SC-Jagatjit Industries Limited Vs. The Intellectual Property Appellate Board

# BLENDERS PRIDE TRADEMARK DISPUTE: WHEN A REGISTRY ERROR MEETS OPPOSITION RIGHTS

## Introduction

The case of Jagatjit Industries Limited versus The Intellectual Property Appellate Board decided by the Supreme Court of India on 20th January 2016 touches upon some of the most fundamental questions in trademark law in India. What happens when the Trade Marks Registry issues a registration certificate by mistake, in clear violation of the statutory procedure governing opposition? Can a Registrar exercise suo motu power to correct such an error even when infringement proceedings are pending in a civil court? Does the bar created by Section 125 of the Trade Marks Act, 1999 extend to the Registrar's independent power to maintain the purity of the trademark register? These questions, which have significant practical consequences for trademark proprietors and opponents alike, were squarely addressed by the Supreme Court in this appeal filed by Jagatjit Industries Limited.

## Factual and Procedural Background

The dispute revolves around the trademark "BLENDERS PRIDE," a well-known name in the Indian whisky market. Respondent No. 4, Austin Nichols and Company Incorporated, a corporation registered under the laws of the United States of America and an ultimate subsidiary of Pernod Ricard S.A., claimed to have coined and adopted the trademark BLENDERS PRIDE through its licensee M/s. Seagram Company Limited as far back as 1973. Austin Nichols claimed that on account of extensive sales and marketing worldwide, the trademark had acquired tremendous reputation, and that it had obtained registration in more than 50 countries. In India, it had been selling BLENDERS PRIDE whisky through its licensee Seagram India Private Limited since 1995, and had applied for registration of the trademark under two applications in Class 33, which were pending.

Jagatjit Industries Limited, the appellant, also applied for registration of the identical trademark BLENDERS PRIDE. This application was advertised in the Trademarks Journal Mega-I, which was published on 7th October 2003. Under the Trade Marks Act, 1999, any person wishing to oppose a trademark application must file a notice of opposition within three months from the date of advertisement, with a provision for a further extension of up to one month in aggregate. Austin Nichols, within the statutory three-month period, filed Form TM-44 on 6th January 2004 seeking an extension of one month to file its notice of opposition, citing the need to seek legal advice. On 19th January 2004, Austin Nichols filed its notice of opposition before the Trade Marks Registry, New Delhi, which was duly numbered as DEL-160325.

On 16th February 2004, the Trade Marks Registry issued a notice to Jagatjit Industries Limited under Section 21(2) of the Act, calling upon it to file a counter-statement to the notice of opposition within two months, with a warning that failure to do so would result in the trademark application being deemed abandoned. This letter, as the Court noted, unambiguously reflected that the notice of opposition had been taken on record.

However, despite opposition proceedings being actively pending, Austin Nichols discovered on 20th January 2005 that a trademark registration certificate bearing No. 618414 had already been issued to Jagatjit Industries Limited on 13th January 2004 — that is, before the extended opposition period had even expired and while the opposition proceedings were still very much alive.

Austin Nichols immediately informed the Trade Marks Registry about the pending opposition proceedings. Receiving no response, it filed writ petitions before the Delhi High Court being Writ Petition Nos. 2712 and 2713 of 2005. On 16th February 2005, the Registrar issued a show cause notice to Jagatjit Industries under Section 57(4) of the Trade Marks Act, 1999, stating that the registration certificate had been issued wrongly and proposing to rectify the register by removing the mark. Jagatjit was also directed to return the wrongly issued certificate and not to use it in any proceedings.

Jagatjit challenged this show cause notice by filing Writ Petition Nos. 10080-81 of 2005 and obtained an interim stay. Meanwhile, on 14th January 2005, Jagatjit had already filed a suit for infringement of its trademark in the District Court of Jalandhar against Seagram Distilleries Private Limited, the licensee of Austin Nichols. In the written statement filed in that suit, Seagram took up the plea that Jagatjit's registration was under challenge and hence the suit ought to be stayed.

On 14th November 2005, the Registrar recalled the show cause notice, holding that in view of Section 125 of the Act, jurisdiction had shifted to the Intellectual Property Appellate Board since infringement proceedings were pending in a civil court. In an appeal before the Appellate Board, the Board reversed the Registrar's order on 6th October 2006, holding that the registration of the trademark on 13th January 2004 was contrary to Section 23 of the Act and directing the Registrar to proceed with the opposition proceedings.

Jagatjit challenged the Appellate Board's order before the Delhi High Court. The learned Single Judge, by judgment dated 9th May 2008, set aside the Appellate Board's order and upheld the Registrar's earlier decision to recall the show cause notice, holding that Section 125 applied and that the Whirlpool judgment of the Supreme Court supported this view. In appeal, however, the Division Bench reversed the Single Judge's decision, holding that the registration was issued in violation of Section 23(1) of the Act, that Section 125 did not bar the Registrar's suo motu powers under Section 57(4), and that it was the Registrar's duty to maintain the purity of the register. The Division Bench directed a de novo hearing of the case. It was against this Division Bench judgment that Jagatjit filed the present appeal before the Supreme Court.

## The Dispute

The central legal questions before the Supreme Court can be understood in three parts. First, was the extension of time for filing the opposition validly granted by the Registrar, and was the registration certificate issued on 13th January 2004 therefore illegal? Second, was the show cause notice issued from Bombay by the Registrar valid, given that the trademark proceedings had been conducted in Delhi? Third, and most importantly, does Section 125 of the Trade Marks Act, 1999 bar the Registrar from exercising suo motu power under Section 57(4) to rectify the register once an infringement suit is pending in a civil court where the defendant has challenged the validity of the plaintiff's trademark registration?

## Reasoning and Analysis of the Judges

Justice Rohinton Fali Nariman, who authored the judgment, examined these questions with care and clarity, drawing upon the statutory scheme of the Trade Marks Act, 1999 and relevant precedents.

On the question of whether extension of time was validly granted, the Court noted that Respondent No. 4 had filed Form TM-44 seeking extension of one month within the three-month period, and that the notice of opposition filed on 19th January 2004 was within the extended period. Most critically, the Registrar's letter dated 16th February 2004 had expressly taken the notice of opposition on record and called upon Jagatjit to file a counter-statement. The Court held that this letter itself was sufficient evidence that the Registrar had extended the time for filing opposition. A separate written order was not necessary, as the extension of time by the Registrar under the Act is a ministerial act requiring no formal hearing.

The Court referred to Section 131 of the Trade Marks Act, 1999, which empowers the Registrar to extend time if satisfied that there is sufficient cause, and expressly provides that no hearing is required and no appeal lies from such an order. While technically Section 131 would not apply to the time for filing opposition since that is expressly provided in the Act itself, the Court used it as a pointer to show that such extensions need not be accompanied by formal written orders. The Court also relied upon the principle settled in Kailash v. Nanhku (2005) 4 SCC 480, where the Supreme Court had held that procedural provisions must be construed in a manner that advances justice rather than defeats it, and that parties must not be denied the opportunity to participate in the justice dispensation process unless compelled by express and specific statutory language. Since the Registrar had clearly acted upon the application for extension by taking the notice of opposition on record, the registration certificate issued on 13th January 2004 — before the extended opposition period had even lapsed — was held to be in clear violation of Section 23(1)(a) of the Trade Marks Act, 1999, which mandates that registration can only be granted after the statutory period for filing opposition has expired without any opposition being received, or after an opposition has been decided in favour of the applicant.

The Court also rejected the argument that the show cause notice issued from Bombay was without jurisdiction. This argument had been raised by Jagatjit on the ground that the trademark application and all subsequent proceedings had taken place in Delhi, and therefore the Delhi office ought to have issued the show cause notice. The Court answered this by examining Section 3 of the Trade Marks Act, 1999, which provides that the Central Government appoints a person to be the Controller-General of Patents, Designs and Trade Marks, who is the Registrar of Trade Marks for purposes of the Act. Other officers in various parts of the country act under the superintendence and directions of this Registrar, whose office is in Bombay. Since there is only one Registrar under the Act and the suo motu power under Section 57(4) can only be exercised by the Registrar himself, the show cause notice issued from Bombay was perfectly valid.

The most substantive and legally significant part of the judgment deals with the interpretation of Section 125 of the Trade Marks Act, 1999 and its relationship with Section 57(4). Section 125(1) provides, in essence, that where in a suit for infringement of a registered trademark the defendant pleads that the registration of the plaintiff's trademark is invalid, the issue of validity shall be determined only on an application for rectification of the register, and such application shall be made to the Appellate Board and not to the Registrar, notwithstanding anything contained in Section 47 or Section 57.

Justice Nariman held that Section 125 does not apply to the facts of this case for two independent reasons. The first is factual. Section 125 speaks of proceedings arising in the context of a suit for infringement where the defendant questions the validity of the plaintiff's trademark registration. In the present case, the suit for infringement was filed by Jagatjit in the District Court of Jalandhar against Seagram Distilleries Private Limited. However, Austin Nichols — Respondent No. 4 before the Supreme Court — was not a defendant in that suit. The Court rejected the argument advanced by Jagatjit's counsel, Smt. Prathiba Singh, that since Seagram was merely a licensee of Austin Nichols and the authorized signatory of both companies was the same person, Austin Nichols should be treated as if it were a defendant. The Court found this argument unconvincing because Jagatjit's own plaint in the infringement suit did not even allege that Seagram was the licensee of Austin Nichols. In fact, Jagatjit's plaint stated that the defendant companies had not even applied for registration of the trademark BLENDERS PRIDE in their own names. Austin Nichols not being a defendant in the infringement suit, Section 125(1) could not be invoked.

The second reason is structural and of broader application. Even if Austin Nichols had been a defendant in the infringement suit, the Court held that Section 125(1) does not bar the Registrar's suo motu power under Section 57(4) because Section 125(1) applies only to applications for rectification of the register filed by parties, and not to the Registrar's independent exercise of its statutory duty to maintain the purity of the trademark register.

In reaching this conclusion, Justice Nariman drew upon a comparison with the predecessor legislation, the Trade and Merchandise Marks Act, 1958. Section 107(1) of the 1958 Act used the expression "section 46, section 56 and sub-section (4) of section 47," deliberately specifying only a particular sub-section of Section 47 rather than the whole section. This was because other sub-sections of Section 47 did not concern applications for rectification but explained what defensive trademarks were. In the 1999 Act, the width of the expression "Section 57" in Section 125(1) is restricted by the words "and an application for rectification of the register." Such applications for rectification are referable only to sub-sections (1) and (2) of Section 57, both of which deal with applications by parties. Section 57(4), which deals with the Registrar's suo motu power, does not contemplate any application by any party at all. Therefore, on a literal construction of Section 125(1), Section 57(4) falls outside its reach.

The Court also relied heavily upon the earlier Supreme Court decision in Hardie Trading Ltd. and Anr. v. Addisons Paint and Chemicals Ltd. (2003) 11 SCC 92, which had firmly established that the Registrar has an independent duty to maintain the purity of the register and that the suo motu power under Section 57(4) serves a public interest function. The Court quoted Hardie's case to the effect that proceedings under Section 56 of the 1958 Act (equivalent to Section 57 of the 1999 Act) are commenced for the purity of the register, which it is in the public interest to maintain. Illustrating the importance of this interpretation, the Court pointed out a practical scenario: if a defendant in an infringement suit raises the plea of invalidity of the plaintiff's trademark registration and then reaches a compromise with the plaintiff and chooses not to file a rectification petition before the Appellate Board, the Registrar's power to clean up the register must remain intact regardless. Accepting the contrary interpretation would leave a wrongly registered trademark permanently on the register simply because private litigation ended without a rectification petition being filed.

The Court then turned to the Whirlpool Corporation v. Registrar of Trade Marks (1998) 8 SCC 1 judgment, which had been strongly relied upon by Jagatjit's counsel. The Court carefully distinguished that case on its facts. In Whirlpool, the rectification notice had been issued suo motu by the Registrar at the request of one of the parties to a suit for passing off — and critically, the court noted that an amendment application to add the relief of infringement had already been filed and was pending, so the suit was effectively on the verge of becoming an infringement suit within the meaning of Section 107(1) of the 1958 Act. The Court observed that no argument had been made in Whirlpool about the independence of Section 57(4) from Section 107(1), and the decision had turned entirely on the peculiar facts of that case. Further, in Whirlpool, one of the parties to the suit had applied for rectification, which distinguished it from the present case where Austin Nichols was not a party to the infringement suit. For these reasons, the Whirlpool judgment was held to have no application to the facts before the Court.

## Final Decision of the Court

The Supreme Court dismissed the appeal filed by Jagatjit Industries Limited and upheld the Division Bench judgment of the Delhi High Court. The Court affirmed that the registration certificate bearing No. 618414 issued to Jagatjit on 13th January 2004 was issued in violation of Section 23(1)(a) of the Trade Marks Act, 1999, as it was granted while the opposition period had not yet expired. The Court confirmed that Section 125(1) of the Trade Marks Act, 1999 did not apply to the facts of the case because Austin Nichols was not a defendant in the infringement suit filed by Jagatjit. The Court further confirmed that even if Section 125(1) had otherwise been applicable, the suo motu power of the Registrar under Section 57(4) would not have been affected, as Section 125(1) operates only upon applications for rectification filed by parties and not upon the Registrar's independent statutory duty to maintain the register. No costs were awarded.

## Point of Law Settled

The Supreme Court settled that the Registrar of Trade Marks can validly grant an extension of time for filing a notice of opposition without passing a separate written order, and that such extension can be inferred from the Registrar's conduct in taking the opposition on record. Any registration certificate issued before the expiry of the extended opposition period is invalid and in contravention of Section 23(1)(a) of the Trade Marks Act, 1999. Equally significantly, the Court settled that Section 125(1) of the Trade Marks Act, 1999, which bars proceedings before the Registrar and requires rectification applications to be made to the Appellate Board in the context of an infringement suit where the defendant challenges the validity of a trademark, applies only to applications for rectification filed by parties under Section 57(1) and (2). It does not bar or restrict the independent suo motu power of the Registrar under Section 57(4) to correct errors in the register and maintain its purity, irrespective of pending infringement proceedings in a civil court.

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**Case Details**

Title: Jagatjit Industries Limited Vs. The Intellectual Property Appellate Board and Ors.

Date of Order: 20th January 2016

Case Number: Civil Appeal No. 430 of 2016 (Arising out of S.L.P. (Civil) No. 14444 of 2009)

Neutral Citation: MANU/SC/0056/2016

Name of Court: Supreme Court of India

Hon'ble Judges: Justice Kurian Joseph and Justice Rohinton Fali Nariman

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*Disclaimer: Readers are advised not to treat this as a substitute for legal advice as it may contain errors in perception, interpretation, and presentation.*

*Written By: Advocate Ajay Amitabh Suman, IP Adjutor [Patent and Trademark Attorney], High Court of Delhi*

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**Headnote**

The Supreme Court of India held that a trademark registration certificate issued by the Trade Marks Registry during a pending opposition period, in violation of Section 23(1)(a) of the Trade Marks Act, 1999, is invalid and liable to be removed from the register. The Registrar's acceptance of a notice of opposition and issuance of a notice calling for a counter-statement constitutes sufficient evidence of implied extension of time under Section 21(1), and no separate written order granting such extension is required. Further, the Court clarified that the bar under Section 125(1) of the Trade Marks Act, 1999 — which requires rectification applications to be made to the Appellate Board rather than the Registrar in cases where an infringement suit is pending and the defendant challenges the validity of the plaintiff's trademark — operates only upon applications for rectification filed by parties under Section 57(1) and (2), and does not curtail or extinguish the Registrar's independent suo motu power under Section 57(4) to correct errors and maintain the purity of the trademark register. The Whirlpool judgment distinguished on facts. Appeal dismissed.

SC-Heinz Italia and Another Vs. Dabur India Ltd.

Glucon-D vs. Glucose-D: How the Supreme Court of India Drew the Line on Passing Off, Phonetic Similarity, and Packaging Deception

Introduction

Trademark law, at its heart, seeks to protect honest traders from those who seek to ride on their hard-built reputation by imitating their marks or packaging. Among the remedies available in such situations, an injunction — particularly an ad interim injunction — is the most urgent weapon in a plaintiff's arsenal. It prevents an infringer from continuing the wrongful act while the court is still examining the matter in full. However, granting or refusing such a remedy involves a careful judicial balancing act.

The Supreme Court of India, in Heinz Italia and Another v. Dabur India Ltd., decided on May 18, 2007, and reported as (2007) 6 SCC 1, took up this very challenge. The case brought before it a dispute between two glucose-based energy drink products — "Glucon-D" and "Glucose-D" — and asked a deceptively simple question: were these products and their packaging so similar as to confuse an ordinary consumer? The case also raised important questions about prior use, phonetic similarity of marks, the relevance of delay in approaching courts, and the standard courts must apply when two courts below have already refused relief. The answers given by a Bench of Justices B.P. Singh and H.S. Bedi settled principles that continue to guide intellectual property jurisprudence in India.

Factual and Procedural Background

The story of this case begins not in a courtroom but in the marketplace, and goes back several decades. The trade mark "Glucon-D" was first used by Glaxo Laboratories in India as far back as the year 1940. It was registered in India in the name of Glaxo under Registration No. 305664 (Class 30) under the Trade and Merchandise Marks Act, 1958. Along with the trade mark, Glaxo had also developed a distinctive packaging — predominantly green in colour — with the image of a happy family superimposed on it, giving the product a warm, familiar identity in the Indian market.

In the year 1994, Glaxo assigned this trade mark along with the goodwill attached to it and the rights in the artistic work used on the packaging, to the first petitioner, M/s Heinz Italia SRL, by a deed of assignment dated September 30, 1994. Glaxo Laboratories also separately assigned their rights in the artistic work used on the packaging to the appellants. From 1994 to 2002, the appellants — Heinz Italia — used the trade mark "Glucon-D" and the distinctive packaging without any interference and established a strong name in the market.

The trouble began in July 2002, when the appellants discovered that the respondent, Dabur India Ltd., one of India's large and established consumer goods companies, had launched a competing product under the name "Glucose-D." The appellants alleged that the packaging used by Dabur for its "Glucose-D" product was deceptively similar to the distinctive packaging of their own "Glucon-D" product. Through their advocate, they promptly served a notice on Dabur calling upon it to stop using both the mark and the deceptive packaging. When no satisfactory reply was received, the appellants filed a suit in court for a permanent injunction and accounts of profits, alleging infringement of the trade mark under Sections 29 and 106 of the Trade and Merchandise Marks Act, 1958, and infringement of copyright in the artistic work used on the packaging under Section 63 of the Copyright Act, 1957. Alongside the main suit, an application was also filed under Order 39 Rules 1 and 2 of the Code of Civil Procedure, 1908, seeking an ad interim injunction to restrain Dabur from using the trade mark "Glucose-D" or any other trade mark and deceptively similar packaging until the suit was finally decided. It is worth noting that a similar suit was also filed before the Calcutta High Court to stop the alleged misuse, but upon Dabur's application, the Calcutta proceedings were stayed pending the outcome of the present suit.

Dabur defended itself by filing a written statement. It took the position that the word "Glucose" was nothing but a generic expression of the product being sold — essentially a description of the ingredient — and therefore no one, including Heinz, could claim any monopoly over it or its derivatives. Dabur also denied any similarity between "Glucon-D" and "Dabur Glucose-D" as trade marks, and further contended that the packaging of the two products was entirely different. It is also admitted on record that Dabur had been using the term "Glucose-D" since the year 1989 and that the disputed packaging (with the happy family imagery) had been in use since the year 2000.

The trial judge decided the interim application by order dated December 11, 2003, and ruled in Dabur's favour. The court held that the word "Glucose" was a generic word and as such, the appellants could not claim that Dabur's use of the word "Glucose-D" violated their registered trade mark "Glucon-D." The trial court also rejected the claim about packaging similarity, after comparing the two sets of packaging and observing the dissimilarities between them. The interim application was accordingly dismissed.

The appellants challenged this decision by filing a first appeal before the Punjab and Haryana High Court. By judgment and order dated October 27, 2005, the High Court confirmed the trial court's decision and dismissed the appeal. The appellants then approached the Supreme Court of India by way of a Special Leave Petition (SLP (C) No. 59 of 2006), which was tagged and decided as Civil Appeal No. 2756 of 2007.

The Dispute Before the Supreme Court

The matter before the Supreme Court was limited in scope. As Justice Harjit Singh Bedi, who authored the judgment, was careful to note in paragraph 7, the court was concerned only with the ad interim injunction application and was confining itself to that limited aspect, leaving all larger issues for decision in the full trial. With that clarity, the court framed two essential disputes:

First, whether the Supreme Court should interfere at all with an ad interim injunction that had been refused concurrently by two courts below. Second, on the merits, whether "Glucon-D" and "Glucose-D" and their respective packaging were so similar as to warrant the grant of interim relief in favour of the appellants on the principles governing passing off and trademark infringement.

Representing the appellants, Senior Counsel Dr. A.M. Singhvi (with Senior Advocate Arun Jaitley and others) made several arguments. He argued that being a prior user of a trade mark is the cardinal test in cases of infringement and passing off — not registration. The mark "Glucon-D" had been in use since 1940 by Glaxo and had been registered in 1975. By contrast, "Glucose-D" had only appeared in 1989. This established the appellants' superior prior use beyond doubt. He also contended that the green packaging with the happy family image had been in use since 1980 by the appellants and for about a decade earlier by Glaxo, which further cemented the case of prior user. He submitted that "Glucon-D" was not a generic word and that even if it were generic, an injunction could follow in special circumstances, placing reliance on Godfrey Philips India Ltd. v. Girnar Food & Beverages (P) Ltd., (2004) 5 SCC 257. He further argued that Dabur had dishonestly appropriated the goodwill and reputation of "Glucon-D," and that this dishonest intention alone would ordinarily entitle the appellants to an injunction. On the issue of delay in filing the suit, he argued that mere delay cannot defeat the case of a plaintiff when dishonest intention is established.

Senior Advocate Sudhir Chandra, appearing for Dabur, countered on multiple fronts. He relied primarily on Wander Ltd. v. Antox India (P) Ltd., 1990 Supp SCC 727, a well-known Supreme Court decision which holds that an interlocutory injunction under Order 39 Rules 1 and 2 of the Code of Civil Procedure is a discretionary relief and that interference should ordinarily not be made when two courts below have both gone against a party. He further argued that the suit had been filed only in 2003, long after the mark "Glucose-D" had been used since 1989, and this delay was itself a ground to refuse interim relief. He argued that no substantial evidence of deceptive similarity between the marks or the packaging had been placed on record to justify ad interim relief, relying on J.B. Williams v. H. Bronnley, (1909) 26 RPC 765 (CA). He also reiterated the trial court's finding that "Glucose" was a generic word and could not be the subject of any monopoly claim.

Reasoning and Analysis of the Court

The Supreme Court, speaking through Justice H.S. Bedi, carefully examined each argument and rendered a judgment that is analytically rich and practically significant.

On the Question of Supreme Court's Interference

The court began by addressing the threshold objection raised by Dabur based on Wander Ltd. v. Antox India (P) Ltd., 1990 Supp SCC 727. In that case, the Supreme Court had laid down that an interlocutory injunction is discretionary and that courts should generally not interfere when two courts have concurrently refused it. However, Justice Bedi noted that the facts of the Wander case were materially different. In Wander, the ad interim injunction had been rightly refused because the opposite party itself had claimed and proved prior user, which formed the very basis of the passing-off action. In the present case, by contrast, the prior use of "Glucon-D" by Glaxo since 1940 and by the appellants thereafter was a matter of clear record — established beyond doubt. The challenge in the present proceedings was to the mark and packaging being used in Gurgaon from the year 2000 onwards. On these facts, the court distinguished the Wander case and rejected Dabur's first objection.

On the Law of Passing Off and Prior User

The court then turned to the substantive law. It drew upon two significant precedents to lay down the governing principles. In Century Traders v. Roshan Lal Duggar & Co., AIR 1978 Del 250, it had been held that in an action for passing off, the plaintiff must establish prior user to secure an injunction and that registration of the mark, or registration of a similar mark, at the relevant point in time, is entirely irrelevant. What matters is who was using the mark earlier.

The court also extensively relied upon Cadila Health Care Ltd. v. Cadila Pharmaceuticals Ltd., (2001) 5 SCC 73 : 2001 PTC 300, in which the modern tort of passing off had been elaborately discussed. Borrowing from the formulation of Lord Diplock in the English case Erven Warnink BV v. J. Townend & Sons, 1979 AC 731 : (1979) 3 WLR 68 : (1979) 2 All ER 927, the court noted that the modern tort of passing off has five elements: first, a misrepresentation; second, made by a trader in the course of trade; third, to prospective customers or ultimate consumers of goods or services supplied by the trader; fourth, which is calculated to injure the business or goodwill of another trader, in the sense that this is a reasonably foreseeable consequence; and fifth, which causes actual damage to a business or goodwill of the trader, or will probably do so. The Cadila Health Care case had also clearly laid down that in passing-off actions, a court must take note of similarities rather than dissimilarities, and the principle of phonetic similarity cannot be ignored. The test is whether a particular mark has obtained such acceptability in the market as to confuse a buyer about the nature of the product being purchased.

The court further considered the principle from Corn Products Refining Co. v. Shangrila Food Products Ltd., AIR 1960 SC 142, which observed that the principle of similarity cannot be very rigidly applied and that if there is prima facie evidence of dishonest intention on the part of the defendant in passing off goods, an injunction should ordinarily follow, and mere delay in bringing the matter to court is not sufficient ground to defeat the plaintiff's case.

On Phonetic Similarity

Applying these principles to the facts, the court made a significant finding on phonetic similarity. It observed that both "Glucon-D" and "Glucose-D" are items containing glucose and that there is a remarkable degree of phonetic similarity between these two words. The court expressed this opinion clearly in paragraph 17 of the judgment, holding that the principle from the Cadila Health Care case applied squarely — the test of phonetic similarity is whether a mark has obtained acceptability in the market such as to confuse a buyer about what he is purchasing. The fact that the dominant component of both names relates to glucose, combined with the similar structure of the names, was, in the court's view, enough to establish the requisite phonetic similarity.

On Packaging and Overall Effect

The court then examined the packaging in great detail, particularly Item D of Annexure P-6 placed before it, which was the packaging in dispute. The court found that the colour scheme of "Glucose-D" and "Glucon-D" were almost identical — a green background with a happy family image superimposed on it. Dabur had pointed out that in its "Glucose-D" packaging the family consisted of four members, while in the "Glucon-D" packaging the family was of three members, arguing that the two were therefore dissimilar. The court categorically rejected this argument. It held that the colour scheme and the overall effect of the packaging must be seen as a whole and not broken down into its individual components. Looking at the product from different years — the 1989 packaging for Glucose-D on the extreme left, the 2000 version in the middle (which was the subject-matter of the suit), and the version pending in the Calcutta proceedings on the right — the court found that the packaging was so similar that it could easily confuse a purchaser.

In a particularly telling observation, the court noted that the respondents had time and again made small changes to their packaging. The court read this pattern not as an innocent evolution of product design but as a deliberate attempt to continue misleading the purchaser while making it more difficult for the appellants to protect their mark. The record showed that Glucon-D had acquired an enviable reputation in the market, and the court found that this was being sought to be exploited by Dabur.

On the Question of Delay

The court dealt with Dabur's argument about delay in filing the suit — that the suit was filed only in 2003 though Dabur had been using "Glucose-D" since 1989. The court did not find this argument persuasive. It drew upon the Corn Products case principle to hold that mere delay in bringing the matter to court is not a ground to defeat the case of the plaintiff, particularly when there is prima facie dishonest intention on the part of the defendant. It is significant to note that the impugned packaging (with the happy family image) had been in use only from the year 2000, and the suit was filed in 2003 — a delay of barely three years qua the specific packaging which was the subject-matter of the present proceedings.

On Prior User as the Decisive Factor

The court returned to the foundational principle that prior user is the cardinal test. The fact that "Glucon-D" and its distinctive packaging had been used by Glaxo since 1940 and thereafter by the appellants, long before the respondent adopted "Glucose-D," was clearly established on record. The registration of a trade mark, while helpful, is subordinate to the fact of prior use. Since prior use stood established, the court held that the case of prior user needed no further evidence in the present circumstances and that the factual question of whether "Glucose-D" was a generic word or not could await the full trial.

The Final Decision

The Supreme Court allowed the Civil Appeal filed by Heinz Italia. It set aside the order of the trial court dated December 11, 2003, and the order of the Punjab and Haryana High Court dated October 27, 2005. The application for ad interim injunction was allowed in terms of prayer clause (ii) of the application — which related to the packaging.

Crucially, however, the injunction was confined to the packaging and did not extend to the use of the word "Glucose-D" itself. The court did not restrain Dabur from using the name "Glucose-D" as a trade mark. This is a nuanced and somewhat controversial aspect of the judgment. The court made a passing observation that there was remarkable phonetic similarity between the two marks but ultimately limited the injunction only to the packaging aspect. The court clarified that any observation made in this order — being confined to an ad interim injunction — would not bind the trial judge in the main proceedings in the suit.

Points of Law Settled

This judgment is significant for several legal propositions it settles and consolidates:

The first and most important point settled is that in a passing-off action, the prior user of a mark is the cardinal test, and the registration of the mark, or of a similar mark, at the relevant point in time, is irrelevant. This principle, drawn from Century Traders v. Roshan Lal Duggar & Co., AIR 1978 Del 250, was reaffirmed emphatically.

Second, the court settled that in passing-off cases, the focus must be on similarities between the marks or the packaging rather than on the dissimilarities. Courts cannot defeat a plaintiff's case by picking out minor differences between competing products. The overall effect on the mind of an ordinary purchaser is the touchstone.

Third, the principle of phonetic similarity was reaffirmed as a critical test. If two marks sound alike when spoken, they are likely to cause confusion in the minds of buyers, especially in a country with diverse literacy levels. The court quoted and applied the phonetic similarity doctrine from Cadila Health Care Ltd. v. Cadila Pharmaceuticals Ltd., (2001) 5 SCC 73.

Fourth, the court settled that changes made to an infringing packaging or mark over time, while maintaining its basic similarity with the original, are of no help to the infringer. If anything, such incremental changes to packaging suggest an attempt to mislead the consumer while avoiding direct confrontation with the senior user. This is an important practical principle for trademark enforcement.

Fifth, the court clarified the limited scope of the Wander Ltd. v. Antox India (P) Ltd., 1990 Supp SCC 727 doctrine. The principle that a court should not interfere when two courts below have concurrently refused an injunction is not an absolute rule. It can be overridden where the facts clearly establish prior use and a prima facie case of passing off by the respondent. The court distinguished Wander on facts rather than overruling it, thereby contributing to a nuanced understanding of that precedent.

Sixth, on the question of delay, the court held that mere delay in bringing a matter to court is not by itself a ground to defeat the case of the plaintiff, especially when there is prima facie evidence of dishonest intention on the part of the defendant.

Case Details

Title: Heinz Italia and Another Vs. Dabur India Ltd.

Court: Supreme Court of India

Bench: Before B.P. Singh and H.S. Bedi, JJ.

Case Number: Civil Appeal No. 2756 of 2007 (Arising out of SLP (C) No. 59 of 2006)

Date of Order: May 18, 2007

Neutral Citation / Reported As: (2007) 6 SCC 1; (2007) 6 Supreme Court Cases 1

From: Final Judgment and Order dated October 27, 2005, of the High Court of Punjab and Haryana at Chandigarh in FAO No. 233 of 2004

Name of Hon'ble Judge (Author of Judgment): Justice Harjit Singh Bedi, J.

Disclaimer: Readers are advised not to treat this as a substitute for legal advice as it may contain errors in perception, interpretation, and presentation.

Written By: Advocate Ajay Amitabh Suman, IP Adjutor [Patent and Trademark Attorney], High Court of Delhi

Suggested SEO Titles

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Glucon-D vs Glucose-D: How the Supreme Court Protected Trade Mark Packaging Rights in India

Passing Off Action in India: Prior User, Phonetic Similarity and Packaging Deception — Heinz Italia v. Dabur India

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Phonetic Similarity and Trade Dress Protection: A Detailed Analysis of Heinz Italia v. Dabur India Ltd.

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Headnote

Heinz Italia and Another v. Dabur India Ltd., (2007) 6 SCC 1

Supreme Court of India | B.P. Singh and H.S. Bedi, JJ. | Civil Appeal No. 2756 of 2007 | Decided May 18, 2007

The appellant, proprietor of the registered trade mark "Glucon-D" (originally used by Glaxo Laboratories since 1940 and registered in 1975 under the Trade and Merchandise Marks Act, 1958, assigned to the appellant in 1994), filed a suit for permanent injunction alleging that the respondent's product "Glucose-D," launched in 2002 with packaging deceptively similar to the appellant's distinctive green packaging with a happy family image, amounted to infringement of the trade mark and copyright in the artistic work, and passing off. The trial court and the High Court both refused the application for ad interim injunction, holding that "Glucose" was a generic word and that the packaging was dissimilar. On appeal, the Supreme Court held: (i) prior user is the cardinal test in passing-off actions and registration of the mark is irrelevant; (ii) in passing-off cases, similarities between marks and packaging must be emphasised over dissimilarities, and phonetic similarity between "Glucon-D" and "Glucose-D" was remarkable; (iii) the colour scheme and overall effect of packaging — both prominently featuring a green background and a happy family image — were so similar as to easily confuse a purchaser; (iv) incremental changes made by the respondent to its packaging over time, while maintaining basic similarity, constituted an attempt to mislead consumers and did not assist the respondent; (v) mere delay in filing the suit is not a ground to defeat the plaintiff's case where dishonest intention is established; (vi) the Wander Ltd. v. Antox India principle of non-interference where two courts have refused injunction is not absolute and is distinguishable on facts. Ad interim injunction granted limited to the packaging. The use of the trade mark "Glucose-D" as a word was not restrained.

Trade Marks Act, 1999, S. 29 — Copyright Act, 1957, S. 63 — Civil Procedure Code, 1908, Or. 39 Rr. 1 & 2 — Passing off — Prior user — Phonetic similarity — Packaging — Interim injunction.

SC-Gujarat Bottling Co. Ltd. and Others Vs. Coca Cola Co. and Others

# Coca-Cola vs. Pepsi: The Battle for Gujarat's Bottling Plants — A Study in Franchise Law, Negative Covenants, and Interlocutory Injunctions

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## Introduction

The case of *Gujarat Bottling Co. Ltd. and Others v. Coca Cola Co. and Others*, decided by the Supreme Court of India on August 4, 1995, is one of the most remarkable corporate legal battles ever fought on Indian soil. It involves two of the world's most powerful multinational beverage corporations — Coca-Cola Company and PepsiCo Inc. — locked in a fierce commercial dispute over franchise rights, negative contractual covenants, and the grant of an interim injunction by the Bombay High Court. The case touches upon some of the most important areas of civil and commercial law, including the law of interlocutory injunctions, the doctrine of restraint of trade under Section 27 of the Indian Contract Act, 1872, the licensing of trade marks under the Trade and Merchandise Marks Act, 1958, and the principles of equity that govern a party's conduct before a court of law. What makes this case extraordinary is not just its legal complexity but also its dramatic factual backdrop — a deliberate corporate manoeuvre by Pepsi to seize control of a Coca-Cola franchisee and use its bottling infrastructure against Coca-Cola's very interests. The Supreme Court, while deciding the appeals against the Division Bench order of the Bombay High Court dated March 31, 1995, upheld the injunction granted in favour of Coca-Cola and dismissed the appeals filed by Gujarat Bottling Co. Ltd. and the share transferees, who were ultimately controlled by Pepsi. The judgment was delivered by Justice S.C. Agrawal.

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## Factual and Procedural Background

To appreciate the depth of this case, one must understand the remarkable history of the Indian soft drink market. Coca-Cola had been operating in India until 1977, when, owing to a change in government policy, it was compelled to shut down its Indian operations. The vacuum left by Coca-Cola's departure was largely filled by the Parle group of companies, owned and controlled by Mr. Ramesh Chauhan and Mr. Prakash Chauhan, who were Respondents 3 and 4 in this case. The Parle group manufactured beverages under trade marks such as "Gold Spot," "Thums Up," "Limca," "Maaza," "Rim Zim," and "Citra," and also sold "Bisleri" club soda. The Parle group had arrangements with bottlers across the country who would prepare beverages from essence or syrup supplied by Parle and bottle the same for sale. In the late 1980s, Pepsi commenced operations in India, and Coca-Cola followed soon after. Under a Deed of Assignment dated November 12, 1993, the Parle group assigned its trade marks in beverages bearing the names "Gold Spot," "Thums Up," "Limca," "Maaza," "Rim Zim," and "Citra" to Coca-Cola.

Gujarat Bottling Company Ltd., referred to as GBC throughout the case, was the first appellant and is a company incorporated under the Companies Act, 1956. Of its shares, 21% were held by Ahmedabad Advertising and Marketing Consultants Ltd., which was Respondent 7. The remaining 79% were held by Mr. Pinakin K. Shah, Respondent 2, and his family members and business associates, along with Respondents 3 and 4 (the Chauhan brothers) and their family members and associates in the ratio of 78% and 22% respectively. GBC operated bottling plants at Ahmedabad and Rajkot in Gujarat. GBC had an existing arrangement with Respondents 3 and 4 under which it had been licenced to prepare, bottle, sell, and distribute beverages under the Parle trade marks.

In anticipation of the assignment of trade mark rights by the Parle group to Coca-Cola, Coca-Cola entered into an agreement with GBC on September 20, 1993, referred to throughout the judgment as the "1993 Agreement." Under this agreement, Coca-Cola permitted and authorised GBC to bottle, sell, and distribute beverages known and sold under the trade marks "Gold Spot," "Thums Up," "Limca," "Maaza," and "Rim Zim." The trade mark "Citra" was excluded because of pending litigation in the Delhi High Court. The 1993 Agreement was to remain operative until November 17, 1998, unless earlier terminated as provided therein. Under paragraph 21 of the agreement, either party could terminate it by giving one year's written notice. Importantly, paragraph 14 of the 1993 Agreement contained a negative covenant by which GBC agreed not to manufacture, bottle, sell, deal, or otherwise be concerned with the products, beverages of any other brands or trade marks or trade names during the subsistence of the agreement, including the period of one year's notice contemplated in paragraph 21. Paragraph 19 of the agreement gave Coca-Cola the right to discontinue supplying GBC with essence, syrup, or other materials upon the happening of certain specified events, one of which under clause (b) related to any transfer of stock, share, or interest or other indicia of ownership of GBC resulting in an effective transfer of control without the prior express written consent of Coca-Cola.

Subsequently, on April 30, 1994, Coca-Cola entered into another agreement with GBC, referred to as the "1994 Agreement," whereby Coca-Cola granted GBC a non-exclusive licence to use the trade marks mentioned in the schedule — "Gold Spot," "Limca," "Thums Up," "Maaza," "Citra," etc. — in relation to goods prepared from concentrates or syrup supplied by Coca-Cola. This 1994 Agreement was executed specifically to comply with the requirements of Rule 83 read with Section 49 of the Trade and Merchandise Marks Act, 1958, for registration of GBC as a registered user of these trade marks. Unlike the 1993 Agreement, which had a fixed expiry date of November 17, 1998, the 1994 Agreement was not limited to any particular period and could be terminated at any time by either party upon giving 90 days' written notice. On July 12, 1994, Coca-Cola applied to the Registrar of Trade Marks under Sections 48 and 49 of the Act for registration of the 1994 Agreement as a Registered User Agreement.

Events then took a dramatic turn. Coca-Cola required GBC to make additional investments in marketing arrangements, purchase of crates, equipment, and trucks. GBC was reluctant. Respondent 2, Mr. Pinakin K. Shah, requested Coca-Cola's consent in advance for the transfer of his interest in GBC. Coca-Cola declined to give consent without knowing who the prospective purchaser was, informing GBC that transfer could be permitted provided GBC does not lose controlling power or management in favour of an outsider. On January 20, 1995, the shareholding of Respondent 2 and his associates, as well as that of Respondents 3 and 4 and their family members, in GBC and in Respondent 7 were all transferred to Appellants 2 to 5, which were entities closely associated with and affiliated to subsidiaries of Pepsi and Pepsi Foods Limited, a subsidiary of Pepsi. As a result, Pepsi effectively acquired control over GBC.

On January 25, 1995, GBC gave a notice to Coca-Cola under clause 7 of the 1994 Agreement terminating that agreement. In the same notice, GBC also stated, without prejudice to its contentions, that the 1993 Agreement either stood replaced by the 1994 Agreement, or that the termination period under the 1993 Agreement stood reduced to 90 days, and that the notice should be treated as termination notice under clause 21 of the 1993 Agreement as well. On the same date, GBC informed Coca-Cola that shares representing 70.6% of the paid-up equity capital of GBC had been transferred to Appellants 2 to 5. On January 31, 1995, GBC wrote to the Director (F&VP) of the Ministry of Food Processing Industries, Government of India, for approval of crown cap designs pertaining to beverages whose trade marks were held by Pepsi.

On January 30, 1995, Coca-Cola filed a suit — Suit No. 400 of 1995 — in the Bombay High Court seeking various reliefs and also moved Notice of Motion No. 316 of 1995 for interim relief. During the hearing before the learned Single Judge (Dhanuka, J.), Coca-Cola sought interim relief in terms of prayers (a)(i), (a)(ii), (a)(iii), and (a)(viii) of the Notice of Motion. By his order dated February 22, 1995, the Single Judge declined the application in terms of prayers (a)(i), (a)(iii), and (a)(viii) but issued an interim injunction restraining GBC from manufacturing, bottling, or selling or dealing with the products or beverages of any brand or trade mark owned by Respondents 5 and 6 or anyone else other than Coca-Cola. Two appeals — Appeals Nos. 183 and 191 of 1995 — were filed before the Division Bench of the Bombay High Court. During the hearing of those appeals, the parties agreed that the Notice of Motion itself should be heard and decided finally by the Division Bench to avoid one more round of appeal. The Division Bench, by its impugned judgment dated March 31, 1995, made Notice of Motion No. 316 of 1995 absolute in terms of modified prayers (a)(ii) and (a)(iii). In terms of prayer (a)(iii) as modified, an injunction was granted restraining the transferees of GBC's shares and those to whom the shares had been sold, and also subsequent transferees, their servants, agents, nominees, employees, subsidiary companies, controlled companies, affiliates or associate companies, or any person acting for and on their behalf, from using the plants of GBC at Ahmedabad and Rajkot for manufacturing, bottling, selling, or dealing with or concerning themselves in any manner whatsoever with the beverages of any person till January 25, 1996. Feeling aggrieved, GBC and the four share transferees filed the appeals before the Supreme Court.

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## The Dispute

The central dispute before the Supreme Court revolved around several interrelated questions. First, whether the 1993 Agreement was still subsisting or had been legally terminated. GBC argued that the 1993 Agreement had been superseded by the 1994 Agreement, and alternatively, that the termination period under the 1993 Agreement had been reduced from one year to 90 days by mutual consent through the 1994 Agreement, so that the notice dated January 25, 1995 effectively terminated the 1993 Agreement within 90 days. Second, whether the negative covenant in paragraph 14 of the 1993 Agreement was void under Section 27 of the Indian Contract Act, 1872, being in restraint of trade. Third, whether the Bombay High Court was justified in enforcing the negative covenant by granting an interlocutory injunction, considering the alleged irreparable loss and unemployment that the injunction would cause to GBC and its workers. Fourth, whether the injunction was too widely worded in that it restrained not only GBC but also the share transferees, who were Pepsi-controlled entities, from using GBC's plants.

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## Reasoning and Analysis of the Judge

**On the question of whether the 1993 Agreement was superseded by the 1994 Agreement**, Justice Agrawal noted an important distinction between the two agreements. The 1993 Agreement was a franchise agreement entered into under the common law governing the licensing of trade marks, through which Coca-Cola permitted GBC to bottle, sell, and distribute beverages under its trade marks. The 1993 Agreement was far wider in its scope than the 1994 Agreement, containing numerous provisions regulating the exercise of the franchise — including quality control obligations, promotional obligations, pricing commitments, and supply terms — none of which were found in the 1994 Agreement. The 1994 Agreement, on the other hand, was executed specifically to comply with the statutory requirements of the Trade and Merchandise Marks Act, 1958, and the Trade and Merchandise Marks Rules, 1959, particularly Rule 83 read with Sections 48 and 49 of the Act, so as to enable registration of GBC as a registered user of Coca-Cola's trade marks. The Court noted that paragraph 25 of the 1993 Agreement expressly stated that it superseded all prior contracts and commitments, but no such supersession clause was contained in the 1994 Agreement. In the absence of such a clause, and given that the 1994 Agreement was much narrower in scope, it could not be construed as superseding the 1993 Agreement. The High Court had rightly rejected GBC's contention on this point.

**On the question of whether the termination period was reduced to 90 days**, Justice Agrawal held that paragraph 21 of the 1993 Agreement required the termination period to be reduced only by mutual consent in writing — a *consensus ad idem* between the parties. No such mutual agreement existed. The notice dated January 25, 1995 sent by GBC to Coca-Cola itself showed that it was GBC's unilateral contention that the termination period had been so reduced — it was not a statement of a mutually agreed fact. The 1993 Agreement could therefore only be terminated by giving one year's notice as required under paragraph 21. The Court left open the question of whether the notice dated January 25, 1995 could be treated as a valid one-year notice, leaving it to the High Court to determine if raised, and proceeded to deal with the case on the basis that the 1993 Agreement was subsisting and had not been terminated upon the expiry of 90 days.

**On the law of trade marks and the nature of the two agreements**, Justice Agrawal delivered a comprehensive analysis of the provisions of the Trade and Merchandise Marks Act, 1958, particularly Sections 2(m), 48 to 54, and the Trade and Merchandise Marks Rules, 1959, particularly Rules 82 to 93. He explained that under the Act, the use of a registered trade mark can be permitted to a registered user, and for that purpose the registered proprietor must enter into an agreement with the proposed registered user and submit it to the Registrar along with the application for registration. The Court also noted that the use of a trade mark can be permitted independently of the Act through a common law licence by the registered proprietor to the proposed user. Such a common law licence is permissible provided the licensing does not result in causing confusion or deception among the public, does not destroy the distinctiveness of the trade mark, and a connection in the course of trade consistent with the definition of trade mark continues to exist between the goods and the proprietor of the mark. The 1993 Agreement was an agreement for grant of franchise under common law, while the 1994 Agreement was a statutory agreement required under Rule 83 read with Section 49(1)(ii)(a) to (d) of the Act for registration of GBC as registered user. Since the two agreements operated in different spheres and the 1994 Agreement was not intended to supersede the 1993 Agreement, both were held to be co-existent with their respective provisions confined to their own fields of application.

**On the question of restraint of trade**, the appellants' principal argument was that the negative covenant contained in paragraph 14 of the 1993 Agreement was void under Section 27 of the Indian Contract Act, 1872. Justice Agrawal undertook a thorough comparative study of English and Indian law on this point. Under English common law, the doctrine of restraint of trade has evolved significantly over centuries. At the earliest times, all contracts in restraint of trade were void. Later, the law moved to the position that a partial restraint might be good if reasonable. Eventually, the distinction between general and partial restraint was abandoned, and the rule today in England is that any restraint — general or partial — may be valid if it is reasonable and reasonably necessary for the purpose of freedom of trade. A covenant in restraint of trade must be reasonable with reference to public policy and also reasonably necessary for the protection of the interest of the covenantee. The Court referred to *Halsbury's Laws of England*, 4th Edition, Volumes 47 (paragraphs 9 to 26), and to the decisions of the House of Lords in *Niranjan Shankar Golikari v. Century Spg. and Mfg. Co. Ltd.*, (1967) 2 SCR 378 : AIR 1967 SC 1098, and *Esso Petroleum Co. Ltd. v. Harper's Garage (Stourport) Ltd.*, 1968 AC 269 : (1967) 1 All ER 699, among others.

In India, Section 27 of the Indian Contract Act, 1872 provides that every agreement by which anyone is restrained from exercising a lawful profession, trade, or business of any kind is to that extent void. The exception carved out is that one who sells the goodwill of a business may agree with the buyer to refrain from carrying on a similar business within specified local limits so long as the buyer carries on a like business therein, provided the limits appear to the Court to be reasonable. Justice Agrawal noted that this provision was lifted from Hon. David D. Field's Draft Code for New York, which was based on the old English doctrine of restraint of trade as prevailing in ancient times, and had been severely criticised by Sir Frederick Pollock for tying down Indian courts to a hard and fast rule with strictly limited exceptions. The Court further noted that while the High Courts in India have consistently held that the test of reasonableness does not apply under Section 27, the Law Commission in its Thirteenth Report had recommended suitable amendment to permit all reasonable restraints, but no action had been taken by Parliament. For purposes of this case, the Court proceeded on the basis that the question of reasonableness of the restraint is not within the purview of Section 27, and what courts in India must consider is only whether the contract is or is not in restraint of trade.

The crucial question then was whether the negative stipulation in paragraph 14 of the 1993 Agreement constituted a contract in restraint of trade. Justice Agrawal relied on a line of important cases. Referring to the observations of Lord Morris in *Esso Petroleum Co. Ltd. v. Harper's Garage (Stourport) Ltd.*, 1968 AC 269, he noted that a stipulation in a contract which is intended for the advancement of trade shall not be regarded as being in restraint of trade. He also referred to *Petrofina (Great Britain) Ltd. v. Martin*, 1966 Ch 146 : (1966) 1 All ER 126, where Diplock L.J. defined a contract in restraint of trade as one in which a party agrees with another to restrict his liberty in the future to carry on trade with other persons not parties to the contract in such manner as he chooses. And in *McEllistrim v. Ballymacelligott Coop. Agricultural and Dairy Society Ltd.*, 1919 AC 548, Lord Finlay had referred to *Herbert Morris Ltd. v. Saxelby*, (1916) 1 AC 688, for the principle that every man shall be at liberty to work for himself and shall not be at liberty to deprive himself or the State of his labour, skill, or talent by every contract he enters into. Lord Reid in *Esso Petroleum Co. Ltd.* doubted whether this extended to the right to sell goods. The Court also referred to *Attorney General of Commonwealth of Australia v. Adelaide Steamship Co. Ltd.*, 1913 AC 781, where Lord Parker observed that monopolies and contracts in restraint of trade have in common that both, if enforced, involve a derogation from the common law right in virtue of which any member of the community may exercise any trade or business in his own interests.

The Court then referred to its own earlier decision in *Niranjan Shankar Golikari v. Century Spg. and Mfg. Co. Ltd.*, (1967) 2 SCR 378 : AIR 1967 SC 1098, where it was held that the doctrine of restraint of trade applies only when the contract comes to an end, not during the continuance of a contract of employment. The same principle was affirmed by A.P. Sen, J. in *Superintendence Co. of India (P) Ltd. v. Krishan Murgai*, (1981) 2 SCC 246 : (1980) 3 SCR 1278, in a concurring judgment. Justice Agrawal held that this principle is not confined to contracts of employment but applies to all contracts — including franchise agreements — and that the doctrine of restraint of trade does not apply where the restriction is to operate during the period the contract is subsisting.

Applying these principles to the facts, Justice Agrawal found that the 1993 Agreement was a franchise agreement — a commercial agreement whereunder both parties had undertaken obligations for promoting the trade in beverages for their mutual benefit. The purpose underlying paragraph 14 and its negative stipulation was to ensure that GBC worked vigorously and diligently to promote and solicit the sale of the products and beverages produced under Coca-Cola's trade marks, which would not be possible if GBC were simultaneously to manufacture, bottle, sell, deal, or otherwise be concerned with the products of any other brands or trade mark names. Importantly, the negative stipulation was expressly confined in its application to the period of subsistence of the agreement, including the period of one year's notice under paragraph 21. Since the restriction operated only during the subsisting period of the contract, it could not be treated as being in restraint of trade within the meaning of Section 27 of the Contract Act. The Court also referred to the growing trend of franchise agreements globally, noting that such agreements routinely incorporate a condition that the franchisee shall not deal with competing goods, and that such a condition is for facilitating the distribution of the franchiser's goods and cannot be regarded as in restraint of trade.

**On the question of clause (b) of paragraph 19 and the transfer of shares**, the appellants' counsel Shri Shanti Bhushan argued that clause (b) of paragraph 19, which imposed a restraint in the matter of transfer of shares of GBC, was void inasmuch as the transfer of shares of a company registered under the Companies Act is governed by Section 82 of that Act, and no restraint can be placed by contract on the said right. The Court agreed, to an extent, that since the shareholders of GBC were not parties to the 1993 Agreement (only Coca-Cola and GBC were parties), clause (b) of paragraph 19 could not have any binding force on the shareholders. However, the clause could be construed to mean that in the event of shareholders transferring their shares resulting in an effective transfer of control, Coca-Cola was entitled to terminate the agreement and also had the additional right to discontinue supplying GBC with essence, syrup, and other materials. This clause, in other words, governed the relationship between Coca-Cola and GBC inter se and could not be construed as placing a restraint on the shareholders' right to transfer shares. The Court distinguished *V.B. Rangaraj v. V.B. Gopalakrishnan*, (1992) 1 SCC 160, on which the appellants had relied, holding that it had no application in the present context.

**On the grant of interlocutory injunction**, Justice Agrawal set out the well-established principles that govern the grant of such injunctions. The court applies three tests — whether the plaintiff has a prima facie case, whether the balance of convenience is in favour of the plaintiff, and whether the plaintiff would suffer an irreparable injury if the injunction is not granted. These principles are drawn from the decision of this Court in *Wander Ltd. v. Antox India (P) Ltd.*, 1990 Supp SCC 727, and from *Chitty on Contracts*, 27th Edition, Volume I, General Principles, paragraphs 27-40, page 1310, and *Halsbury's Laws of England*, 4th Edition, Volume 24, paragraph 992.

The Court also relied on *Ehrman v. Bartholomew*, (1898) 1 Ch 671 : (1895-99) All ER Rep Ext 1680, and *Niranjan Shankar Golikari v. Century Spg. and Mfg. Co. Ltd.* to reinforce the position that in England, where a contract is negative in nature or contains an express negative stipulation, breach of it may be restrained by injunction as a matter of course. In India, Section 42 of the Specific Relief Act, 1963, provides that where a contract comprises an affirmative agreement to do a certain act, coupled with a negative agreement not to do a certain act, the circumstance that the court is unable to compel specific performance of the affirmative agreement shall not preclude it from granting an injunction to perform the negative agreement, subject to the proviso that the plaintiff has not failed to perform the contract so far as it is binding on him. The Court however noted that the court is not bound to grant an injunction in every case and that an injunction to enforce a negative covenant would be refused if it would indirectly compel the employee either to idleness or to serve the employer.

Having regard to the negative covenant in paragraph 14 of the 1993 Agreement, the Court found that Coca-Cola had made out a prima facie case for grant of injunction. The Court found that the balance of convenience also favoured Coca-Cola. Pepsi, with full knowledge of the terms of the 1993 Agreement, had deliberately taken over control of GBC with the express design of paralyzing Coca-Cola's operations in that region and promoting its own products. In the absence of the interim injunction, Pepsi would have been free to use GBC's plants at Ahmedabad and Rajkot to manufacture Pepsi products, which would have reduced Coca-Cola's market share and its resultant loss in goodwill and profits could not have been adequately compensated by damages. Insofar as the loss that GBC might suffer as a result of the injunction was concerned, the Court found that it could be assessed and compensated by an award of damages which could be recovered from Coca-Cola in view of the undertaking that Coca-Cola was required to give under Rule 148 of the Bombay High Court (Original Side) Rules, 1980. It was not suggested that Coca-Cola lacked the financial capacity to pay whatever might be found payable.

**On the conduct of GBC and the equitable considerations**, Justice Agrawal invoked the well-settled principle that the jurisdiction of the court to interfere with an interlocutory injunction under Order 39 of the Code of Civil Procedure, 1908 is purely equitable. The court, on being approached, will look not only to other considerations but also to the conduct of the party invoking its jurisdiction, and may refuse to interfere unless his conduct was free from blame. The party seeking the relief must show that he himself was not at fault and was not responsible for bringing about the state of things complained of, and that he was not unfair or inequitable in his dealings with the party against whom he was seeking relief. The Court cited *Lalbhai Dalpatbhai & Co. v. Chittaranjan Chandulal Pandya*, AIR 1966 Guj 189 : (1965) 2 LLJ 284, *Modern Food Industries India Ltd. v. Shri Krishna Bottlers (P) Ltd.*, AIR 1984 Del 119, and *American Cyanamid Co. v. Ethicon Ltd.*, 1975 AC 396 : (1975) 1 All ER 504, in this context.

The Court found that GBC had acted in a grossly unfair and inequitable manner in its dealings with Coca-Cola. It transferred shares in favour of Pepsi-controlled entities without obtaining Coca-Cola's prior consent, in clear violation of the terms of the 1993 Agreement. Neither was Coca-Cola consulted nor was it informed of the names of the persons to whom the shares were proposed to be transferred. Furthermore, it was GBC itself, and not Coca-Cola, that issued the termination notice — and it did so by giving only three months' notice, whereas the 1993 Agreement required one year's notice. GBC, having itself acted in violation of the agreement and being prima facie responsible for the breach of the contract, could not legally claim that the order of injunction be vacated, particularly when it was primarily responsible for having brought about the state of things it was complaining of. Pepsi could not ask Coca-Cola to part with its trade secrets and essence/syrup to its business rival. The appellants' complaints about closure of factories and unemployment of workers, the Court found, were being raised by Pepsi through the mouth of the appellants, and it would be unreasonable to allow Pepsi to take advantage of the plight of workers to assail the interim injunction when it was Pepsi itself that had engineered the entire situation.

**On the scope of the injunction**, the appellants contended that the interim injunction was worded too widely as it extended to the share transferees and subsequent persons. The Court found that while the injunction was indeed widely worded in its terms, in actual operation it restrained those persons only from using the plants of GBC at Ahmedabad and Rajkot for manufacturing, bottling, or selling or dealing with beverages in any manner till January 25, 1996 — the expiry of one year from the date of the termination notice dated January 25, 1995. The interim injunction was thus found to be consonant with and confined to the negative stipulation contained in paragraph 14 of the 1993 Agreement.

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## Final Decision of the Court

The Supreme Court, for all the reasons stated above, found no infirmity in the impugned order of the Bombay High Court dated March 31, 1995 granting an interim injunction in terms of prayers (a)(ii) and (a)(iii) of the Notice of Motion as amended. The appeals were accordingly dismissed, and no order as to costs was made.

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## Points of Law Settled in the Case

This judgment settled several important points of law that have continued to be applied by Indian courts in subsequent decades. The Court definitively held that the 1994 statutory agreement executed under the Trade and Merchandise Marks Act, 1958, for the purpose of registering a licensee as a registered user, does not supersede a broader common law franchise agreement entered into between the same parties, even if both agreements contain similar provisions, unless the later agreement expressly provides for such supersession. The Court further settled that negative covenants operating only during the subsistence of a contract — and not extending beyond its termination — are not in restraint of trade within the meaning of Section 27 of the Indian Contract Act, 1872, and this principle is applicable not just to employment contracts but to franchise and other commercial agreements as well. It was also settled that a franchisee's covenant not to deal with competing goods during the life of the franchise is a condition facilitating the franchiser's distribution of its own goods and is therefore not a restraint of trade. The case authoritatively held that a party who has itself breached a contract and acted inequitably cannot invoke the equitable jurisdiction of the court to vacate an injunction — equity demands clean hands from the party seeking relief. The Court also confirmed that the grant of interlocutory injunction requires satisfaction of the three-pronged test of prima facie case, balance of convenience, and irreparable injury, and that where the loss to the defendant from the injunction can be assessed and compensated in money, it does not tip the balance of convenience in the defendant's favour.

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*Disclaimer: Readers are advised not to treat this as a substitute for legal advice as it may contain errors in perception, interpretation, and presentation.*

*Written By: Advocate Ajay Amitabh Suman, IP Adjutor [Patent and Trademark Attorney], High Court of Delhi*

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## Case Details

**Title:** Gujarat Bottling Co. Ltd. and Others v. Coca Cola Co. and Others

**Date of Order:** August 4, 1995

**Case Number:** Civil Appeals Nos. 6839-40 of 1995

**Neutral Citation:** (1995) 5 Supreme Court Cases 545

**Name of Court:** Supreme Court of India

**Name of Hon'ble Judge:** Justice S.C. Agrawal (with Justice S. Saghir Ahmad)

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## Headnote

Gujarat Bottling Co. Ltd. and Others Vs. Coca Cola Co. and Others** — (1995) 5 SCC 545 — Supreme Court of India — Civil Appeals Nos. 6839-40 of 1995 — Decided August 4, 1995 — Before Justice S.C. Agrawal and Justice S. Saghir Ahmad.

The case arose out of a franchise arrangement between Coca-Cola Company and Gujarat Bottling Co. Ltd. (GBC), under which GBC was authorised to bottle and distribute beverages under Coca-Cola's trade marks pursuant to the 1993 Agreement. The 1993 Agreement contained a negative covenant in paragraph 14 restraining GBC from dealing with beverages of any other brand during the subsistence of the agreement. Pepsi subsequently acquired effective control of GBC by purchasing shares without Coca-Cola's consent, in violation of the agreement, and GBC served a termination notice. Coca-Cola filed a suit and obtained an interim injunction from the Bombay High Court restraining the use of GBC's plants for manufacturing Pepsi products. The Supreme Court dismissed the appeals against the High Court's order, holding: (i) the 1994 Agreement executed under the Trade and Merchandise Marks Act, 1958 for statutory registration of GBC as registered user did not supersede the wider 1993 franchise agreement in the absence of an express supersession clause; (ii) the termination period of one year under the 1993 Agreement was not reduced to 90 days as no mutual consent in writing existed; (iii) the negative covenant in paragraph 14 of the 1993 Agreement was not in restraint of trade under Section 27 of the Indian Contract Act, 1872, because the restriction operated only during the subsistence of the contract; (iv) the principle that the doctrine of restraint of trade does not apply during the continuance of a contract is not confined to employment contracts but applies equally to franchise and other commercial agreements; (v) a franchisee's covenant not to deal with competing goods during the franchise period is a condition facilitating distribution of the franchiser's goods and cannot be regarded as in restraint of trade; (vi) Coca-Cola had made out a prima facie case for grant of injunction, the balance of convenience favoured Coca-Cola as any loss to GBC could be compensated in money, whereas Coca-Cola's loss of goodwill and market share could not be adequately compensated by damages; and (vii) GBC, having itself breached the agreement and acted inequitably by facilitating Pepsi's takeover without Coca-Cola's consent, could not invoke the equitable jurisdiction of the court to vacate the injunction. Appeals dismissed. No costs.

SC-.Hoffmann-La Roche & Co. Ltd. Vs. Geoffrey Manner & Co. Pvt. Ltd.

F. Hoffmann-La Roche & Co. Ltd. v. Geoffrey Manner & Co. Pvt. Ltd.: The Supreme Court on Deceptive Similarity and Invented Words in Trade Mark Law

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Introduction

In the world of trade marks, two of the most frequently contested questions are: when are two marks so similar that one is likely to be confused with the other, and when can a newly coined word claim the status of an "invented word" eligible for trade mark protection? These questions are not merely academic — they determine whether a business gets to keep its trade mark on the register or must surrender it. The Supreme Court of India addressed both these questions with clarity and precision in its landmark decision in F. Hoffmann-La Roche & Co. Ltd. v. Geoffrey Manner & Co. Pvt. Ltd., decided on September 8, 1969. The judgment, delivered by a Bench of Justice J.C. Shah and Justice V. Ramaswami, arose from a rectification proceeding in which a well-known Swiss pharmaceutical company sought the removal of an Indian company's trade mark from the Register of Trade Marks on the ground that it was deceptively similar to its own registered mark. The case remains, to this day, one of the foundational authorities on the test of deceptive similarity between word marks and the meaning of "invented word" under Indian trade mark law.

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Factual and Procedural Background

F. Hoffmann-La Roche & Co. Ltd. is a company incorporated under the laws of Switzerland and has been engaged in the manufacture and sale of pharmaceutical and chemical products on a global scale. On December 2, 1946, the company applied for the registration of its trade mark "PROTOVIT" in India. The application was granted and the mark was registered in Class V in respect of pharmaceutical preparations for human use, veterinary use, infants' foods, and invalids' foods. The company had been using this mark on multi-vitamin preparations — both in liquid and tablet forms — and its goods had been sold under that mark at least since the year 1951. The mark "PROTOVIT" had, therefore, built up a reputation and consumer recognition over several years.

Geoffrey Manner & Co. Pvt. Ltd. is a company incorporated in India under the Companies Act and is also engaged in the manufacture and sale of pharmaceutical products. On January 28, 1957 — over a decade after the registration of "PROTOVIT" — Geoffrey Manner applied for registration of its trade mark "DROPOVIT" in respect of medicinal and pharmaceutical preparations and substances. The application was registered. Unfortunately for Hoffmann-La Roche, the advertisement of Geoffrey Manner's application for registration escaped their notice, and they did not oppose it at the time of registration — a step that, had they taken it, could have nipped the dispute in the bud.

It was only by a letter dated March 4, 1958 from Messrs Voltas Ltd. — the agents of Hoffmann-La Roche in India — that the company's attention was drawn to Geoffrey Manner's trade mark "DROPOVIT." Negotiations followed between the parties, but on March 19, 1958, Geoffrey Manner wrote back refusing to alter its trade mark. Having failed to resolve the matter through negotiation, Hoffmann-La Roche filed an application on January 21, 1959 before the Trade Marks Registry for rectification of the Register by removing the trade mark "DROPOVIT." The ground urged was that the mark "DROPOVIT" so nearly resembled the already-registered mark "PROTOVIT" as to be likely to deceive or cause confusion — which is the standard test for deceptive similarity. On March 9, 1960, Hoffmann-La Roche applied for amendment of the rectification application, adding a further ground — that "DROPOVIT" was not an "invented word" and therefore not entitled to registration. This amendment was allowed by the Registrar.

The Joint Registrar of Trade Marks rejected the rectification application on August 5, 1961, holding that "DROPOVIT" was not deceptively similar to "PROTOVIT" and that, taken as a whole, "DROPOVIT" was not a descriptive word. Hoffmann-La Roche appealed to the Bombay High Court. A learned Single Judge, Mr. Justice Tarkunde, dismissed the appeal on December 7, 1962. Hoffmann-La Roche then preferred an appeal under the Letters Patent, which was heard by a Division Bench consisting of Chief Justice Chainani and Justice Mody. This appeal too was dismissed on August 17, 1964. An important development during the hearing before the Division Bench was that Geoffrey Manner restricted the designation of its goods under the mark "DROPOVIT" to "medicinal and pharmaceutical preparations and substances containing principally vitamins." Hoffmann-La Roche then came to the Supreme Court by certificate.

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The Dispute

The dispute before the Supreme Court centred on two distinct but connected questions. The first and primary question was whether the trade mark "DROPOVIT" was deceptively similar to the earlier-registered trade mark "PROTOVIT" — that is, whether it so nearly resembled "PROTOVIT" as to be likely to deceive or cause confusion among consumers. This question was governed by Section 12(1) of the Trade and Merchandise Marks Act, 1958 (Act No. 43 of 1958), which prohibits the registration of a trade mark that is identical with or deceptively similar to a trade mark already registered in the name of a different proprietor in respect of the same or descriptive goods. Section 2(1)(d) of the same Act defines "deceptively similar" to mean a mark that so nearly resembles another as to be likely to deceive or cause confusion.

The second question was whether "DROPOVIT" was an "invented word" within the meaning of Section 9(1)(c) of the Act — which is one of the essential particulars required for registration of a trade mark in Part A of the Register — or whether it was merely a combination of common English words and therefore descriptive, disqualifying it from protection as an invented word.

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Reasoning and Analysis of the Judges

The Supreme Court began its analysis by setting out the governing legal framework. It noted that even though the application for rectification was filed on January 21, 1959 — before the Trade and Merchandise Marks Act, 1958 came into operation — it was not disputed by either party that by virtue of Section 136(3) of the 1958 Act, the decision of the case was governed by the provisions of that Act. The court then proceeded to consider the two questions in turn.

On the question of deceptive similarity, the court first articulated the fundamental principle: it is not necessary that a mark should be intended to deceive or intended to cause confusion. What matters is the probable effect of the mark on ordinary customers — whether the customers are likely, in the normal course of commerce, to be deceived or confused. The court drew upon a rich body of English trade mark jurisprudence to frame the correct tests.

The court referred to Parker-Knoll Ltd. v. Knoll International Ltd., 1962 RPC 265, where Lord Denning had drawn a clear distinction between "deceiving" a person and "causing confusion." To deceive is to make a false representation — to tell a lie, in effect, whether or not intentionally — that causes someone to believe something false. To cause confusion, however, does not require any false representation at all. A person may be confused without being deceived, simply because they lack the knowledge or ability to distinguish between two true but similar things, or because they do not take the trouble to do so. This distinction is important because the trade mark law is concerned with both forms of mischief.

The court then cited the classic formulation of the test for comparing two word marks, laid down by Lord Parker in Pionotist Co. Ltd.'s Application, 23 RPC 774. According to this test, the two marks must be judged both by their look and by their sound; the nature of the goods to which they are applied must be considered; the kind of customer likely to buy those goods must be assessed; and all surrounding circumstances must be weighed, including what is likely to happen if each mark is used in the normal way for the respective owner's goods. If, considering all these factors, the conclusion is that there will be confusion in the public mind — meaning not necessarily that one trader will be harmed and the other will gain illicit benefit, but that the public will be confused and led to confuse the goods — then registration must be refused.

The court then applied what is known as the visual and phonetic test — that marks must be assessed both for how they look and for how they sound. It referred to the decision of the House of Lords in Aristoc Ltd. v. Rysta Ltd., 62 RPC 65, a case concerning the resemblance between "Aristoc" and "Rysta." Viscount Maugham in that case adopted the exposition of Lord Justice Luxmoore in the Court of Appeal, which the Supreme Court found to be the correct statement of law: the test of resemblance between two marks must not be conducted by meticulous comparison letter by letter and syllable by syllable, as pronounced by a teacher of elocution. The comparison must take into account imperfect recollection, careless pronunciation, and the habits of ordinary buyers and shop assistants. This is because it is the person who knows only one mark and has an imperfect recollection of it — not the person familiar with both marks — who is likely to be deceived or confused.

The court further laid down the important principle that marks must always be compared as wholes. It is wrong to isolate a portion of a word, note that that portion differs from the corresponding portion of the other mark, and then conclude that there is no similarity. The true test is whether the totality of the proposed trade mark is such as to be likely to cause deception or confusion in the minds of persons accustomed to the existing mark. On this point, the court cited Tokalon Ltd. v. Davidson & Co., 32 RPC 133, where Lord Johnston had observed that the comparison is not like a microscopic analysis of letters — it must be from the general and even casual point of view of a customer walking into a shop.

Applying these principles to the two marks "PROTOVIT" and "DROPOVIT," the Supreme Court conducted a careful analysis. Each of the two words consists of eight letters. The last three letters — "VIT" — are common to both. However, the court noted that this common suffix "VIT" is a well-known and widely-used abbreviation in the pharmaceutical trade to denote vitamin preparations. The affidavit of one Frank Murdoch, filed in the proceedings on January 11, 1961, revealed that there were as many as 57 trade marks on the Register of Trade Marks with the common suffix "VIT," all indicating that the goods in question were vitamin preparations. The court concluded that the terminal syllable "VIT" was both descriptive and common to the trade, and therefore lesser weight was to be attached to it when comparing the two marks.

When greater attention is paid to the uncommon elements of the two words — the letters that differ between them — the picture becomes clear. In "DROPOVIT," the uncommon portion comprises the letters "D-R-O-P-O," while in "PROTOVIT," the uncommon portion is "P-R-O-T-O." The court observed that the letters "D" and "P" in "DROPOVIT" and the corresponding letters "P" and "T" in "PROTOVIT" cannot possibly be slurred over in pronunciation — they produce quite distinct sounds. Taking the words as wholes and considering both their visual appearance and their phonetic sound, the court was satisfied that the words were so dissimilar that there was no reasonable probability of confusion between them, either visually or phonetically.

The court also took into account the specific context in which the goods bearing these marks would be purchased. Since both marks were being applied to vitamin preparations — pharmaceutical products — most customers would obtain a prescription from a doctor and present it to a pharmacist or chemist before making a purchase. The court reasoned that in such a situation, except in cases where the doctor's handwriting was very bad or illegible, the chance of confusion was remote. Moreover, given that as many as 57 trade marks on the Register shared the "VIT" suffix, an average customer familiar with vitamin products would naturally exercise greater care and attention when purchasing such goods, knowing that the "VIT" suffix appears in a large number of trade marks.

An additional factor reinforcing this conclusion was the regulatory framework under the Drug Rules, 1945. Under Rule 61(2) of those Rules, vitamin preparations fall under item 5 in Schedule C-(1), and a licence is required to stock and retail such preparations. This means that the goods bearing either of the two rival trade marks would be sold only by licensed dealers — not at any general shop. The court held that this fact of the seller being a licensed dealer further reduced the possibility of confusion to a considerable extent, since a licensed pharmacist would be expected to know the difference between "PROTOVIT" and "DROPOVIT."

Weighing all these circumstances together — the dissimilarity in the uncommon parts of the two words, the descriptive and common nature of the "VIT" suffix, the prescription-based purchase of such products, the prevalence of "VIT"-suffixed trade marks in the pharmaceutical register, and the requirement of a licensed dealer for sale — the court concluded that there was no real, tangible danger of confusion if "DROPOVIT" was allowed to continue on the Register. The Joint Registrar of Trade Marks and the Bombay High Court were both right in dismissing the rectification application on this ground.

The court then turned to the second question — whether "DROPOVIT" was an "invented word." Section 9(1)(c) of the Trade and Merchandise Marks Act, 1958 provides that a trade mark is eligible for registration in Part A of the Register if it contains or consists of one or more invented words. Hoffmann-La Roche argued that "DROPOVIT" was nothing more than a combination of three ordinary English words — "DROP," "OF" (with "of" misspelled as "o"), and "VIT" (shorthand for "Vitamins") — joined together. The argument was that "DROPOVIT" simply meant "Drop of Vitamins" and was therefore not an invented word but a descriptive combination of common words.

To determine what constitutes an "invented word," the court turned to the celebrated Diabolo case, 25 RPC 565, where Parker J. had explained that to be an invented word within the meaning of the Act, a word must not only be newly coined — in the sense of not being already current in the English language — but must also be such that it does not convey any meaning, or at least any obvious meaning, to ordinary English-speaking persons. It must be a word that has no meaning or no obvious meaning until a meaning has been assigned to it. The Privy Council in De Cordova and Others v. Vick Chemical Co., 68 RPC 103 had described this formulation by Parker J. as "the best standing interpretation," and the Supreme Court adopted it.

The court then asked whether the word "DROPOVIT" would strike an ordinary English-speaking person as meaning "Drop of Vitamin." In addressing this, the court made a telling observation: the original rectification application filed by Hoffmann-La Roche on January 21, 1959 did not contain the ground that "DROPOVIT" was descriptive. This ground was added only by amendment on March 9, 1960 — more than a year later. The court drew the inference that the word "DROPOVIT" had not struck even the legal advisers of Hoffmann-La Roche — Messrs Depenning and De-Penning, who were experienced attorneys — as being descriptive when they first filed the application. Further, Mr. Justice Tarkunde himself had remarked, at the hearing before the Single Judge, that when the case was first opened before him, he did not understand that "DROPOVIT" meant "Drop of Vitamin" until the explanation was given to him. These two facts — that experienced lawyers did not initially perceive the word as descriptive, and that even a learned judge did not spontaneously understand its purported meaning — powerfully supported the conclusion that "DROPOVIT" did not, as a matter of first impression, convey any obvious meaning to ordinary persons.

The court acknowledged that "DROPOVIT" had been coined out of words commonly used by and known to ordinary English-speaking persons. But the critical point was that the resulting combination produced a new, newly coined word that did not remind an ordinary person of the original component words — unless they were specifically told of the derivation or unless they devoted deliberate thought to it. This is precisely the kind of word that qualifies as an "invented word." The court therefore held that "DROPOVIT" was an invented word, entitled to be registered as a trade mark, and was not liable to be removed from the Register.

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Final Decision of the Court

The Supreme Court dismissed the appeal with costs. The court upheld the findings of the Joint Registrar of Trade Marks and the Bombay High Court (both the Single Judge and the Division Bench), confirming that "DROPOVIT" was neither deceptively similar to "PROTOVIT" nor a non-invented descriptive word. The trade mark "DROPOVIT" was held entitled to remain on the Register of Trade Marks, limited to medicinal and pharmaceutical preparations and substances containing principally vitamins — the restriction voluntarily offered by Geoffrey Manner before the Division Bench of the Bombay High Court.

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Point of Law Settled

This judgment settled several important points of trade mark law. First, the test for deceptive similarity between two word marks is not a microscopic, letter-by-letter comparison but a holistic assessment — the marks must be compared as wholes, from the visual and phonetic point of view, having regard to the probable effect on ordinary consumers with imperfect recollection. Second, elements that are descriptive and common to the trade — such as the suffix "VIT" for vitamin preparations — carry lesser weight in the comparison and must not be allowed to dominate the analysis. Third, the nature of the goods and the manner of their purchase — such as sale through licensed pharmacists on prescription — are highly relevant factors in assessing the likelihood of confusion. Fourth, an invented word need not be completely meaningless; it suffices if the word, as a newly coined combination, does not convey any obvious meaning to ordinary persons at first impression. If the resulting combination does not readily remind an ordinary person of the component words from which it is formed unless they think hard about it or are told, the word qualifies as an invented word under Section 9(1)(c) of the Trade and Merchandise Marks Act, 1958.

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Case Details

Title: F. Hoffmann-La Roche & Co. Ltd. Vs. Geoffrey Manner & Co. Pvt. Ltd.

Date of Order: September 8, 1969

Case Number: Civil Appeal No. 1330 of 1966

Neutral Citation: MANU/SC/0302/1969; Equivalent Citations: AIR 1970 SC 2062; (1969) 2 SCC 716; [1970] 2 SCR 213; 1982 (2) PTC 335 (SC); 1971 (73) BOMLR 119; 1971 MhLJ 354

Name of Court: Supreme Court of India

Name of Hon'ble Judges: Justice J.C. Shah and Justice V. Ramaswami

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Disclaimer: Readers are advised not to treat this as a substitute for legal advice as it may contain errors in perception, interpretation, and presentation.

Written By: Advocate Ajay Amitabh Suman, IP Adjutor [Patent and Trademark Attorney], High Court of Delhi

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4. Holistic Test for Trade Mark Comparison: Supreme Court's Ruling in PROTOVIT vs DROPOVIT Case
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Headnote

The Supreme Court of India, in F. Hoffmann-La Roche & Co. Ltd. v. Geoffrey Manner & Co. Pvt. Ltd., Civil Appeal No. 1330 of 1966, decided on September 8, 1969, reported at AIR 1970 SC 2062 and (1969) 2 SCC 716, held that the trade mark "DROPOVIT" was neither deceptively similar to the registered trade mark "PROTOVIT" nor a non-invented descriptive word, and accordingly dismissed the rectification application. The court laid down that the test of deceptive similarity requires a holistic comparison of two marks — both visually and phonetically — taking into account the probable effect on ordinary consumers with imperfect recollection, the nature and class of goods, the mode of purchase, and the regulatory environment. Elements that are descriptive and common to the trade must receive lesser weight in the comparison. Since the suffix "VIT" appeared in as many as 57 registered trade marks for vitamin preparations and was thus common to the pharmaceutical trade, the comparison between "PROTOVIT" and "DROPOVIT" had to focus on the dissimilar elements, which were found to be clearly distinct both in appearance and sound. The court further held that a word qualifies as an "invented word" under Section 9(1)(c) of the Trade and Merchandise Marks Act, 1958 if, as a newly coined combination, it does not convey any obvious meaning to an ordinary English-speaking person at first impression — even if it is composed of common English words — so long as the composite word does not readily reveal its component parts without deliberate thought. The appeal was dismissed with costs.