Karnataka High Court Rejects Trademark Suit After Finding Reliefs Were Undervalued To Avoid Commercial Court

The Karnataka High Court has rejected a trademark infringement and passing-off suit filed by a Raichur-based rice trader after holding that the plaintiff had deliberately undervalued the suit reliefs and instituted the dispute before a civil court instead of the commercial court.

Justice Ravi V Hosmani passed the order on June 1 while allowing a revision petition filed by Shri Prasanna Anjaneya Agrotech and setting aside an order of the XVIII Additional City Civil and Sessions Judge, Bengaluru, which had refused to reject the plaint.

Relying on its earlier decision in Bangalore Blues Entertainment India Pvt. Ltd. v. One Ikigaii Edutech Pvt. Ltd, the Court observed that “valuation of IPR suits cannot be arbitrary or whimsical and plaintiff cannot undervalue relief to evade rigors of CCA which amounts to forum shopping and abuse of process.”

MRN Agro Industries had instituted the suit, alleging infringement and passing off of its registered trademark “MRN Gold” in relation to rice. It claimed continuous use of the mark since 2001 and contended that Shri Prasanna Anjaneya Agrotech had adopted the deceptively similar mark “MR Gold” for identical goods.

According to the plaint, Shri Prasanna Anjaneya Agrotech had applied for registration of “MR Gold” in 2015-16. MRN Agro Industries opposed the application, following which it was withdrawn. MRN Agro Industries further alleged that Shri Prasanna Anjaneya Agrotech resumed use of the mark in September 2023.

MRN issued a cease-and-desist notice on September 19, 2023. After Shri Prasanna Anjaneya replied on September 29, 2023 refusing to comply with its demands, MRN filed the suit before a Civil Court in Bengaluru. It contended that the Bengaluru court had territorial jurisdiction because both parties' products were sold within its jurisdiction.

However, the defendant sought rejection of the plaint on grounds including limitation, lack of territorial jurisdiction, suppression of material facts and undervaluation of reliefs to avoid the Commercial Courts Act, 2015.

The High Court rejected the limitation objection. Referring to the Supreme Court's decision in Bengal Waterproof Ltd. v. Bombay Waterproof Mfg. Co., the Court held that MRN Agro Industries had specifically asserted continued sale of the allegedly offending goods and would therefore be entitled to rely on the law relating to continuing infringement.

However, the Court found merit in the objection concerning the valuation of the suit.

The Court noted that in a legal notice issued on September 19, 2023, MRN Agro Industries had claimed ₹25 lakh as advance towards proposed damages, with actual damages to be determined after production of accounts by Shri Prasanna Anjaneya Agrotech.

It also noted that one of the prayers in the suit sought a preliminary decree for rendition of accounts of profits and a final decree for recovery of profits. The Court observed that MRN Agro Industries had valued that claim at more than ₹25 lakh in the legal notice and had not stated that it was abandoning that assessment.

The Court further observed that MRN Agro Industries had valued the reliefs in the suit at ₹1,000 for the purposes of court fee and jurisdiction. It also filed a memo stating that the specified value of the suit was below ₹3 lakh, but without furnishing particulars.

Holding that the valuation adopted by MRN Agro Industries could not be accepted, the Court observed:

“In view of fact that plaintiff valued damages to be more than Rupees 25 Lakhs in its legal notice, valuation of suit relief at Rs.1,000/- for purposes of Court fee and jurisdiction would fall within above stated mischief. Consequently, suit filed before Civil Court instead of commercial dispute before Commercial Court under CCA, would be without jurisdiction.”

The court therefore allowed the revision petition with costs, set aside the trial court's order, and rejected the plaint.

As a consequence, the connected appeal challenging the trial court's refusal to grant a temporary injunction was dismissed as infructuous.

The court clarified that its findings, except on the tenability of the civil suit, were on a prima facie consideration of the available material and would not prevent MRN Agro Industries from filing a commercial dispute before the appropriate forum. It kept all contentions of both sides open for consideration in such proceedings.