Relief in Suits for Infringement/Passing Off :
Civil Litigation : A suit can be initiated either under the law of passing off or for infringement under the Trade Marks Act, 1999 depending on whether the trade mark is unregistered, pending registration or registered respectively.
• Jurisdiction and Venue : The suit for passing off and/or infringement can be initiated either in the District Court or in the High Court depending on the valuation of the suit. The suit can be at the place where the rights holder or one of the rights holders actually and voluntarily reside or work for gain or carries on business.
• Elements of the Complaint : In the complaint, the rights holder is required to demonstrate that (a) the alleged infringing act involves a mark that is identical or similar to a trade mark of the rights holder; (b) the infringing representation of a trade mark is being used in connection with goods or services and might lead to confusion in public regarding the origin of the infringing goods/services; (c) the unlawful act interfered with the trade mark holder’s rights of exclusive use or caused the rights holder economic loss.
Section 135 expressly stipulates that the relief which a Court may grant in any suit for infringement or for passing off referred to in Section 134 includes injunction (subject to such terms, if any, as the court thinks fit) and at the option of the plaintiff, either damages or an account of profits, together with or without any order for the delivery up of the infringing labels and marks for destruction or erasure.
Ex-parte Interim Injunction : Most Indian Courts will grant ex-parte interim injunctions. Ex-parte interim injunction is a temporary injunction granted without any notice to the infringer restraining him from using the infringing mark during the pendency of the trial. This injunction is normally granted at the early stages of the trial and many a times on the first date of hearing itself, provided that the rights holder is able to establish its rights before the Court and prove the gravity of the offence, merits immediate consideration.
An interlocutory order for any of the following mattes can also be passed, namely:—
(a) for discovery of documents;
(b) preserving of infringing goods, documents or other evidence which are related to the subject-matter of the suit;
(c) restraining the defendant from disposing of or dealing with his assets in a manner which may adversely affect plaintiff’s ability to recover damages, costs or other pecuniary remedies which may be finally awarded to the plaintiff.
The Court shall not grant relief by way of damages (other than nominal damages) or on account of profits in any case—
(a) where in a suit for infringement of a trade mark, the infringement complained of is in relation to a certification trade mark or collective mark; or
(b) where in a suit for infringement the defendant satisfies the court—
(i) that at the time he commenced to use the trade mark complained of in the suit, he was unaware and had no reasonable ground for believing that the trade mark of the plaintiff was on the register or that the plaintiff was a registered user using by way of permitted use; and
(ii) that when he became aware of the existence and nature of the plaintiff’s right in the trade mark, he forthwith ceased to use the trade mark in relation to goods or services in respect of which it was registered.
However, the Courts are restrained from granting relief by way of damages (other than nominal damages) or on account of profit in any case where the infringement complained of relates to certification mark or collective mark or where the defendant satisfies the Court that when he used the mark, he was unaware or had no reasonable ground of belief that the trade mark is registered one and when he came to know of existence and nature of plaintiffs right, he stopped the use of the trade mark.
The distinction between a suit based on infringement and that based on passing off was explained by the Supreme Court in Kaviraj Pandit Durga Dutt Sharma v. Navaratna Pharmaceutical Laboratories, AIR 1965 SC 980. It was explained that “while an action for passing off is a common law remedy being in substance an action for deceit, that is, a passing off by a person of his own goods as those of another, that is not the gist of an action for infringement. The action for infringement is a statutory remedy conferred on the registered proprietor of a registered trade mark for the vindication of the ‘exclusive right to the use of the trade mark in relation to those goods’. The use by the defendant of the trade mark of the plaintiff is not essential in an action for passing off, but is the sine qua non in the case of an action for infringement.”
It was further noticed that “where the evidence in respect of passing off consists merely of the colourable use of a registered trade mark, the essential features of both the actions might coincide, in an action for infringement, the plaintiff must, no doubt, make out that the defendant’s mark is so close either visually, phonetically or otherwise and the Court should reach the conclusion that there is an imitation” in which event it would be established that the plaintiff’s rights are violated.
The grant of an injunction is a right expressly provided by the Trade Marks Act, 1999. The rules governing the grant of injunctions in trade mark cases are based on the provisions contained in Sections 36 to 42 of the Indian Specific Relief Act, 1963 and Order 39 Rules 1 and 2 read with Section 151 of the Code of Civil Procedure (Century v. Roshanlal AIR 1978 Del. 250).
In Midas Hygiene Industries (P) Ltd. v. Sudhir Bhatia and Ors.. AIR 2004 SC 186, it was held that the law on the subject is well settled. In cases of infringement either of trade mark or of copyright, normally an injunction must follow. Mere delay in bringing action is not sufficient to defeat grant of injunction in such cases. The grant of injunction also becomes necessary if it prima facie appears that the adoption of the mark was itself dishonest.
In an action for infringement where the defendant’s trade mark is identical with the plaintiff’s mark, the Court will not enquire whether the infringement is such as is likely to deceive or cause confusion. The test, therefore, as to likelihood of confusion or deception arising from similarity of marks is the same both in infringement and passing off actions [See Ruston & Hornsby Ltd . v. The Zamindara Engineering Co., AIR 1969 SC 304].
In Ramdev Food Products Pvt. Ltd. v. Arvindbhai Rambhai Patel and Ors., AIR 2006, it was held that a prima facie case of irreparable injury has been made out by the Appellant. It may not be necessary to show more than loss of goodwill and reputation to fulfill the condition of irreparable injury. If the first two pre-requisites are fulfilled, irreparable loss can be presumed to have taken place.
It was further held that the grant of an interlocutory injunction is in exercise of discretionary power and hence, the Appellate Courts will usually not interfere with it. However, Appellate Courts will substitute their discretion if they find that discretion has been exercised arbitrarily, capriciously, perversely, or where the court has ignored settled principles of law regulating the grant or refusal of interlocutory injunctions. [Wander Ltd.. v. Antox India P. Ltd., (1990) Supp SCC 727; Seema Arshad Zaheer v. MC of Greater Mumbai (2006) 5 SCALE 263]
In Laxmikant V. Patel v. Chetanbhai Shah and Anr., AIR 2001 SC 763, it was stated:
A person may sell his goods or deliver his services such as in case of a profession under a trading name or style. With the lapse of time such business or services associated with a person acquire a reputation or goodwill which becomes a property which is protected by Courts. A competitor initiating sale of goods or services in the same name or by imitating that name results in injury to the business of one who has the property in that name. The law does not permit any one to carry on his business in such a way as would persuade the customers or clients in believing that the goods or services belonging to someone else are his or are associated therewith. It does not matter whether the latter person does so fraudulently or otherwise. The reasons are two. Firstly, honesty and fair play are, and ought to be, the basic policies in the world of business. Secondly, when a person adopts or intends to adopt a name in connection with his business orservices which already belongs to someone else, it results in confusion and has propensity of diverting the customers and clients of someone else to himself and thereby resulting in injury.
The Delhi High Court in Toyota Jidosha Kabushiki Kaisha v. Deepak Mangal & Others, 2010 (43) PTC 161(Del.), held that plaintiff is not entitled to the discretionary relief as prayed for by him. He has not been able to make any prima facie case in his favour for injuncting the defendant from using the trade mark “PRIUS” on which the defendant is admittedly the registered proprietor and owner since 2002. Principles of equity and fair play also do not find favour with the plaintiff. The balance of convenience in fact lies in favour of the defendant. If at this stage i.e. after business growth of more than seven years, the defendant is injuncted from using his trade name under which he is selling his auto accessory products, he would suffer huge business loss which would probably bring to a close not only his business reputation but all his legitimate financial expectations. On the other hand no irreparable loss or injury will be suffered by the plaintiff as admittedly the plaintiff is not in the market.
Plaintiff has given up all claims if any on the use of the mark “PRIUS” as he has knocked the doors of theCourt after an unexplainable delay of more than six and half years. None of the ingredients for continuing of the interim injunction in favour of the plaintiff arise. If injunction is allowed to continue, the loss to be suffered by the defendant would become irreparable as his business would come to stand still. In these circumstances, balance of convenience is also in favour of the defendant. The application of the defendant under Order 39 Rule 4 CPC is accordingly allowed and the interim ex parte injunction granted is set aside.
Recently in Proctor & Gamble Co. & Anr v. Shipra Laboratories (November, 2011), the Delhi High Court held that it is not in dispute that the defendant has been using the trade mark SAFE GUARD for sale of antisepticcreams. There is practically no difference between the trade mark SAFEGUARD and SAFE GUARD since no person is likely to notice the space between the words SAFE and GUARD…
The Court observed that in any case, the defendant has no legal right to use the trade mark SAFEGUARD or any other mark identical or deceptively similar to this registered trade mark of the plaintiff in respect of any of the products for which registration has been granted. The plaintiffs, therefore, are entitled to an appropriate injunction, restraining the defendant from using the trade mark SAFE GUARD in respect of the product for which registration has been granted to it by Registrar of Trade marks in India.
Criminal Litigation: The Trade Marks Act, 1999 provides for remedies for infringement under the criminal laws too. The police have the power to suo motu conduct raids and seizure operations. However, the use of such powers by the police is minimal.
Under the criminal law, should the rights holder not be aware of the details (name, address, dates of infringement, etc.) of the infringers, it is advisable to procure a general search and seizure warrant from the local magistrate and thereafter organize search and seizure operations in that area. In the alternative, should the rights holder be aware of the details of the infringer a complaint can be lodged with the police authorities and raids organized accordingly. In a criminal proceeding, the litigation is between the State and the infringer and therefore the rights holder has a limited role to play. The maximum imprisonment that an infringer can get under the Trade Marks Act, 1999 is up to three years with a fine of up to ` two lakhs.
Provisions under the Customs Laws : Besides the civil and the criminal remedies mentioned herein above, there are also certain provisions under the trade mark law and the customs law which prohibit the importation of infringing goods in India. The Customs authorities have promulgated guidelines known as the Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007, under which the rights holder can record their registered trade marks with the Customs authorities. These guidelines authorize the Custom officials to seize goods infringing the trade marks of the rights holder at the border without obtaining any orders from the Court.
These rules also empower the Custom officers to destroy the suspended goods under official supervision or dispose them outside the normal channels of commerce after it has been determined that the goods detained have infringed the trade marks of the rights holder and that no legal proceeding is pending in relation to such determination. These rules also prohibit the re-exportation of the goods infringing trade marks in an unaltered state.
Milment Oftho Industries v. Allergan Inc. (2004) 20 ILD 74 (SC) ; 2004 (170) ELT 260 (SC) S. N. Variava & H. K. Seema, JJ. [Decided on 7.5.2004]
Brief Facts:
The respondent is the owner of trade mark ”Ocuflox” in respect of an eye care product containing ‘Ofloxacin’ and other compounds. The trade mark was registered in various countries except India. The respondent company had no intention to come to India. The appellant, on the other hand, was selling its product ’Ocuflox’ on a medicinal preparation containing Ciprofloxacin HCL to be used for the treatment of the eye and ear. The respondents filed a suit of injunction based on passing off action against the appellants.
The appellants contended in the suit that it had coined the word ‘Ocuflox’ by taking the prefix ‘Ocu’ from ‘Ocular’ and ‘Flox’ from ‘Ciprofloxacin’ which was the base constituent of the product and that it had been granted registration by the Food & Drug Control Administration and that its application for the registration of the trade name ‘Ocuflox’ was pending. The trial court refused to grant injunction on the grounds that the respondent’s product was not being sold in India and the appellant had introduced the product first in India.The Division Bench of the Court allowed the appeal of the respondent on the ground that it was the first in the market and granted injunction. The appellants approached the Supreme Court of India by way of an appeal against the order granting injunction.
Decision: Directions given to the trial court to dispose of the matter within 6 months.
Reasons:
While considering the possibility of likelihood of deception or confusion, in present times and particularly in the field of medicines, the courts must keep in mind the fact that nowadays the field of medicine is of a international character. The court has to keep in mind the possibility that with the passage of time, some conflict may occur between the use of the mark by the applicant in India and the user by the overseas company. The court must ensure that public interest is in no way imperlled. Doctors, particularly eminent doctors, medical practitioners and persons or companies connected with medical field keep abreast of latest developments in medicine and preparations worldwide. Medical literature is freely available in the country.
Doctors, medical practitioners and persons connected with the medical field regularly attend medical conferences, symposiums, lectures, etc. It must also be remembered that nowadays goods are widely advertised in newspapers, periodicals, magazines and other media which is available in the country. This results in a product acquiring a worldwide reputation. Thus, if a mark in respect of a drug is associated with the respondents worldwide it would lead to an anomalous situation if an identical mark in respect of a similar drug is allowed to be sold in India. However, one note of caution must be expressed. Multinational corporations, who have no intention of coming to India or introducing their product in India should not be allowed to throttle an Indian company by not permitting it to sell a product in India, if the Indian company has genuinely adopted the mark and developed the product and is first in the market. Thus, the ultimate test should be who is first in the market.
In the instant case, the marks were the same. They were in respect of pharmaceutical products. The mere fact that the respondents had not been using the mark in India would be irrelevant if they were the first in the world market. The Division Bench had relied upon material which prima facie showed that the respondents’ product was advertised before the appellants entered the field. On the basis of that material, the Division bench had concluded that the respondents were first to adopt the mark. If that be so, then no fault could be found with the conclusion drawn by the Division Bench.
However, it was submitted on behalf of the appellants that the respondents were not the first to use the mark. It was submitted that there was no proof that the respondents had adopted the mark and used the mark before the appellants started using the mark in India. These were matters which would require examination on evidence. Considering the fact that for all these years, because of the injunction order, the appellants had sold their product under some other name, the balance of convenience was that the injunction order be continued and the hearing of the suit be expedited. If on evidence it was proved that the respondents had
adopted the mark prior to the appellants’ doing so, on the settled law, then the respondents would become entitled to an injunction. However, if on evidence it was shown that the respondents had not adopted the mark prior to its use in India by the appellants, then, undoubtedly, the trial court would vacate the injunction. The Trial Court would undoubtedly then assess the damage which appellants had suffered for having wrongly not been allowed to use the mark for all these years. With the above said directions, the appeal stands disposed of.
Satyam Infoway Ltd v. Sifynet Solutions Pvt Ltd (2004) 120 COMP CAS 729 (SC); (2004) 19 ILD 30 (SC) Mrs. Ruma Paul & P. Venkatarama Reddi, JJ.
Brief Facts: The appellant is a well-known IT company. The appellant owned and registered several domain names such as “www.sifynet”, “www.sifymall.com”, “www.sifyrealestate.com” etc in 1999 with INCANN. In the year 2001 the respondent company also registered domain names “www.siffy.com” and www.siffynet.net. The appellant served a notice on the respondent not to use the similarly sounding domain names but the respondent did not oblige. The appellant filed a suit in the civil court and obtained a temporary injunction against the respondent. The High Court stayed the operation of the trial courts injunction order and the appellant challenged the order of the High court before the Supreme Court.
Decision: Appeal allowed.
Reasons:
As far as India is concerned there is no legislation, which explicitly refers to dispute resolution in connection with domain names. But although the operation of the trade marks act, 1999 itself is not extra territorial and may not allow for adequate protection of domain names, this does not mean that domain names are not to be legally protected to the extent possible under the laws relating to passing off.
Passing off action is based on the goodwill that a trader has in his name unlike an action for infringement of a trademark where a trader’s right based on property in the name as such. Therefore unless goodwill can be established by the appellant by showing that the public associates the name “Sify” with the services provided by the appellant, it cannot succeed.
The appellant, at least prima facie, had established goodwill by showing that the public associated the name “Sify” with the services provided by the appellant. Apart from the close visual similarity between “Sify” and “Siffy”, there is phonetic similarity between the two names. The addition of “net” to “Siffy” did not detract from this similarity. The evident media prominence to “Sify” and the large subscriber base could have left the respondent in no doubt as to its successful existence prior to the adoption of “Siffy” as part of its domain names. It will therefore appear that the justification followed the choice and that the respondent’s choice of the word “Siffy” was not original but inspired by the appellant’s business name and that the respondent’s explanation for its choice of the word “Siffy” as a corporate and domain name is an invented postrationalization. What is also important was that the respondent admittedly adopted the mark after the appellant.
The appellant is the prior user and has the right to debar the respondent from eating into the goodwill it might have built up in connection with the name. The similarity in the name might lead an unwary user of the internet of average intelligence and imperfect recollection to assume a business connection between the two. Such user may, while trying to access the information or services provided by the appellant, put in that extra “f” and be disappointed with the result. The Respondent’s assertion that its business is limited to network marketing unlike the appellant which carried on the business of software development, software solution and connected activities is factually incorrect and legally untenable.
A domain name is accessible by all internet users and the need to maintain an exclusive symbol for such access is crucial. Therefore, a deceptively similar domain name might not only lead to a confusion of the source but the receipt of unsought for services. Besides, the appellant has brought on record printouts of the respondents’ website in which it had advertised itself as providing, inter alia, software solutions, integrating and management solutions and software development, covering the same filed as the appellant.
The respondent will not suffer any such loss if an injunction is granted. The respondent can carry on its business and inform its members of the change of name. The fact that the grant of an interlocutory order might disrupt the respondent’s business cannot be seen as an argument against granting relief to the appellant to whom it is entitled. The doubtful explanation given by the respondent for the choice of the word “Siffy” coupled with the reputation of the appellant led to the conclusion that the respondent is seeking to cash in on the appellant’s reputation as a provider of service on the internet. In view of the prima facie view on the dishonest adoption of the appellant’s trade name by the respondent, the investments made by the appellant in connection with the trade name, and the public association of the trade name “Sify” with the appellant, the appellant is entitled to the relief it claimed. The decision of the High Court is set aside and that of the city civil court is affirmed.
Yahoo Inc v. Akash Arora [(2000) CLA-BL.Supp: 106; Dr. M. K. Sharma J (Delhi).]
Facts:
The plaintiff is a global internet media rendering services under the domain name/trade name yahoo. The plaintiff was amongst the first in the field to have the domain name yahoo providing search services. The name yahoo is a dictionary connotation adopted by the plaintiff. It is providing services at the internet under the domain name/trade name of yahoo. The plaintiff had registered trade mark name of yahoo. Its applications for registration of trade mark are pending in 69 countries all over the world. Its application for registration is also pending in India.
In the plaint filed in the High Court the plaintiff stated that the defendant, by adopting the name of yahoo.india offering services similar to those provided by the plaintiff, had been passing off services and goods of its own as those of the plaintiff’s trade mark and that this was identical to or deceptively similar to the plaintiff’s trade mark. The plaintiff claimed that the defendant could not adopt the domain name/trade name adopted by the plaintiff and that it (the plaintiff) was entitled to protection against passing off, as in the case of trade mark.
Refuting the plaintiff’s contentions, the defendant has stated that the trade mark laws in India relate to goods and, therefore, provisions of Trade and Merchandise Marks Act, 1958 were not applicable to the facts of this case, that the trade mark/domain name of yahoo was not registered in India and that, therefore, there could be no action for infringement of the registered trade mark. Further the term yahoo was a general dictionary term. Since it was not a word invented by the plaintiff, it could not claim to have acquired any distinctiveness. Thirdly, persons using internet being technically qualified, literate persons there was no possibility of their mistaking one for the other.
Decision & Reasons: Should action for infringement or passing off lie only in respect of goods? The principle underlying action of passing off is that no man is entitled to carry on business of another or to lead him to believe that he was carrying on or has any connection with the business being carried on by another person. Passing off action is a common law remedy. Principles of common law govern actions of passing off. Where parties were engaged in common or overlapping fields of activity competition would take place but if two contesting parties are involved in the same or similar line of business there is bound to be a grave and immense possibility for confusion and suspicion and, therefore, there is possibility of suffering damage.
In the instant case both the parties have a common field of activity: operating on the web site and providing information, which is almost similar in nature. Courts in the United States have held that the domain name serves the same functions as the trade mark and that it is not a mere address or like finding number on the internet and, therefore, domain name is entitled to equal protection as trade mark. A domain name is more than a mere internet address for it also identifies the internet site to those who reach it. It is also held that where the value of a name consists solely in its resemblance to the name or trade mark of another enterprise the court will normally assume that the public is likely to be deceived, for why would the defendants choose it?
Although the word ‘services’ may not find place in sections 27 and 29 of the Trade and Merchandise Marks Act 1958, the expression ‘services rendered’ has come to be recognised for an ‘action of passing off “.Thus the law of passing off is an action under the common law which also is given statutory recognition in the Act. It cannot, therefore, be said that passing off action cannot be maintained against services on the ground that it could be maintained only for goods.
With the advancement of technology, services rendered on the internet have also come to be recognised and accepted and are being given protection to the provider of service from passing off as services rendered by others as those of the plaintiff. In the instant case yahoo of the plaintiff and yahoo.india of the defendant are almost similar except for the use of the suffix “india” by the defendant. In cases where the degree of similarity of the markets is of vital importance in an action for passing off, there is every possibility and likelihood of confusion and suspicion being caused. When both the domain names are considered, it becomes clear that the two being almost identical or similar in nature, there is every possibility of a user of internet being confused and deceived into believing that both the domain names belong to one common source and connection, although the two belong to two different sources.
There is no merit in the argument that since the users of internet are sophisticated persons, there is no risk of confusion. This is because though he/she is a sophisticated person, as a consumer he may be unsophisticated and such person may first go to defendant’s internet site. The other argument that since yahoo is taken from a dictionary it cannot be appropriated as the domain name/trade mark of any particular person. There are a number of instances where such words are used by various companies as their trade marks. Those words have acquired uniqueness and distinctiveness and are associated with the business of the concern. And such words have received protection from courts as for example Whirlpool.
Rediff Communications Ltd. v. Cyberbooth [(2000) CLA BL-Supp. 115; A. P. Shah J (Bom)].
Facts:
The plaintiff was a group of companies named Rediffusion Dentsu Young and Rubican Advertising Ltd. The domain name of Rediff used by the plaintiff comprised of the first six letters (shown in bold) of the group name and is associated with the plaintiff and its group of companies. The domain name was registered by the plaintiffs. In the present suit they alleged that the domain name of Radiff.com registered by the defendants was intended to induce members of the public into believing that the defendants were associated with the plaintiffs and/or part of the Rediff group of companies. Adoption of the name, according to them, was a deliberate act on the defendant’s part to pass off their business services as those of the plaintiff. On the other hand the defendants contended that the name was derived by taking the first three letters of Radical and the first letters of the three words ‘information’ and ‘future’ and ‘free’. Therefore, according to them, there was no likelihood of deception or confusion between the two domain names.
The question before the Court was whether the domain name Radiff chosen by the defendants was deceptively similar to the domain name/mark of the plaintiffs and whether they seek to pass off their goods and services as those of the plaintiffs.
Decision & Reasons: To promote themselves and their products, in some cases to buy and sell goods and services, internet is being used by commercial organisations all over the world. For these purposes they need a domain name identifying the computer which they are using. The domain name enables them to have a e-mail address and a web site address. Decisions of American, English and Indian Courts establish that the internet domain names are of importance and can be valuable corporate assets. A domain name is more than an internet address and is entitled to equal protection as trade mark. With the advancement and progress in technology services rendered on the internet site have also come to be recognised/ accepted and are being given protection so as to protect such provider of service from ‘passing off’ the services rendered by others as his own services.
Passing off: its meaning and scope: The principle underlying the action of passing off is that no one is entitled to carry on his business in such a way as to lead to the belief that he is carrying on the business of another man or to lead to believe that the carrying on has any connection with the business being carried on by another man.
In the instant case the plaintiff and the defendant were carrying on business of communication and providing services through the internet. They were operating the web sites and providing information of a similar nature. The domain name of Rediff adopted by the defendant was almost similar in nature to the domain name of the plaintiff. There is therefore every possibility of an internet user getting confused and deceived into believing that both the domain names belonged to one common source.
The explanation offered by the defendants for using their domain name made no sense. The only object in adopting the domain name of Rediff was to trade upon the reputation of the plaintiff’s domain name of Rediff which they had built up for themselves. The defendant’s argument that their field of activity was different from that of the plaintiff had no substance. The field of activity in both cases was similar and overlapping.
Uniply Industries Ltd. v. Unicorn Plywood (P) Ltd. [2001(3) SCALE 642; S. Rajendra Babu and K. G. Balakrishnan JJ].
Facts:
The appellant and the respondent were dealers in plywood and plywood products. While the appellant was established in 1996 the respondent was established in 1993. Both did the same business, each of them adding ‘UNI’ before the word ‘PLY’ and ‘Board’. Each claimed that they had right of trade mark in respect of these products but no clinching evidence to establish their right of trade mark had been brought on record.
Applications of both of them for registration of trade mark under the Trade & Merchandise Marks Act, 1958 were pending investigation. The Supreme Court observed that in the state of material placed before the lower courts, they should have been wary and cautious in granting injunction that affected the trade and business of another person.
The Supreme Court observed: There are many precedents that for inherently distinctive marks ownership is governed by priority of use of such marks. The first user in the sale of goods or services is the owner, who is senior to the others. These marks are given legal protection against infringement immediately upon adoption and use in trade, if two companies make use of the same trade mark and the gist of passing off in relation to goodwill and reputation to goods.
Some courts indicate that even prior sales of goods, though small in size, with the mark are sufficient to establish priority, the test being to determine continuous prior user and the volume of sale or the degree of familiarity of the public with the mark. Bona fide test of marketing, promotional gifts and experimental sales in small volumes may be sufficient to establish a continuous prior use of the mark. But on other occasions courts have classified small sales volumes as so small and inconsequential for priority purposes. These facts have to be thrashed out. In the instant case the courts below had merely looked at what the prior case is and tried to decide without considering various other aspects arising in the matter.
Cadila Health Care Ltd. v. Cadila Pharmaceuticals Ltd. [2001 CLC 564; B. N.Kirpal, Doraiswamy Raju and Brijesh Kumar JJ (SC)].
Facts: Both the appellant and the respondent were pharmaceutical firms. In a suit for injunction the appellant claimed that a medicine being sold by the respondent under the name of Falcitab was similar to the drug being sold by it (the appellant) under its brand name of Falcigo and that the drug would be passed off as the appellant’s drug Falcigo which is used for the treatment of the same disease in view of the confusing similarity and deception in the names, more so because they were medicines of last resort.
The trial court held that the two drugs Falcitab and Falcigo differ in appearance, formulations and price, that they are sold to hospitals and institutions and that there was thus no chance of deception or of confusion specially as the drug was sold to hospitals and institutions and is not meant to be sold to any individual. The appellant’s appeal was dismissed by a single Judge of the High Court holding that there was no chance of any passing off one product for the other.
At the special leave stage the Supreme Court did not consider it necessary to interfere with the orders of the High Court but directed the courts below to expedite disposal of the suit. The Court had, however, set out the factors to be kept in mind while dealing with an action for infringement and passing off, especially in cases relating to medicinal products. The Court observed that expression of opinion on merits at this stage would not be advisable.
For deciding the question of deceptive similarity in an action for passing off on the basis of unregistered trade mark the Court directed the trial court to decide the case keeping in view the following factors:
(a) nature of marks, that is, whether the marks are word marks or label marks or composite marks;
(b) degree of resemblance between marks phonetically similar and hence similar in idea;
(c) nature of the goods in respect of which they are used as trade marks;
(d) similarity in the nature, character and performance of the goods of rival traders;
(e) class of purchasers who are likely to buy the goods bearing the marks they require, on their education and intelligence and a degree of care they are likely to exercise in purchasing and/or using the goods;
(f) mode of purchasing the goods or placing orders for the goods and any other surrounding circumstances which may be relevant in the extent of dissimilarity between the competing marks.
Introductory: Most of our laws are modelled on laws enacted by the British Parliament and the enunciation of laws by our courts is based on the principles of interpretation laid down by superior courts in England. Although the Trade & Merchandise Marks Act, 1958 is based on English law and principles of law laid down in respect of trade marks and passing off action by courts in England, the Supreme Court in the instant case, has struck a note of warning that courts should be wary of using English principles in their entirety, without regard to Indian conditions (for reasons explained in the judgment). This is because in India there is no common language for the whole country, a large majority of the population is illiterate even in their own mother tongue. Only a small percentage of people know English. In trade marks and passing off action cases the Supreme Court observed that ‘To apply the principles of English law regarding dissimilarity of the marks or the customer knowing about the distinguishing characteristics of the plaintiff’s goods is to overlook the ground realities in India, (see also Corn Products Refining Co. v. Shangrila Food Products Ltd., (1960) 1 SCC 142, for more detailed observations on the point).
In the case of medicinal preparations, however, courts have carved out an exception. It is said that the test to be applied for adjudging violation of trade mark law in these cases may not be at par with cases involving non-medicinal products. ‘A stricter approach is adopted because while confusion in the case of nonmedicinal products may only cause economic loss to the plaintiff confusion between two medicinal products may have disastrous effects. Stringent measures should be adopted specially where medicines are the medicines of last resort, as any confusion in such medicines may be fatal. Confusion as to the identity of the product itself could have dire consequences on public health.”Public interest would support lesser degree of proof showing confusing similarity in respect of medicinal preparations. Drugs are poisons, not sweets. Confusion between medicinal products may be life threatening.
It is not uncommon that in hospitals drugs can be requested verbally. Many patients may be elderly or infirm or illiterate, may not be in a position to differentiate between one medicine and another.
It is perhaps for this reason that the Drugs and Cosmetics Act has provided that anything that indicates imitation or resemblance of one drug with another drug in a manner that is likely to deceive to be regarded as spurious drug. It is to avoid such situation, the Act enjoins that the authority granting permission to manufacture a drug should be satisfied that there will be no confusion or deception in the market. The authority can ask the applicant to submit certain details to enable that authority to come to a correct conclusion.
Trademark and passing off action: compared
Trademark is essentially adopted to advertise one’s product and to make it known to the purchaser. It attempts to portray the nature and quality of a product. And over a period of time when the product becomes popular, temptations sprout up and induce others to pass off a similar or nearly similar product of theirs as that of the original owner, though not in the same words and same symbols, but in a way that makes thegullible consumer believe the product that he is purchasing is the same as the one on whose quality he has full faith and confidence.
While an action for passing off is a common law remedy for passing off of one’s own goods as those of another, action for infringement of a trade mark is a statutory remedy for vindication of one’s own exclusive right to the use of trade mark in relation to those goods. The use by the defendant of a trademark is not essential in an action for pissing off but is a sine qua non in the case of an action for infringement. In a passing off action the plaintiff’s right is “against the conduct of the defendant which leads to or is intended to lead to deception. Passing off is said to be a species of unfair trade competition or of actionable unfair trading by which one person, through deception, attempts to obtain an economic benefit of the reputation that the other has established for himself in a particular trade or business. The action is regarded as an action for deceit”.
Passing off action depends upon the principle that nobody has a right to represent his goods as the goods of some body else. That is, a man shall not sell his goods or services under the pretence that they were those of another person.
The modern tort of passing off has five elements—(1) a misrepresentation; (2) made by a trader in the course of his trade; (3) to prospective customers of his or ultimate consumers of goods or services supplied to them; (4) which is calculated to injure business or goodwill of another trader (in the sense that this is a reasonably foreseeable consequence); and (5) which causes actual damage to a business or goods of the trader by whom the action is brought or will probably do so.
Trade & Merchandise Marks Act, 1958: Under section 28 of this Act, on registration of a trade mark, its proprietor gets exclusive right to use the trademark in respect of the trade mark registered by him. However, in respect of a trademark that has not been registered, by virtue of section 27(1) no person shall be entitled to institute any proceeding to prevent or to recover damages for infringement of unregistered trademark. [For an example of a case how right in a trademark can be decided where two persons are dealing in the same product with one common word say “Uni” in the name of their product but both of which remained unregistered over a period of time see the decision of the Supreme Court in Uniply Industries Ltd. v. Unicom Plywood(P) Ltd., LW: 139.9.2001]
Sections 8 and 10 of the Act use the words “are likely to deceive or cause confusion”. The Act does not lay down any criteria for determining what is likely to deceive or cause confusion. “A trade mark is likely to deceive or cause confusion by its resemblance to another mark which is already on the register if it is likely to do so in the course of its legitimate use in the market where two marks are assumed to be in use by traders in the market.”
Decisions of Supreme Court: In Amritdhara Pharmacy v. Satya Deo., [AIR 1963 SC 449] which is the earliest case on the point Amritdhara and Lakshmandhara, were two names in use relating to medicinal preparations which are likely to be purchased by people, both literate and illiterate, for quick alleviation of their suffering. The question was whether the two names Amritdhara and Lakshmandhara are likely to deceive and cause confusion in the minds of buyers. It is said that in such a case the question has to be examined from the point of view of a man of average intelligence and imperfect recollection. To such a man the overall structural phonetic similarity of the two words is likely to deceive or cause confusion. An illiterate villager would go more by the overall structural and phonetic similarity and the nature of the medicine he has previously purchased. Where the trade relates to goods largely sold to illiterate persons a critical comparison of the two words may disclose some point of difference but an unaware purchaser of average intelligence would be deceived by the overall similarity of the two names having regard to the nature of medicine he is looking for. In a passing off action the marks must be compared as a whole: it is not correct to take a part of one word and compare it with a part of another word. Each word must be considered as a whole and compared with the other word as a whole.
The purpose of comparison is for determining whether the essential features of the plaintiff’s trademark are to be found in that used by the defendant. The identification of the essential features of the mark is, in essence, a question of fact and depends on the judgment of the court based on the evidence led before it. This view has been followed by the court for over four decades in later cases.
Amritdhara was the trade name of a medicinal preparation that was used for quick alleviation of various ailments. When the respondent had applied for registration of his preparation Lakshmandhara, which was also a medicinal preparation for the same purpose as the appellant’s medicine, the question arose whether the name Lakshmandhara was likely to deceive the public or cause confusion to the trade. The Supreme Court had held that a consumer would go more by the similarity of the two names in the context of the widely known medicinal preparation that he wants for his ailment.
In Dyechem Ltd. v. Cadbury (India) Ltd. 2000(5) SCC 573, the Supreme Court seems to have departed from the principles laid down by the Court in earlier cases. It was observed that ‘where common marks are included in the common trade marks, more regard is to be paid to the parts not common and the proper course is to look at the marks as a whole but at the same time not to disregard the parts which are common’.
Commenting on these observations the Supreme Court held in the instant case that the principle applied in Dyechem was not correct for the reason that the ‘dissimilarities have to be more important than the phonetic similarity in the use of the words Piknik and Picnic. The Court disagreed with the view that ‘the principle of phonetic similarity has to be jettisoned when the manner in which the competing words are written is different and the conclusion so arrived at is clearly contrary to the binding precedent of this court in Amritdhara case where the phonetic similarity was applied by judging the two competing marks’. The Court held that the decision in Dyechem did not lay down the law correctly
In the Special Leave Petition(C) No.21594 of 2009 decided on 07th September, 2009 in the case of M/s. Shree Vardhman Rice & Gen Mills vs. M/s Amar Singh Chawalwala the Supreme Court held that :
“…Without going into the merits of the controversy, we are of the opinion that the matters relating to trademarks, copyrights and patents should be finally decided very expeditiously by the Trial Court instead of merely granting or refusing to grant injunction. Experience shows that in the matters of trademarks, copyrights and patents, litigation is mainly fought between the parties about the temporary injunction and that goes on for years and years and the result is that the suit is hardly decided finally. This is not proper.