Neon Laboratories Ltd. Vs. Medical Technologies Ltd.

Neon Laboratories Ltd. Vs. Medical Technologies Ltd: Prior User of Trade Mark prevails over prior Registration but subsequent User of Trademark

Case Title: Neon Laboratories Ltd. Vs. Medical Technologies Ltd. & Ors.
Date of Order: October 5, 2015
Case No.: Civil Appeal No. 1018 of 2006
Neutral Citation: 2015 AIR SCW 6470, 2016 (1) AKR 20, 2015 (6) AIR BOM R 828, (2016) 2 SCC 672
Name of Court: Supreme Court of India
Name of Judges: Hon’ble Mr. Justice Vikramajit Sen and Hon’ble Mr. Justice Shiva Kirti Singh

Introduction:

This case revolved around a dispute over the trademarks PROFOL and ROFOL, both of which were used for the pharmaceutical product Propofol, an anesthetic drug. The core issue before the Supreme Court was whether the prior registration of the trademark ROFOL granted Neon Laboratories Ltd. superior rights, or whether the first actual user of the mark, Medical Technologies Ltd., could claim priority. The case highlights the interplay between trademark registration, actual use, passing off, and the ‘first in the market’ principle under Indian trademark law.

Detailed Factual Background:

Medical Technologies Ltd. (plaintiff) claimed that its predecessor-in-title had introduced the drug Propofol in India and had coined the trademark PROFOL in April 1998. It had applied for the registration of the mark on May 24, 1998, and had been actively using it in the market since then. After amalgamating with its predecessor in February 2000, Medical Technologies Ltd. continued using PROFOL in commerce and obtained goodwill for its product.

Neon Laboratories Ltd. (defendant) had applied for the registration of the mark ROFOL in 1992 but did not use the mark in commerce until 2004. The plaintiff came to know about the defendant’s use of the ROFOL mark in 2005 and immediately filed a suit for an injunction, damages, and accounts of profits, arguing that ROFOL was deceptively similar to PROFOL and was likely to cause confusion among medical practitioners and consumers.

Detailed Procedural Background:

The case began in 2005 when Medical Technologies Ltd. filed a suit for injunction, claiming that Neon Laboratories Ltd. was passing off its product as that of the plaintiff by using a similar-sounding name. The trial court granted a temporary injunction, which Neon Laboratories challenged before the Gujarat High Court. The High Court affirmed the injunction in 2005, leading the defendant to appeal before the Supreme Court in 2006.

The Supreme Court generally avoids interfering in interlocutory orders, but in cases involving trademark disputes, ad-interim injunctions often determine the final outcome due to delays in legal proceedings. Since Neon Laboratories had been restrained from using its mark since 2005, the case gained significant commercial implications, warranting Supreme Court intervention.

Issues Involved in the Case:

The Supreme Court had to determine whether Neon Laboratories Ltd.’s prior registration of ROFOL in 1992 gave it an absolute right over the mark. The Court also had to decide whether Medical Technologies Ltd., as the first actual user of the mark PROFOL since 1998, had a superior claim over a non-user registered proprietor. The issue of whether Neon Laboratories Ltd.’s delayed use of the ROFOL mark in 2004 after years of inaction amounted to abandonment or acquiescence was also considered. Another key question was whether confusion among consumers and medical professionals was likely due to the similarity between PROFOL and ROFOL, and whether an ad-interim injunction preventing the use of ROFOL should be upheld or vacated.

Detailed Submissions of Parties:

Medical Technologies Ltd. argued that it had coined and continuously used the mark PROFOL in India since 1998 and had built goodwill and market recognition. It contended that Neon Laboratories Ltd., despite having applied for trademark registration in 1992, had not used the mark until 2004, indicating a lack of bona fide intent to use it. The plaintiff relied on Section 34 of the Trade Marks Act, 1999, which states that a prior actual user has superior rights over a registered proprietor who has not used the mark. It was also argued that Neon Laboratories Ltd. had initiated the use of ROFOL only after seeing the success of PROFOL, indicating an intent to ride upon its goodwill. The phonetic and visual similarity between PROFOL and ROFOL was highlighted as a serious concern, especially in the pharmaceutical industry, where mistaken prescriptions could have dangerous consequences.

Neon Laboratories Ltd. countered that it had applied for trademark registration in 1992, much before Medical Technologies Ltd. started using PROFOL in 1998. It argued that the date of registration application is the relevant factor, not the date of actual use. The defendant further contended that the plaintiff’s mark was similar to the generic drug name Propofol, which should not be given exclusivity. Since it had secured trademark registration for ROFOL in 2001, it claimed a legal right to use the mark.

Detailed Discussion on Judgments Cited:

The Supreme Court considered multiple precedents, including Wander Ltd. v. Antox India P. Ltd. (1990 Supp SCC 727), which held that appellate courts should not interfere with the exercise of discretion by lower courts unless it is perverse or unreasonable. This principle guided the Supreme Court’s approach to injunctive relief. The Court also referred to N.R. Dongre v. Whirlpool Corporation (1996) 5 SCC 714, which upheld the prior user principle and ruled that a worldwide prior user had superior rights over a subsequently registered Indian proprietor.

The decision in Milmet Oftho Industries v. Allergan Inc. (2004) 12 SCC 624 was considered, where the Supreme Court had applied the first in the market test, holding that prior users in foreign markets could restrain Indian companies from using similar marks. Another relevant judgment cited was S. Syed Mohideen v. P. Sulochana Bai (2015) 7 SCALE 136, which held that passing off actions are based on common law principles and that prior user rights override trademark registration.

Detailed Reasoning and Analysis of Judge

The Supreme Court held that prior user trumps prior registration under Section 34 of the Trade Marks Act, 1999. Since Medical Technologies Ltd. had continuously used PROFOL since 1998, it had superior rights over Neon Laboratories Ltd., which registered ROFOL in 1992 but did not use it until 2004. Neon Laboratories Ltd.’s long delay in using the mark suggested abandonment, which worked against it under Sections 34 and 47 of the Trade Marks Act. The Court noted that the confusing similarity between PROFOL and ROFOL was a serious concern in the pharmaceutical industry, where mistaken prescriptions could have harmful consequences. The balance of convenience was in favor of Medical Technologies Ltd., as it had been using PROFOL for years, while Neon Laboratories had alternative branding options.

Final Decision:

The Supreme Court dismissed the appeal, upholding the injunction against Neon Laboratories Ltd. The Court ruled in favor of Medical Technologies Ltd., holding that prior user rights took precedence over registration.

Law Settled in This Case:

Prior use is superior to trademark registration under Section 34 of the Trade Marks Act, 1999. Non-use of a registered trademark for extended periods can lead to a loss of rights under Section 47. The first in the market principle applies strongly in pharmaceutical trademarks, where confusion can impact public health. Trademark rights are established through actual use and market goodwill, not just registration.

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

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