Intellectual Property

This judgment, delivered by Mr. Justice Muhammad Shafi Siddiqui of the High Court of Sindh at Karachi, is a landmark ruling on the interplay between customs law and trade mark protection in Pakistan. It is the first reported decision to clearly distinguish the applicability of SRO 768(I)/2014 from SRO 170(I)/2017 in the context of goods being exported from Pakistan, and to authoritatively interpret the word “use” in section 5(2) of the Trade Marks Ordinance, 2001 in an export context. It will be of particular interest to IP practitioners, customs authorities, and exporters.

Case Details

J U D G M E N T

Muhammad Shafi Siddiqui, J. — Appellant Muhammad Shah Kakar, through his son and being the proprietor of Muhammad Shah & Sons, has filed this statutory Miscellaneous Appeal under section 19 of the Intellectual Property Organisation Act, 2012, being aggrieved by an order passed by the Intellectual Property Tribunal of Sindh and Balochistan dated 01.04.2020.

Background Facts

The matter arose when, for the protection of a registered trade mark, IPR enforcement proceedings were initiated by customs officials designated under the applicable legislation. The proceedings were triggered by a legal notice dated 06.02.2020 claiming action against the alleged infringer of the trade mark “Tabiat”. Pursuant to that complaint and legal notice for IPR Enforcement, 20 consignments of rice bearing the trade mark “Tabiat” (hereinafter referred to as the “infringed goods”) were seized. These goods were being exported by M/s Hassan Corporation (Respondent No. 4) to UAE for their ultimate destination of Iran. At the time of lodging the complaint, the consignments were in the course of clearance at the Model Customs Collectorate (MCC) Exports, Customs House, Karachi.

This complaint was also forwarded to the Directorate for taking cognizance in the matter. The proceedings for determination of rights were initiated by the Directorate of IPR Enforcement (South), Customs House, Karachi, on the basis of the complaint dated 06.02.2020. A hearing was conducted on 07.02.2020, attended by the appellant as well as by the alleged owner of the goods carrying the disputed trade mark on their livery. The right holder/appellant placed on record a trade mark certificate issued by the Trade Mark Registry. The Customs examination officer confirmed that, as per the declaration filed by the owners of the goods, the bags of rice carried the infringed mark “Tabiat”. At that stage, no explanation was offered by the owners of the goods as to why the infringed mark had been used in the course of exporting the goods. The matter was posted to 12.02.2020, which was attended by the appellant, the clearing agent of the owners of the infringed goods, and the Deputy Collector (Exports).

The Directorate examined the packing livery of the infringed trade mark printed on the bags in English and Urdu on both sides — constituting the trade dress of the goods — within the framework of the Customs Act and the applicable SROs. Pursuant to that examination, the Directorate held that the trade mark registration certificate held by the alleged holder, issued by the Trade Mark Registry, was prima facie evidence supporting the complaint and the taking of cognizance. The Directorate further observed that, prima facie, the right holder appeared to have established its status as the registered proprietor of the trade mark. The owner of the goods was given two opportunities but failed to establish any right to use the registered mark. It was accordingly held that the owner of the goods had been involved in the export of goods under a mark whose proprietorship did not vest in it, and no licence or assignment had ever been granted.

The officials thus held that this constituted an unauthorised use of a registered trade mark by the owner of the goods, without the consent of the right holder/appellant, on the rice bags in the 20 shipments under reference — rendering the mark “Tabiat” printed thereon, in both English and Urdu, a counterfeit trade mark under the Trade Marks Ordinance, 2001. The officials, after taking cognizance, were pleased to seize the goods under section 168 of the Customs Act, 1969, being in contravention of section 15(c) of the Customs Act as well as paragraph 16(d) of the Export Policy Order, 2016, in exercise of the powers conferred upon the Directorate under paragraph 2(1) of Notification No. SRO 768(I)/2014 dated 12.08.2014.

While that action was completed, the appellant also filed a suit for declaration and protection of his rights before the Tribunal. At the initial stage, before injunctive orders were passed, the intervention of this Court was sought by filing Misc. Appeal No. 10 of 2020, which was disposed of on 03.03.2020. By that order, the respondents therein were directed not to change the status of the property/subject consignments, and the case was remanded to the Tribunal for decision of the interim application within three days. Consequently, the injunction application during the pendency of the suit was heard and dismissed — hence this Miscellaneous Appeal.

Contentions of the Appellant

Learned counsel for the appellant argued that the presiding officer erred in treating the appellant’s claim of 20 years’ use of the mark as improbable on the ground that registration was only obtained on 02.02.2012. Counsel pointed out that a trade mark is not mandatorily required to be registered under any law, and that even unregistered trade marks are afforded protection under the equitable doctrine of passing off — a point the presiding officer entirely failed to consider. There was thus a confusion in the mind of the presiding officer, who incorrectly equated the date of first use with the date of registration.

It was further contended that the presiding officer erred in law in characterising the suit before the Tribunal as one pertaining merely to infringement of packaging material, rather than infringement of the trade mark itself. Counsel pointed out that a perusal of the written statement and counter-affidavit available before the Tribunal revealed that the answering respondent had not filed any document depicting the exterior of the covers or package livery, nor had any such documents been put to counsel or the presiding officer at any stage.

It was further urged that the presiding officer had failed to peruse the contents of the registration certificate of the registered trade mark, annexed to the plaint of Suit No. 2 of 2020, which expressly states that a disclaimer is made to the effect that registration shall not give the appellant the right to enforce a claim over use of the word “Anwar Shah,” along with other words in Farsi (Persian), as well as other descriptive features appearing on the label.

Learned counsel further contended that the presiding officer failed to apply his mind when holding that the appellant had “slept over his rights” by not pursuing their claim earlier, despite the goods allegedly being exported for many years. Counsel pointed out that as soon as the appellant became aware of the infringing exports, he immediately wrote a complaint to initiate proceedings — though an earlier complaint had also been filed in the year 2014, when no consignments had been discovered by the customs officials.

Learned counsel further argued that the presiding officer erred in law and fact by holding that the appellant had failed to comply with Rule 680 framed under SRO 170(I)/2017. Counsel contended, to the contrary, that the presiding officer had failed to appreciate that Rule 678 onwards of SRO 170(I)/2017 expressly provides that the Chapter applies to “imported goods only.” The goods in question were being manufactured, packaged, and exported from Pakistan — this was not a case of import.

Learned counsel additionally argued that the jurisdiction of the Tribunal was not confined to conducting a judicial review of the customs officials’ exercise of powers. Rather, the Tribunal was required to adjudicate upon infringement of the trade mark based on the trade mark laws and infringement of the substantive law. The customs officials’ action, initiated pursuant to the complaint, had never been independently challenged by the respondent and had therefore reached finality. The Tribunal seriously erred in holding that SRO 170(I)/2017 and the rules framed thereunder were not adhered to and that, consequently, the goods were liable to be released. The Tribunal failed to respond to the submission that it was SRO 768(I)/2014 which was applicable, read with sections 15 to 17 of the Customs Act, 1969.

Contentions of the Respondents

Mr. M. Nadeem Qureshi, learned counsel for Respondent No. 4, seriously opposed the appellant’s contentions. He submitted that the appellant’s goods were not being marketed within the jurisdiction where the mark is registered, and that the goods of Respondent No. 4 were meant for the ultimate destination of Iran and were not intended for the local market where the mark is claimed. There was therefore no question of infringement within the territory and jurisdiction of the Directorate IPR, the Tribunal, or this Court.

It was urged that Tabiat Sabz Mihan are the registered proprietors of the mark “Tabiat” in Iran, and since its registration they have authorised Respondent No. 4 and issued a No-Objection Certificate for the registration of their brand in Pakistan. Counsel submitted that it was primarily the violation of the rules framed under SRO 170(I)/2017 that the Tribunal questioned, and that the goods were accordingly ordered to be released. In support of this contention, counsel relied upon Fazl-e-Rabbi v. Federation of Pakistan reported in 2020 PTD 281, which provides that the rights of an importer are protected subject to fulfillment of the prescribed requirements before any action is taken.

It was further contended that the Director General of IPR has no independent jurisdiction under Rule 680 of the Customs Rules, 2001 to initiate enforcement proceedings. When the consignment had been cleared from customs, the subject rules should not have been applied. Counsel further submitted that there is a serious vacuum in the law for the seizure of goods being exported under an alleged complaint, as the goods were not meant for the local market and the rules being applied were therefore devoid of merit. He further submitted that the appellant neither had a prima facie case, nor did the balance of inconvenience or irreparable loss lie in their favour — and hence the injunction application was rightly dismissed. The main lis remains pending, and it is still open to the appellant to establish its case after recording evidence.

Mr. Khalil Dogar supported the impugned order and submitted that it was passed in view of SRO 170(I)/2017 and the rules framed thereunder. Learned Assistant Attorney General adopted the arguments of Mr. Dogar.

The Court’s Analysis

I have heard the learned counsel appearing for all parties and perused the material on record.

Let us first examine the impugned order passed by the Tribunal. The first point noted by the Tribunal as the basis for its impugned conclusion was the alleged contradiction between the date of use of the mark and its registration, as noted at typed pages 12 and 13. The Tribunal failed to appreciate that the initial date and period of use of a mark may be different from and distinct from the date of its registration — and this reasoning cannot be a proper basis for determining the rights of the parties, either under the law of use of the mark or after its registration. I therefore straightaway disagree with this reasoning assigned by the Tribunal.

The second point taken into consideration by the Tribunal, at pages 15, 16, and 17 of the impugned order, was the alleged distinction between the two marks themselves. The Tribunal compared the two marks and reached the conclusion that the respondent’s mark was neither deceptively nor confusingly similar from the perspective of the unwary buyer. The Tribunal concluded that the word “Tabiat,” as claimed by the appellant/plaintiff as a registered mark, was visually different and that neither the colour scheme nor the artistic work (birds and a cottage on one, and peasants working in a field on the other — neither of which was claimed as a copyright) could deceive the public. The two marks are reproduced below for comparison.

[Images of the competing “Tabiat” trade marks to be inserted here from the original document.]

The registered trade mark for identifying the goods is one and only one: “Tabiat.” It may have been written in different fonts, whereas the dress code or colour pattern is different and subject to a disclaimer as far as the trade mark certificate goes. It is not always the colour scheme that inspires a buyer to purchase a product — rather, it is the reputable brand name that is the claim under dispute and which attracts the buyer’s attention. Colour and colour scheme are at times claimed to be inventive, but that is not the case here, as no party has claimed the livery, colour scheme, or get-up as a mark of distinction under any intellectual property right. Both parties are contesting over one mark: “Tabiat” — and neither has claimed any exclusive right over the livery or dress of the mark. Everything, therefore, is a disclaimer except “Tabiat.”

In fact, if there are deceptively similar liveries on a product such as rice, each bearing the trade mark “Tabiat,” and in the absence of any right being claimed over the liveries, the buyer would inevitably be confused and would resort to some other brand altogether. Trade dress is, of course, an eye-catcher, but under the circumstances of this case, the conclusive test for the buyer is the trade mark and trade name — which is literally identical here. The font, under these circumstances, is immaterial; no copyright is claimed over a different font or colour scheme. Even otherwise, on such a count, the mark with its livery has failed to achieve even a minor degree of distinctiveness from the colour scheme perspective — and this is not even being asserted as a claim.

The Tribunal also attempted to highlight a distinction between the two marks by reference to the name of the proprietor mentioned in the overall get-up of the packaging, which is again immaterial. There is no dispute that the mark is one: “Tabiat.” The Tribunal’s entire debate was that the mark should be viewed as the entire dress rather than the mere word “Tabiat.” The goods are identical — rice — and both are being exported to a common destination: UAE/Iran. It is inconceivable to accept the Tribunal’s reasoning that, viewed visually and under a colour scheme bearing different artistic work, there is no case for infringement of the appellant’s mark. The effective part of the mark in the entire livery and colour scheme is “Tabiat,” and that is of prime importance. It is only the highlighted mark “Tabiat” that plays a pivotal role in identifying and recognising the goods.

Grocery items are normally purchased by buyers in bulk alongside other items; buyers tend to select products not by going through the colour pattern or artistic work — particularly when such colour scheme or livery has not even reached a level of public acceptance — but by the permanent brand name. When a brand name is visually and distinctly available, buyers focus on the established trade mark, which in the instant case is “Tabiat” and which has gained popularity in the region. I therefore say, very conveniently and without any hesitation, that the Tribunal’s finding that the two marks are not deceptively similar is incorrect. The mark is identical; the other disclaimers forming part of the livery may be different, but that does not alter the outcome.

This analysis is further supported by the following case law, which is discussed in the later part of this judgment: (i) British Sugar PLC v. James Robertson & Sons Ltd; (ii) Philips Electronics NV v. Remington Consumer Products Ltd; and (iii) Aktiebolaget Volvo v. Heritage (Leicester) Limited.

The third and last reasoning assigned by the Tribunal concerns the action and process involved in the seizure of the goods by the Directorate of IP of the customs authorities. The Tribunal highlighted that the appellant had slept over its rights, since the respondent had allegedly been exporting goods for the last 6 to 8 years and the appellant had been unable to satisfactorily explain this delay. In the last paragraph of page 19 of the impugned order, the Tribunal attempted to highlight the absence of any significant harm being faced by the appellant/plaintiff. The Tribunal further reached the conclusion that, while an alternate remedy had been availed before the Director of IP Rights Enforcement (South), Customs House, and the goods had been seized, this had nonetheless been done without complying with the rules of SRO 170(I)/2017, and the customs authorities had failed to apply Rule 680 as framed. The Tribunal applied the law developed in Fazl-e-Rabbi v. Federation of Pakistan reported in 2020 PTD 281.

Relying on that judgment, the Tribunal observed that the Directorate IPR should have refused to entertain the incomplete application submitted in the shape of a legal notice. The Tribunal also observed that, though the alleged action was initiated on the basis of an application/legal notice bearing reference No. NIL dated 06.02.2020, the authorities had also considered complaints of 08.12.2014 and 11.12.2014. The Tribunal was thus of the view that Rule 680, as framed, was not applied in the strict sense, and that the seizure of the goods was in violation of the applicable rules. The application on the basis of which the action was triggered was not complete in terms of Rule 680.

Applicability of SRO 170(I)/2017 to Export Goods

To resolve this question, let us first set out the chronological facts of the case, which are not in dispute. A legal notice/application was issued by the appellant to Respondent No. 3, the Director of the Directorate of IPR Enforcement, seeking initiation of proceedings in respect of goods lying in transit for their onward journey from Karachi, Pakistan, to UAE/Iran. Notices were issued to Respondent No. 4 in respect of the allegations raised in the legal notice. After hearing, a seizure order was passed by the Directorate on 12.02.2020. The seizure order disclosed that Respondent No. 3 had taken cognizance on 07.02.2020 in exercise of the powers conferred upon the Directorate under paragraph 2(1) of Notification No. SRO 768(I)/2014 dated 12.08.2014, read with section 15 of the Customs Act, 1969. The first hearing took place on 07.02.2020 and was attended by the appellant, the owner of the goods, and the Customs examination officer. The trade mark certificate was produced by the claimant, issued by the Trade Mark Registry vide No. 313716 showing the trade mark “Tabiat.” On the second hearing date of 12.02.2020, the claimant, the clearing agent of the owner of the goods, and the Deputy Collector Exports, Karachi, appeared, and no further documents were placed on record. The Directorate examined the infringing goods — particularly the mark printed thereon in English and Urdu on both sides of the bags (the trade dress/livery) — in comparison to the corresponding registered mark available in the IPO Pakistan Recordation Database, within the framework of section 15 of the Customs Act, 1969, read with paragraph 2(1) of Notification No. SRO 768(I)/2014 dated 12.08.2014. The Directorate reached the conclusion that the mark constituted a counterfeit trade mark in all 20 export shipments and accordingly seized them under section 168 of the Customs Act, 1969, in contravention of section 15(c) of the Customs Act as well as paragraph 16(d) of the Export Policy Order, 2016.

In order to determine whether Rules 680 and 682 of Chapter XXVIII of Enforcement of IPR, framed pursuant to SRO 170(I)/2017 dated 17.03.2017, ought to have been applied in the present case, a perusal of those rules is unavoidable. That SRO was issued in exercise of powers conferred by section 219 of the Customs Act, 1969. The Federal Board of Revenue directed certain amendments to be made to the Customs Rules, 2001. The first amendment, inserting Chapter XXVIII in respect of enforcement of Intellectual Property Rights, was inserted as Rule 678, which provides that this Chapter shall apply to “imported goods only” and is not applicable to parallel or grey market imports, nor to de minimis imports.

Prima facie, one should read no further for the purpose of this case, as the subject rule is intended for goods imported into Pakistan. However, Rule 680 — which follows Rule 678 (which has already limited applicability to imported goods only) — provides that a right holder, where there is valid ground for suspicion that the imported goods are infringing intellectual property rights protected under the Copyright Ordinance, 1962, the Trade Marks Ordinance, 2001, etc., may make an application in the format set out in Annexure-A to these Rules to the Director, IPR (Enforcement), requesting enforcement action against such goods.

Each and every item of information sought through the formatted Annexures was otherwise available through the notice of 06.02.2020 and the subsequent hearing. All material information required through those formatted annexures was provided to the Directorate. Yet, in my view, why should action be taken pursuant to such rules when the alleged goods were not imported goods but were, in fact, goods being exported out of the jurisdiction? The reason I have explained above is that the Tribunal’s opinion that certain information was lacking is an incorrect analysis — all material information was provided and cognizance was properly taken.

The referred judgment of this Court, 2020 PTD 281, also emphasises the applicability of those rules to imported goods. That judgment did not extend to goods which are likely to be exported. All formatted applications such as Annexures A, B, and C are therefore not applicable to the present case.

Powers of the Directorate Under SRO 768(I)/2014

A perusal of SRO 768(I)/2014, issued on 12.08.2014, reveals that in exercise of the powers conferred by sections 3CC and 3E of the Customs Act, 1969 and sections 30 and 30E of the Sales Tax Act, 1990, the Federal Board of Revenue was pleased to notify the formation of the Directorate General of Intellectual Property Rights Enforcement and to specify its functions, jurisdiction, and powers as incorporated therein. It is the formation of this Directorate that was established as the instrument to initiate action in respect of exported goods, by virtue of this SRO — i.e., SRO 768(I)/2014.

Since I have discarded the applicability of SRO 170(I)/2017 and the rules thereunder, let us now examine how customs officials are empowered to take action in respect of counterfeit trade marks on goods or services being exported, in pursuance of SRO 768(I)/2014.

It is not the rules alone that empower the officials. The substantive law is sections 15, 16, and 17 of the Customs Act, 1969. The rules framed under SRO 170(I)/2017 were for imported goods only, and no rules were framed for goods likely to be exported. The customs officials were already empowered under Chapter IV of the Customs Act, 1969. Sections 15, 16, and 17 provide as follows:

Section 15 — Prohibitions. No goods specified in the following clauses shall be brought into or taken out of Pakistan, namely:

(a) Counterfeit coins, forged or counterfeit currency notes, and any other counterfeit product;

(b) any obscene book, pamphlet, paper, drawing, painting, representation, figure, photograph, film, or article, video or audio recording, CDs or recording on any other media;

(c) goods having applied thereto a counterfeit trade mark within the meaning of the Pakistan Penal Code, 1860 (Act XLV of 1860), or a false trade description within the meaning of the Copyright Ordinance, 1962 (XXXIV of 1962), the Registered Layout-Designs of Integrated Circuits Ordinance, 2000 (XLIX of 2000), the Registered Designs Ordinance, 2000 (XLV of 2000), the Patents Ordinance, 2000 (LXI of 2000), and the Trade Marks Ordinance, 2001 (XIX of 2001) [Omitted];

(d) goods made or produced outside Pakistan and having applied thereto any name or trade mark, being or purporting to be the name or trade mark of any manufacturer, dealer or trader in Pakistan, unless the name or trade mark is accompanied by a definite indication of the goods having been made or produced in a place outside Pakistan, shown in letters as large and conspicuous as any letter in the name or trade mark, in the same language and character;

(e) goods involving infringement of copyright, layout-design of integrated circuits, industrial designs, or patents;

(f) goods made or produced outside Pakistan and intended for sale, having applied thereto a design in which copyright exists, or any fraudulent or obvious imitation of such design, except when the application of such design has been made with the licence or written consent of the registered proprietor or right holder.

[Provided that offences relating to goods imported or exported in violation of Intellectual Property Rights shall, notwithstanding anything contained in any other law for the time being in force, be adjudicated under section 179 by the appropriate officer of customs.]

Section 16 — Power to prohibit or restrict importation and exportation of goods. The Federal Government may, from time to time, by notification in the official Gazette, prohibit or restrict the bringing into or taking out of Pakistan of any goods of specified description by air, sea, or land.

Section 17 — Detention, seizure and confiscation of goods imported in violation of section 15 or section 16. Where any goods are imported into, or attempted to be exported out of, Pakistan in violation of the provisions of section 15 or of a notification under section 16, such goods shall, without prejudice to any other penalty to which the offender may be liable under this Act or the rules made thereunder or any other law, be liable to detention, seizure, or confiscation, subject to approval of an officer not below the rank of an Assistant Collector of Customs, and seizure for confiscation through adjudication, if required.

Thus, the powers to detain, seize, and confiscate goods being exported out of Pakistan have always been available to customs officials. It is not SRO 170(I)/2017 that conferred these powers — it only set the process for customs officials in relation to goods being imported. What was amended by SRO 768(I)/2014 is equally material. Under sections 3CC and 3E of the Customs Act, 1969, the formation of the Directorate General of Intellectual Property Rights Enforcement was redesigned along with its functions, jurisdiction, and powers:

3CC. Directorate General of Intellectual Property Rights Enforcement. The Directorate General of Intellectual Property Rights Enforcement shall consist of a Director General and as many Directors, Additional Directors, Deputy Directors, Assistant Directors, and such other officers as the Board may, by notification in the official Gazette, appoint.

3E. Powers and functioning of the Directorates, etc. The Board may specify the functions, jurisdiction, and powers of the Directorates specified in the preceding sections and their officers by notification in the official Gazette.

The functions and jurisdiction under paragraph 2 of SRO 768(I)/2014 provide that the Directorate General of IPR Enforcement shall be responsible for enforcement of all types of intellectual property rights at the import of goods into and export of goods from Pakistan — including all land, sea, and air ports, postal shipments, and goods ordered via the internet. IPR Enforcement shall be carried out in accordance with applicable laws at the time of import or export, as the case may be. The Directorate General is also required to perform the following functions:

• Develop strategy to enforce IPR at borders;
• Develop clear and simple procedure for all aspects of IPR Enforcement;
• Promote communication between right holders and the Directorate General of IPR Enforcement;
• Foster partnership and coordination in all IPR-related matters with other IPR enforcement organisations nationally and internationally;
• Develop guidelines and computer-based IPR Risk Assessment and Targeting tools;
• Develop procedure for post-clearance audits for IPR violations;
• Compile statistical data for IPR violations;
• Develop training programmes for officers and staff with national and international assistance at local and foreign institutes;
• Develop programmes to hold IPR Enforcement workshops and seminars throughout the country.

The Directorates of IPR Enforcement and their territorial jurisdictions, as specified in paragraph 2 of SRO 768(I)/2014, are set out in the following table:

A perusal of the aforesaid SROs thus provides a clear picture of their respective applicability. Rules have been framed by virtue of SRO 170(I)/2017 for imported goods, but no rules have been framed for the procedural applicability of the substantive law — i.e., sections 15, 16, and 17 of the Customs Act, 1969 — to goods being exported, in conjunction with SRO 768(I)/2014. In the absence of any such rules, there is no cavil to the proposition that we must revert to the principal statute — the Customs Act — and attempt to carve out a process within the frame of the relevant provisions of law, reading these along with the seizure order to determine whether any violation of a fundamental right has occurred.

I have carefully examined the seizure order, which was not independently challenged by the respondent. The Directorate provided Respondent No. 4 with opportunities to defend itself; it was served with notice and was represented on the occasions when hearings took place. Mr. Nadeem Qureshi therefore failed to demonstrate that the Directorate of IPR did not apply SRO 170(I)/2017 and the rules incorporated in the Customs Rules. Under SRO 170(I)/2017, I find no procedural violation in the manner in which proceedings were conducted.

Another point requiring consideration is that Respondent No. 4 has not independently challenged the seizure proceedings and order. The appellant’s lis before the Tribunal — out of which the impugned order arises — claimed only a declaration over the mark “Tabiat,” and the seizure order was not impugned before it. The Tribunal’s assumption of jurisdiction to embark upon the seizure order, when it was not under challenge, was undoubtedly an attempt to avoid offering reasons on the question of infringement or non-infringement of the mark. The Tribunal could only pass an order to the extent of determining whether the trade mark had been infringed and restraining any violation. The procedural action was not independently questioned by the respondent. Once the effect of infringement had been determined by the Tribunal, the customs officials would have followed that determination accordingly.

Use of the Trade Mark in the Context of Export Goods

The next point of contention is the “use” of the mark within the territory where it is registered. The defence taken by counsel for Respondent No. 4 is that the infringed goods are not meant for the local market, nor are the appellant’s goods being marketed locally. Respondent No. 4 contends that since the goods are intended for an onward destination — UAE/Iran — there can be no infringement of the appellant’s claimed rights. It is their case that the subject mark is registered in Iran (registration in 2014, as per the trade mark registration certificate at page 85 along with the application under Order XXXIX Rule 4 CPC bearing CMA No. 2241 of 2020), purportedly in Grade/Class 19. Although Class 19 includes certain construction materials, non-metallic pipes, and inflexible non-metal construction materials, it also covers cacao, sugar, rice, and various food items. I am, however, more concerned with the violation of the alleged mark as claimed by the appellant within our jurisdiction, once the goods were found to be identical — namely, rice. Moreover, the mark of the appellant and its use are established to be prior to the registration of Respondent No. 4’s mark in 2014 — a use that is seriously disputed by the appellant, particularly the classification of both construction items and food items within a single Grade/Class. No process of rectification of the trade mark was shown to have been initiated by the respondent. I now confine the analysis to whether such use of the mark on the livery of goods intended exclusively for export constitutes infringement, even though the goods are not meant for the local market.

In this regard, the first judgment I came across is Beautimatic International Ltd v. Mitchell International Pharmaceuticals Ltd and Alexir Packaging Limited [1999] ETMR 912. The controversy therein also concerned printed packaging material and its export abroad, where the packaging was applied to goods and ultimately exposed to the public. The claimant was the proprietor of a registered mark “LEXUS” for soaps, perfumes, and toilet preparations (Class 3). The first defendant marketed outside the United Kingdom a range of cosmetic preparations under the mark LEXUS. The packaging (including labelling bearing the LEXUS mark) was manufactured in the UK to the order of the first defendant and sent abroad where it was applied to goods. The case is summarised as follows:

The claimant brought proceedings for summary judgment for trade mark infringement. It contended that the use and application of the LEXUS sign on the packaging — whether or not such packaging was affixed or applied to the first defendant’s goods in the United Kingdom — and the use of the LEXUS sign on the invoices constituted infringement of the registered trade mark by the first defendant; and that by manufacturing labels with the LEXUS sign and by using the sign on acceptance notes, the second defendant had also infringed the registered trade mark. The defendants argued that the application of the mark to packaging which was then sent abroad for application to the goods was neither use “in the course of trade” nor use “in relation to the goods.” It was also argued that the use of the mark on invoices for goods to be shipped abroad was not an infringement, and that because the invoices were between the packager and the manufacturer of the goods, the mark had not been used in communication with the public or other consumers.

Held, giving judgment for the claimant on some of its claims: the application of the mark in the United Kingdom to packaging for goods which were to be sold abroad was use “in the course of trade” in the United Kingdom, and was use “in relation to” the goods. The use of the mark on invoices for goods made in the United Kingdom but which were to be shipped abroad to be marketed and sold was an infringement. Even though the use of the mark on the invoices did not communicate the mark to the general public, such use nonetheless amounted to infringement. Where what was being supplied were the goods themselves, labelled and packaged, the use of the mark on such invoices was a reference to the goods so labelled and packaged, and not merely to the labels and packaging — and thus constituted infringement.

The provision pari materia with our section 40 (infringement of registered trade mark) of the Trade Marks Ordinance, 2001 is section 10 of the Trade Marks Act, 1994 (UK), which was discussed in the above judgment. Section 10 provides, in relevant part:

10. Infringement of registered trade mark.

(1) A person infringes a registered trade mark if he uses in the course of trade a sign which is identical with the trade mark in relation to goods or services which are identical with those for which it is registered.

(2) A person infringes a registered trade mark if he uses in the course of trade a sign where, because (a) the sign is identical with the trade mark and is used in relation to goods or services similar to those for which the trade mark is registered, or (b) the sign is similar to the trade mark and is used in relation to goods or services identical with or similar to those for which the trade mark is registered, there exists a likelihood of confusion on the part of the public, which includes the likelihood of association with the trade mark.

(4) For the purposes of this section a person uses a sign if, in particular, he — (a) affixes it to goods or the packaging thereof; (b) offers or exposes goods for sale, puts them on the market or stocks them for those purposes under the sign, or offers or supplies services under the sign; (c) imports or exports goods under the sign; or (d) uses the sign on business papers or in advertising.

The pari materia provision in the Indian Trade Marks Act, 1999 is section 29, which is reproduced as under:

29. Infringement of registered trade marks.

(1) A registered trade mark is infringed by a person who, not being a registered proprietor or a person using by way of permitted use, uses in the course of trade a mark which is identical with, or deceptively similar to, the trade mark in relation to goods or services in respect of which the trade mark is registered and in such manner as to render the use of the mark likely to be taken as being used as a trade mark.

(6) For the purposes of this section, a person uses a registered mark, if, in particular, he — (a) affixes it to goods or the packaging thereof; (b) offers or exposes goods for sale, puts them on the market, or stocks them for those purposes under the registered trade mark, or offers or supplies services under the registered trade mark; (c) imports or exports goods under the mark; or (d) uses the registered trade mark on business papers or in advertising.

What is thus important is to define the word “use” and “used” within the parameters of section 40 of the Trade Marks Ordinance, 2001, given that the counterfeited goods were meant for export. Section 5(2) of the Trade Marks Ordinance, 2001 is the most applicable provision to address this situation — though, in my view, subsection (2) of section 5 is not ideally placed within that provision and would more conveniently serve as a part of the relevant infringement provisions of this Ordinance, or as an independent provision (such as section 56 of the Trade Marks Act, 1999 (India) and section 228 of the Trade Marks Act, 1995 (Cth) (Australia), which are independent provisions dealing with goods to be exported).

Section 5(2) of the Trade Marks Ordinance, 2001:

The application in Pakistan of a trade mark to goods or services to be exported from Pakistan, and any other act done in Pakistan in relation to goods or services to be so exported which, if done in relation to goods or services to be sold or otherwise traded in within Pakistan would constitute use of a trade mark therein, shall be deemed to constitute use of the trade mark in relation to those goods or services for any purpose for which such use is material under this Ordinance or any other law for the time being in force.

Section 56 of the Indian Trade Marks Act, 1999 and section 228 of the Australian Trade Marks Act, 1995 (Cth) are pari materia to section 5(2) of our Trade Marks Ordinance, 2001:

Section 56 (India) — Use of trade mark for export trade. The application in India of a trade mark to goods to be exported from India, or in relation to services for use outside India, and any other act done in India in relation to goods to be so exported or services so rendered outside India which, if done in relation to goods to be sold or services provided or otherwise traded in within India would constitute use of a trade mark therein, shall be deemed to constitute use of the trade mark in relation to those goods or services for any purpose for which such use is material under this Act or any other law.

Section 228 (Australia) — Use of trade mark for export trade. If a trade mark is applied in Australia to, or in relation to, goods that are to be exported from Australia (export goods), or in relation to services that are to be exported from Australia (export services); or any other act is done in Australia to export goods or export services which, if done in relation to goods or services to be dealt with or provided in the course of trade in Australia would constitute a use of the trade mark in Australia — the application of the trade mark or the other act is taken, for the purposes of this Act, to constitute use of the trade mark in relation to the export goods or export services.

Section 27 of the Trade Marks Act (Singapore) is similarly pari materia to section 5(2) of our Trade Marks Ordinance, 2001:

27(4). Acts amounting to infringement of a registered trade mark. For the purposes of this section, a person uses a sign if, in particular, he — (a) affixes it to goods or the packaging thereof; (b) offers or exposes goods for sale, puts them on the market, or stocks them for those purposes under the sign; (c) imports or exports goods under the sign; or (d) uses the sign on business papers or in advertising.

In order to define the word “use” in the context of trade mark infringement, the cases of British Sugar PLC v. James Robertson & Sons Ltd. (1996) RPC 281 and Philips Electronics NV v. Remington Consumer Products Ltd [1999] RPC 809 conclude that the use of a word as a distinct word — whether with or without other words or material added to it — constitutes use of that word. In British Sugar PLC, the use of “toffee treat” and “treat” was the subject matter, whereas in Aktiebolaget Volvo v. Heritage (Leicester) Limited [2000] FSR 253, the words “independent Volvo Specialist” and “Volvo” were in dispute.

In Origins Natural Resources Inc. v. Origin Clothing Limited [1995] FSR 280 at 284 (Jacob J), the view was expressed (and later corrected in British Sugar) that affixing a sign to goods or their packaging does not constitute infringement if it is done for the purpose of affixing it to goods overseas. However, it was confirmed that importing or exporting goods — including importation or export to or through the United Kingdom as a temporary transit — amounts to infringement. It is no answer that the defendant did not know the goods would be so imported or exported, if he is responsible as principal for those acts: see Waterford Wedgwood Plc v. David Nagli Ltd [1998] FSR 92.

In Pioneer Cement Limited v. Fecto Cement Limited, reported at 2013 CLD 201, section 5(2) was defined and the Bench held that if a specific trade mark is applied to goods to be exported from Pakistan, it shall be deemed to have been actually used in Pakistan, and thus prior use, reputation, and goodwill shall be deemed to have existed in Pakistan — giving rights to its owner (the prior user) to restrain infringement by any other party.

The most relevant and factually analogous case to the present proceedings is Burberry Ltd v. Megastar Shipping Pte Ltd, Civil Appeals No. 237 and 238 of 2017, [2019] SGCA 1. The Court of Appeal of Singapore, disagreeing with the opinion of the amicus curiae, held that the structure of the Trade Marks Act is consistent with “import” covering goods brought into Singapore only for the purpose of transit. The plain meaning of section 27 and its context in the Trade Marks Act support the view that goods can be considered to be imported even if they are not intended for the Singapore market. This is because the acts considered as “use” for the purposes of trade mark infringement do not explicitly contemplate that goods must be intended for sale or placement on the Singapore market. Putting goods on the Singapore market is only one of the possible infringing uses. The relevant part of the judgment is as follows:

We agree with the Judge that the context and structure of the TMA are consistent with “import” covering goods brought into Singapore only for the purpose of transit. The plain meaning of section 27 and its context in the TMA support the view that goods can be considered to be imported even if they are not intended for the Singapore market. This is because the acts considered as “use” for the purposes of trade mark infringement do not explicitly contemplate that the goods must be intended for sale here or to be placed on the Singapore market. Putting the goods on the Singapore market is only one of the possible infringing uses… As long as any of the infringing uses in section 27(4) of the TMA takes place in Singapore, it does not matter whether the goods are eventually intended for a foreign market. In Beautimatic International Ltd v. Mitchell International Pharmaceuticals Ltd, the application of the sign on goods in the UK was held to be infringement even though the goods were intended to be shipped overseas. In Waterford Wedgwood Plc v. David Nagli Ltd [1998] FSR 92, the transhipment of counterfeit Waterford crystals was held to be trade mark infringement by way of importing and re-exporting. It was no answer that the goods were only temporarily in England while in transit.

The above judgments thus conclude that the interpretation of the word “use” — even if goods are not intended for consumption in a country but merely enter its port for an onward journey — encompasses use of the mark within that jurisdiction. The question whether goods in transit are considered to be “imported” under the law would be answered accordingly, unless the Trade Marks Ordinance, 2001 suggests otherwise. As established above, there is no inconsistency in the framing of the relevant provisions of our Trade Marks Ordinance as far as this scheme is concerned. The word “import” or “export” is not defined differently under our Trade Marks Ordinance in a manner that would exclude goods in transit. Indeed, the case of the appellant is on stronger footing, since the attempt is made to export goods from the territory where the mark is registered.

As regards the additional documents placed on record by both appellant and respondents in support of their respective contentions — these do not alter the analysis. In view of the applicable law and the admitted facts, the absence or presence of documents subsequently filed would not affect the tentative assessment and determination of the infringement of the mark.

Since the plaintiff/appellant has established their rights over the proprietary mark, they would suffer irreparable loss if such mark is infringed and their reputation will be at stake unless an injunctive order is passed. In view of the applicability of law to these admitted facts, the tentative assessment, on the basis of fact and law, leads to the lawful conclusion that an injunctive order should be passed during the pendency of the main lis, as prayed in the application before the Tribunal.

Summary of Conclusions

The above discussion, within the framework of the Trade Marks Ordinance, 2001, may be summarised as follows:

• Sections 15 and 16 of the Customs Act, 1969 empower the Director IPR to initiate action in respect of goods being exported, on the basis of allegations of counterfeiting or infringement.
• In terms of the amendments to sections 3CC and 3E effected under SRO 768(I)/2014, the officials are empowered to take action and have therefore lawfully exercised jurisdiction.
• The Tribunal had not seized the lis (Suit No. 02/2020) in which the action of the Directorate of IPR Enforcement was under challenge. All that was required of the Tribunal was to determine whether infringement was practised by the respondent; the resulting judgment/order would then have had its consequential effect upon the Directorate of IPR Enforcement.
• SRO 170(I)/2017 was misapplied in the instant case.
• Once it is established that the appellant is the registered proprietor of a trade mark, prima facie case, balance of inconvenience, and irreparable loss all lean in favour of the appellant.
• The word “use,” as explained above, is applicable to goods “for export only.” Accordingly, sections 5(2) and 40 of the Trade Marks Ordinance, 2001 are to be interpreted as constituting use within the territory of Pakistan.

Hence, the impugned order is set aside and this appeal is accordingly allowed. The application for injunction filed by the appellant before the Tribunal is accordingly granted. Miscellaneous applications are also disposed of accordingly.