Trademark; Neon Laboratories Vs. Medical Technologies [Supreme Court of India, 05-10-2015]

Trade Marks Act, 1999 – ‘first in the market’ test – Temporary Injunction – 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. 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. The unsuccessful litigating party had in the duration of the litigation started using another mark, and found that this would prima facie assume significance in assessing “irreparable loss”.

Trade Marks Act, 1999 – S. 34 – Saving for vested rights – 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 Plaintiff-Respondents.

Trade Marks Act, 1999 – S. 47 – 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.

Practice & Procedure – Interim Injunction – 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.

Practice & Procedure – Interlocutory Orders – Supreme 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.

Practice & Procedure – Discretion – Exercise of – Perversity – 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.

Practice & Procedure – Same Litigants before different High Courts – 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.

Trademark

(2016) 2 SCC 672 : 2015 (4) RCR (Civil) 860 : 2015 (3) MIPR 107 : AIR 2015 SCW 6470 : 2015 (10) Scale 505 : 2015 (5) RAJ 273 : 2015 (7) MLJ 618 : 2015 (64) PTC 225 : 2015 (6) ALL MR 965 : 2015 (6) AIR Bom.R 828 : 2015 (4) JBCJ 469 : 2015 (6) RAJ 433 : 2015 (5) Law Herald (SC) 3906 : 2016 (1) WLN 11 : 2016 (157) AIC 98 : 2016 (114) ALR 235 : 2016 (1) Andh LD 97 : 2015 (3) PLJ 641 : 2016 (1) Air Kar R 20 : 2015(2) Drugs Cases (DC) 1 : 2016(1) Cal. H.C.N. 30 : 2016(1) RJ 435 : 2016 (1) CivilLJ 416


IN THE SUPREME COURT OF INDIA

CIVIL APPEALLATE JURISDICTION

(VIKRAMAJIT SEN) AND (SHIVA KIRTI SINGH) JJ.

October 5, 2015

CIVIL APPEAL NO. 1018 OF 2006

Neon Laboratories Ltd. … Appellant

Versus

Medical Technologies Ltd. & Ors. … Respondents

For the Appellants : Ravikesh K. Sinha, Sunil Nair and Uday B. Dube, Advocates; For the Respondents : C.A. Sundaram, Sr. Adv., Akhil Sibal, Y.J. Trivedi, Ms. Namita Choudhary, Jatin Trivedi, Ashutosh Kumar, Aditya Kr. Choudhary, Himanshu Setia, Sushant Singh, Ms. Rohini Musa, Zafar Inayat, Ahishek Gupta, Pradeep Chhindra, Ms. Anisha Gupta, S.K. Verma, M.K. Choudhary, Yudhister Bhardwaj, Advocates.

J U D G M E N T

VIKRAMAJIT SEN, J.

1. 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 Health 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. 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