Nairobi Pyrotechnics Ltd v Nairobi Sports House Ltd [2023] KEHC 26282 (KLR)

Nairobi Pyrotechnics Ltd v Nairobi Sports House Ltd (Civil Suit E243 of 2022) [2023] KEHC 26282 (KLR) (Civ) (8 December 2023) (Ruling)

Neutral citation: [2023] KEHC 26282 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Law Courts)

Civil

Civil Suit E243 of 2022

CW Meoli, J

December 8, 2023

Between

Nairobi Pyrotechnics Ltd

Plaintiff

and

Nairobi Sports House Ltd

Defendant

Ruling

1. The suit herein was instituted by Nairobi Pyrotechnics Ltd (hereafter the Plaintiff/Applicant) through a plaint accompanied by a motion under certificate of urgency dated 09. 12. 2022. Seeking inter alia that pending hearing and determination of the suit, the court be pleased to issue a temporary injunction restraining the Nairobi Sports House Ltd (hereafter the Defendant/Respondent) by itself, its directors, officers, employees, servants or agents, licensees, franchises from using the Applicant’s trade name “Nairobi Pyrotechnics”, insignia and or symbol and or passing off their product as that of the Applicant.

2. Secondly, that the court be pleased to order the Respondent to disclose all the names and addresses of persons to whom it has supplied goods and services whilst using the Applicant’s trade name “Nairobi Pyrotechnics” from the year 2018 to date, and thirdly, that the Applicant be permitted to enter the Respondent’s premises situated along Moi Avenue within Nairobi County and elsewhere within the Republic for the purposes of seizing all goods bearing the trade mark “Nairobi Pyrotechnics” owned by the Applicant, together with purchase and sales records for the period 2018 to date relating to the aforementioned infringement. The final prayer seeks an order directing the Officer Commanding (OCS) Central Police Station to ensure the compliance of the latter order.

3. The motion is expressed to be brought inter alia under Section 1A, 1B & 3A of the Civil Procedure Act, Order 40 Rule 1(a) & 2 of the Civil Procedure Rules. The grounds on the face of the motion are amplified in the supporting affidavit sworn by Jayshree Suchak, who describes himself as the director of the Applicant and duly authorized to swear the affidavit. He deposes that the Applicant was incorporated on 23. 08. 2018 vide registration number PVT-5JU3ERK and is renowned within East and Central Africa in the trade involving the provision of fireworks, confetti and pyrotechnics.

4. That in in that regard, the Applicant has engaged in extensive advertisement, media branding efforts that have resulted in the enhancement of its goodwill. He asserts that the Respondent has without colour of right, illegally and in utter disregard to business etiquette or trade practice, to the detriment of the Applicant, started trading, both at the Respondent’s physical stores and on digital platforms , under URL http:nairobipyrotechincs.co.ke/ aswell as Facebook page on URLhttp:www.facebook.com/indoorpyros/, in goods and services similar to those supplied by the Applicant as “Nairobi Pyrotechnics”, a name that is wholly associated with the Applicant herein .

5. That the Respondent has unfairly gained business mileage, clientele and trade from the illegal use of the Applicant’s brand name, which causing confusion and deception among the Applicant’s clientele and public at large. He asserts that the Respondent has recklessly and negligently refused to heed the Applicant’s demand to cease their acts of passing off and for an admission of liability for its action. Lastly, he deposes that unless the court immediately intervenes and grants the orders sought, the Applicant will suffer and continue to suffer great injustice and substantial loss, while no prejudice will be visited on the Respondent by the orders sought. He therefore urged that it is in the interest of justice that the motion be allowed.

6. The Respondent opposes the motion through a replying affidavit sworn by the Bavik Shah, a director of the Respondent. He deposes that the Respondent is a limited liability company incorporated in Kenya and has been involved in the business of fireworks, pyros, and indoor pyrotechnics such as confetti, fog jets, low fog machines and cold fountains for over thirty (30) years trading in fireworks and indoor pyrotechnics, inter alia. That the Respondent is the exclusive dealer and franchise holder of many world renown sporting equipment brands such as Puma, Canote, Wilson, Hi-Tech, Mikasa, Nodor, Reebok, Spalding, Speedo, Stiga, Misun, Pacific among others and is also in the business of selling fireworks and indoor pyrotechnics under the brand name(s) “Shogun”, “Nairobi Pyrotechnics”, “Fireworks Kenya” and “Vulcan” which the Respondent imports, sells, distributes and displays for sale.

7. He further states that the Respondent has traded in and actively promoted the contested brand since 2010; that in 2016 the Respondent started a Facebook page which it operates to date, thereby generating extensive goodwill in the business of trading in and offering the services of fireworks display, as supported by massive financial investment, diligence, painstaking labor and skill to build goodwill.

8. The deponent asserts that the Applicant lacks the locus standi to institute the instant proceedings or maintain action against any person over the subject matter of the suit; that the Applicant has not demonstrated that it has any cause of action as relates to the subject matter of the suit; that the Applicant has not laid any basis for issuance of injunctive orders by this court; and that the Applicant is engaging in unfair trade practices in fragrant violation of the legislation regulating competition. In conclusion, he deposes that the Applicant is deliberately abusing the court process, and not having established a prima facie case, the Applicant will not suffer any prejudice as the balance of convenience tilts in favour of declining the orders sought. Hence the motion ought to be dismissed with costs.

9. In a rejoinder by way of a further affidavit Jayshree Suchak, contends the Respondent has wholly misconceived the substratum of the motion, as what is in issue is not the use of the name “Nairobi Sports House Ltd” but rather “Nairobi Pyrotechnics Limited” which belongs to the Applicant ; that the annexures to the Respondent’s affidavit include invoices, licenses, local purchase orders and receipts in respect of “Nairobi Sports House Ltd” and not “Nairobi Pyrotechnics Limited” which is a clear distinction of the brands. That the Respondent’s admission to dealing in fireworks and indoor pyrotechnics under the brand name(s) “Shogun”, “Nairobi Pyrotechnics”, “Fireworks Kenya” and “Vulcan” demonstrates that the Respondent is involved in illegal and an unfair business practice. He concludes by deposing that the Applicant has established the legal threshold for the grant of a temporary injunction.

10. The motion was canvassed by way of written submissions. Counsel for the Applicant condensed his submissions in three (3) cogent issues for the court’s consideration. Addressing the question whether the Respondent is guilty of passing off goods under the Applicant’s name, counsel relied on the English decisions in Star Industrial Co. Ltd v Yap Kor t/a New Star Industrial Co. [1976] FSR 256-269 as cited inHarleys Limited v Sun Pharma East Africa Limited [2017] eKLR, Reckitt and Colman Ltd v Borden Inc. and Others [1990] 1WLR 59 as cited in East Africa Metal Works Ltd v Unique Suppliers & 4 Others [2011] eKLR, Amritdhara Pharmacy v Satya Deo Guptaar [1990] 1 WLR 59 and Sabel BV v Puma AG, Rudolf Dassier Sport C-251/95 as cited in Strategic Industries Ltd v Solphia Kenya Limited [2011] eKLR. It was contended that the tortious use of the Applicant’s brand name “Nairobi Pyrotechnics” by the Respondent in its marketing, advertising as well as branding on social media platforms has caused confusion in the market by which the Respondent has benefitted and or touted the Applicant’s clientele in their favour.

11. On whether the motion has satisfied the legal threshold for the grant of an order of temporary injunction, counsel anchored his submissions on the cases of Giella v Cassman Brown (1973) EA 358, Mrao v First American Bank of Kenya Limited & 2 Others [2003] eKLR, Nguruman Limited v Jan Bonde Neilsen & 2 Others [2014] eKLR, Premier Food Industries Ltd v Ai-Mahra Ltd [2006] eKLR and Mbuthia v Jimba Credit Corporation (1988) KLR 1 as cited in Francis Marete v Philip Njeru Mwathi & 3 Others [2014] eKLR. Counsel asserted regarding the applicable principles that, the Applicant having established that the Respondent is illegally passing off under the Applicant’s brand name has demonstrated a prima facie case.

12. Secondly, that the injury complained of cannot be adequately compensated by an award in damages; and thirdly that the balance of convenience tilts in favour of the Applicant having demonstrated its due incorporation under the contested brand name. Regarding costs, counsel while calling to aid the decision in Mutunga & Muindi Associates v M/s Busscar Limited [2006] eKLR submitted that given the Respondent’s tortious conduct, costs ought to follow the event. The court was thus urged to allow the motion as prayed.

13. Counsel for the Respondent equally anchored his submissions on the oft-cited cases of Giella (supra) and Mrao (supra) on the prerequisites for the grant of an interlocutory injunction. Addressing the merits of the Applicant’s motion, counsel relied on the provisions of Section 5 of the Trademarks Act and the decision in Reckitt & Coleman Properties Ltd (supra) and Strategic Industries Ltd(supra) on the applicable test regarding a cause of action founded on passing off, and urged the court to make a finding that the Applicant has not proved a prima facie case or risk of suffering irreparable damages.

14. Concerning the good will test, counsel placed reliance on the English decision in Commissioner Inland Revenue v Muller & Amp; Co. Margaine Ltd [1901] AC 217; [1900-1903] All ER 413 to submit that the Applicant has not demonstrated its sales over time or exhibited its licence to trade in fireworks while asserting incorporation in 2018. Whereas the Respondent has been trading under the disputed name since June of 2016. It was argued that without evidence of good will and that the Applicant is trading in the impugned brand, the Applicant’s case does not pass the misrepresentation test.

15. Finally, on the test of damages, it was submitted that the tort of passing off is not actionable per se as Section 5 of the Trademarks Act requires proof of damages. That the Applicant having failed to demonstrate that it had engaged in any trade, cannot purport to have suffered any loss. Counsel reiterated that it is the Respondent who is trading in the contested name of “Nairobi Pyrotechnics” accusing the Applicant of approaching the court with unclean hands by engaging in anti-competitive business conduct. The court was urged to dismiss the motion with costs.

16. The court has considered the material canvassed in respect of the motion and must determine whether the Applicant has made out a case for the grant of a temporary injunction. The motion invokes the provisions of Order 40 Rule 1(a) & 2 of the Civil Procedure Rules. Order 40 Rule 2 provides that;“(1)In any suit for restraining the defendant from committing a breach of contract or other injury of any kind, whether compensation is claimed in the suit or not, the plaintiff may, at any time after the commencement of the suit, and either before or after judgment, apply to the court for a temporary injunction to restrain the defendant from committing the breach of contract or injury complained of, or any injury of a like kind arising out of the same contract or relating to the same property or right.(2)The court may by order grant such injunction on such terms as to an inquiry as to damages, the duration of the injunction, keeping an account, giving security or otherwise, as the court deems fit.”

17. The Applicant’s cause of action as pleaded in the plaint is premised on the tort of passing off. Section 5 of the Trademarks Act provides that;“No person shall be entitled to institute any proceeding to prevent, or to recover damages for, the infringement of an unregistered trade mark, but nothing in this Act shall be deemed to affect rights of action against any person for passing off or the remedies in respect thereof”.

18. Passing off is a common law tort attaching to rights related to unregistered trademarks. That said, at this juncture, the court’s duty is to determine whether the Applicant has made out a case to warrant issuance of an interlocutory injunction pending hearing and determination of the suit.

19. The principles governing the grant of an interlocutory injunction are long settled. In Nguruman Limited v Jan Bonde Nielsen & 2 Others [2014] eKLR the Court of Appeal restated the principles enunciated in the locus classicus , namely, Giella v Cassman Brown & Co. Ltd [1973] EA 358 at page 360 where it was stated that;“First, an Applicant must show a prima facie case with a probability of success. Secondly, an interlocutory injunction will not normally be granted unless the Applicant might otherwise suffer irreparable injury, which would not adequately be compensated by an award of damages. Thirdly, if the court is in doubt, it will decide the application on the balance of convenience. (E. A Industries v Trufoods [1972] EA 420).”

20. The Court of Appeal further stated in Nguruman Ltd(supra) that;“...Since the fundamentals about the implications of the interlocutory orders of injunctions are settled, at least over four decades since Giella case, they could rather be questioned nor be elaborated in detailed research. Since those principles are already ....... by authoritative pronouncements in the precedents they may be conveniently noted in brief as follows:In an interlocutory injunction application, the Applicant has to satisfy the triple requirements to:a)establish his case only at a prima facie levelb)demonstrated irreparable injury if a temporary injunction is not granted.c)allay any doubts as to (b) by showing that the balance of occurrence is in his favor.”

21. In addition, the court emphasized that the three (3) conditions apply separately as distinct and logical hurdles to be surmounted sequentially by the Applicant. That is to say, that the Applicant who establishes a prima facie case must further establish irreparable injury, being injury for which damages recoverable could not be an adequate remedy and that where the court is in doubt as to the adequacy of damages in compensating such injury, the court will consider the balance of convenience. Finally, where no prima facie case is established, the court need not look into the question of irreparable loss or balance of convenience.

22. As to what constitutes a prima facie case, the Court of Appeal in Nguruman expressed itself as follows: -“Recently, this court in Mrao Ltd. v First American Bank of Kenya Ltd & 2 others [2003] KLR 125 fashioned a definition for “prima facie case” in civil cases in the following words:“In civil cases, a prima facie case is a case in which on the material presented to the court, a tribunal properly directing itself will conclude that there exists a right which has apparently been infringed by the opposite party to call for an explanation or rebuttal from the latter. A prima facie case is more than an arguable case. It is not sufficient to raise issues but the evidence must show an infringement of a right, and the probability of success of the applicant’s case upon trial. That is clearly a standard, which is higher than an arguable case.”We adopt that definition save to add the following conditions by way of explaining it. The party on whom the burden of proving a prima facie case lies must show a clear and unmistakable right to be protected which is directly threatened by an act sought to be restrained, the invasion of the right has to be material and substantive and there must be an urgent necessity to prevent the irreparable damage that may result from the invasion. 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 establish title it is enough if he can show that he has a fair and bona fide question to raise as to the existence of the right which he alleges. The standard of proof of that prima facie case is on a balance or, as otherwise put, on a preponderance of probabilities. This means no more than that the Court takes the view that on the face of it the applicant’s case is more likely than not to ultimately succeed."

23. As earlier noted, the Applicant’s chief complaint against the Respondent is that, despite the Applicant’s incorporation on 23. 08. 2018 as “Nairobi Pyrotechnics Limited” and being renowned to trade in the provision of fireworks, confetti and pyrotechnics within East and Central Africa, the Respondent had without colour of right, illegally and in utter disregard towards business etiquette or trade practice, to the detriment of the Applicant carried on trading as “Nairobi Pyrotechnics” both in its physical stores and digital platforms. That the said name is wholly associated with the Applicant and the Respondent’s actions have caused confusion and is deception to the Applicant’s clientele and public at large.

24. The Respondent on its part has vehemently challenged this position by arguing that it is a limited liability company incorporated in Kenya in the business of fireworks, pyros, and indoor pyrotechnics such as confetti, fog jets, low fog machines and cold fountains for over thirty (30) years. The Respondent outlined measures taken over the years to build its good will.

25. Black’s Law Dictionary 9th Ed. at Pg. 1233 defines “Passing Off” as“The act or instance of falsely representing one’s own product as that of another in an attempt to deceive potential buyers”.Whereas “Trademark” is defined at Pg.1630 as“A word, phrase, logo or other graphical symbol used by a manufacturer or seller to distinguish its products from those of others”.

26. Section 2 of the Trademark Act defines a “trade mark” to mean; -“(except in relation to a certification trade mark) a mark used or proposed to be used—a.In relation to goods for the purpose of indicating a connection in the course of trade between the goods and some person having the right either as proprietor or as registered user to use the mark, whether with or without any indication of the identity of that person or distinguishing goods in relation to which the mark is used or proposed to be used from the same kind of goods connected in the course of trade with any person;b.In relation to services for the purpose of indicating that a particular person is connected, in the course of business, with the provision of those services, whether with or without any indication of the identity of that person or distinguishing services in relation to which the mark is used or proposed to be used from the same kind of services connected in the course of business with any other person;”

27. The Court of Appeal in Nairobi Map Services Limited v Airtel Networking Kenya Limited & 2 others [2019] eKLR cited with approval the English decision in Reckitt and Colman Products Ltd v Borden Inc and others [1990] 1 All ER 873. In that case , the House of Lords held that in an action in passing off, the plaintiff must establish first, a goodwill or reputation attached to the goods or services; secondly, he must demonstrate a misrepresentation by the defendant to the public (whether or not intentional) leading or likely to lead the public to believe that goods or services offered by him are the goods or services of the plaintiff; and thirdly, he must demonstrate that he suffers or, in a quia timet action, that he is likely to suffer damage by reason of the erroneous belief engendered by the defendant's misrepresentation that the source of the defendant's goods or services is the same as the source of those offered by such plaintiff.

28. The Applicant’s contention here is that it is a registered company under the name “Nairobi Pyrotechnics Limited” and deals in the sale and distribution of fireworks, whereas the Respondent purports to similarly deal in the sale and distribution of fireworks while using the name “Nairobi Pyrotechnics”. The Respondent’s assertion is that it has been using the contested name since 2010, hence the Applicant has not laid any basis for issuance of any injunction order by this court. In support of its argument the Applicant exhibited copies of its Certificate of Incorporation and Registration Certificate (as Annex-2) and extracts of a web page under the name “Nairobi Pyrotechnics” and a Facebook Web Page using the handle “Nairobi Pyrotechnics” (as Annex-3) by the Respondent. The Respondent on its part has equally adduced various excerpts to the said Facebook Web Page using the handle “Nairobi Pyrotechnics” (as BS 6) which page it asserts to have managed since 2016.

29. Thus, while the Applicant is registered as “Nairobi Pyrotechnics Limited”, the Respondent engages in the sale of fireworks under the assumed name of “Nairobi Pyrotechnics”. None of the parties have evinced proof of registration of the trademark “Nairobi Pyrotechnics” and or “Nairobi Pyrotechnics Limited”. What the court notes from the totality of the material before it is that the Applicant registered a company using the name “Nairobi Pyrotechnics Limited” while the Respondent either has been or is engaged in the business of selling and distribution of fireworks using the name “Nairobi Pyrotechnics”. The Applicant’s contention being that by the Respondent’s use of the latter name, it has unfairly gained business mileage, clientele and trade.

30. In Mrao Ltd (supra) the court emphasized that it was not merely sufficient to raise issues but to adduce evidence showing infringement of a right sufficient to call for an explanation or rebuttal from the opposite party and that the standard of proof required is higher than an arguable case. As earlier noted, there is slight variance as to the brand name in issue. While the Applicant has registered its business as “Nairobi Pyrotechnics Limited” the Respondent has been promoting and or selling similar products as the Applicant under the assumed name “Nairobi Pyrotechnics”.

31. In the absence of proof by the Applicant that it has registered the name “Nairobi Pyrotechnics Limited” as a trademark under the Trademarks Act, the onus fell upon the Applicant to demonstrate a prima facie case in respect of the alleged act of passing off by the Respondent. Applying the decision in Reckitt and Colman Products Ltd v Borden Inc and others [1990] 1 All ER 873 to the facts of this case, the Court is not persuaded that the onus has been discharged. Assertions of the use by the Respondent of a near-similar name, without more is not enough. There is therefore no demonstration of a prima facie case of the alleged passing off.

32. The Court of Appeal in Nguruman Ltd held that where no prima facie case is established, the Court need not inquire into the consideration of irreparable damage or balance of convenience. The issues arising herein require an in-depth inquiry as to first in right, purpose and effect with respect to the imputed name. It would be perilous for this court to attempt such an examination at an interlocutory stage, and more so, in the circumstances of this case. The exercise must await the trial of the suit. Consequently, the motion dated 09. 12. 2022 must fail and is hereby dismissed with costs to the Respondent.

DELIVERED AND SIGNED ELECTRONICALLY AT NAIROBI ON THIS 8TH DAY OF DECEMBER 2023. C.MEOLIJUDGEIn the presence ofFor the Applicant: Mr Kiombe holding brief for Mr FarahFor the Respondent: Mr Kiprotich holding brief for Mr Mwangi