Cadila Healthcare Ltd. Vs. Dabur India Ltd.

Commonly used terms describing product attributes cannot be monopolized as a Trademark.

Introduction: The case of Cadila Healthcare Ltd. v. Dabur India Ltd., decided by the Delhi High Court, revolves around the claim of exclusive rights over the expression "SUGAR FREE" by Cadila Healthcare Ltd. The dispute primarily concerns whether the term "SUGAR FREE" has acquired distinctiveness as a trademark and whether Dabur’s use of the term in its product "Chyawanprakash" amounts to passing off. The case raises significant questions regarding the intersection of intellectual property rights and generic descriptive terms.

Factual Background: Cadila Healthcare Ltd., a leading pharmaceutical company in India, introduced a low-calorie tabletop sweetener under the brand name “SUGAR FREE” in 1988. Despite the lack of formal trademark registration, the company argued that over the years, the term had acquired secondary meaning and distinctiveness, making it uniquely associated with their brand. Dabur India Ltd., a well-known manufacturer of Ayurvedic and food products, introduced a sugar-free variant of its product, "Chyawanprakash." The packaging of this product prominently displayed the term “SUGAR FREE,” which Cadila alleged was an attempt to mislead consumers and exploit its goodwill.

Procedural Background: Cadila Healthcare filed a suit seeking a permanent injunction against Dabur India, restraining them from using the term "SUGAR FREE." The suit also included claims for damages, rendition of accounts, and delivery of infringing goods.Along with the plaint, Cadila Healthcare sought an interim injunction under Order 39 Rules 1 and 2 of the Civil Procedure Code, 1908. The learned Single Judge of the Delhi High Court dismissed this application in an order dated July 9, 2008. Aggrieved by this decision, Cadila Healthcare filed an appeal (FAO(OS) No. 387/2008) before the Division Bench of the High Court.

Issues Involved in the Case: Whether the term "SUGAR FREE" had acquired secondary meaning and distinctiveness in relation to Cadila Healthcare's product?Whether Dabur India's use of the term "SUGAR FREE" constituted passing off?Whether the expression "SUGAR FREE" was merely descriptive or had become a well-known trademark?

Submissions of Cadila Healthcare Ltd.: Argued that "SUGAR FREE" had acquired distinctiveness through long and extensive use since 1988. Cited the case of Cadila Healthcare Ltd. v. Gujarat Cooperative Milk Marketing Federation Ltd., 2008 (36) PTC 168 (Del.), where the court recognized a level of distinctiveness in the term.Contended that Dabur's use of "SUGAR FREE" was deceptive and likely to mislead consumers.Stressed that the Single Judge had overlooked the findings in the Gujarat Cooperative Milk case while ruling in favor of Dabur.

Submissions of Dabur India Ltd. :Claimed that "SUGAR FREE" was a generic and descriptive term, commonly used to indicate a product's sugar-free nature.Argued that their product packaging clearly displayed the "DABUR" trademark and "Chyawanprakash" in a prominent manner, reducing any likelihood of confusion. Submitted that in an appeal against an interlocutory order, the appellate court should refrain from substituting its discretion for that of the Single Judge unless there was an arbitrary or perverse exercise of discretion.

Discussion on Judgments Cited:

1. Cadila Healthcare Ltd. v. Gujarat Cooperative Milk Marketing Federation Ltd., 2008 (36) PTC 168 (Del.)

   • The court had acknowledged that "SUGAR FREE" had acquired some distinctiveness but also recognized that a term commonly used to describe a product’s feature cannot be monopolized.

   • The judgment was relied upon by both parties: Cadila used it to argue for distinctiveness, while Dabur cited its ruling that generic terms cannot be monopolized.

2. Wander Ltd. v. Antox India Pvt. Ltd., 1990 Suppl. (1) SCC 727

   • Supreme Court laid down the principle that an appellate court should not interfere with the discretionary orders of a lower court unless it was arbitrary or perverse.

   • Dabur relied on this case to argue that the appeal should be dismissed, as the Single Judge’s order was based on sound reasoning.

Reasoning and Analysis of the Judge

The Division Bench examined the following aspects while upholding the learned Single Judge’s decision:

1. Descriptive vs. Distinctive Nature of "SUGAR FREE"

   • The court held that "SUGAR FREE" is fundamentally a descriptive term, indicating that a product is free from sugar.

   • Even if it had acquired secondary meaning for Cadila’s product, it was not sufficient to grant an exclusive right to its use.

2. Comparison of Packaging

   • The court reviewed the packaging of both parties and observed that Dabur prominently displayed its brand name "DABUR" and the product name "Chyawanprakash."

   • "SUGAR FREE" was used in a smaller font, reinforcing that it was merely describing the product's attribute rather than serving as a trademark.

3. Application of Precedents

   • The court agreed with the Single Judge that the case did not warrant the application of the Cadila Healthcare Ltd. v. Gujarat Cooperative Milk Marketing Federation Ltd. judgment, as the circumstances were different.

   • Relying on Wander Ltd. v. Antox India Pvt. Ltd., the court concluded that appellate interference was unwarranted.

4. No Likelihood of Confusion

   • The court ruled that the packaging was distinct enough to prevent consumer confusion.

   • Since Dabur used "SUGAR FREE" in an appropriate context to describe its product rather than as a trademark, there was no case of passing off.

Final Decision

The Division Bench dismissed the appeal, affirming the learned Single Judge’s ruling. The court reiterated that:

• "SUGAR FREE" could not be monopolized by any single company.

• Dabur’s packaging was sufficiently distinctive.

• There was no prima facie case of passing off.

Law Settled in This Case

1. Generic and Descriptive Terms Cannot be Exclusively Claimed as Trademarks

   • The judgment reinforces the principle that commonly used terms describing product attributes cannot be monopolized.

2. Passing Off Requires Likelihood of Confusion

   • A successful claim of passing off necessitates proof that consumers are misled into believing the defendant's product originates from the plaintiff.

3. Limited Scope of Appellate Intervention in Interim Orders

   • The court reaffirmed that appellate courts should not interfere with discretionary interim orders unless there is arbitrariness or perversity.

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Case Title: Cadila Healthcare Ltd. Vs. Dabur India Ltd.
Date of Order: September 29, 2010
Case No.: FAO (OS) 387/2008
Neutral Citation: 2008:DHC:2662-DB
Court: High Court of Delhi
Judges: Hon’ble Mr. Justice Sanjay Kishan Kaul & Hon’ble Mr. Justice Mool Chand Garg

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