Summary: Diageo Brands v. Great Galleon

Judgment Summary

Case Name– Diageo Brands B.V. & Anr. vs Great Galleon Ventures Limited

Citation– 2022 SCC OnLine Del 2350

Coram- Justice Sanjeev Narula

Date – 2^nd August 2022

BRIEF BACKGROUND

This case pertains to dispute between Diageo Brands B.V. and United Spirits Ltd. (“the Plaintiff”), and Great Galleon Ventures Limited (“the Defendant”), over the alleged infringement of Diageo’s Registered Design for their “Hipster” bottle. The Plaintiffs claim that the Defendant’s products imitate their bottle design and trade dress, infringing their intellectual property rights. Consequently, the Plaintiff seeks a permanent injunction and related reliefs to prevent the Defendant from manufacturing and selling these allegedly infringing bottles.

FACTS OF THE CASE
Diageo Brands B.V. (“Plaintiff No. 1) is a global entity holding the intellectual property rights for various products, including the innovative “Hipster” bottle design. United Spirits Ltd. (Plaintiff No. 2), a subsidiary of Diageo, distributes these products in India. Great Galleon Ventures Limited (the Defendant) manufactures and sells alcoholic beverages under the ‘GOA’ brand, including ‘GOA Gold Whisky’ and ‘GOA Silver Whisky.’
The “Hipster” bottle is a 180 ml container designed to resemble a smartphone, which is intended to make it convenient for carrying in a pocket and appealing to a modern consumer base. This design is covered under Design Registration No. 292602 granted under the Designs Act, 2000. It has been used for premium Scotch whisky brands like ‘Black Dog,’ ‘Vat 69,’ and ‘Black & White’ in the Indian market.
The Plaintiffs allege that the Defendant’s 180 ml bottles for these products closely mimic the “Hipster” design, infringing on their Registered Design and creating confusion among consumers. Plaintiffs assert that the Defendant’s bottles are a “slavish and fraudulent imitation” of their Registered Design and trade dress, leading to unfair competition and passing off.
On February 23, 2021, the court granted an ex-parte interim injunction against the Defendant, restraining them from manufacturing, selling, or distributing the allegedly infringing bottles.
The present Petition was filed by the Plaintiffs seeking a permanent injunction against the Defendant along with damages for the alleged infringement and passing off.

ISSUES (Para 22)

The issues involved in the present dispute are as under:

Whether the Plaintiff is the proprietor of the Design.
Whether the Plaintiffs’ Registered Design is legally protected
Whether the Defendant’s bottles constitute an obvious or fraudulent imitation of the Plaintiffs’ Registered Design.
Whether the Defendant has valid grounds under Section 19 of the Designs Act to challenge the Plaintiffs’ Registered Design.
Whether the Defendant’s use of a similar design amounts to passing off and unfair competition.

ANALYSIS AND DECISION

After hearing and analysing the submissions and documents placed on record, by the respective parties, the analysis of the Hon’ble Court is provided as under:

Issue 1

The Defendant argued that the Plaintiff’s design must fall into the public domain in order to encourage design innovation, which includes the right to copy freely . It was also contended that the design was actually created by a company called ‘Love Creative’ (Para 24).
However, the Hon’ble Court observed that Love Creative did not claim any ownership over the design. Furthermore, that the first-person would remain the proprietor of the design, and at no point will the person who executed the work retain any rights/title for the work. Hence, the Plaintiff is the proprietor of the registered design (Para 27). The relevant paragraph from the judgment is reproduced below:

“No document has been shown where Love Creative has laid a claim of ownership/proprietary rights in the design. Further, it is evident from Section 2(1)(j) of the Designs Act,18……… that even when work is executed for one person by another, the first-person would remain the proprietor of the design, and at no point will the person who executed the work retain any rights/ title for the work.”

Consequently, the Hon’ble Court decided this issue in favour of the Plaintiff by declaring them as the proprietor of the registered design.

Issue 2

It was argued by the Defendant that since the Cancellation application of the design is pending before the concerned authority, an injunction must not be granted with respect to the same (Para 29).
The Hon’ble Court observed in this regard that Registration is not prima facie evidence of the validity of a design. This is because the public opposition stage is wholly missing in the design registration process unlike that of the Trade Marks Act. The Court also observed that the effect of registration must prevail uniformly throughout the course of registration. (Para 30 and 31).
Consequently, the Hon’ble Court decided this issue in favour of the Plaintiff as well and held that the Plaintiff’s design is legally protected.

Issue 3

The Hon’ble Court observed that it is a trite principle of law that for determining infringement of designs, the yardstick is ‘visual effect’, ‘appeal to the eye’ of the customer’ and ‘ocular impression’ of design, as a whole. The test is not to look out for subtle dissimilarities, but rather, to see if there is substantial and overall similarity in the two designs (Para 37).
Thereby, the court observed that even though there are minute differences between the two products, they vaporise when looked at from a decent distance. Hence, there is an overall and substantial similarity which is apparent to the naked eye. Thereby, the court held the products to be deceptively similar (Para 37 and 29).
Hence, the Hon’ble Court decided this issue also in favour of the Plaintiff.

Issue 4

The Defendant argued that the Plaintiff’s ‘hip flask’ had been in existence since 500 AD, hence, was not new and original. Thereby, it was not eligible for protection.
The Hon’ble Court observed that “Novelty” in the patent regime corresponds to new inventions and existence of an “inventive step” which cannot be appropriated to the design’s regime. What is protected under designs law is not the article itself, but the idea/conceptualization which has been applied upon it, that is to say, the physical manifestation of such idea. It was also observed that the Plaintiffs’ Registered Design had been conceptualised and designed after undertaking extensive research and development. Hence, it met the threshold of ‘new and original’ as it created an altogether different impression on an informed user. (Para 66 and 71).
Notably, the Court rejected the Defendant’s argument that the Plaintiff has merely ‘cobbled together’ known integers, or that the Registered Design is liable to be cancelled on ground of “mosaicing”. The Court held that position of law on this aspect is well settled, i.e., individual features of a design should not be dissected to try and find them individually in each prior art; instead, a conspectus of features as a whole should be seen[1] (Para 76).
It was also rightly observed by the Court that true novelty lied in the originality of application of existing ideas in a hitherto unknown fashion. Any rule stricter than this would amount to stifling human creativity and enterprise and would be counterproductive to the intent of novelty and innovation in design (Para 77).
It was also argued by the Defendant that a design which is purely functional cannot be protected, as the same lies in the domain of patent laws. However, the Hon’ble Court held that functionality, ipso facto, does not render a design liable to be cancelled. That is, merely because a design has relevance to a particular function, it will not enter a domain of patent laws. Hence, functionality of a design will not take away a proprietor’s right to register its. (Para 80).
Thereby, the issue was decided in favour of the Plaintiff.

Issue 5

Finally, the Plaintiff argued that the similarity in the Trade dress/get up of the two products constituted Passing off since the Defendant was aiming to deceive unwary customers. However, it was held by the Hon’ble Court that the distinctiveness of a trade dress is not to be perceived by its individual elements in isolation, but has to be seen as a whole, to determine whether its essential features are distinctive enough to become a source identifier. That is, all the elements of a design need to be considered as a whole to see if a distinctive visual impression is created (Para 93).
Consequently, the Court observed that the essential features were not distinctive enough to become a source identifier and it cannot be said that the Defendant’s intent was to deceive unwary customers (Para 96).
Hence, the court denied an injunction for passing off and held for the Defendant in this issue.

CONCLUSION

In conclusion, the Hon’ble Delhi High Court upheld the Plaintiffs’ claims, granting an injunction to prevent the Defendant from manufacturing and selling the impugned bottles. It was also made clear that just because there are similarities that support a design infringement claim does not automatically give rise to a passing-off claim, there must also be an intent to deceive customers (which did not exist in the present case). The Court noted that although a bottle is not a new invention, its novelty is derived from its unique design and configuration, which is the product of its creator’s imagination, thereby, giving importance to the overall appearance of the product rather than just its individual design components.

[1] Author’s Note: The discussion on mosaicing constitutes one of the most important aspects of this judgment. Through this discussion, the Hon’ble Court makes it clear that it is not necessary that every single aspect of a design must be new and original. If that was the case, there would cease to be any new or original design. Hence, what is important is the design must not be deceptively similar when looked at as a whole, instead it can be a unique design which is inspired by other previous designs.