Saturday, 14 May 2016

Supreme court; Every High Court must give due deference to enunciation of law made by another High Court

The Defendant-Appellant finally filed a Notice of Motion in
the Bombay High Court as late as 14.12.2005, in which it was successful in
being granted an injunction as recently as on 31.3.2012. We may reiterate that
every High Court must give due deference to the enunciation of law made by
another High Court even though it is free to charter a divergent direction.

However, this elasticity in consideration is not available where the litigants arethe same, since Sections 10 and 11 of the CPC would come into play. Unless
restraint is displayed, judicial bedlam and curial consternation would inexorably
erupt since an unsuccessful litigant in one State would rush to another State in
the endeavour to obtain an inconsistent or contradictory order. Anarchy would
be loosed on the Indian Court system. Since the Division Bench of the Bombay
High Court is in seisin of the dispute, we refrain from saying anything more.

Neon Laboratories Ltd. Medical Technologies Ltd. & Ors.

Dated;October 5, 2015.
Citation;(2016)2 SCC 672


This Appeal assails the Judgment dated 19.12.2005 of the Learned Single

Judge of the High Court of Gujarat at Ahmedabad, who returned the opinion
that the Trial Court had rightly granted an injunction in favour of the Plaintiffs
(Respondents before us) till the disposal of the suit.

2 Briefly stated, the Plaintiff-Respondents 1 & 2 had filed a suit for
injunction, damages and account of profits. The Plaintiff-Respondents are
engaged in the business of manufacture and marketing of pharmaceutical
products and medicinal preparation, and as pleaded by them, have acquired high
reputation and goodwill in the market. Hematal Biologicals Ltd. or Core HealthPage 2
Care Ltd., the predecessor-in-title of Plaintiff-Respondents is stated to have
introduced the molecular preparation and generic drug “Propofol” in India, in
respect of which an application had been filed before the Drug Controller of
India on 22.4.1998. Product Permission was received on 2.5.1998 from the
Commissioner of Food and Drugs Control Administration. It has been pleaded
that the predecessor-in-title of Plaintiff-Respondent No.1 had coined and
invented the trademark PROFOL in April 1998 and not applied for registration
of the said trademark on 24.5.1998 in Class V. However, it seems to us that this
claim may not find acceptance inasmuch as PROFOL is almost an anagram of
and is phonetically almost indistinguishable from the molecular compound,
namely “Propofol”. In our opinion, to claim exclusivity of user, the trademark
should normally partake of a new creation, or if an existing word, it should not
bear descriptive characteristics so far as the product is concerned, nor should it
be of an extolment or laudation. It would be surprising if exclusivity is given to
marks such as ‘bestsoap’ etc. Having said this, we must accept the reality that
in the pharmaceutical industry it is commonplace that trademarks reproduce and
resonate the constituent composition. While this aspect and feature may be a
good ground for declining registration of the trademark, it may nevertheless
remain a favourable determinant in a passing-off action. So far as the subject
trademarks are concerned, not only do their names constitute part of the generic
drug “Propofol”, but they are also so similar that even the concerned medical
practitioner/anaesthesiologist could fail to discern the difference between them.Page 3
It has been pleaded in the plaint that the said predecessor-in-title has been
openly employing this mark since April 1998. After amalgamating with its
predecessor-in-title on 17.2.2000, Plaintiff-Respondent No. 1 became the owner
of the trademark PROFOL, and has been using it since 2000, when it also
applied for its registration. Plaintiff-Respondent No. 2 is a licensee of
Plaintiff-Respondent No. 1. On coming to learn that Defendant No. 1, the
Appellant before us, had introduced into market the same generic drug under
the trademark ROFOL, the Plaintiff-Respondents filed the present suit on
17.7.2005, on the predication that ROFOL is identical and deceptively similar to
the Plaintiff-Respondents’ trademark PROFOL. As is to be expected, the
assertion in the plaint is that the Defendant-Appellant is marketing and passing
off its products as that of the Plaintiff-Respondents.
3 This Court does not normally entertain appeals against interlocutory
orders. In the case of trademarks, however, keeping in perspective the endemic
delay in concluding cases/suits in India because of the exponentially increasing
docket explosion, temporary ad interim injunctions are of far reaching
consequences, oftentimes effectively deciding the lis and the disputes
themselves. Possibly for this reason ‘Leave’ has already been granted in the
present Appeal. However, it is now well entrenched in our jurisprudence that
the Appellate Court should not flimsily, whimsically or lightly interfere in the
exercise of discretion by a subordinate court unless such exercise is palpably
perverse. Perversity can pertain to the understanding of law or the appreciation
of pleadings or evidence. We shall restrict ourselves to reference in Wander
Ltd. v. Antox India P. Ltd. 1990 Supp SCC 727, wherein it has been adumbrated
that the Appellate Court ought not to “reassess the material and seek to reach a
conclusion different from the one reached by the court below if the one reached
by that court was reasonably possible on the material. The appellate court
would normally not be justified in interfering with the exercise of discretion
under appeal solely on the ground that if it had considered the matter at the trial
stage it would have come to a contrary conclusion. If the discretion has been
exercised by the trial court reasonably and in a judicial manner the fact that the
appellate court would have taken a different view may not justify interference
with the trial court’s exercise of discretion”. We shall be careful not to
transgress these frontiers.
4 Before granting an ad interim injunction, the Court in seisen of the
litigation has to address its attention to the existence or otherwise of three
aspects – (a) whether a prima facie case in favour of the applicant has been
established; (b) whether the balance of convenience lies in favour of the
applicant; and (c) whether irreparable loss or damage will visit the applicant in
the event injunctory relief is declined. We shall cogitate on the first factor first
– is the law favourable to the applicant.
5 The primary argument of the Defendant-Appellant is that it had received
registration for its trademark ROFOL in Class V on 14.9.2001 relating back to
the date of its application viz. 19.10.1992. It contends that the circumstances as
on the date of its application are relevant, and on that date, the
Plaintiff-Respondents were not entities on the market. However, the
Defendant-Appellant has conceded that it commenced user of the trademark
ROFOL only from 16.10.2004 onwards. Furthermore, it is important to note
that litigation was initiated by Plaintiff-Respondents, not Defendant-Appellant,
even though the latter could have raised issue to Plaintiff-Respondents using a
similar mark to the one for which it had filed an application for registration as
early as in 1992. The Defendant-Appellant finally filed a Notice of Motion in
the Bombay High Court as late as 14.12.2005, in which it was successful in
being granted an injunction as recently as on 31.3.2012. We may reiterate that
every High Court must give due deference to the enunciation of law made by
another High Court even though it is free to charter a divergent direction.
However, this elasticity in consideration is not available where the litigants are
the same, since Sections 10 and 11 of the CPC would come into play. Unless
restraint is displayed, judicial bedlam and curial consternation would inexorably
erupt since an unsuccessful litigant in one State would rush to another State in
the endeavour to obtain an inconsistent or contradictory order. Anarchy would
be loosed on the Indian Court system. Since the Division Bench of the Bombay
High Court is in seisin of the dispute, we refrain from saying anything more.
The Plaintiff-Respondents filed an appeal against the Order dated 31.3.2012 and
the Division Bench has, by its Order dated 30.4.2012, stayed its operation.
6 It may be reiterated that the Plaintiff-Respondents asserts that their
predecessor-in-interest had initiated user of the trademark PROFOL in 1998,
when it commenced production thereof and Plaintiff-Respondents succeeded to
the user of the mark upon amalgamation with their predecessor-in-title in the
year 2000. The position that emerges is that whilst the Defendant-Appellant
had applied for registration of its trademark several years prior to the
Plaintiff-Respondents, (1992 as against 26.5.1998 at the earliest), the user
thereof had remained dormant for twelve years. We can appreciate that this
passivity may be the result of research of the product or the market, but the
Defendant-Appellant will have to explain its supineness through evidence. In
this interregnum, the Plaintiff-Respondents had not only applied for registration
but had also commenced production and marketing of the similar drug and had
allegedly built up a substantial goodwill in the market for PROFOL. The legal
nodus is whether the prior registration would have the effect of obliterating the
significance of the goodwill that had meanwhile been established by the
Plaintiff-Respondents. Would a deeming provision i.e. relating registration
retrospectively prevail on actuality – competing equities oscillate around prior
registration and prior user.
7 Section 34 of the Trade Marks Act, 1999 (the Act) deserves reproduction
34. Saving for vested rights.—Nothing in this Act shall entitle the
proprietor or a registered user of registered trade mark to interfere
with or restrain the use by any person of a trade mark identical with
or nearly resembling it in relation to goods or services in relation to
which that person or a predecessor in title of his has continuously
used that trade mark from a date prior—
(a) to the use of the first-mentioned trade mark in relation to
those goods or services be the proprietor or a predecessor in
title of his; or
(b) to the date of registration of the first-mentioned trade mark
in respect of those goods or services in the name of the
proprietor of a predecessor in title of his;
whichever is the earlier, and the Registrar shall not refuse (on such
use being proved), to register the second mentioned trade mark by
reason only of the registration of the first mentioned trade mark.
This Section palpably holds that a proprietor of a trade mark does not have
the right to prevent the use by another party of an identical or similar mark
where that user commenced prior to the user or date of registration of the
proprietor. This “first user” rule is a seminal part of the Act. While the case
of the Plaintiff-Respondents is furthered by the fact that their user
commenced prior to that of the Defendant-Appellant, the entirety of the
Section needs to be taken into consideration, in that it gives rights to a
subsequent user when its user is prior to the user of the proprietor and prior
to the date of registration of the proprietor, whichever is earlier. In the facts
of the case at hand, the Defendant-Appellant filed for registration in 1992,
six years prior to the commencement of user by the Plaintiff-Respondents.
The Defendant-Appellant was, thus, not prevented from restraining the
Plaintiff-Respondents’ use of the similar mark PROFOL, but the intention of
the Section, which is to protect the prior user from the proprietor who is not
exercising the user of its mark prima facie appears to be in favour of the
8 Section 47 of the Act is in the same vein and statutory strain inasmuch as
it postulates the possibility of a registered mark being taken off the register on
an application being made by any aggrieved person, inter alia, on the ground
that for a continuous period of five years and three months from the date on
which the trademark was registered, there was no bona fide use thereof. In the
case in hand, prima facie, it appears that for over five years after a registration
application was made by the Defendant-Appellant, the mark was not used.
Facially, the Act does not permit the hoarding of or appropriation without
utilization of a trademark; nay the Defendant-Appellant has allowed or
acquiesced in the user of the Plaintiff-Respondents for several years. The
legislative intent behind this Section was to ordain that an applicant of a
trademark does not have a permanent right by virtue of its application alone.
Such a right is lost if it is not exercised within a reasonable time.
9 We must hasten to clarify that had the Defendant-Appellant commenced
user of its trademark ROFOL prior to or even simultaneous with or even shortly
after the Plaintiff-Respondents’ marketing of their products under the trademark
PROFOL, on the Defendant-Appellant being accorded registration in respect of
ROFOL which registration would retrospectively have efficacy from
19.10.1992, the situation would have been unassailably favourable to it. What
has actually transpired is that after applying for registration of its trademark
ROFOL in 1992, the Defendant-Appellant took no steps whatsoever in placing
its product in the market till 2004. It also was legally lethargic in not seeking a
curial restraint against the Plaintiff-Respondents. This reluctance to protect its
mark could well be interpreted as an indication that the Defendant-Appellant
had abandoned its mark at some point during the twelve year interregnum
between its application and the commencement of its user, and that in 2004 it
sought to exercise its rights afresh. It would not be unfair or fanciful to favour
the view that the Defendant-Appellant’s delayed user was to exploit the niche
already created and built-up by the Plaintiff-Respondents for themselves in the
market. The ‘first in the market’ test has always enjoyed pre-eminence. We
shall not burden this Judgment by referring to the several precedents that can be
found apposite to the subject. In the interest of prolixity we may mention only
N.R. Dongre v. Whirlpool Corporation (1996) 5 SCC 714 and Milmet Oftho
Industries v. Allergan Inc. (2004) 12 SCC 624. In Whirlpool, the worldwide
prior user was given preference nay predominance over the registered trademark
in India of the defendant. In Milmet, the marks of pharmaceutical preparation
were similar but the prior user worldwide had not registered its mark in India
whereas its adversary had done so. This Court approved the grant of an
injunction in favour of the prior user. Additionally, in the recent decision in S.
Syed Mohiden v. P. Sulochana Bai (2015) 7 SCALE 136, this Court has pithily
underscored that the rights in a passing-off action emanate from common law
and not from statutory provisions, nevertheless the prior user’s rights will
override those of a subsequent user even though it had been accorded
registration of its trademark. Learned counsel for the Defendant-Appellant has
endeavoured to minimise the relevance of Whirlpool as well as Milmet by
drawing the distinction that those trademarks had attained worldwide
reputation. However, we think that as world shrinks almost to global village,
the relevance of the transnational nature of a trademark will progressively
diminish into insignificance. In other words, the attainment of valuable
goodwill will have ever increasing importance. At the present stage, the
argument in favour of the Defendant-Appellant that we find holds more water is
that in both Milmet and Whirlpool, as distinct from the case before us, the
prior user of the successful party predated the date of application for registration
of the competing party. The question to examine, then, would be whether prior
user would have to be anterior to the date of application or prior to the user by
the Defendant-Appellant. In other words, the question before the Court would
remain whether the situation on the date of application for registration alone
would be relevant, or whether the developments in the period between this date
and the date of grant of registration would have any bearing on the rights of the
parties. All these considerations will be cast into a curial cauldron to be
appreciated by the Court before which the suit is being contested. In these
premises, we cannot conclude that a prima facie case has not been disclosed by
the Plaintiff-Respondents.
10 Since we are confronted with the legal propriety of a temporary
injunction, we must abjure from going into minute details and refrain from
discussing the case threadbare, in order to preclude rendering the suit itself an
exercise in futility and the decision therein a foregone conclusion. All that we
would say in the present Appeal is that since the Plaintiff-Respondents have
alleged, and have prima facie supported with proof, that they had already been
using their trademark well before the attempted user of an identical or closely
similar trademark by the Defendant-Appellant, the former would be entitled to a
temporary injunction, in light of the abovementioned ‘first in the market’ test.
We find that the Plaintiff-Respondents have made out a prima facie case. The
two other factors in an interim injunction, namely the balance of convenience
and an irreparable loss, are both in favour of the Plaintiff-Respondents, given
the potential loss of goodwill and business they could suffer should an
injunction be denied. The Defendant-Appellant has been injuncted from using
the mark ROFOL since 2005, after having launched products bearing the mark
only in the previous year, so the balance of convenience is in favour of allowing
the injunction to continue. In Milmet, this Court had taken note of the fact that
the unsuccessful litigating party had in the duration of the litigation startedPage 12
using another mark, and found that this would prima facie assume significance
in assessing “irreparable loss”.
11 For manifold and myriad reasons, we are of the opinion that the decision
of the Trial Court, as affirmed by the First Appellate Court, is reasonable and
judicious, and does not suffer from perversity by any dialectic that the
Defendant-Appellant may proffer. The Appeal is accordingly dismissed, but
with no order as to costs.
New Delhi,
October 5, 2015.

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