Introduction and Background
1. Before the court for determination is the Plaintiff’s Notice of Motion made, inter alia, under Order 40 Rules 1, 2, 3 and 4(1) of the Civil Procedure Rules seeking the following orders:
[5] THAT an injunction do issue to restrain the Defendants, their servants or agents, from applying and/or passing off the Plaintiff’s “Cleo Nature” design or any fraudulent or obvious imitation thereof to any substance or article of manufacture or processing, and in particular to cosmetic and personal care products, and from publishing, selling, or exposing the same for sale and restrain the Defendants and their agents from selling or offering for sale “Katya Natures” cosmetic and personal care products pending the hearing and determination of this suit.
[6] THAT an injunction do issue to compel the Defendants, their servants or agents, to remove from their various posts relating to “Katya Nature”, or their other forms of electronic, print and social media of any form or nature whatsoever, the Plaintiff’s design of “Cleo Nature” or any fraudulent or obvious imitation thereof and to hand over the Plaintiff’s social media Facebook and Instagram accounts back to the Plaintiff pending the hearing and determination of this suit.
[7] THAT an injunction do issue to compel the Defendants to remove, take down, destroy, demolish and/or withdraw all the “Katya Natures” cosmetic and personal care products and all products to which the Plaintiff’s “Cleo Nature” design or a fraudulent or obvious imitation thereof shall have been applied from any retail, wholesale shops or any points of sale and that are in the possession of or under the control of the Defendants, their servants and agents pending the hearing and determination of this suit.
[8] The costs of the application be provided for.
2. The application is supported by the grounds set out on its face together with the supporting affidavit of Tom Kiragu, the Plaintiff’s director, sworn on 28th February 2023. It is opposed by the Defendants through the replying affidavit of the 1st Defendant sworn on 13th March 2023.The Defendants have also supplemented their depositions by filing written submissions.
3. It is not in dispute that the Plaintiff has for more than 5 years manufactured and sold a range of well-known cosmetic and personal care products under the name “Cleo Nature”. It is also common ground that the 2nd Defendant manufactures and sells cosmetic and personal care products under the name “Katya Natures”.
4. In its plaint and application, the Plaintiff accuses the Defendants of wrongfully selling and passing off their cosmetic and personal care products under the name “Katya Natures” as those manufactured Plaintiff thus mislead the public into believing that they are the Plaintiff’s cosmetic and personal care products, thereby causing injury both to the public and to the Plaintiff.
5. The Plaintiff states that while it has acquired goodwill in relation to the name, symbol, packaging and logo of “Cleo Nature” associated with its products, the Defendants have, in the sale and marketing of their products “Katya Natures”, used the Plaintiff’s products’ name, symbol, packaging and logo, or a fraudulent or obvious imitation thereof. That the 1st Defendant fraudulently converted the Plaintiff’s social media accounts under the name “Cleo Nature” to “Katya Nature” and has been misleading the Plaintiff’s clients that the two names are the same brand thereby creating confusion among the Plaintiff’s clients and that the Defendants have been using the Plaintiff’s advertising styles, slogans and paid campaigns.
6. The Plaintiff accuses the Defendants of taking advantage of the 1st Defendant’s access to the Plaintiff’s regulatory compliance approvals by using the Plaintiff’s Kenya Bureau of Standards (“KNBS”) approval stickers to market and sell the 2nd Defendant’s products and that the Defendants have expressly misrepresented that their products’ source, quality, control and responsibility are connected with the Plaintiff.
7. The Plaintiff claims that the cosmetic and personal care products sold by the Defendants are of an inferior quality and the sale of such as the Plaintiff’s cosmetic and personal care products has already caused and will cause damage to the Plaintiff in the form of loss of existing trade and profit, loss of potential trade and profit, loss of licensing revenues, reputational loss and dilution of the Plaintiff’s goodwill. The Plaintiff further accuses the Defendants of infringing upon its copyright and claims that the 1st Defendant is a director of the Plaintiff and has acted in breach of his statutory and contractual duties. The Plaintiff avers that unless restrained by the Court, the Defendants will continue disrupting the Plaintiff’s business operations and causing it irreparable loss and damage.
8. The Defendants deny that the Plaintiff has registered any copyright of the designs for its products and that the products were only superior when the 1st Defendant was still the Plaintiff’s director. The Defendants state that at the time of filing this suit, the 1st Defendant was not a director of the Plaintiff as he resigned from this position on 5th December 2022 but still retains 30% shares of the Plaintiff. That his statutory and fiduciary duties as a director of the Plaintiff ceased upon his resignation. Further, the Defendants state that they are strangers to the allegations of contractual responsibilities as there was no contract between the Plaintiff and the 1st Defendant.
9. The Defendants deny that they have wrongfully sold and passed off and are selling and passing cosmetic and personal care products not of the Plaintiff’s manufacture as and for the Plaintiff’s cosmetic and personal care products. The Defendants contend that they manufacture and sell their own products and that it is also untrue that its Katya Nature products are meant to mislead the public in any way as the name ‘Nature’ is a common name and as at 30th March 2023, the same had been used by over 550 companies as per the e-citizen register and the names ‘Katya’ and ‘Cleo’ have no real and apparent similarities.
10. The Defendants deny using the Plaintiff’s products’ name, symbol, packaging and logo or any imitation thereof. They state that they have registered a trademark of the name and design ‘Katya Natures’ and that it is also untrue that the 1st Defendant converted the Plaintiff’s social media accounts under the name ‘Cleo Nature’ to ‘Katya Nature’. The Defendants state that the said social media accounts were personal accounts of the 1st Defendant and since he was a director of the Plaintiff, he took a personal initiative to market the Plaintiff's products using his own accounts. The Defendants deny that they have been using the Plaintiff’s styles and/or slogans and state that the said styles and slogans are unspecified and not particularized.
11. The Defendants deny that they are using the Plaintiff’s KNBS approvals and stickers since they have their own approvals and stickers. They contend that it is disingenuous for the Plaintiff to allege that the Defendants have used its stickers without any evidence. They deny that they have expressly misrepresented their products’ source, quality, control and responsibility are connected with the Plaintiff. The Defendants urge the court to dismiss the application as it does not satisfy the conditions for the grant of an injunction.
Analysis and determination
12. Whether the court should grant an injunction in favour of the Plaintiff is predicated on whether it has satisfied the conditions for the grant of an injunction set out in Giella v Cassman Brown & Co., Ltd [1973] EA 358. In order to succeed, the plaintiff must demonstrate that it has a prima facie case with a probability of success, demonstrate irreparable injury which cannot be compensated by an award of damages if a temporary injunction is not granted, and if the court is in doubt show that the balance of convenience is in its favour. In Nguruman Limited v Jane Bonde Nielsen and 2 Others NRB CA Civil Appeal No. 77 of 2012 [2014] eKLR the Court of Appeal reiterated these conditions and further clarified that they are to be applied as separate, distinct and logical hurdles which an applicant is expected to surmount sequentially. This means that if the applicant does not establish a prima facie case then irreparable injury and balance of convenience do not require consideration.
13. In Mrao Ltd v First American Bank of Kenya Limited and 2 Others [2003] eKLR the Court of Appeal explained a prima facie 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.” Thus and in order to succeed, the Plaintiff is expected to demonstrate that it has a copyright which the Defendants have been infringing by passing off their products as those of the Plaintiff using the copyrighted material. The Plaintiff also has to demonstrate that the 1st Defendant has been in breach of his duties as a director.
14. On passing off and wrongful sale, the Plaintiff claims that the Defendants have, in the sale and marketing of their products “Katya Natures”, used the Plaintiff’s products’ name, symbol, packaging and logo, or a fraudulent or obvious imitation thereof, that the 1st Defendant fraudulently converted the Plaintiff’s social media accounts under the name “Cleo Nature” to “Katya Nature” and has been misleading the Plaintiff’s clients that the two names are the same brand thereby creating confusion among the Plaintiff’s clients and that the Defendants have been using the Plaintiff’s advertising styles, slogans and paid campaigns. The Plaintiff also claims that the Defendants, using the 1st Defendant’s access to the Plaintiff’s regulatory compliance approvals, have been using the Plaintiff’s Kenya Bureau of Standards approval stickers to market and sell the 2nd Defendant’s products and they have expressly misrepresented that their products’ source, quality, control and responsibility are connected with the Plaintiff.
15. The Plaintiff has demonstrated the Defendants’ wrongful use, copyright infringement and passing off. The Defendants’ social media page, while using the handle ‘katya naturals’ has images of different products branded ‘cleo nature’. I also note that in one product, ‘raw shea butter’ the packaging of products of both parties contain the same design and get up and in some of the comments on the said pages, some people are questioning whether the 1st Defendant’s products are those of the Plaintiff and whether the Plaintiff has changed its brand name. Indeed, I cannot help but notice that the parties’ products are similar in respect of their designs and packaging and that the same is causing confusion to members of the public.
16. The Defendants, in their deposition admitted to receiving a complaint in respect of the design as evidenced by an email correspondence from an entity called Ednet Kenya Limited. In that email, the 2nd Defendant is accused of using the copyrighted design without the consent of the owner who states that the Plaintiff has paid for the right to use the design but not the 2nd Defendant. I therefore find that this is prima facie proof that the Defendants are guilty of copyright infringement in using the same design as that of the Plaintiff without the right and permission to do so either from the owner of the copyright or from the Plaintiff who has the copyrights to the said design.
17. At this point, let me state that a copyright need not be registered for a claim to accrue as section 22(5) of the Copyright Act provides that “Rights protected by copyright shall accrue to the author automatically on affixation of a work subject to copyright in a material form, and non-registration of any copyright work or absence of either formalities shall not bar any claim from the author.” This unauthorized use of the copyrighted design has evidently caused confusion to members of the public and that in using the Plaintiff’s name ‘cleo nature’ in the 2nd Defendant’s products, it is clear that the Defendants have been passing off their products as that of the Plaintiff as the products are deceptively similar in their packaging and design.
18. I find and hold that the Plaintiff has been able to demonstrate on a prima facie basis that the Defendants have been wrongfully selling and passing off their products as those of Plaintiff by applying and using the Plaintiff’s products’ name, symbol, packaging and logo. I further find that the Plaintiff has been able to demonstrate that the Defendants have been using the Plaintiff’s packaging design without its permission and license and this amounts to copyright infringement.
19. As to whether the 1st Defendant has been in breach of his statutory duties as a director of the Plaintiff, the Plaintiff had accused the 1st Defendant of misusing his access to the Plaintiff’s social media accounts under the name “Cleo Nature” and fraudulently converting the said accounts to “Katya Nature” and has been misleading the Plaintiff’s clients that the two names are the same brand. Whereas the 1st Defendant denied that he is a director of the Plaintiff at the time of filing the suit and that he resigned as a director on 5th December 2022, the Plaintiff’s CR 12 dated 25th January 2023 and annexed by the Plaintiff indicates that 1st Defendant is still a director. This court is inclined to accept that prima facie, the list of directors of the Plaintiff is as stated in the said CR 12 (Gitamaiyu Trading Company Ltd v Zephania Mwangi Nyoro & 9 others KBU HCCC No. 13 of 2018 [2019] eKLR). In response to one of the social media posts by the 2nd Defendant where it had posted an image resembling the packaging of that of the Plaintiff, the 1st Defendant informs the person who inquired as to whether there was a change of branding that “My name is Rick, I was one of Cleo founders and we left Cleo and started our own company. You can expect better quality same products, superb service and customer care….”. It is clear that the 1st Defendant is informing the public that though they are a different company, they intend to use the same products as those of the Plaintiff and there is little or no attempt to distance its products from that of the Plaintiff.
20. I also agree with the Plaintiff that this is a conflict of interest and the 1st Defendant’s actions go against section 16 of the Companies Act, 2015 which requires a director to declare the nature and extent of the director’s interest to the other directors that conflict that of the company. There is a duty not to profit from a position of trust which directors hold and that duty has been extended to protect opportunities available to a company. Thus a director, even where he is a shareholder should not take any corporate opportunities for personal benefits (See Eveready East Africa Limited v Energizer Middle East and Africa Limited & another ML HCCC No. 40 of 2016 [2017] eKLR).
21. I therefore find and hold that the Plaintiff has been able to satisfy the first condition for the grant of an injunction by demonstrating a prima facie case with a chance of success. Following the Dicta in the Nguruman Case (Supra), I will now determine whether they have established the other grounds
22. On whether the Plaintiff stands to suffer irreparable damage that cannot be compensated by damages, the answer is in the affirmative. Confusion as to whether the Defendants are actually the Plaintiff and vice versa in the course of their trade will surely damage the Plaintiff’s reputation, goodwill and profits, which cannot be arrested if an injunction is not issued at this point as the loss to the Plaintiff stands to suffer could be of such monetary magnitude that it cannot be ascertained and/or compensated by way of damages.
23. In any case, as the entity with the rights to use the copyrighted design on its packaging and having used the same for a longer period of time than the 2nd Defendant, I hold the balance of convenience tilts in favour of the Plaintiff.
Disposition
24. For the reasons I have outlined, I find that the Plaintiff’s Notice of Motion dated 28th February 2023 is allowed on the following terms:
a) An injunction be and is hereby issued restraining the Defendants, their servants or agents, from applying and/or passing off the Plaintiff’s “Cleo Nature” design or any fraudulent or obvious imitation thereof to any substance or article of manufacture or processing, and in particular to cosmetic and personal care products, and from publishing, selling, or exposing the same for sale and restrain the Defendants and their agents from selling or offering for sale “Katya Natures” cosmetic and personal care products pending the hearing and determination of this suit.
b) The Plaintiff shall file and serve an Undertaking as to damages under seal within 14 days from the date hereof.
c) The Defendants shall bear the costs of this application
DATED and DELIVERED at NAIROBI this 28TH day of JULY 2023
D. S. MAJANJA
JUDGE