shoes Ltd. and connected matter
Neutral Citation: 2025: DHC:5042-DB
Case Numbers: FAO (OS) (Comm) 151/2023 and FAO (OS) (Comm) 152/2023
Bench: Justice C. Hari Shankar and Justice Ajay Digpaul
