1
COMPETITION APPELLATE TRIBUNAL
UTPE No.95 of 2007
C.A. No. 45 of 2007
CORAM
Hon’ble Justice G.S. Singhvi
Chairman
IN THE MATTER OF:
M/s. Adidas India Marketing Pvt. Ltd.,
Regd. Office at
C-II, Ansal Villa,
Satbari, New Delhi – 110074.
…Complainant
Vs.
1.
Nike India Pvt. Ltd.,
701, Millenia, Tower B
Murphy Road, Ulsoor,
Bangalore – 560 002, India.
2.
Board of Cricket For India,
Brabourne Stadium (North Stand),
Veer Nariman Road,
Churchgate,
Mumbai – 400 020.
3.
Mr. Sachin Tendulkar,
LA Mer, 10th & 11th Floor,
Mistry Park,
Kadeshwary Temple Road,
Near Leelavathi Hospital,
Bandra, West Mumbai – 400051.
4.
M/s. Iconix,
Palm Court, Ground Floor,
20/4, Sukhrali Chowk,
Opposite HUDA Park,
Sector – 14,
Gurgaon – 122001 (Haryana)
Appearances:
….Respondents
Shri C.Mukund with Ms. Firdouse Qutb Wani and Shri Vivek Anandh,
Advocates for the Appelelant
Shri N.Ganpathy, Advocate for Respondent No. 1
Shri Amit Sibal, Senior Advocate with Ms. Radhe Rangaswamy,
Advocates for Respondent No. 2
Shri Anshuman Nandi, Advocate for Respondent No. 3
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ORDER
The complainant and Respondent No. 1 are private limited companies
incorporated under the Companies Act, 1959.
The complainant is a subsidiary and
representative of Adidas AG. Respondent No. 1 is a subsidiary and representative of
Nike Corporation of USA.
Both are engaged in the business of manufacturing,
distributing and selling quality footwear, sports equipments and other products and are
competitors in the market. Respondent No. 2 is a society registered under the Tamil
Nadu Societies Registration Act. It is a member of the International Council of Cricket
and is responsible for regulating and promoting the sports of cricket in India.
Respondent No. 3, Sachin Tedulkar, is a world renowned cricketer and sports icon.
2.
The complainant’s products and brand have been endorsed by Respondent No. 3
since 1997. For this purpose, they have entered into agreement from time to time
including the one dated 14.05.2004.
The definitions of some of the terms and
paragraphs 4.1, 4.7, 5.2, 5.3, 6(a), 6(b) and 6(c) of that agreement read as under :
1. Definitions
“Adidas Products” shall mean Products bearing any mark, logo, sign,
symbol, or other identifier of the adidas brand but shall not include
watches and eyewear.
“Athlete’s Endorsement” shall mean the Athlete’s – name, nickname,
initials, autograph, voice, facsimile signature, photograph, motion picture,
videotape, likeness or any other endorsement.
“Competitor” shall man any person, entity or organization (other than a
member of the adidas Group) who or which, now or in the future,
produces and/or solely distributes Products within the same or similar
product categories as comprised by the Products.
3
“Contract Period” shall mean the period commencing on February 16,
2004 and ending on February 15, 2009 unless extended or sooner
terminated in accordance with the terms and conditions hereof.
4.
Obligation of the Athlete
4.1
At all times during the Contract Period, without impinging on
Athlete’s
other
sponsor
commitments
(excluding
competing
products) and subject to the professional commitments of the
Athlete
under
BCCI/ICC/IDI/Mumbai
Cricket
Association
Regulations or Contracts, the Athlete shall exclusively wear, use
and promote adidas Products throughout the Contract Territory
whenever the Athlete:
(a)
is training or competing or otherwise involved in athletic events;
(b)
is being filmed by promotional videotape or posing for photographs
or otherwise engaged in promotional or other activities;
(c)
attends any athletic event or training session in the Contract
Territory whether as an athlete, spectator, television commentator
or in any other capacity;
(d)
appears in or is featured in any sporting, lifestyle or general
interest articles or features in any newspapers, magazines or other
publications which is pre-arranged by adidas;
(e)
participates in any public appearance or interview including but not
limited to television, the Internet, wireless technology facilitating
transmission to any portable wireless device which is capable of
receiving data and voice and video communication and other press
appearances in relation to both sporting and non-sporting events.
(f)
engages in sports or sports product promotional activities;
Provided that if it is necessary, as a result of the Athlete’s
representation of or connection with any national or State team
that the Athlete should wear or use any product not sold by any
member of the adidas Group, then the wearing or use of that
product by the Athlete whilst competing on behalf of that national
or State team shall (subject to the provisions of this clause 4) not
be a breach of this clause 4. If it is necessary as a result of the
Athlete’s appearance on television as a commentator or during any
other public appearance or social events or interview on television
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to wear formal/casual wear then the wearing of formal/casual wear
by the Athlete whilst so appearing shall not be a breach of the
Athlete’s obligations under this clause 4. In such an event, the
Athlete must not wear products from brands that compete directly
or indirectly with adidas.
A list of such brands is provided in
Annexure I.
4.7
The Athlete shall not wear, promote, use or otherwise endorse any
Product of a Competitor of adidas or any member of the adidas
Group or any other goods of a Competitor of adidas or any member
of the adidas Group which is sold or under the name, brand, logo,
symbol or other feature which is also used in relation to Products
subject to the following exceptions:
·
The Athlete may participate in a cricket event/tournament
that may be organized or sponsored or endorsed by one of
more of adidas’ competitors during the terms of the
agreement in his official capacity as a member of the Indian
cricket team and or state or regional cricket teams.
·
Participate in a charity event
·
Participate in an international event where the athlete
participates as a world renowned cricketer (e.g. World XI
International matches)
·
Appear on television/radio or internet program provided that
the promotions and advertisements in relation to such
programs shall in no way depict or give the impression that
the athlete is personally endorsing any Competitor of adidas
and tht such programs are not titled using the Athlete’s
name, image or surname in connection with names or marks
of the Competitor of adidas.
5.2
Adidas shall be entitled to, subject to the total number of days as
set out in Clause 4.8 above:
(a)
the services of the Athlete as an on-camera or on-tape performer,
either individually or as part of a group, for production of television
or radio commercials or motion picture, videotape, radio, Internet
or mobile wireless advertising or promotional materials, and/or
(b)
the services of the Athlete, either individually or as part of a group,
in photography sessions, for the purpose of making print or other
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types of advertisement, or for use as promotional materials or as
promotional means, including without limitation, in consumer
magazines, newspapers, direct mail pieces, posters, catalogues,
brochures and point-of-purchase displays and materials and in all
forms of electronic media such as the Internet and mobile wireless
technology now existing or hereafter developed.
5.3
All advertising and promotional materials produced hereunder shall
be and remain the sole property of adidas, and the Athlete shall
have no right, title or interest of any kind in or to such material, any
component part, element or reproduction thereof, nor shall the
Athlete be entitled to the payment of any amounts as royalties or
otherwise in respect thereof. The Athlete hereby acknowledges that
it does not have any rights whatsoever to use the adidas trade
marks or any other names, designs or marks of adidas or of any
member of the adidas Group or to license or authorize any third
party so to do and in particular (without limitation) the Athlete
undertakes that the Athlete shall not use such rights without
obtaining the express prior written consent of adidas. The Athlete
irrevocably and unconditionally waives any moral rights and
performance rights which the Athlete might have in respect of any
advertising or promotional materials to the extent permitted by law.
6.1
The Athlete represents and warrants that the Athlete :
(a)
is free to enter into this Agreement and to fulfill and perform the
Athlete’s obligations contemplated herein;
(b)
is the sole owner of the promotional, endorsement and licensing
rights (including the Athlete’s Endorsement) granted hereunder and
that the Athlete has not granted, and agrees that the Athlete will
not grant, any right, license or privilege, or any option relating
thereto during the Contract Period or any extension thereof with
respect to the Athlete’s promotional, endorsement or consulting
rights and services to any Competitor of adidas or any member of
the adidas Group;
(c)
has not entered and will not enter into any other contractual
commitment
that
will
prevent
or
substantially
impair
performance of the Athlete’s obligations under this Agreement;
the
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(d)
does not know of any existing health problem or medical condition
which may significantly affect the Athlete’s ability as an athlete and
the Athlete shall notify adidas if the Athlete becomes aware of any
health problem or medical condition which subsequently arises
during the Contract Period and which may significantly affect the
Athlete’s ability as an athlete; and
(e)
does not now, and did not during the year prior to the date of
execution of this Agreement, and shall not during the Contract
Period or any extension thereof, use or possess any drugs or other
substances, the use or possession of which is prohibited by
applicable law or any applicable rules or regulations of any sports
federation or national or international sports organization with
jurisdiction over the Athlete.
(Emphasis added)
3.
On 15.12.2005, Respondent No. 2 invited tenders for sponsorship and supply of
footwear, apparel and related cricketing accessories for a period of five years
commencing from 01.01.2006. The complainant and Respondent No. 1 submitted their
respective bids.
After considering the same, Respondent No. 2 awarded contract to
Respondent No. 1. As a sequel to this, the parties signed an agreement on 23.12.2005
with the title SPONSORSHIP AND LICENSE AGREEMENT. The definitions of the relevant
terms and clauses 5, 7, and 10 of agreement dated 23.12.2005 read as under :
(b)
“National Team(s) shall mean the Men’s Senior National Team,
Men’s A Team, Men’s Jr., Under 20, Under 18, Under 16 and other
National Teams, which participate in “National Team Competition”
(as such term is defined below), as well as any other national
teams developed by BCCI, and the players, coaches and staff who
comprise each team, and shall also include players and team
participating in the BCCI academies.
(c)
“National Team Competition” shall mean all international cricket
competitions sanctioned by the ICC and/or BCCI, including all
exhibitions, training matches and clinics in which a National Team
participates as a team representative from India, and all other
BCCI-sponsored events in which a National Team participates.
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(f)
“Staff” shall mean collectively, assistant coaches, physiotherapist,
equipment managers, trainers and other field staff employed by
BCCI or any National Team to provide coaching and support
services to any such team and its players.
(j)
“Licensed Marks” shall eman the BCCI name, logo and trademarks
as set forth on Exhibit. A hereto and any other trademark now or
hereafter owned or used by BCCI.
(k)
“Products” shall mean:
(1)
All formal uniforms including shirts, trousers, blazers, ties
and socks;
(2)
Clothing articles for the ODI and test teams including but not
limited to shorts, shirts, pants and socks, training apparel,
practice wear, windcheaters, caps, helmets and scarves
which Players wear or may be reasonably expected to wear
while participating in competitions;
(3)
All accessories of an athletic or sports-related nature, limited
to headwear, sunglasses, eyewear and carrying bags,
headbands, wristbands, which Players normally wear; and
(4)
(s)
Athletic Footwear.
“Logo” shall, unless excluded otherwise specifically dealt with,
means the trademarks/ Brand names as specified in schedule I
hereunder written or As may be mutually acceptable between BCCI
and Nike In writing, but subject to existing Standard Playing
Conditions and Regulations and Restrictions of ICC including its
size, specifications, Dimensions, modifications or exclusions as
detailed in Schedule II hereunder mentioned.
(t)
“Match”
shall
mean
any
test
match
or
Match
including
tournaments, series or bi-lateral, Tours or otherwise which is
officially recognized by BCCI and/ or ICC whether organized by
BCCI or any other Cricket Board and/ or included in the ICC
Calendar involving the Indian Team.
5.
GRANT OF ENDORSEMENT RIGHTS & OFFICIAL SPONSORSHIP
DESIGNATIONS
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BCCI hereby grants to NIKE, and NIKE hereby accepts:
(i)
The designation as “the exclusive supplier of the athletic
footwear, apparel and accessory products of BCCI and
Cricket India; and
(ii)
The right to utilize (subject to the approval provisions of
Paragraph
10
Designations
below)
worldwide,
the
Licensed
in any
Marks
and/or
media including,
the
worldwide web, CD-ROM and other interactive and multimedia technologies, in connection with the manufacture,
advertising,
marketing,
promotion
and
sale
of
NIKE
Products, and the NIKE brand, and in the creation and
production of NIKE sports-themed games and broadcast
programming, subject to clause 10 below
Such rights shall specifically include, the following:
(a)
The exclusive right to supply Products for each Team and to
use the Designations;
(b)
Exclusive endorsement rights for the Athletic Product
Category for BCCI grassroots activities and development
programms;
(c)
The right to manufacture and sell (subject to Paragraph 9
below) NIKE Product bearing or incorporating Licensed
Marks and to conduct promotions with and through NIKE
retain accounts; and
(d)
The right to use, without additional cost (unless otherwise
provided), in connection with the advertisement and
promotion
of
NIKE
Products
and
the
NIKE
brand,
photographs and/or videotape/film footage of National Team
game-action,
National
Team
Players
and/or
Coaches
(respectively, “BCCI Photos” and “BCCI Footage”) in their
respective official National Team uniforms, NIKE-S use, if
any, of BCCI Photos or Footage of minimum of 5 players
who
have
not
either
entered
into
an
endorsement
agreement with NIKE or otherwise expressly granted
permission to NIKE to use his or limited to use in a team
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context or incidental use only to the extent necessary to
effectuate the use in which such Player’s image or likeness
appears as it may so decide provided that no such campaign
or advertisement shall constitute personal endorsement of
NIKE or any of its products or services or otherwise by any
individual players (s) in any manner whatsoever nature.
7.
SUPPLY OF PRODUCTS FOR TEAMS.
(a)
Apparel, Footwear & Accessories. In further consideration of the
sponsorship benefits to be provided and licensing rights granted by
BCCI, and of the other obligations undertaken by BCCI herein, each
Contract Year, NIKE shall supply to BCCI, free of charge (unless
otherwise specified), for non-returnable use during the Term by
each National Team for use in National Team Competition by the
Players, Coaches and Staff members of each such, NIKE Products
(including balls). The exact quantities, styles, sizes and delivery
dates of such NIKE Products shall be mutually determined by NIKE
and BCCI; provided, however, that in no event shall the total
quantities of Official Team Uniforms and NIKE footwear Products
exceed the total retail value allocated for each Contract Year
(“Product Supply Cap”) as follows:
2006: Rs. 72,000,000 (Rupees Seven Hundred Twenty lacs only)
2007: Rs. 72,000,000 (Rupees Seven Hundred twenty lacs only)
2008: Rs. 72,000,000 (Rupees Seven Hundred twenty lacs only)
2009: Rs. 72,000,000 (Rupees Seven Hundred twenty lacs only)
2010: Rs. 72,000,000 (Rupees Seven Hundred twenty lacs only)
Products allowance includes footwear for any non-personally
endorsed athletes in the National Teams.
BCCI may order and purchase additional NIKE Products from NIKE
at NIKE’s cost plus twenty percent (20%).
BCCI may at its sole discretion decide to pay for the product
directly or thru its Team sponsor. If BCCI decides to do the same
then BCCI will take the amount listed above towards base
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compensation. Thus for computation purposes the amount listed
above will count towards additional revenue to BCCI, and will be
used to compute minimum payout to the BCCI in deciding who is
the successful bidder under the tender terms.
( b)
NIKE Acknowledges that the BCCI has given rights to a team
sponsor whose logo shall prominently appear on the chest and
leading arm of the player. This logo shall be faithfully reproduced
by NIKE on all shirts. BCCI shall not permit any team or player to
add any other trademark or logo other than BCCI, NIKE or ICC in
accordance with ICC guidelines without NIKE’s prior written
consent.
The team sponsor shall provide NIKE the right to produce and
reproduce through registered trademarks or logos on the product
and the advertising with NIKE intends to undertake pursuant to
Clause No. 10 hereunder.
BCCI and NIKE agree that the team sponsor shall be a person or a
company that is not directly engaged in a business in direct conflict
with NIKE.
(c)
BCCI shall insure that the NIKE Product supplied pursuant to this
Agreement shall not be altered in any way.
10.
ADVERTISING AND LICENSED PRODUCT APPROVAL
( a)
Advertising. In order to establish and maintain high standards of
style, quality and propriety associated with BCCI and its teams, in
the event NIKE desires to use Licensed Marks in any advertising or
promotion, NIKE shall first submit the concept or a sample of the
proposed use to BCCI for approval, which approval shall not be
unreasonably withheld. Under no circumstances shall any use of
Licensed Marks or the image or likeness of any Player, Coach or
Staff member, which BCCI in good faith believes reflects
unfavorably upon or disparages BCCI or its teams, be approved.
BCCI shall use its best efforts to advise NIKE of its approval or
disapproval of the concept or sample within fifteen (15) calendar
days of its receipt of the concept or sample.
If BCCI has not
conveyed its approval or disapproval of the concept or sample in
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writing within such 15-day period, it shall be deemed to have
granted its approval of the concept or sample as submitted.
(b)
Quality Control and Licensed Product. All Licensed Product shall
meet and conform to the high standards of quality, style and
appearance of BCCI.
Prior to any commercial production or
distribution of any Licensed Product, NIKE shall, at its expense,
submit to BCCI (or its Agent) for approval two samples of each
Product. BCCI shall use best efforts to notify NIKE of the approval
or disapproval of the submitted item within ten (10) calendar days
of receipt thereof. BCCI’s approval, or disapproval, shall be final
and in writing. Any submitted item that has not been disapproved
within twenty (20) calendar days of receipt by BCCI (or its Agent)
shall be deemed approved. Once the submitted item is approved,
NIKE shall not depart there from in any material respect.
(c)
In the event BCCI desires to use the NIKE Marks in any advertising
or promotion, BCCI shall first submit a sample or the concept of the
proposed advertisement or promotion to NIKE for approval, which
approval shall not be unreasonably withheld.
4.
During the currency of its agreement with Respondent No. 2, Respondent No. 1
manufactured and sold T-shirts bearing the names of various members of Indian Cricket
Team including Respondent No. 3 and the number allotted to him by Respondent No. 2.
It also came out with series of T-shirts known as “Nike Cricket Hero Tees”.
The names
of the players were printed on the front as well as the reverse side of these shirts.
5.
The complainant sent legal notice dated 20.10.2006 to Respondents Nos. 1 and
2 claiming that the manufacture and sale of T-shirts by Respondent No.1 with the
names and personal attributes of Respondent No.3 amounted to breach of agreement
dated 14.05.2004 and an unfair trade practice within the meaning of Section 36-A of
the Act. In reply, the advocate for Respondent No.1 sent letter dated 27.10.2006 to
the complainant’s counsel denying the allegation made on behalf of the complainant
and, at the same time, sought time to send comprehensive reply, which was done on
17.11.2006. The relevant paragraph of that reply is reproduced below :
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“Nike wishes to inform your client that its manufacture and
sale of the merchandise in question and the use of all names
and marks thereon is licensed by the Board of Control for
Cricket in India (“BCCI”) which your client is aware, is the
central gaoverning body of the game of cricket in India, and
with whom Mr. Sachine Tendulkar as an Indian national
team player has executed one or more contract. The use of
the names of the players in the Indian national cricket team
is not meant to signify an endorsement by these players of
Nike’s products but only stems from the rights granted by
BCCI in Nike’s favour as the official apparel sonsor of the
India national cricket team. Please note that Nike is bound
by certain obligations of confidentiality in the agreement it
has entered into with the BCCI.”
(emphasis added)
5.
In the meanwhile, the complainant sent letter dated 8.11.2006 to Respondent
No. 1 annexing therewith a fax/letter of the same date received from M/s. Iconix on
behalf of Respondent No. 3 that he had not endorsed any product of Respondent No. 1.
6.
After some time the complainant filed complaint under Sections 36-A, 36-D, 10
and 37 of the Monopolies and Restrictive Trade Practices Act, 1969 (for short, ‘the Act’)
and prayed that an enquiry be ordered into the alleged unfair and restrictive trade
practices indulged by Respondent No. 1 and a direction be issued to it to discontinue
such practices. The complainant further prayed that Respondent No. 2 may be directed
to ensure that Respondent No. 1 does not indulge in such practices. The complainant
also filed an application under Section 12-B read with Section 36D and Section 37 of the
Act with prayers substantially similar to those contained in the main complaint.
Paragraphs 17, 18, 19, 20, 21 and 22 of the complaint as also letter dated 8.11.2006
sent by M/s. Iconix on behalf of Respondent No. 3 are extracted below :
17.
That, pertinently, a distinction has been consciously maintained in
the agreement of BCCI & Nike India between the “product” which
are the subject matter of the agreement and the “marks” which the
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sponsoring companies are authorized to put upon such product.
The product by itself means only the bare team uniform or product
without any marks. The products are required to be marked in the
manner provided in the agreement wherein only the licensed marks
i.e. “BCCI name, logo and trademarks used by BCCI” are permitted
to be marked upon such products.
As stated above the name,
number or personal details of any player are not in the nature of
trademarks falling in the definition of Licensed Marks. Hence, Nike
India cannot claim usage of name or personal details of any player
or their image or likeness under its agreement with BCCI.
18.
That in fact under the said Agreement, as per draft floated by
BCCI, a clear distinction is also made by BCCI between the identity
of the BCCI Team and the individual identity of a player.
The
agreement shows that conscious effort has been made by BCCI to
prevent the said agreement to be used by Nike India as a personal
endorsement of their product by any individual players. Prohibition
to this effect is indicated in clause 5(d). Clause 8 (c) shows that
BCCI does not recognize the right of Nike India to use the name,
personal attributes or image of any individual player unless they
have contractual endorsement relationship with such players.
Clause 12 contains additional representation and warranty wherein
under sub clause b(1) & (2), BCCI has acknowledged the
intellectual property and other rights of third parties and its
intention not to violate any such rights.
19.
That in this regard it is categorically stated and claimed by Adidas
India that the name and personal details of any individual players
and more specifically Mr. Sachin Tendulkar are not part of name,
logo or any trade mark belonging to BCCI.
BCCI has no right or
property in such name and personal details and none is in fact
claimed by them to the understanding of Adidas India. Mr. Sachin
Tendulkar is individually free to endorse any products of his choice.
BCCI or Nike India and any trademarks used by them cannot
interfere in such bonafide use of his name and other personal
details for endorsement of the products of Adidas India as per the
mandate of section 35 of the Trade marks Act.
BCCI and Nike
India cannot indulge in any conduct, which may interfere with or
14
violate the exclusive endorsement rights bonafide given by the said
athlete to Adidas India.
Nike India has, therefore, no right or
authority to mark their products with the name and personal details
of the said athlete.
20.
That however it appears that Nike India, apparently misinterpreting
their agreement with BCCI, has started manufacturing, distributing
and selling T-shirts bearing the name and other personal details of
Mr. Sachin Tendulkar purporting the same to be licensed product
under its agreement with the BCCI.
By doing so Nike India is
projecting and falsely representing that they and their products
have the personal approval of and/or affiliation/association with Mr.
Sachin Tendulkar and are endorsed by him.
This is strongly
objected to by Adidas India who have the exclusive endorsement
rights in this regard. However, Nike India who are fully aware of
this position are consciously engaging in this unfair trade practice
and passing off themselves and their products as having the
privilege of such affiliation/association, approval and endorsement
of Mr. Tendulkar. They are thereby fraudulently trading upon and
devaluing/damaging the exclusive endorsement rights of Adidas by
cheating and deceiving innocent consumers who are likely to
purchase
these
products
believing
that
these
have
the
endorsement of Mr. Sachin Tendulkar and are affiliated with him
and associated with his name.
21.
That it may be pointed out that Nike India has come out with a
series of T-shirts known as “Nike Cricket Hero Tees”. These are
plain coloured T-shirts with name “Tendulkar” mentioned on the
front as well as the reverse side.
These are T-shirts of inferior
quality and designs, which are sold at a price of Rs. 895.00 a piece
only for the reason that the same has the name “Tendulkar”
printed upon them.
It is submitted that the T-shirts have no
significant value except for the name of “Tendulkar” written on the
same, which is the only reason for the purchase of such a T-shirt
by any consumer at such a price. But, for the name of the player
being so marked on these T-shirts, Nike India can’t possibly sell
these at such a price. It is stated that in this manner Nike India
are violating the rights of Respondent No.3, which have been
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exclusively granted to the Adidas India and at the same time
unjustly enriching themselves.
A copy of the Printed Brochure
issued by Nike India mentioning these T-shirts is annexed herewith
and marked as Annexure P-4. Photographs of some of these Tshirts being so marked and sold by Nike India are annexed
herewith and marked as Annexure P-4A.
22.
That the above actions of Nike India are absolutely illegal and
without any lawful authority to mark their products with the name
or any other personal details or attributes of Mr. Sachin Tendulkar
is in violation of exclusive endorsement right given of Adidas India.
These actions are in violation of legal rights of Mr. Sachin
Tendulkar as exclusively conferred on Adidas India. These actions
also amount to an unfair trade practice under the provisions of
Section 36A(1) (iv) & (v) of the Monopolies and Unfair Trade
Practices Act.
Such markings of the product by Nike India also
amount to applying a false description to their products as per
Section 2 (za) (viii) of the Trademark Act.
Letter/fax dated 08/11/2006 sent by M/s. Iconix :
“Under the provisions of the Clause 5.1 of the Agreement, Sachin
has exclusively granted the right and license to use his
endorsement (defined as “Athlete’s Endorsement” in the
Agreement) only to Adidas and the members of the Adidas Group
without any limitations whatsoever.
As such, only Adidas and
members of the Adidas Group can use the Athlete’s Endorsement in
relation to manufacture, sale, distribution and promotion of their
products to the exclusion of all their competitors including Nike.
Sachin has adhered to his obligations & assurances under the
various Clauses of the Agreement including those as specifically
granted, represented and warranted by him under Clauses 5.1 &
6.1 (a), (b) & (c). We, on behalf of Sachin, again confirm all the
representations,
warranties
&
assurances
given
under
the
agreement.
He has no contractual commitment which would in any manner
detract from or impair the performance of his obligations under the
above quoted Agreement with Adidas.
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Sachin and ICONIX are anguished and strongly resent the inactions
of Nike India in marking Sachin’s name and particulars on their
products being sold in the open market without his or our authority
or consent. ICONIX, on his behalf, categorically declare that he
does not endorse the products of Nike India and have no
contractual or legal relationship with them.
Nike has no authority to use his name, particulars, image or
likeness or any devise or materials suggestive or indicative of his
personal endorsement or personal approval/affiliation for promotion
of their brand or products. Sachin is aggrieved by the actions of
Nike India, which is a cause of loss & injury to him, Adidas as well
as
to
cricket
fans
who
choose
products
based
on
his
endorsements.”
7.
On being noticed by the Commission, Respondents Nos. 1, 2 and 3 filed separate
replies. While Respondent No. 3 supported the complaint, Respondents Nos. 1 and 2
raised a preliminary objection to the maintainability thereof on the ground that it was
at best a case arising out of the alleged breach of contract.
On merits, Respondent
No. 1 pleaded that it was associated with cricket since 1990 and sold cricket shoes
under the brand names like “Air Flipper”, “Air Yorker”, “Air Century” and “Boundary”
apart from other cricket accessories, that it had secured products used and
endorsement contracts with top cricket players, namely Shane Warne (Australia) and
Ian Botham (England). According to Respondent No. 1, the agreement entered with
Respondent No. 2 is self explanatory and by manufacturing T-shirts including “Hero Tee
Shirts”, it has not violated any provisions of the Act.
In paragraphs 8, 9 and 10 of the
reply, Respondent No.1 made the following averments :
8.
The averments contained in these paragraphs are not to the
knowledge of this respondent and the petitioner is put to strict
proof of the same.
It is interesting to note that the petitioner
claims its rights under a purported contract with the third
respondent, but has failed to produce a copy of the same before
this Hon’ble Commission.
It is also interesting to note that the
17
purported contract between the third respondent and the petitioner
has not been placed before this Hon’ble Commission. It is further
submitted that from the averments in these paragraphs it would
appear that the contract, if any exists, is restrictive and anticompetitive.
Without prejudice to all of the foregoing it is
submitted that this respondent is the official supplier of apparel to
the second respondent and Cricket India. This respondent’s use of
third respondent’s name and attributes in the manner actually
used, is permitted by the second respondent.
This respondent
believes that this permission is granted in exercise of rights accrued
to the second respondent under its contract with the third
respondent. This respondent is entitled to use all licensed marks
belonging to or otherwise used by the second respondent and the
attributes of a player are held out to be a licensed mark, owned by
the second respondent and this respondent has no reason to
believe that this is not the case. It is relevant to point out that
Clause 12(b)(1) of the agreement attached by the petitioner bears
that the second respondent represented to this respondent that in
performing the agreement it could not be violating any of the rights
of any other person including the right to grant the benefits set
forth in the agreement. It is interesting to note that although, in
the process of exchange of notices leading to the institution of this
petition, the third respondent was called upon to confirm whether
or not he had granted the rights to the use of his attributes to the
second respondent, he has not done so.
The letter dated
18.01.2007 purportedly written by the third respondent is vague
and evasive and will be exposed as such in the course of
arguments.
9.
It is submitted that the tenor of pleadings in the paragraphs under
reply is argumentative and completely meritless.
submitted
that
the petitioner
is
for
its
own
It is also
convenience
demonstrating deliberate inconsistency in complaining about the
first respondent’s use of the third respondent in this manner, as the
Petitioner’s parent and group companies in other parts of the world
have produced products bearing the name and attributes of
prominent Nike-sponsored athletes such as Lebron James, Kobe
18
Bryant and Ronaldo, allegedly pursuant to rights obtained from
contracts with their teams or federations. It is reiterated that the
use of the third respondent’s attributes by this respondent on its
products is permitted by the second respondent. Hereto annexed
and marked Annexure-A is a copy of the art work of the Hero Tee
Shirts which were specifically permitted to be used by the second
respondent in accordance with the approval procedures in Clause
10(b) of the agreement. The copy produced bears that the same
has been consented to by Mr. Lalit Modi who represents the second
respondent. This respondent shall rely on documents on record in
support of its contentions. All averments contrary to the stance of
this respondent are denied as false.
10.
It is belief of this respondent that the right to attributes of the
individual players of the Indian national cricket team have been
acquired by the second respondent.
This respondent has been
permitted to use these rights. It is denied that the activities of this
respondent are in any manner contrary to law or infringing of any
right whatsoever. It is further submitted that this respondent has
not any point in time “interfered” in or “violated” the use of the
attributes of the third respondent by the petitioner.”
8.
In its reply Respondent No. 2 pleaded that it is a body responsible for promotion
and administration of the game of cricket in the country and the players who play
matches representing the country do so under the agreement entered with it; that the
advertisement rights pertaining to the matches are the property of Respondent No. 2
and it has the discretion to award contract for such advertisement. Respondent No. 2
denied that Respondent No. 1 had indulged in any unfair and restrictive trade practice.
9.
After hearing counsel for the parties and taking note of the statement made on
behalf of Respondent No. 1 that it had stopped manufacturing T-shirts from October,
2006, the Commission directed an enquiry in the matter. Notice was also issued on the
application filed under Section 12-B of the Act. Respondent No. 1 filed reply dated
29.4.2008 and reiterated the stand taken in the initial reply. It has further pleaded that
19
the complainant does not have the locus to institute proceedings under the Act. In a
separate reply filed through its Secretary, Respondent No. 2 has raised an objection of
the maintainability of the complaint on the ground that the dispute raised by the
complainant is purely a contractual dispute of commercial nature and such dispute
cannot be adjudicated by the Commission and that the remedy, if any, available to the
complainant is to approach the Civil Court. Respondent No. 2 has relied upon Sections
2(o), (s), (u), 36-A and 36D of the Act and pleaded that no relief can be granted to the
complainant because it (Respondent No. 2) is not engaged in any trade or trade
practice as defined under the Act. In paragraph 10 of the reply, Respondent No. 2 has
averred as under :
“10.
Without prejudice to the preliminary objections raised hereinabove,
I have the following to say on the merits :
i)
That the goods in question are ‘NIKE CRICKET Hero Tees’ which
were allegedly sold by the respondent No. 1. It is clear that there
is no public interest whatsoever involved in the question of whether
or not the Respondent No. 1 should be restrained from selling the
tee-shirts in question, for the following reasons :
(a)
There is no “unfair trade practice” involved because there is
no possibility whatsoever of confusion among members of the
general public as to whether the individual whose name appears on
the shirt is sponsoring or approving the product. It is clear from a
cursory examination of the shirt that the essence of the association
evoked by the product is not with the individual but to the player as
a member of the Indian cricket team :
(i)
the word “India” is prominently featured across the front of the
shirt, establishing that Sachin Tendulkar is only referred to as a
member of the Indian team;
(ii)
the number “10” which appears prominently on the front and back
is the number allocated by the Answering Respondent to Mr.
Tendulkar only in his capacity as a member of the Indian team;
and
(iii)
shirts.
20
It would be absurd to suggest that the mere display for sale of a
series of such shirts making prominent reference to the Indian
cricket team bearing the names and numbers used by different
players when
they play
for India would
amount to any
representation that each such player has individually endorsed the
products of the manufacturer under Section 36A of the MRTP Act.
Therefore, the sale of such shirts, without more, cannot be an
“unfair trade practice” or “restrictive trade practice”.
(b)
The fallacy in the Complainant’s argument is that any appearance
of a name on a piece of clothing automatically amounts to a
representation that the person named has endorsed the product
regardless of the context.
The shirts in question by definition
evoke an association with the team that plays for India. The mere
sale of shirts bearing the name and number of any player including
Respondent No. 3 only promotes the game of cricket and cannot by
itself signify in any way that the given player has endorsed that
particular piece of clothing. Such team-oriented sports apparel in
no way signifies the sponsorship or approval of any individual
player. For instance, if several “Nike Cricket Hero Tee” shirts which
are identical in all respects save in respect of the name of the
individual player are displayed on hangers for sale at a store, no
reasonable person would believe that each of the different players
named on each of the identical shirts has endorsed it. The only
interest involved in the present complaint is the commercial interest
of the Complainant pitted against its trade rival, Respondent No. 1.
(c)
When members of the public purchase such “Nike cricket hero
tees” or similar clothing they are not concerned with whether the
individual player has endorsed or approved the clothing.
They
purchase it because they wish to own the piece of clothing that
evokes the Indian cricket tem and individuals as members of the
team.
Therefore there is no element of deception or lack of
fairness in selling such clothing, and therefore no detriment to the
public interest.
(d)
The sale of such sports apparel which refers to and evokes
identification with the Indian cricket team to the public is squarely
in the public interest because it creases and promotes interest in
21
and enthusiasm for the team in particular and the game of cricket
in general, and encourages the members of the general public to
play cricket and watch cricket live at stadia, where the members of
the public prefer to wear such apparel, and encourages interest in
following cricket on TV and radio and on the internet. The use of
the players’ attributes including their names and numbers assigned
to them in the context of their performance of duties as members
of the Indian cricket team to promote the sport of cricket is in the
public interest.
(ii)
Thus there is a fundamental distinction between the use of players’
attributes in a team context and the use of their attributes to
signify that they endorse a product. The Nike Hero tees are an
instance of the former not the latter, and sale of such shirts cannot
be an “unfair trade practice” or “restrictive trade practice” under
the Act.
(iii)
The sale of the shirts in question is neither unfair nor deceptive. As
admitted by the Complainant in para 3 of the Complaint, the BCCI
is the sole apex body for the promotion and administration of the
game of cricket in the country. It selects and promotes the team
representing India and owns the events organized by it where such
players play for the country.
The players who play matches
representing the country do so only under agreements entered into
with the BCCI. The BCCI has the right to use players’ attributes
including their names and numbers assigned to them in the context
of their performance of duties as members of the BCCI team to
promote the sport of cricket.
The players of the Indian cricket
team can enter into an agreement with third parties for only those
rights which belong exclusively to them and not those which
pertain to their performance on the field representing Team India
which is selected and promoted by the BCCI. Even the Respondent
No. 3 very clearly states in his counter affidavit that he is only
concerned with the use of his player attributes for a commercial
purpose in particular at paras 3(b), 3(e) and 3(g) of his affidavit
dated 11.10.2007. he is by implication not concerned with the use
of his attributes in the context of performance of his duties as
22
member of Team India to promote the sport of cricket, which
duties are in the public interest.
(iv)
Without prejudice to the contentions raised above, I further say
that the respondent No. 1 and Answering Respondent have entered
into a sponsorship and license agreement (hereinafter referred to
as the “SLA”) dated 23.12.2005. It is submitted that the SLA does
not permit any sale of products which signify endorsement of Nike
India or its products by individual players.
(v)
I further say that the allegations of the Complainant in respect of
use of photographs/footage by Nike India also reflect the private
commercial motive against Nike India as trade rival which solely
drives the complaint. The allegations in this regard are also vague
and devoid of material particulars.
Significantly, however, the
Complainant nowhere avers that photographs/footage of less than
the minimum number of 5 players stipulated under the SLA has
been used by Nike India. Clause 5(d) of the SLA grants Nike India
the right to use, for the development and promotion of Nike India
products and the Nike brand, photographs and/or video tape/film
footage of national team game action, national team players and/or
coaches in their respective official national team uniforms.
Nike
India’s use if any of the BCCI’s photos or footage of minimum of 5
players who have not either entered into an endorsement
agreement with Nike India or otherwise expressly granted
permission to Nike India to use his or her image or likeness for
commercial purposes is limited to use in a team context or
incidental use only to the extent necessary to effectuate the use in
which such players image or likeness appears. The SLA expressly
prohibits the use of such photographs or footage as personal
endorsement of Nike India or any of its products or services or
otherwise by any individual player in any manner whatsoever.
Thus clause 5(d) of the SLA explicitly recognizes the distinction
between use of footage/photographs in a team context on the one
hand and their use to signify personal endorsement by an
individual, a distinction that eludes the complainant.”
23
10.
In the rejoinders filed by it, the complainant has reiterated its plea that
Respondent No. 1 is guilty of unfair and restrictive trade practices.
11.
After enforcement of Section 66 of the Competition Act, 2002, all the matters
pending before the erstwhile Commission were transferred to this Tribunal.
On
27.7.2010, the Tribunal framed the following issues :
1. Whether the proceedings in the present form are maintainable under
the Monopolies and Restrictive trade Practices Act, 1969 (in short “The
Act”)?
2. Whether R-1 is guilty of indulging in unfair and restrictive trade
practices as alleged?
3. Whether the complainant is entitled to compensation in terms of
Section 12-B of the Act?
4. If the answer to the Issues nos. 3 & 4 are in the affirmative, whether
the proceedings are in the public interest?
12.
The complainant produced evidence in the form of affidavit of Ms. Neeru Bhalla,
who was then working as Company Secretary. She was cross-examined on 6.8.2012,
9.11.2012 and 11,12,2012 by the counsel for Respondent No. 1 and on 20.2.2013 by
the counsel for Respondent No. 2. Respondent No. 1 produced evidence in the form of
affidavit of Jatin Paranjape who was Sports Marketing Head between May 2006 and
March 2012.
He was cross-examined by the complainant’s advocate on 17.2.2014 and
21.2.2014. Respondent No. 2 filed an affidavit of Ratnakar Shetty (General Manager,
Cricket Development) of Respondent No. 2.
He was cross-examined on 12.5.2014 and
11.8.2014.
13.
Before proceeding further, I may mention that like other players, R-3 had signed
agreement dated 04.01.2006 with Respondent No. 2. Clauses 4.1.1, 4.1.4, 5.1.1 and
5.1.3 thereof read as under :
“4.1
Use of the Player’s Attributes for Promotion of Cricket:
24
4.1.1 Subject to Clause 4.1.3, the Player grants to the BCCI a royalty-free
license to use his Attributes for the publicity and promotion of
cricket, in or on any materials including, but not limited to,
newspapers,
magazines,
motion
pictures,
match
programs,
broadcasts, telecasts, web-casts, billboards and all other media
provided that:
4.1.1.1 the Player’s Attributes will be given equal exposure along with at
least five (5) other players drawn from different graded categories
of the BCCI Team.
Further provided however that this Clause
4.4.4.4 shall not apply to instances where the BCCI desires to use
the Player’s Attributes for mementos, souvenirs and handbooks for
the promotion and publicity of cricket; and 4.1.1.2 the BCCI must
give the Player at least fifteen (15) days notice of its intention to
use the Player’s Attributes in advertisements.
4.1.4. In the event the BCCI wishes to use the Players Attributes for
commercial purposes (such as licensing
and merchandising
activities), the BCCI and the Player shall mutually agree the
royalties to be paid to the Player, on a case to case basis and enter
into a separate agreements for that purpose.
5.
Sponsorship and Endorsements:
5.1.1. The Player acknowledges that the BCCI has the sole and exclusive
right to permit any person to represent that they or their goods or
services, have the sponsorship or approval of, or are in any way
endorsed by or associated with the BCCI or any BCCI Team.
5.1.3. The Player agrees that the BCCI may allow the BCCI Sponsor to
use the Player’s Attributes in promotional and advertising activities
for the BCCI Sponsor, provided that (i) the BCCI gives the Player
drawn from different graded categories of the BCCI Team ar also
involved in such activities; (ii) such promotional and advertising
activities do not exceed a total of six (6) working days ( for
clarification a working day means not more than eight continuous
hours) per annum; and (iii) the Player shall have the right of
reasonable approval of commercials relating to the promotion and
advertising of the BCCI Sponsor and the outline of any proposed
25
promotional campaign, provided, however, that the player shall not
unreasonably withhold his approval. A copy of the story-board will
be sent to the player two (2) weeks prior to the shoot of a
commercial for his approval. If the BCCI does not get an approval
in writing within five (5) working days of receipt f the story board
by the Player it will be deemed as approved. With respect to usage
of the Players Attributes in press and other below the line
advertising, layouts of the advertising material will also be sent to
the Player for his approval.”
(emphasis added)
14.
It also needs to be mentioned that Respondent No. 1 had manufactured T-Shirts
and “Nike Cricket Hero Tees” for a short span of less than six months during 2006. Out
of these 5000 T-shirts bore the name “Tendulkar” and the number 10 assigned to him
by Respondent No. 2 and during this period, the complainant had not manufactured
and sold T-Shirts with the name and personal attributes of Respondent No. 3.
15.
Shri C. Mukund, Learned counsel for the complainant extensively referred to the
pleadings of the parties and various agreements and argued that Respondent No. 1,
who is competitor in the business of manufacturing, distributing and selling foot-wear,
sports equipments and other products should be declared guilty of indulging in unfair
and restrictive trade practices because it deliberately manufactured T-Shirts with the
name of Respondent No. 3 knowing that he has already entered into an agreement with
the complainant not to endorse any such articles/goods manufactured/produced by any
other person. Learned counsel emphasized that Respondent No. 1 misinterpreted and
misuse the agreement entered with Respondent No. 2 and manufactured T-Shirts with
the name and personal attributes of Respondent No. 3 with the sole object of
enhancing its profits. Shri Mukund submitted that Respondent No.3 is a cricketer of
international fame and with the object of encashing his popularity, Respondent No. 1
unauthorizedly manufactured, distributed and sold T-Shirts with his picture and name
etc.
Shri Mukund further argued that Respondent No. 1 cannot take advantage of
26
clause 5(d) of the agreement executed by it with Respondent No. 2 because there was
no agreement between Respondent No. 1 and Respondent No. 3 authorising the former
to use the name, photograph etc. of the latter in the goods manufactured by it. In
support of his argument, Shri Mukund relied upon some portions of the affidavits filed
by Jatin Paranjape and Ratnakar Shetty on behalf of Respondents Nos. 1 and 2
respectively and their cross-examination.
16.
Shri N. Ganpathy, learned counsel for Respondent No. 1 argued that allegation of
unfair and restrictive trade practices levelled against his client is baseless and the
Commission committed a jurisdictional error by entertaining the complaint filed by its
competitor in business. Learned counsel referred to the photographs of T-Shirts, which
are available at pages 212 to 225 of the paper book and submitted that Respondent No.
1 had manufactured the same with the express approval of Respondent No. 2 in
conformity with agreement dated 23.12.2005 and the T-Shirts were exclusively meant
for Team India. Learned counsel submitted that personal attributes of none of the
players, including Respondent No. 3 were printed on any of the T-Shirts. Shri Ganpathy
emphasized that the complainant has not produced any evidence to prove that any
person had purchased T-Shirts solely because the name and number of Respondent No.
3 was printed on it. Learned counsel also relied upon the cross-examination of Ms.
Neeru Bhalla (page 596) wherein she admitted that during 2006 the complainant had
not manufactured T-Shirts.
17.
Shri Amit Sibal, learned senior counsel for Respondent No. 2 argued that the
complaint should be dismissed as not maintainable because the complainant does not
have the locus to seek an enquiry into the alleged unfair/restrictive trade practices
indulged in by Respondent No. 1.
Learned counsel relied upon the averments
contained in paragraphs 10, 11, 22 and 40 of the complaint and reply given by Ms.
Neeru Bhalla in her cross-examination to show that the complainant is a competitor of
Respondent No. 1 in the business of manufacturing, distributing and selling foot-wear,
27
apparels and other sports goods and not a consumer or a registered consumers’
association or any trade association who could file a complaint of facts constituting
unfair trade practice. Learned counsel submitted that this is also not a case falling
under Section 36B(d) because the Commission had not initiated enquiry on the basis of
own knowledge or information. Shri Sibal further argues that even if the complainant is
held to have locus to seek an enquiry into the alleged unfair trade practice committed
by Respondent No. 1, no relief should be granted to it because no evidence has been
produced to prove that the said practice is prejudicial to public interest or to the interest
of any consumer or consumers generally.
18.
I have considered the irrespective arguments and carefully scanned the record.
For deciding whether the Commission could have initiated enquiry under Section 36-B
into the alleged unfair trade practice committed by Respondent No. 1 and whether the
Commission (Now the Tribunal) can pass order under Section 36-D, it will be useful to
notice Sections 2(n), (o), (s),(t), (u), 36-A (1) (iv), (v), 36-B and 36-D and the same
read as under :
2(n)
“registered consumers’ association” means a voluntary association
of persons registered under the Companies Act, 1956 (1 of 1956)
or any other law for the time being in force which is formed for the
purpose of protecting the interests of consumers generally and is
recognized by the Central Government as such association on an
application made in this behalf in such form and such manner as
may be prescribed;
“2(o) “restrictive trade practice” means a trade practice which has, or
may have, the effect of preventing, distorting or restricting
competition in any manner and in particular,(i)
which tends to obstruct the flow of capital or resources into
the stream of production, or
(ii)
which tends to bring about manipulation of prices, or
conditions of delivery or to affect the flow of supplies in the
28
market relating to goods or services in such manner as to
impose on the consumers unjustified costs or restrictions;”
2(s)
“trade” means any trade, business, industry, profession or
occupation relating to the production, supply, distribution or control
of goods and includes the provision of any services;
2(t)
“trade association” means a body of persons (whether incorporated
or not) which is formed for the purpose of furthering the trade
interests of its members or of persons represented by its members;
2(u)
“trade practice” means any practice relating to the carrying on of
any trade, and includes(i)
anything done by any person which controls or affects the
price charged by, or the method of trading of, any trader or
any class of traders;
(ii)
a single or isolated action of any person in relation to any
trade;”
Section 36-A Definition of unfair trade practice – In this Part, unless the
context otherwise requires, “unfair trade practice” means a trade practice
which, for the purpose of promoting, the sale, use or supply of any goods
or for the provision of any services, [adopts any unfair method or unfair or
deceptive practice including any of the following practices], namely:(1)
the practice of making any statement, whether orally or in writing
or by visible representation which, -(iv)
represents that the goods or services have sponsorship,
approval, performance, characteristics, accessories, uses or
benefits which such goods or services do not have;
(v)
represents that the seller or the supplier has a sponsorship
or approval or affiliation which such seller or supplier does
not have;”
“Section 36-B. Inquiry into unfair trade practices by Commission The Commission may inquire into any unfair trade practice,(a)
upon receiving a complaint of facts which constitutes such
practice [from any trade association or from any consumer
or a registered consumers' association, whether such
29
consumer is a member of that consumers' association or
not]; or
(b)
upon a reference made to it by the Central Government or a
State Government;
(c)
upon an application to it by the Director General; or
(d)
upon its own knowledge or information.”
Section 36-D -
Powers which may be exercised by the Commission
inquiring into an unfair trade practice
(1) The Commission may inquire
into any unfair trade practice which may come before it for inquiry and, if,
after such inquiry, it is of opinion that the practice is prejudicial to the
public interest, or to the interest of any consumer or consumers generally,
it may, by order direct that(a)
the practice shall be discontinued or shall not be repeated;
(b)
any agreement relating to such unfair trade practice shall be
void or shall stand modified in respect thereof in such
manner as may be specified in the order;
[(c)
any information, statement or advertisement relating to such
unfair trade practice shall be disclosed, issued or published,
as the case may be, in such manner as may be specified in
the order.]
(2)
The Commission may, instead of making any order under
this section, permit any party to carry on any trade practice,
if it so applies and takes such steps within the time specified
by the Commission as may be necessary to ensure that the
trade practice is no longer prejudicial to the public interest
or to the interest of a consumer or consumers generally, and
in any such case, if the Commission is satisfied that
necessary steps have been taken within the time so
specified, it may decide not to make any order under this
section in respect of that trade practice.
(3)
No order shall be made under sub-section (1) in respect of
any trade practice which is expressly authorised by any law
for the time being in force.”
30
19.
The term “registered consumers’ association” has been defined to mean a
voluntary association of persons registered under the Companies Act, 1956 or any other
law for the time being in force which is formed for the purpose of protecting the
interests of consumers generally and is recognized by the Central Government as such
association.
The term “trade” means any trade, business, industry, profession or
occupation relating to the production, supply, distribution or control of goods and
includes the provision of any services. “Trade association” has been defined as a body
of persons (whether incorporated or not) which is formed for the purpose of furthering
the trade interests of its members or of persons represented by its members. The term
“trade practice” means any practice relating to the carrying on of any trade, and
includes anything done by any person which controls or affects the price charged by or
the method of trading of or any trader or any class of traders; a single or isolated action
of any person in relation to any trade. Section 36-A defines the term “unfair trade
practice” to mean a trade practice which for the purpose of promoting the sale, use or
supply of any goods or for the provision of any services, adopts any unfair method or
unfair or deceptive practice including the practice of making a representation that the
goods or services have sponsorship, approval, performance, characteristics, accessories,
uses or benefits which such goods or services do not have or represents that the seller
or the supplier has a sponsorship or approval or affiliation which such seller or supplier
does not have. Section 36-B which postulates an inquiry into unfair trade practices
provides that the Commission may inquire into any unfair trade practice upon receiving
a complaint of facts constituting such practice or from any trade association or from any
consumer or a registered consumers’ association, whether such consumer is a member
of that consumers’ association or not or upon a reference made to it by the Central
Government or the State Government or upon an application made to it by the Director
General or upon its own knowledge or information. Section 36-D lays down that if the
Commission, after making appropriate inquiry, forms an opinion that the unfair trade
31
practice in which an inquiry has been made is prejudicial to the public interest or to the
interest of any consumer or consumers generally, then it can give directions
enumerated in clauses (a)(b) and (c) of Section 36-D. Section 36-D(2) empowers the
Commission to defer making of an order in terms of Section 36-D(1) if the person
indulging in such trade practice ensures that the particular trade practice is no longer
prejudicial to public interest or to the interest of consumer or consumers generally.
20.
The term ‘consumer’ has not been defined in the 1969 Act but keeping in view
the language of Section 4(1) which declares that subject to the provision contained in
Section 4(2) or elsewhere in the Act, the provisions of the 1969 Act shall be in addition
to, and not in derogation of, any other law for the time being in force, it would be
reasonable to take cognizance of the definition of that term appearing in Section 2(d) of
the Consumer Protection Act, 1986 which reads as under :
“(d) "consumer" means any person who,-(i) buys any goods for a consideration which has been paid or
promised or partly paid and partly promised, or under any system
of deferred payment and includes any user of such goods other
than the person who buys such goods for consideration paid or
promised or partly paid or partly promised, or under any system of
deferred payment, when such use is made with the approval of
such person, but does not include a person who obtains such
goods for resale or for any commercial purpose; or
(ii) [hires or avails of] any services for a consideration which has
been paid or promised or partly paid and partly promised, or under
any system of deferred payment and includes any beneficiary of
such services other than the person who [hires or avails of] the
services for consideration paid or promised, or partly paid and
partly promised, or under any system of deferred payment, when
such services are availed of with the approval of the first
mentioned person [but does not include a person who avails of
such services for any commercial purpose];
32
[Explanation.--For the purposes of this clause, "commercial
purpose" does not include use by a person of goods bought and
used by him and services availed by him exclusively for the
purposes of earning his livelihood by means of self-employment]”
21.
A bare reading of the above reproduced definition shows that a person who
obtains goods for resale or for any commercial purpose is not a consumer except when
the goods are sold for the purposes of earning livelihood by means of self-employment.
I may hasten to add that the definition of ‘consumer’ given in Section 2(f) of the
Competition Act, 2002 does not exclude a person who purchases goods for resale or for
any commercial purpose.
However, that definition is not relevant for deciding the
objection raised by learned counsel for Respondent No. 2.
22.
The complainant has neither pleaded nor produced any evidence to show that it
has been buying goods or availing services for consideration which has been paid or
promised or partly paid and partly promised, or under any system of deferred payment.
Rather, as per its own showing, the complainant is engaged in the business of
manufacturing, distributing and selling quality footwear, sports equipments and other
products and is a competitor of Respondent No. 1 in the market.
Thus, the
complainant does not fall within the ambit of the terms consumer. It is also borne out
from the record that the complaint has been filed by the complainant in its individual
capacity and not as a member of any registered consumer association or any trade
association. Therefore, the complainant cannot be treated as a consumer for purpose of
Section 36-D of the Act unfortunately, the Commission did not even consider the issue
of the complainant locus to invoke the provisions of that section and initiated inquiry by
assuming that the complainant is entitled to file an application under Section 36-B of
the Act. It may also be mentioned that the Commission did not initiate inquiry into the
so called unfair trade practice allegedly committed by Respondent No. 1 upon its own
knowledge or information, as contemplated by Section 36-B(d) of the Act.
33
23.
In conclusion, I hold that the Notice of Enquiry issued by the Commission was
ultra vires the provisions of Section 36-B of the Act and on this ground alone the
complaint is liable to be dismissed.
24.
I also agree with Shri Amit Sibal, learned senior counsel for Respondent No. 2,
that even if the Commission could order an inquiry in to the allegation of unfair trade
practice, no order can be passed under Section 36-D of the Act because the
complainant has neither pleaded nor adduced any evidence to prove that the so called
unfair trade practice committed by Respondent No. 1 is prejudicial to public interest or
to the interest of any consumer or consumers generally.
25.
No doubt the complainant has alleged that the manufacture of T-shirts and Nike
Hero Cricket Tees violated the prohibition contained in agreement dated 14.05.2004
and Respondent No. 1 is not entitled to take shelter of clause 5(d) of agreement with
Respondent No. 2 and further that Respondent No. 1 had made false representation
that its products have personal approval of Sachin Tendulkar and are endorsed by him,
there is nothing in the complaint from which it can be inferred that the manufacture of
T-shirts by Respondent No. 1 was prejudicial to public interest or to the interest of any
consumer or consumers generally.
The only evidence produced by the complainant in
support of its cause is in the form of affidavit of Ms. Neeru Bhalla (Company Secretary
of the complainant) which is accompanied by several documents including copy of
agreement dated 14.05.2004. In her detailed affidavit running into 70 paragraphs, Ms.
Neeru Bhalla has made several statements in the context of agreement dated
14.05.2004
entered between the complainant and Respondent No. 3, the contract
awarded by Respondent No. 2 to Respondent No. 1 and claimed that the T-shirts
manufactured by Respondent No. 1 did not have significant value except for the name
of “Tendulkar” and that was the only reason for purchase of the T-shirts by the
consumers (Paragraph 31 of the affidavit), and that this activity of Respondent No. 1
amounted to breach of the terms of agreement dated 14.05.2004 and further that this
34
activity of Respondent No. 1 constitutes an unfair trade practice, she has not said that
such unfair trade practice was prejudicial to public interest or to the interest of
consumer or consumers generally.
In her cross-examination dated 06.08.2012, Ms.
Neeru Bhalla stated that she joined the complainant company in April, 2007 and that
she was not present at the time of signing of agreement between the complainant and
Respondent No. 3. In her cross-examination dated 11.12.2012, Ms. Neeru Bhalla stated
that she does not know the figures of the T-shirts marked with the name of Sachin
Tendulkar under the brand name Adidas during 2005-06-07 respectively. In her further
cross-examination
held
on
20.02.2013,
Ms.
Neeru
Bhalla admitted
that
the
commitments of Respondent No. 3 in his agreement with the complainant are subject
to his obligation to Respondent No. 2 and that the said agreement does not prohibit
Respondent No. 2 from using the name and attributes of Respondent No. 3 in a team
context without signifying that they endorsed a product or a brand. She also admitted
that the complainant and Respondent No. 1 are competitors in trade and that they
competed for the tender for sponsorship of the Indian team. The complainant has not
produced any other evidence to prove the ingredients necessary for enabling the
Commission to pass under Section 36-D.
Therefore, the Tribunal cannot ordain that
the practice in question should be discontinued and that too by overlooking the fact
that Respondent No. 1 had discontinued manufacture of T-shirts with the name and
number of team India even before filing the complaint.
26.
Notwithstanding the above conclusions, I may advert to the pleadings and
evidence of the parties and decide whether Respondent No.1 had indulged in unfair
trade practice as defined under Section 36-A of the Act.
The thrust of the
complainant’s case is that despite the embargo contained in the agreement dated
14.05.2004 in terms of which Respondent No. 3 was not entitled to sponsor or promote
any product etc. competing with those manufactured by the complainant and that
Respondent No. 1 misused the agreement entered with Respondent No. 2 and
35
manufactured T-shirts with the name and personal attributes of Respondent No. 3 to
promote its products and thereby indulged in unfair trade practice.
Respondent No. 1
and Respondent No. 2, have categorically denied the allegations levelled by the
complainant. They have pleaded that the name of Sachin Tendulkar was used on the
T-shirts as a member of Indian cricket team and the same did not signify his
endorsement to the products manufactured by Respondent No. 1.
According to
Respondent No. 1, the manufacturer of T-shirts and Nike Cricket Hero Tees was in
conformity with the terms of agreement entered with Respondent No. 2 and there was
no violation of agreement signed by the complainant with Respondent No. 3.
Respondent No. 1 has relied upon clause 5(d) of agreement dated 23.12.2006 and
averred that it was entitled to manufacture products to be used by team India. It has
also pleaded that the personal attributes of Respondent No. 3 were not printed on any
product and mere printing of name and number of the said respondent on the T-shirts
did not amount to unfair trade practice.
27.
As mentioned earlier, the complainant filed affidavit of Ms. Neeru Bhalla by way
of evidence. Shri Jatin Paranjape, who was Sports Marketing Head of Respondent
No. 1 between May, 2006 and March, 2012 filed his affidavit to support the case set up
by Respondent No. 1. In paragraphs 4 and 13 of his affidavit, Shri Paranjape made the
following statements :
“4.
I say that the Respondent No. 1 is the official supplier of apparel to
the second respondent and to the Indian Cricket team.
This
respondent’s use of the third respondent’s name and attributes in
the manner actually used, is permitted by the second respondent.
This respondent believes that this permission is granted in exercise
of rights accrued to the second respondent under its contract with
the third respondent. This respondent is entitled to use all licensed
marks belonging to or otherwise used by the second respondent
and the attributes of a player are held out to be a licensed mark,
owned by the second respondent and this respondent has no
reason to believe that this is not the case. It is relevant to point
36
out that Clause 12(b)(1) of the agreement attached by the
Complainant bears that the second respondent represented to this
respondent that in performing the agreement it could not be
violating any of the rights of any other person including the right to
grant the benefits set forth in the agreement.
13.
I say that in pursuance of its contractual rights, the first respondent
had in August-September 2006 undertaken a one-time production
of tee shirts in its “Hero Tees” range for marketing and sales in
India in October-November 2006.
This range of tee shirts was
marketed and sold together using different Indian national team
players, a team sponsored by the first respondent, and which in
accordance with standard industry practice was regarded as
ordinary usage of team imagery. Out of these tee shirts less than
5000 tee shirts bore the name of third respondent. At the time of
the manufacture of these tee shirts, the first respondent decided
independently, due to business and market considerations, that this
range was to be for one selling season only, and not to continue to
manufacture anymore tee shirts in this range for any subsequent
quarterly selling seasons. Consequently, the marketing and sale of
the entire “Here Tee” range was discontinued after the one time
release in October – November 2006, which was before the
commencement of these proceedings before this Hon’ble Tribunal.”
28.
Along with his affidavit, Shri Jatin Paranjape annexed art work of T-shirts and
“Nike Cricket Hero Tees”. Some of the T-shirts have the logo of Respondent No. 2 and
mark like
“SAHARA INDIA” or “INDIA”.
The names of the players like “Sachin
Tendulkar” or “Tendulkar”, “R. DRAVID or DRAVID”, “S. SREESANTH or SREESANTH”.
“I. KHAN or PATHAN” and “M S DHONI AND DHONI” were also printed. Some of the Tshirts also had the number of players printed on them. Each of the art work had been
approved by Mr. Lalit Modi, who was then representing Respondent No. 2. In his crossexamination dated 21.02.2014, Mr. Jatin Paranjape made the following statements :
“Cross-examination by Sr. Advocate Amit Sibal for R-2:
Marking of document referred to as Ex.R1/1 in RW1/A is objected on the ground that
the document has not been properly proved.
37
The permission referred to in para-4 of RW1/A is the permission under the
sponsorship and license agreement dated 23.12.2005 between Respondent No.1
and Respondent No.2.
The statements regarding permission that is referred to the aforesaid paragraph
is based on my interpretation of the agreement.
Q.
Is it correct that all your statements in your affidavit regarding permission
of R-2 are based on your interpretation of the clauses in the agreement?
Ans. Yes. Also subject to the subsequent written approval obtained from the
BCCI which is also under the sponsorship and license agreement. In this
answer I am referring to the document Ex.R1/1. Presently, I am not in
possession of the original Ex.R1/1.
Q.
Is it correct that the permission referred to in para-6 of RW1/A was sought
by Respondent No.1?
Ans. Yes.
Q.
I put it to you that the document Ex.R1/1 even if it were to be proved
does not show consent by the BCCI to the shirts in question?
Ans.
Q.
It is incorrect to say so.
(The attention of the witness to the portion marked ‘E’ in para-4 of RW1/A
is drawn) Which part of the definition of ‘Licensed Products’ in the
sponsorship and license agreement refers to players’ attributes? (The
question is objected to on the ground that the document is part of the
record and that the document speaks for itself.)
Ans. Clause 9, 10 and 12(b)(1) and (2).
Q.
Which part of the clauses 9, 10 and 12(b)(1) and (2) refer to players’
attributes? (The question is objected to on the ground that the document
is part of the record and that the document speaks for itself.)
Ans. The entire clauses.
Q.
Your reference to ‘the attributes of a player are held out to be a licensed
mark’ in para – 4 of RW1/A - is this also based on your interpretation of
the sponsorship and license agreement?
Ans. It is based on the written approval obtained from the BCCI on the
products.
Q.
Is it correct that according to you the alleged written approval is under
provisions of the agreement?
Ans. Yes. It is my view.”
38
29.
Shri Ratnakar Shetty, who filed affidavit dated 09.05.2013 on behalf of
Respondent No. 2, made the following statements:
9.
I say that the Sponsorship and Licensing Agreement (SLA) dated 23.12.2005
entered into between Nike India and the BCCI has permitted the attributes of
Sachin Tendulkar and other members of the Indian team to be used in a team
context. The said agreement did not permit any sale of products which signify
endorsement of Nike India or its products by individual players. The said
agreement is annexed and marked as Exhibit R2W/4.
10.
I say that the Complaint does not anywhere state that photographs/footage of
less than the minimum number of 5 players stipulated under the SLA has been
used Nike India. Clause 5(d) of the SLA grants Nike India the right to use, for the
development and promotion of Nike India products and the Nike
brand,
photographs and/or video tape/film footage of national team game action,
national team players and/or coaches in their respective official national team
uniforms. Nike India’s use if any of the BCCI’s photos or footage of minimum of
5 players who have not either entered into an endorsement agreement with Nike
India or otherwise expressly granted permission to Nike India to use his or her
image or likeness for commercial purposes is limited to use in team context or
incidental use only to the extent necessary to effectuate the use in which such
players image or likeness appears. The SLA expressly prohibits the use of such
photographs or footage as personal endorsement of Nike India or any of its
products or services or otherwise byany individual player in any manner
whatsoever.
Thus clause 5(d) of the SLA explicitly recognizes the distinction
between use of footage/photographs in a team context on the one hand and
their use to signify personal endorsement by an individual.
11.
I say that in the agreement dated 14.05.2004 exhibited, Sachin Tendulkar has
permitted the use of his attributes in a team context.
I say that the team
oriented sports apparels in no way signifies the sponsorship or approval of any
individual player. I say that when the members of the public purchase such
‘Nike cricket hero tees’ or similar clothing they are not concerned with whether
the individual player has endorsed or approved the clothing. They purchase it
because they wish to own the piece of clothing worn by members of the Indian
team and individuals as members of the team. Therefore there is no deciption or
lack of fairness in selling such clothing, and therefore no detriment to the public
interest. There is a distinction between the use of players attributes in a team
39
context and use of their attributes to signify endorsement of the product. The
sale of Nike Hero tee shirts cannot be an “unfair trade practice” or “restrictive
trade practice” under the Act.
12.
I say that the Complainant and Nike India are trade rivals which is a motive of
filing the complaint. The sponsorship and licensing agreement prohibits the use
of photograph/footage as personal endorsement of Nike India or of any of its
products or services or otherwise by any individual player in any manner
whatsoever.
13.
I say that Nike India is separate and independent and a legal entity which is not
a subsidiary or of, agent or distributor of, or otherwise under the control of the
BCCI. The same is reinforced by clause 21 of the SLA.
14.
I say that by an agreement dated 04.01`.2006 between the BCCI and Sachin
Tendulkar i.e. Respondent No. 3 the Respondent No. 3 has acknowledged that
the BCCI has the sole and exclusive right to permit any person to represent that
their goods have the sponsorship and approval of the BCCI or the team. The
player is also agreed that the BCCI would allow its sponsor to use the players’
attributes in promotional and developmental activities. The said agreement is
annexed and marked as Exhibit R2W/5.”
30.
In his cross-examination held on 12.05.2014, Shri Ratnakar Shetty made the
following statements :
“Q.
Ex.R2W/4 is shown to the witness and attention of the witness is drawn to
Clause 12(c)(3) in page 16 of the agreement. Please tell whether “National team
players”
in the said clause cover the affiliated players referred to in your
previous answer? (The question is objected on the ground that the witness is
asked to interpret a clause in the agreement which has already been defined in
the agreement. And also that the bar under Section 91 of the Evidence Act is
also attracted. This is objected on behalf of the Complainant on the ground that
the question raised in context of the answer provided by the witness to the
earlier question.)
Ans.
The reference to national team players in the said Clause is to those players who
are contracted with BCCI and represent the Indian team in international
matches.
40
Q.
I suggest that the affiliated players referred to in your answer aforesaid covers
“National Team Players” in Clause 12(c)(3) of R2W/4? (Same objection as
recorded to the previous question.)
Ans.
My reply to the question whether an agreement was signed with all affiliated
players was that we sign a player agreement only with such players who play in
the Indian team and this covers the “National Team Player”.
Q.
Is any permission from BCCI required before a player enters into an
endorsement agreement in his personal capacity with any company for endorsing
the company’s products?
Ans.
The players contracted with the BCCI do not require any permission of the BCCI
for their personal endorsements. However, they are required to ensure that the
requirements of the BCCI’s sponsor takes precedence over his personal
endorsements when playing for India and till he fulfills the requirements of the
player agreement which he has signed with BCCI.
Q.
At the time when BCCI’s sponsor agreement is entered into, does BCCI enquire
with the players of any agreement that the player has entered into, in his
personal capacity?
Ans.
We do not have to enquire with the player or ask him about his personal
endorsement because once he signs the BCCI Player Agreement, he is
committed to ensure that he fulfills BCCI’s contract with its sponsors.
Q.
At the time when R2W/4 was executed, was BCCI aware of the agreement
between the Complainant and R3?
Ans.
We are not concerned with the individual endorsements that a player may have
and, therefore, there was no need to be aware of the same.
Q.
Can you explain the term “Team Context” referred to in first sentence of para-9
of your affidavit of evidence?
Ans.
Nike was appointed as the apparel sponsor for the India team vide the
agreement dated 23.12.2005 and as per that agreement Nike was permitted to
use the attributes of the players who represent the Indian team at that point of
time being a part of team India.
Q.
Ex.CW1/8 dated 14.5.2004 shown to the witness. Was BCCI aware of this
agreement at the time when R2W/4 was signed?
41
Ans.
No. I have already stated that there is no need for BCCI to be aware of
individual endorsements of players.
Q.
At any point of time after execution of R2W/4, was BCCI made aware of the
Ex.CW1/8 agreement?
Ans. We came to know of this Ex.CW1/8 agreement only when the present dispute
arose between Addidas and Nike. BCCI came to know about the agreement after
the filing of the present complaint.
Q.
At the time when reply dated 26th July 2007 on behalf of BCCI came to be filed
in response to the complaint before this Forum, was BCCI aware of Ex.CW1/8
agreement?
Ans. I can not answer without referring to the reply.
Q.
Reply is shown to the witness. Please answer the earlier question?
Ans. I suppose the said agreement CW1/8 must have been informed to the BCCI as it
is referred to in the reply.”
31.
If the affidavits and cross-examination of Ms. Neeru Bhalla, Mr. Jatin Paranjape
and Mr. Ratnakar Shetty, are read in conjunction with the three agreements to which
reference has been made hereinabove, it is not possible to record a finding that
Respondent No. 1 had manufactured T-shirts and Nike Cricket Hero Tees with the name
and number of Respondent No. 3 in violation of agreement dated 14.05.2004. The
affidavits of Jatin Paranjape and Ratnakar Shetty and their cross-examination show that
the T-shirts and Nike Cricket Hero Tees were manufactured for the players of Team
India and this was in consonance with clause 5(d) of agreement dated 23.12.2005
entered between Respondent No. 1 and Respondent No. 2. Clause 4.1(f) and portions
of 4.7 of agreement dated 14.05.2004 signed by the complainant with Respondent
No. 3 also made specific exception in favour use of any product by Respondent No. 3 as
member of National or State team. Likewise, contract executed between Respondent
No. 2 and Respondent No. 3 on 04.01.2006 allowed use of the latter’s attributes for
promotion of cricket.
A conjoint reading of various clauses of agreements dated
14.05.2004, 23.12.2005 and 04.01.2006 leave no manner of doubt that the Sponsorship
and License Agreement entered between Respondent No. 1 and Respondent No. 3
permitted the former to use the name and number of the members of the cricket team
42
for the purpose of advertising in different ways and this did not amount to unfair trade
practice.
32.
On the basis of above discussion, I hold that :
1. The complainant does not have the locus to invoke Section 36-B of the Act;
2. The manufacturer of T-shirts and Nike Cricket Hero Tees by Respondent
No. 1 did not violate the agreement dated 14.05.2004 entered between the
complainant and Respondent No. 3 and Respondent No. 1 did not indulge in
any unfair trade practice as defined in Section 36-A of the Act.
3. The Tribunal cannot pass any order under Section 36-D because no evidence
has been produced by the complainant to prove that the so called unfair
trade practice indulged by Respondent No. 1 is prejudicial to public interest or
to the interest of any6 consumer or consumers generally.
33.
In the result the complaint is dismissed.
34.
In view of the finding recorded by the Tribunal on the issue of unfair trade
practice, the application filed by the complainant under Section 12-B of the Act is also
dismissed. In this connection, reference deserves to be made to the judgment of the
Supreme Court in Saurabh Prakash vs. DLF Universal Ltd., [2007] 1 SCC 228,
paragraphs 33 to 35 which are extracted below:
“33 .
The power of the Commission is enumerated under Section 12 of
the Act. Section 12-A provides for the power of the Commission to grant
temporary injunction. Power to award compensation by the Commission
is contained in Section 12B of the Act, Sub-section (1) whereof reads as
under:
“12B. Power of the Commission to award compensation.-(1)
Where, as a result of the monopolistic or restrictive, or unfair trade
practice, carried on by any undertaking or any person, any loss or
damage is caused to the Central Government, or any State Government
or any trader or class of traders or any consumer, such Government or,
as the case may be, trader or class of traders or consumer may, without
43
prejudice to the right of such Government, trader or class of traders or
consumer to institute a suit for the recovery of any compensation for the
loss or damage so caused, make an application to the Commission for an
order for the recovery from that undertaking or owner thereof or, as the
case may be, from such person, of such amount as the Commission may
determine, as compensation for the loss or damage so caused. ”
34.
The power of the Commission to award compensation, therefore,
is restricted to a case where loss or damage had been caused as a result
of monopolistic or restrictive or unfair trade practice. It has no
jurisdiction where damage is claimed for mere breach of contract.
35.
It was not a case where a notice of inquiry had been directed. If
there had been no inquiry, the petitioner has to file a suit wherein the
relevant particulars are required to be stated as to how loss or damage
occurred owing to one or the other trade practices referred to therein.
The power of the Commission is not in addition to the power of the civil
court. An application under Section 12B of the Act would not lie where a
complaint is confined to a breach of contract. Purchases on the part of
Respondent must necessarily relate to one or the other trade practices
contemplated under Sub-section (1) of Section 12B of the Act.”
35.
For filing a frivolous complaint and compensation application, the disposal of
which has consumed substantial time of the Commission and the Tribunal, the
complainant is saddled with cost of Rs. 1,00,000/-. This amount shall be deposited by
the complainant within four weeks with the Registrar of Tribunal, who shall utilize the
same for providing Legal Aid in deserving cases.
[G.S. Singhvi]
Chairman
Dated : 21st January, 2015