A local gumboot manufacturer, Rida International Industry (U) Limited, is to pay Shs16.768 billion to its competitor, Migoo Industrial and Trading Company (U) Limited, for copying its product. The High Court Commercial Division awarded Migoo Shs12.768 billion in special damages and Shs4 billion in general damages after finding that Rida deliberately copied the appearance of Migoo’s gumboots and confused customers.
Justice Stephen Mubiru also issued a permanent injunction restraining Rida from manufacturing, selling, importing, stocking or distributing gumboots in a manner likely to make consumers believe that its products were made or sold by Migoo. The dispute arose from competition between the two companies, which manufacture and sell gumboots through similar markets and distribution channels.
Migoo told the court that it had manufactured and sold gumboots since 2012 and had built a reputation around the design and appearance of its products. The company accused Rida of later producing gumboots with a strikingly similar shape, configuration and pattern and selling them to the same customers at lower prices. Rida denied the allegations, arguing that the design was common in the market and that other manufacturers were producing similar gumboots.
However, Justice Mubiru found that Rida had gone beyond simply using a common market design. The judge noted that Rida had initially used a visible logo to distinguish its gumboots from Migoo’s products but later removed the distinguishing feature, making the products more similar.
The court was also persuaded by evidence from Migoo distributor Aida Ndagire, who testified that some customers bought Rida gumboots believing they were purchasing Migoo products. According to the evidence, some customers only realised they had bought the wrong product after noticing Rida branding or differences in quality. The products were then returned and exchanged for Migoo gumboots.
Justice Mubiru found this to be direct evidence of actual consumer confusion. The judge said a passing-off case does not require every consumer to be confused. It is sufficient to show that a significant number of consumers could be misled into believing that competing products came from the same company or from businesses connected. The court further found that Rida’s conduct caused financial harm to Migoo.
Evidence before the court showed that Migoo reduced the price of its gumboots from between Shs10,000 and Shs10,500 per pair to between Shs7,000 and Shs7,500 as it faced competition from Rida’s cheaper products. Migoo’s accountant calculated the financial loss using the company’s sales records, receipts, Value Added Tax returns, and income tax records.
The accountant estimated that Migoo had lost Shs12.768 billion as a result of the price reduction between 2017 and September 2021. The court accepted the calculation and awarded the entire amount as special damages. Justice Mubiru also awarded Shs4 billion in general damages for continuing financial harm, damage to goodwill and harm to Migoo’s reputation in the market.
The Shs12.768 billion special damages will attract interest at 15 percent per year from May 3, 2019, when the case was filed, until payment in full. The Shs4 billion general damages will attract interest at six percent per year from the date of judgment until payment in full. However, the court rejected Rida’s counterclaim against Migoo over a police raid and seizure of its property in 2019.
Rida had accused Migoo of maliciously using the criminal justice system to disrupt its business. It claimed that police seized gumboots, moulds and other materials from its factory, forcing the company to stop production for nearly a month. Rida claimed more than Shs1.5 billion in losses arising from the interruption of its production and also sought damages over property it said had not been returned.
The court found that Migoo had reported the alleged infringement to police and provided evidence, but that police independently investigated the matter and obtained an opinion from the Uganda Registration Services Bureau before searching. Justice Mubiru therefore ruled that Migoo was a complainant and not the person who controlled or instigated the criminal proceedings.
The court also rejected Rida’s claim for conversion of its property. Although the seizure order was later revoked and the seized items ordered to be returned, the court found that the property remained in police custody. There was no evidence that Migoo had possession or control of the seized goods or had directed police to keep them. The court consequently dismissed Rida’s counterclaim with costs.
In another significant finding, Justice Mubiru cancelled the industrial design registrations held by both companies. Migoo’s industrial design, registered in February 2019, and Rida’s design, registered in August 2018, were both revoked after the court found that the disputed gumboot design was not sufficiently new because similar designs were already being used in the market.However, the cancellation of Migoo’s industrial design did not prevent it from succeeding in its passing-off claim. Justice Mubiru explained that protection against passing off is different from ownership of a registered industrial design. A company may still protect the goodwill and reputation it has built around its products where another business deliberately misrepresents its goods and confuses consumers.
The judge concluded that Rida had deliberately exploited Migoo’s reputation and customer base and had passed off its gumboots as those of Migoo. Rida was ordered to pay the costs of the main case and the counterclaim-URN. Give us feedback on this story through our email: kamwokyatimes@gmail.com
