Post Assignment of Trademark, a Party Cannot Use a Similar Trademark
Introduction:
Trademark law plays a crucial role in maintaining fair competition in the marketplace and protecting consumers from confusion regarding the source of goods and services. This case involves ITC Limited, a prominent player in the fast-moving consumer goods (FMCG) sector, which faced infringement issues stemming from the defendants’ use of a trademark that was similar to its registered marks. This analysis will delve into the facts of the case, the arguments presented by both parties, the court's findings, and the resulting injunction against the defendants.
Background of the Plaintiff: Overview of ITC Limited:
ITC Limited is a major manufacturer and seller of a diverse range of products, including home care, health and hygiene items, personal care, and other FMCG products. Established as a leading brand, ITC has invested heavily in creating a strong presence in the market. The company acquired registered trademarks, namely 'NIMYLE' and 'JOR-POWR', from the defendants through assignment agreements in 2018.
Marketing and Sales Efforts:
Since acquiring these trademarks, ITC has dedicated significant resources to promote and market its 'NIMYLE' product line, which includes 'NIMEASY' and 'NIMWASH'. The company recorded impressive sales turnover, amounting to over ₹400 crores, and has invested more than ₹60 crores in marketing efforts for the 'NIMYLE' and 'NIM' family of products. These investments underscore ITC’s commitment to establishing its brand in the market and enhancing consumer recognition.
Defendants' Infringing Acts: Introduction of 'POWRNYM:
In contrast to ITC’s efforts, the defendants began marketing a floor cleaner product under the mark 'POWRNYM'. This trademark is considered a derivative of ITC’s registered trademarks, 'NIMYLE' and 'JOR-POWR'. The defendants not only adopted a similar name but also mimicked the trade dress, bottle shape, and overall packaging of ITC’s 'NIMYLE' products.
Trademark Application:
Defendant No. 1 proceeded to apply for the registration of the 'POWRNYM' trademark, which further escalated the dispute. ITC's assertion was that the adoption of this trademark constituted a direct infringement of their rights and could lead to significant consumer confusion in the marketplace.
Plaintiff’s Arguments: Breach of Assignment Agreements:
ITC contended that the defendants were bound by the assignment agreements, which explicitly prohibited them from using any confusingly similar marks after transferring all rights to 'NIMYLE' and 'JOR-POWR'. The plaintiff argued that 'POWRNYM' was phonetically, structurally, and visually similar to its registered marks, thereby constituting a breach of the agreements.
Likelihood of Confusion:
The plaintiff emphasized that the defendants' use of the impugned mark and trade dress amounted to trademark infringement and passing off. ITC expressed concern over the potential for irreparable harm, asserting that consumers would likely be misled into believing that the products originated from or were affiliated with ITC.
Defendants’ Contentions: Distinctiveness of 'POWRNYM:
The defendants contended that 'POWRNYM' is a distinct and different mark from ITC's trademarks. They claimed that their use of 'POWRNYM' commenced only after the expiry of the non-compete period specified in the assignment agreements, thereby arguing that they were within their rights to develop and market this new brand.
Meaning of 'NYM':
The defendants argued that the term 'NYM' in 'POWRNYM' referred to 'NEEM', which is a common ingredient used in various cleaning products. This claim was presented as a means to differentiate their product in the market and emphasize that the differences in composition, branding, and packaging would prevent any likelihood of confusion among consumers.
Defendants’ Defenses:Delay in Objection:
The defendants asserted that ITC did not raise any objections to the 'POWRNYM' trademark application at an earlier stage, suggesting that this delay undermined the plaintiff's claims of infringement. They highlighted instances where ITC had not acted against similar third-party marks, arguing for a lack of consistency in their enforcement of trademark rights.
Non-Use of 'JOR-POWR':
Furthermore, the defendants noted that ITC had not actively used the 'JOR-POWR' trademark in the market, which they argued weakened the plaintiff's position to claim infringement based on that particular mark.
Court's Findings and Ruling:Key Observations:
Ownership and Assignment: The court found that the defendants were the previous owners of the 'NIMYLE' and 'JOR-POWR' trademarks, having assigned all rights in these marks to ITC for ₹100 crores. This transfer of rights established a clear legal basis for ITC’s claims against the defendants.
Derivative Nature of 'POWRNYM': The court concluded that the adoption of the 'POWRNYM' mark was likely a derivative of ITC’s existing trademarks. The similarity in naming, along with the adoption of a comparable trade dress and packaging, heightened the risk of consumer confusion.
Unconvincing Explanations: The explanations provided by the defendants regarding the reasons for adopting the 'POWRNYM' mark were found to be unconvincing. The court expressed skepticism about their claims that 'NYM' referred to 'NEEM', considering the context of the existing trademark landscape.
Injunction Granted:
In light of the findings, the court granted an ad-interim injunction in favor of the plaintiff. The defendants were restrained from manufacturing, selling, or dealing with the 'POWRNYM' mark or any other mark that is deceptively similar to ITC’s 'NIMYLE', 'JOR-POWR', and the 'NIM' family of marks.
Additionally, the court dismissed the defendants’ application under Order XXXIX Rule 4 of the Civil Procedure Code (CPC), which sought to vacate the injunction.
Conclusion:
This case reinforces the principles of trademark assignment and the implications of adopting similar marks after an assignment has taken place. The court's ruling highlights the necessity of protecting established trademarks and preventing consumer confusion in the marketplace. It serves as a reminder that parties involved in trademark assignments are bound by the terms of their agreements, and any infringement or passing off will not be tolerated. The injunction granted in favor of ITC not only protects its brand but also upholds the integrity of trademark law in India.
Case Citation: Itc Limited Vs Arpita Agro Products Pvt Ltd: 08.10.2024: CS(COMM) 698/2023: 2024:DHC: 7796: Delhi High Court: Saurabh Banerjee: H.J.
Written by: Advocate Ajay Amitabh Suman
IP Adjutor [Patent and Trademark Attorney] United & United
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