Partly allowed

Netsweeper Inc., a company v. Netsweeper Technologies Pvt.

Madras HC8 Jun 2022CS/334/2018

Case brief

AI extract

What is this about?

Suit for permanent injunction against defendants for passing off corporate name and trademark by former employees and a newly incorporated company. Court decreed specific injunctive prayers and outstanding fees but denied damages and some injunctions due to lack of registration and evidence on losses.

What did the court decide?

Injunctions restraining use of NETSWEEPER trademark (prayers c-f, j); Payment of outstanding CAD invoices and service tax; Costs of Rs.3,00,000. Damages (prayer a) and injunction for unregistered mark

Netsweeper Inc., a company Vs Netsweeper Technologies… — Intellectual Property | Madras HC (2022)

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C.S. No.334 of 2018

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IN THE HIGH COURT OF JUDICATURE AT MADRAS

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Judgment reserved on 09.02.2022 Judgment pronounced on 08.06.2022

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CORAM

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The Hon'ble Mr. Justice SENTHILKUMAR RAMAMOORTHY

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Civil Suit (Comm.Div) No.334 of 2018

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Netsweeper Inc., A company having its registered office at Suite 4, 156 Columbia Street W., Waterloo, Ontario, Canada, N2L 3L3 Rep. by its authorised signatory Mr.N.Krishnan ... Plaintiff

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vs.

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1.Netsweeper Technologies Private Limited, CIN:U72900TN2005PTC057943, having registered office at No.5-11-1, Arihant Majestic Towers, J N Road, 100 Feet Road, Koyambedu, Chennai – 600 107.

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2.Mr.C.Gajapathy,

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Director and Shareholder, Netsweeper Technologies Private Limited, Having office at No.5-1-1, Arihant Majestic Towers, J N Road, 100 Feet Road, Koyambedu, Chennai – 600 107.

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https://www.mhc.tn.gov.in/judis ______________ Page No.1 of 12_

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C.S. No.334 of 2018

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3.Mrs.Haritha Gajapathy, Director and Shareholder, Netsweeper Technologies Private Limited, having office at No.5-1-1, Arihant Majestic Towers, J N Road, 100 Feet Road, Koyambedu, Chennai – 600 107.

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4.Netsweeper Technologies India Private Limited, CIN:U72900TN2017PTC117540, Having registered office at No.4B, Soundarya Apartments, Mel Ayanambakkam Main Road, Mel Ayanambakkam, Chennai - 600 095.

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5.Mr.Jagdeesh Sengodappa, Director and Shareholder, Netsweeper Technologies India Private Limited, Having registered office at No.4B, Soundarya Apartments, Mel Ayanambakkam Main Road, Mel Ayanambakkam, Chennai - 600 095.

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6.Mr.Senthamaraikannan Pradeepkannan Director and Shareholder, Netsweeper Technologies India Private Limited, Having registered office at No.4B, Soundarya Apartments, Mel Ayanambakkam Main Road, Mel Ayanambakkam, Chennai - 600 095. ... Defendants

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Civil Suit is filed under Order VII Rule 1 of the Code of Civil Procedure, 1908 r/w Order 4 Rule 1A of the Original Side Rules and Section 134 (1)(C) of the Trademarks Act, 1999 praying that (a) the Defendant Nos.1 to 6 be ordered and directed jointly or severally to pay to the Plaintiff,

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C.S. No.334 of 2018

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a sum of INR 1,00,00,000/- (Indian Rupees one crore only) as damages for passing off its products of software or service as and for the Plaintiff's products or software of services by wrongfully associating themselves with the Plaintiff and / or its affiliates;

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(b) Permanent injunction restraining the Defendants, its / their men, servants, agents, successors in business retailers, legal representatives, assigns or any other person claiming through or under them, from in any manner, whatsoever, using or otherwise dealing with the trademark / trade name NETSWEEPER owned by the Plaintiff and / or any identical or deceptively similar trademark / tradename to that of NETSWEEPER in any manner whatsoever;

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(c) Permanent injunction restraining the Defendant Nos.1 to 6 its / their men, servants, agents, successors in business retailers, legal representatives, assigns or any other person claiming through or under them, from in any manner, using, selling, licensing, or offering services, advertising or otherwise dealing with the trademark / tradename NETSWEEPER owned by the Plaintiff and / or any identical or deceptively similar trademark / tradename to that of NETSWEEPER and thereby passing off their products or software or programs or services as and for the products or software or services of the Plaintiff in any manner whatsoever;

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(d) Permanent injunction restraining the Defendants, its / their men, servants, agents, successors in business retailers, legal representatives, assigns or any other person claiming through or under them, from in any manner or through any other entity, contacting the customers of the Plaintiff

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C.S. No.334 of 2018

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for providing services by wrongfully associating themselves with the Plaintiff / or its affiliates;

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(e) The Defendants be directed and ordered to surrender to the Plaintiff for destruction, the name boards, invoice / bills, prints, letter beads, business cards, advertising materials and any other materials in the Defendant's possession, which bears the trademark / tradename NETSWEEPER of the Plaintiff.

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(f) The Defendant Nos.1, 2 and 3 be directed to pay the outstanding invoice payable to the Plaintiff towards the fee for the software license availed by the first Defendant for the period from April,2017 to December, 2017 vide invoice No.2111 dated 31.12.2017 for a sum of Canadian Dollars (CAD)51753.01 and for the period from January,2018 to March, 2018 vide invoice No.2121 dated 31.03.2018 for a sum of Canadian Dollars (CAD)42604.04, totalling to Canadian Dollars (CAD) 94357.09 together with interest at 18% per annum until the date of re-payment of the entire amount.

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(g) A preliminary decree be passed in favour of the Plaintiff directing the Defendant Nos. 1 to 6 to render account of all revenues whether in liquid form or as assets by diverting the revenues by use of the identical and / deceptively similar trademark / tradename NETSWEEPER and / or passing off and (ii) a final decree be passed in favour of the Plaintiff for the entire amount of revenues including assets purchased out of the revenue thus found to have been made by the Defendant Nos.1 to 6 after the latter have rendered accounts;

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C.S. No.334 of 2018

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(h) The Defendants 1 to 3 be ordered and directed to pay to the Government of India, including but not limited to, a sum of Rs.43,48,631(Rupees Forty Three Lakhs, Forty Eight Thousand, Six hundred and thirty only) with additional interest and penalty towards the service tax debts owed to the Government of India by the first Defendant and for costs of the suit.

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For Plaintiff : Mr.Arun C.Mohan Asstd. By Mr.S.Aravindan for M/s.Fox Mandal & Associates

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For Defendants : No appearance

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J U D G M E N T

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The suit was filed for permanent injunctions to restrain the Defendants from infringing the Plaintiff's corporate name 'NETSWEEPER' and from passing off the Defendants' products as that of the Plaintiff's. The Plaintiff has also prayed for damages in a sum of Rs.1,00,00,000/-.

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In spite of service of summons on all the six Defendants,

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Defendants 4 to 6 did not enter appearance. Therefore, Defendants 4 to 6 were set ex parte on 26.06.2019. As far as Defendants 1 to 3 are concerned, their right to file written statement was forfeited on 24.08.2020 and they were, subsequently, set ex parte on 10.09.2020. Pursuant thereto, the Plaintiff adduced ex parte evidence through N.Krishnan, an employee of the

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C.S. No.334 of 2018

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Plaintiff, who was examined as P.W.1. 31 documents were exhibited as Ex.P1 to Ex.P31 through P.W.1.

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The Plaintiff states that it is a company incorporated in the year

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1999 under the laws of Ontario, Canada, and engaged in the business of Internet content filtering and web threat management. According to the Plaintiff, the trademark 'NETSWEEPER' was registered by the Plaintiff under classes 9 and 42 in Canada and USA in the year 2003 and 2006, respectively. The trade mark was subsequently renewed on 14.02.2017 and 18.11.2016, respectively. Further, the Plaintiff states that it is in the process of applying for registration of the said trade mark in India.

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The suit was filed after discovering that the 4^th Defendant had incorporated a company under the corporate name 'NETSWEEPER' on 13.07.2017 with the same objects as the first Defendant, which previously had a licence to use the corporate name 'NETSWEEPER'. The Plaintiff asserts that the above act amounts to passing off of the Plaintiff's goodwill and reputation. The incorporation certificate, Memorandum and Articles of Association of the Defendants 1 and 4 were exhibited as Exs.P1, P2, P6 and

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C.S. No.334 of 2018

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P7 to corroborate the said contention. The Plaintiff has exhibited several

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communications and invoices to prove that the licence was terminated and regarding the amounts outstanding from the first Defendant to the Plaintiff. The Plaintiff has also exhibited the employment contracts of the 2^nd and 3^rd Defendants with the Plaintiff as Ex.P4 and Ex.P5 and their respective termination letters as Ex.P19 and Ex.P20.

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On examining the plaint, proof affidavit and Exs.P9 to P11,

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the Plaintiff has established that it is the registered proprietor of the Trademark in Canada and USA under classes 9 and 42. Even though it has not registered the trade mark in India, the common law remedy of passing off is available to the Plaintiff under Section 134(1)(c) of the Trademarks Act, 1999. Consequently, the Plaintiff is entitled to succeed as regards prayers (c) to (f), (h) and (j). As the Plaintiff has failed to adduce evidence on the loss of profit incurred because of the incorporation of the 4^th Defendant, prayer (a) relating to damages is denied. Since the mark 'NETSWEEPER' is not a registered trade mark in India, prayer (b) is denied. As regards prayer (g), in the absence of accounts from the defendant, the

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C.S. No.334 of 2018

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profits and the court fee thereon cannot be ascertained and paid. Therefore, prayer (g) is rejected.

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Accordingly, Civil Suit (Comm.Div) No.334 of 2018 is decreed

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in terms of prayers (c) to (f), (h) and (j) of paragraph 22 of the plaint. The Defendants are also directed to pay the Plaintiff a sum of Rs.3,00,000/(Rupees three lakhs only) as costs, which includes court fees of about Rs.1,59,000/-, lawyer's fees and other costs.

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08.06.2022

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Index : Yes Internet : Yes rrg

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Plaintiff's witness:

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Mr.N.Krishnan : P.W.1

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Documents exhibited by the Plaintiff:

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Sl.N	Exhibi	Date	Particulars of Documents
o	ts
1.	Ex.P1	26.10.2005	Memorandum and Articles of Association

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C.S. No.334 of 2018

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Sl.N o	Exhibi ts	Date	Particulars of Documents
2.	Ex.P2	03.11.2005	Incorporation Certificate of the first Defendant Company.
3.	Ex.P3	13.05.2018	Master Data of the first Defendant Company
4.	Ex.P4	10.10.2005	Employment Contract given to the second Defendant.
5.	Ex.P5	01.04.2009	Employment contract given to the 3^rd Defendant.
6.	Ex.P6	12.07.2017	Incorporation Certificate of the 4^thDefendant Company
7.	Ex.P7	12.07.2017	Memorandum and Article of Association of the 4^thDefendant Company.
8.	Ex.P8	13.05.2018	Master Date of the 4^thDefendant Company
9.	Ex.P9	07.03.2006	Certificate of Registration of Trademark.
10.	Ex.P10	18.11.2016	Renewed of registration of Trademark obtained in the United States of America
11.	Ex.P11	14.02.2017	Renewal of registration of Trademark obtained in Canada
12.	Ex.P12	01.01.2018 to 31.01.2018	Bank Statement of the first Defendant Company
13.	Ex.P13	21.03.2018	Email between the Plaintiff and the 2^ndand 3^rd Defendants.
14.	Ex.P14	21.03.2018	Email thread between the Plaintiff and its customers notifying termination of license of the first Defendant Company
15.	Ex.P15	22.03.2018	Email thread between the Plaintiff and one of its primary customers notifying them about the termination of the license of the first Defendant Company

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C.S. No.334 of 2018

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Sl.N o	Exhibi ts	Date	Particulars of Documents
16.	Ex.P16	28.03.2010	Representation by the Plaintiff to the Government of India notifying the misconduct of non-remittance of service tax by the first Defendant.
17.	Ex.P17	05.04.2018	Reply by the Government of India for the representation of the Plaintiff.
18.	Ex.P18	07.05.2018	Cease and Desist notice issued by the Plaintiff to Defendants 1 to 3
19.	Ex.P19	08.05.2018	Termination letter issued by the Plaintiff to the 2^ndDefendant.
20.	Ex.P20	08.05.2018	Termination letter issued by the Plaintiff to the third Defendant.
21.	Ex.P21	April,2015 - Dec, 2017	Invoices withheld by the Defendants 1 to 3.
22.	Ex.P22	-	Bank Statement provided by the Defendants 1 to 3.
23.	Ex.P23	22.03.2018	Board Resolution of the Plaintiff
24.	Ex.P24	31.12.2017	Invoice No.2111 raised by the Plaintiff on the first Defendant.
25.	Ex.P25	31.03.2018	Invoice No.2121 raised by the Plaintiff in the first Defendant Company.
26.	Ex.P26	31.12.2017	Email sent by the Plaintiff to the Defendants 1 to 3.
27.	Ex.P27	10.05.2018 08.06.2018 & 22.06.2018	Counter foil provided by the banker of the first Defendant Company.

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C.S. No.334 of 2018

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Sl.N o	Exhibi ts	Date	Particulars of Documents
28.	Ex.P28	-	Certificate of Incorporation pursuant to change of name.
29.	Ex.P29	16.08.2010 to 22.07.2019	Bank Statement of the first Defendant Company

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Defendants' documents : NIL

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SKRJ

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C.S. No.334 of 2018

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SENTHILKUMAR RAMAMOORTHY, J

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rrg

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Pre-Delivery Judgment

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C.S.(Comm. Div)No.334 of 2018

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08.06.2022

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Netsweeper Inc., a company v. Netsweeper Technologies Pvt.

Case brief

What is this about?

What did the court decide?

Netsweeper Inc., a company v. Netsweeper Technologies Pvt.

Case brief

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What did the court decide?

What the court decided

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