[2020] KEIPT 129 (KLR)

REPUBLIC OF KENYA

IN THE INDUSTRIAL PROPERTY TRIBUNAL

AT NAIROBI

IPT CASE NUMBER 87 OF 2020

KENYA WINE AGENCIES LIMITED....................APPLICANT

VERSUS

MOUNT KENYA BREWERIES LIMITED........ RESPONDENT

IN THE MATTER OF: THE INFRINGEMENT OF KENYA WINE AGENCIES LIMITED INDUSTRIAL DESIGN NO. 1093 BY MOUNT KENYA BREWERIES LIMITED.

RULING

Kenya Wine Agencies limited [KWAL] the Applicant seeks an interim injunction to restrain Mount Kenya Breweries limited [MKBL] whether acting by its directors, officers, employees, servants or agents or otherwise howsoever from further infringing and or using in anyway KWAL’s Industrial design No.1093-a shape and configuration of a bottle in which it sells and markets its Kibao Vodka, pending the hearing and determination of the matter.

1. The principal matter is a request dated 24th April 2020 in form IPT 16 [Rule 20 [1] Industrial Property Tribunal Rules 2002. The request brought under section 106 of the Industrial Property Act was filed before the Tribunal on 28th April 2020. The Requestor seeks inter alia; a declaration that MKBL has infringed KWAL’s industrial design No. 1093, a permanent injunction to restrain further infringement or use of that industrial design No. 1093 and damages for the alleged infringement of the said design.

2. The request is supported by a statement of facts setting out the facts relied upon to support the Requestor’s infringement claim. On 4th May, 2020, the Applicant filed a Notice of Motion application dated 29th April, 2020 under certificate of urgency, expressed to be brought under order 40 rule 1, 2 and 3 of the civil procedure rules, section A, 3A and 63 (e) civil procedure Act, section 92 (3) and S.106 of the Industrial Property Act and is supported by the supporting affidavit accompanying the application and a further affidavit sworn by Lina Githuka the applicant’s managing director in response to the Respondent replying affidavit sworn by Gordon Wilfred Mutugi Maina (the Respondent’s Managing director) on 15th May 2020 filed in opposition to the notice of motion application.

3. The Requestor’s case as pleaded in the statement of facts and elaborated in the supporting and further affidavit of Lina Githuka is that it is the registered owner of industrial design number 1093 a shape and configuration of the bottle in which it sells its Kibao Vodka brand an alcoholic drink in the same family as the Respondents Sparkler Vodka brand. That industrial design was registered following an application for registration KE/D/2018/1914 dated 4th April 2018 filed with the Kenya Industrial Property Institute [KIPI] on 19th June 2018 [Exh. KWAL1] and a certificate of registration issued on 21/1/2019 by KIPI [Exh. KWAL 4].

4. In January this year the applicant discovered that another alcoholic drink, Sparkler Vodka, associated with the Respondent was being sold in bottles embodying the features of its registered design No. 1093. It then instructed its then Advocates M/S Hamilton Harrison Mathews to issue a cease and desist letter to the Respondent which was done by letter dated 7th January 2020 annexed as exhibit KWAL 8 in the supporting affidavit.

In particular, the applicant complained that it had come to its notice that the respondent had been collecting and reusing its Kibao Vodka bottles for the latter’s Sparkler Vodka which constituted infringement and passing off of registered design No. 1093.

5. The letter was responded to by letter dated 22nd January, 2020 (KWAL 9) from the Respondent’s advocates M/S Kaimenyi Mose & Co. The letter did not deny that the Respondent was collecting and reusing bottles for its Sparkler Vodka brand, but said that they received generic empty bottles under a used bottles collection scheme from bottle collectors. According to their understanding, the empty used bottles that they receive from bottle collectors as part of their Corporate Social Responsibility were collected from bars, dustbins and garbage dumpsites. They added that the Respondent does not accept and or reuse any bottles bearing their competitor’s names, brand names, unique slogans or known registered trademark and ended by saying that in the event that there is a unique registered mark/design belonging to the Applicant they would not hesitate to advise the bottle collectors to desist from collecting such bottles from bars, dustbins and dumpsites. The Applicant contends that this letter constitutes an admission of infringement by the Respondent a contention that the Respondent strongly denies and accuses the applicant of reading portions of the letter out of context in a bid to mislead this Tribunal.

6. The Applicant further pleaded that the bottles embodying the registered design continued to appear in the Kenyan market selling/offering alcoholic drinks bearing the Respondent’s Sparkler Vodka brand Mark despite the cease and desist letter and their agents spotted and bought such drinks contained in bottles embodying design No. 1093 in April 2020 and that is what prompted them to institute these proceedings to seek protection from the Tribunal. In this connection, the Applicant has exhibited some purchase receipts from four named outlets [KWAL 10] which it alleges were issued when the offending bottles were bought. At KWAL 11, the Applicant has exhibited photographs of its Kibao Vodka and the offending Sparkler bottles which were allegedly bought by agents. Those photographs of the two bottles have a striking resemblance and on the face of it appear identical in shape and configuration.

7. The Respondent has by its replying affidavit of Gordon Wilfred Mutugi sworn on the 15th May 2020 denied that it is infringing on the intellectual property rights of the Applicant specifically its industrial design no. 1093. It contends that the bottle that it uses to market its Sparkler Vodka is different and distinct from that of the Applicant Kibao Vodka and the registered design. It exhibited as MKBL 2 a photograph of its bottle used to market its Sparkler Vodka brand which it alleges are sourced from Milly Glass Works ltd and Pragati Glass Gulf LLC. Those bottles sourced from the two companies, it is contended, are different from the Applicant’s bottles in the market and Design no. 1093 as they are not engraved with the words ‘FINEST QUALITY’. The Respondent has exhibited copies of a Pro Forma Invoice and a purchase order from Milly Glass Works ltd dated 9th and 7th May 2020 [MKBL 3a] and an invoice [MkBL 3b] from Pragati Glass Gulf LLC as evidence of source of their bottles.

8. Regarding the offending bottles that the Applicant’s agents had found and bought in the market the Respondent contends that they were not bought from or displayed at its prencints and the same was used to counterfeit its Sparkler Vodka brand. In this connection, the Respondent has exhibited (MKBL 7) a copy of a letter to the Commissioner-General Kenya Revenue Authority supporting a crackdown on trade in illicit alcohol and tax evasion in Kenya. It is dated 26th November, 2019 signed by Gordon W. Mutugi as Chairman Alcohol Beverages Association [abak]. The letter is a generalized one and does not specifically address or report the alleged counterfeit of the Respondent’s Sparkler Vodka brand being sold in the applicant’s registered design to the Anti Counterfeit Authority or any other relevant authority for action. The Respondent then denies admitting infringement in its advocates letter of 22/1/2020 (KWAL 9) and contend that the applicant has not come to court with clean hands and these proceedings are brought in bad faith because the applicant is unhappy that the respondent has employed Gordon who was formerly employed by the applicant. The Respondent is silent on the issue of reusing bottles sourced from bottle collectors under the used bottle scheme for its Sparkler Vodka brand.

9. The parties filed written submissions and bundles of authorities in addition to the oral arguments made by the advocates at the first hearing of the application which we have taken into account in writing this ruling.

10. The principles for grant of interim or temporary injunctions are now well settled. They are as set out in Giella v Cassman Brown & Co [1973] EA 358 and have been reiterated in subsequent appellant and High Court decisions some of which have been cited before us. First, the applicant must show a prima facie case with a probability of success at the trial, secondly, an injunction will not normally issue unless the applicant is likely to suffer an irreparable injury which cannot be compensated adequately by an award of damages and if in doubt the trial court should decide the application on a balance of convenience or what is in some jurisdictions referred to as the balance of hardship.

11. These legal principles application to interim injunctions, do not change when applied to the protection of intellectual property rights in a registered industrial design from infringement. What is discernable from the High Court decisions relied upon by both the Applicant and the Respondent in the instant proceedings is that once a registered right holder demonstrates it is has a registered industrial design which is in danger of infringement by another party; then the court will grant protection of that statutory right by way of a temporary injunction whether or not the likelihood of irreparable damage is shown. see Nairobi HCCC 588 OF 2014 Safepak ltd V General Plastic ltd [2015 Eklr and Nairobi HCCC 359 OF 2007 Safepak ltd v Dynaplas ltd [2007] EKLr. In the latter case the HON. Justice Warsame [as he then s was] rendered himself as follows;

‘ …. In my understanding, the existence of a right allegedly infringed by the opposite party gives the court the duty or obligation to accord it the necessary protection given by the law. The establishment or demonstration of a right infringed is a prima facie evidence that the case of the plaintiff has a probability of success at the trial. …. On damages, I am minded to hold that, a party entitled to statutory protection cannot be made to suffer loss and damages because the opposite party is able to compensate him for any eventual loss or damages. I do not think the protection of a right through the grant of an injunctive order can be a substitute for damages. In my view damages cannot be in lieu of protection of a right through injunction. In short, my take is that the plaintiff’s case is not one where damages are appropriate due to the protection given under section 92(1) and (2) of the Industrial Property Act.’

12. In the instant case, the first issue for determination is whether the Applicant has established a prima facie case with a probability of success at the trial. In the case of NGURUMAN LIMITED vs JAN BONDE NIELSEN AND ANOR (2012) rightly presented to us by the Respondent, the court of appeal addressed itself on how to establish a prima facie case by stating;

“We reiterate that in considering whether or not a prima facie case has been established, the court does not hold a mini-trial and must not examine the merits of the case closely. All that the court is to see is that on the face of it the person applying for an injunction has a right which has been or is threatened with violation. Positions of the parties are not to be proved in such a manner as to give a final decision in discharging a prima facie case. The Applicant need not to establish title it is enough if he can show that he has a prima facie case on a balance or, as otherwise put, on a preponderance of probabilities. This means no more than the court takes the view that on the face of it the applicant’s case is more likely than not to ultimately succeed”

13. The Applicant has urged us to find that it has a prima facie case because it has a registered design No.1093 which is being infringed by the sale in Kenya (in bottles embodying its registered design) of a drink going by the name of Sparkler Vodka which is associated with the Respondent. The Respondent does not dispute that the Applicant is the registered holder of industrial design No. 1093 but contends that the Applicant has not shown a prima facie case as required by law and the Sparkler Vodka sold in the bottles complained of by the Applicant is counterfeited. In our assessment, the registration of that design prima facie, gives the Applicant exclusive right to the shape and configuration of the bottle in which it markets its Kibao Vodka and by dint of section 92 [1] IPA grants it a statutory right to exclude all others including the Respondent from reproducing, importing offering for sale and selling a product reproducing the protected industrial design, or stocking such a product for purpose of offering it for sale, using or exploiting commercially a product embodying design no. 1093 without the applicant’s consent.

14. The second issue is whether there is an infringement of the Applicant’s registered design by the Respondent. This issue is hotly contested. On one hand, the Applicant asserts that its registered industrial design has been infringed by the Respondent. In support of this assertion the Applicant’s managing director depones that its agent brought to its attention that the Respondent was using bottles which are similar or deceptively similar to the shape and configuration of its industrial design No.1093, it asked the Respondent to cease and desist from infringing, the Respondent impliedly admitted infringement but failed to cease and desist and instead the Respondent’s Sparkler Vodka bottled in bottles embodying the Applicant’s industrial design continued to be in the market.

Its agents bought Sparkler Vodka in bottles embodying the registered design in April this year. It produced exhibit –KWAL 10– and KWAL 11 being photographs of the registered design bottle and the offending bottle together with the purchase receipts that they say were used to purchase those offending Sparkler Vodka.

15. The Respondent on its part has denied being in any way associated with the offending bottles and poked holes on the authenticity of the Applicant’s evidence regarding the offending materials contending that the Sparkler Vodka bottles complained of are counterfeit and there is no way of knowing the source as they were not bought from or displayed in its prencints. That it buys the bottles which it uses to sell its Sparkler vodka from two named companies and the features of those bottles are not similar but uniquely distinct from those in which the Applicant’s Kibao Vodka is sold and marketed. To good measure the Respondent casts doubt on the Applicant’s motivations in bringing these proceedings against it, characterizing it as a mere vendetta.

16. We remind ourselves that the function of a court considering an interlocutory application for an injunction is not to resolve conflicts of evidence or detailed legal arguments but to consider the contending parties positions on a tentative basis to enable it determine whether or not a grant of interim relief to regulate and where appropriate preserve the rights of the parties pending the final determination of the matter is warranted.

17. The parties conflicting factual and legal positions can only be resolved conclusively at the trial of the action. For the moment we observe that the Respondent appears to have been re-using bottles collected from bars, dustbins and garbage dumpsites at some point at least up to 22/1/2020 when the response to the Applicant’s cease and desist letter was written. Equally, though the Respondent says that the Sparkler Vodka bottles complained of by the Applicant as infringing on the design No. 1093 are strange to it pointing out that there is no evidence that they were displayed at their premises and allege counterfeiting of its Sparkler Vodka brand they do not appear to have taken steps to stop or arrest the alleged counterfeiting of their products after the Applicant’s cease and desist letter.

In these circumstances, we are unable to say on a prima facie basis that the Applicant’s complaint that its industrial design No. 1093 has been infringed is an idle one. It appears to us like it is a serious issue for trial.

18. On the question of whether the Applicant will suffer an irreparable loss that cannot be compensated by way of damages, we are not in a position to decide one way or another based on the material before us. The Applicant asserts that it will suffer irreparable loss. There is no sufficient material to guide us as to what the likely loss will be occasioned to the Applicant. The Respondent on its part asserts that no evidential material has been tendered to demonstrate that irreparable injury is likely to result in the event that an interim injunction is not granted at this stage. But that said it is clear to us that the Applicant has a statutory right to the industrial design No.1093 which on the face of it appears to be infringed by the presence in the Kenyan market of Sparkler Vodka embodying the said design. That statutory right requires protection regardless of the magnitude of any resultant loss. We are also alive to the fact that exclusive industrial design rights are granted for a limited period of time and the computation and assessment of damages in intellectual property disputes generally speaking is a herculean task. Declining to protect the Applicant’s right to exploit design No.1093 for part of the limited duration allowed by law on the basis that it has not demonstrated the extent of its loss consequent to the alleged infringement would be inconsistent with the statutory requirement to protection of that right.

19. The last question is on the balance of convenience. In our assessment, the balance tilts in favour of the Applicant because the Applicant stands to suffer economic loss by the continued presence of Sparkler Vodka bottled products that mimic its registered industrial design in the market. On the other hand, no prejudice will be caused to the Respondent by the grant of a temporary injunction forbidding the use of the Applicant’s industrial No. 1093 as the Respondent had no claim to it and will be able to continue marketing its Sparkler Vodka in bottles that don’t offend the Applicant’s registered design.

In the upshot, we allow the Applicant’s application dated 29th April 2020 with cost to the applicant.

Read and delivered virtually on the 3RD day of JUNE ,2020

Signed:

Brown Kairaria - Chairman ……………………………….

Wycliffe Swanya - Member ………………………………

Pauline Mudeshi - Member ………………………………

Brettah Muthuri - Member ………………………………

Dr. Frasia Wangari - Member ………………………………