High Court rules that Rida’s gumboots were presented in a way likely to confuse customers with Migoo products.
KAMPALA (UGNEWSLINE) – The High Court Commercial Division has ordered Rida International Industry (U) Limited to pay rival gumboot manufacturer Migoo Industrial and Trading Company (U) Limited Shs16.768 billion after finding that Rida marketed its products in a manner that could confuse consumers.
Justice Stephen Mubiru awarded Migoo Shs12.768 billion in special damages for losses incurred between 2017 and September 2021, in addition to Shs4 billion in general damages for the injury to the company’s goodwill and reputation.
The court also issued a permanent injunction restraining Rida from manufacturing, selling or dealing in gumboots presented in a manner that could make buyers believe they originated from Migoo or were connected to the company.
How the dispute started
Migoo told court that it had been selling gumboots since 2012 and had built significant goodwill around the appearance and presentation of its products.
The company alleged that Rida later introduced gumboots with similarities in shape, arrangement and patterns.
The products were also sold through some of the same distribution channels, often at lower prices.
Rida denied infringing Migoo’s rights, arguing that the design features in question were common throughout the gumboot industry and could not be exclusively claimed by Migoo.
The court, however, found evidence that Rida’s presentation of the products had increasingly made them difficult for consumers to distinguish from Migoo’s.
Justice Mubiru noted that Rida initially used a prominent logo on its gumboots, helping distinguish them from Migoo’s products, but later removed the logo.
Buyers confused over brands
Evidence from Migoo distributor Aida Ndagire was central to the court’s findings.
Ndagire testified that some customers bought Rida gumboots believing they were Migoo products.
Some reportedly returned the shoes after discovering the different branding or noticing differences in quality, exchanging them for Migoo products.
The judge regarded the incidents as evidence that actual confusion had occurred in the market.
Justice Mubiru held that Migoo did not need to prove that every customer had been deceived.
For a passing-off claim to succeed, it was enough to demonstrate that a significant section of consumers could be led to believe that the goods came from the same business or from businesses with a connection.
Price cuts cost Migoo billions
The court also considered the financial impact of the competition on Migoo.
Evidence showed that Migoo had been selling its gumboots at between Shs10,000 and Shs10,500 per pair, but later reduced the price to between Shs7,000 and Shs7,500 in response to Rida’s cheaper products.
Migoo’s accountant reviewed sales records, receipts and tax documents to calculate the financial impact of the price reduction.
The resulting loss was put at Shs12.768 billion for the period from 2017 to September 2021.
Justice Mubiru accepted the calculation and awarded the full amount as special damages.
The additional Shs4 billion in general damages took into account the continuing financial consequences and the alleged damage to Migoo’s goodwill and reputation.
The special damages will attract 15 per cent annual interest from May 3, 2019, the date the case was filed, until payment in full.
General damages will attract 6 per cent annual interest from the date of judgment.
Rida’s Shs1.5bn counterclaim rejected
Rida had also filed a counterclaim arising from a 2019 police operation at its premises.
The company claimed that police seized gumboots, moulds and other materials following a complaint by Migoo, disrupting production for nearly a month and causing losses of more than Shs1.5 billion.
Rida also sought compensation for property it claimed had not been returned.
The court rejected the claims.
Justice Mubiru found that although Migoo had reported the alleged infringement and provided information to police, investigators conducted their own inquiries.
Police also obtained an opinion from the Uganda Registration Services Bureau before conducting the search.
The judge therefore found no basis for holding Migoo responsible for controlling the criminal investigation.
Rida’s claim over the seized property also failed because there was no evidence that Migoo had taken possession of the items or directed police to retain them.
The counterclaim was dismissed with costs.
Court cancels both companies’ design registrations
The judgment also dealt a blow to the industrial design registrations held by both companies.
Justice Mubiru cancelled Migoo’s design registration, made in February 2019, and Rida’s registration, made in August 2018.
The court found that the disputed design could not be considered sufficiently new because similar designs were already available on the market.
However, the cancellation of the registrations did not shield Rida from liability for passing off.
Justice Mubiru distinguished between exclusive rights arising from industrial design registration and the protection afforded to a business’s goodwill.
He held that even where a particular product design cannot be exclusively owned, a trader can still be liable for presenting its goods in a manner that misleads consumers about their origin.
The court ultimately found Rida liable for passing off its gumboots in a way that exploited Migoo’s established reputation and customer base.
Rida was ordered to pay the costs of both the main suit and its failed counterclaim.
