Marico Limited v. Agro Tech Foods Limited

Delhi High Court (Division Bench) | FAO(OS) No. 352/2010 Decided on 1 November 2010 Bench: Justice Sanjay Kishan Kaul and Justice Valmiki J. Mehta

Background

Marico Limited was the registered proprietor of the trademarks “LOSORB” and “LO-SORB” in Class 29 covering edible oils and allied products. The registrations were effective from 28 May 2001 and had been applied for on a “proposed to be used” basis meaning there was no actual use of the mark at the time of filing the application. Marico sold edible oil under the prominent brand names “Sweekar” and “Saffola” and used the marks “LOSORB” and “LO-SORB” alongside these brands to indicate that the oil contained an anti-foaming agent which resulted in less oil being absorbed by food during the process of frying. Marico also claimed an unregistered trademark in the expression “LOW ABSORB.”

Agro Tech Foods Limited sold edible sunflower oil under its well known brand “Sundrop.” Since this product also contained an anti-foaming agent with a similar oil absorption reducing property Agro Tech began using the expression “WITH LOW ABSORB TECHNOLOGY” on its packaging. Marico filed a suit before the Delhi High Court in 2009 alleging infringement of its registered trademarks and passing off on account of Agro Tech’s use of the expression “LOW ABSORB.”

A single judge of the Delhi High Court dismissed Marico’s application for injunction and also vacated the ex parte interim order that had been granted earlier in August 2009. The single judge held that no case for infringement was made out and that the use of “LOW ABSORB” by Agro Tech did not amount to passing off either. Marico challenged this order before the Division Bench.

Issue for Determination

The Division Bench identified two broad issues for consideration.

The first was whether Marico’s registration of “LOSORB” and “LO-SORB” gave it an exclusive right to prevent Agro Tech from using the expression “LOW ABSORB TECHNOLOGY” and whether an action for infringement was maintainable in the facts of the case. Included in this was the question of whether a civil court is entitled to examine the validity of a registered trademark while deciding an application for interim injunction and whether the defences available under Sections 30(2)(a) and 35 of the Trade Marks Act 1999 were available to Agro Tech even assuming the registration was valid.

The second was whether Marico’s use of the unregistered expression “LOW ABSORB” gave it any right in passing off against Agro Tech’s use of substantially the same expression.

Statutory Provisions Involved

Section 9 of the Trade Marks Act 1999 lays down absolute grounds for refusal of registration. Marks which are devoid of distinctive character or which serve only to describe the kind quality intended purpose or other characteristics of the goods ordinarily cannot be registered. The proviso however permits registration of such marks if they have acquired a distinctive character by use before the date of application or are well known trademarks.

Section 28 confers on the registered proprietor the exclusive right to use the mark in relation to the goods for which it is registered but only if the registration is valid. The expression “if valid” in Section 28 is central to the court’s analysis.

Section 29 provides the basis for an infringement action against a person using an identical or deceptively similar mark in relation to the same or similar goods.

Section 30(2)(a) provides that a registered trademark is not infringed where the use in question indicates the kind quality intended purpose or other characteristics of the goods. This is a complete statutory defence to an infringement action.

Section 31 provides that registration is only prima facie evidence of validity and not conclusive proof.

Section 32 provides that a trademark registered in breach of Section 9(1) shall not be declared invalid if it has acquired a distinctive character after registration and before commencement of legal proceedings challenging the registration. The court held that this provision operates only in cancellation proceedings before the Registrar or the Appellate Board and not in infringement proceedings before a civil court.

Section 35 saves any bona fide use by a person of a description of the character or quality of his goods from being treated as an infringement.

Section 57 provides for cancellation of registration of a trademark by the Registrar or Appellate Board.

Section 124 deals with the stay of infringement proceedings when the validity of registration is questioned and also provides in sub-section 5 that the court may pass any interlocutory order it considers fit notwithstanding any stay of the suit.

Key Holdings of the Court

The Division Bench dismissed the appeal and affirmed the order of the single judge refusing injunction. The court laid down the following key positions.

The expression “LOW ABSORB” is plainly a descriptive expression. It is a combination of two common English words that directly describes the characteristic of the product namely that the edible oil absorbs less. It is not a coined word and it is not an unusual juxtaposition of words. Anyone who adopts such a descriptive expression as a trademark takes the risk that others in the trade will equally be entitled to use it.
Marico’s registered marks “LOSORB” and “LO-SORB” were found to be prima facie invalid. The applications for registration had been filed on a “proposed to be used” basis which meant there was no actual use and no evidence of distinctiveness before the Registrar at the time of registration. The marks are merely a minor tweaking of the descriptive expression “LOW ABSORB” and do not become distinctive merely because of that cosmetic alteration.
A civil court is entitled to examine the prima facie validity of a registered trademark while deciding an application for interim injunction. The court held that registration under Section 31 is only prima facie evidence of validity. The expression “if valid” in Section 28 makes it clear that the right to sue for infringement is conditional on the registration being valid. Where the written statement raising the plea of invalidity has not yet been filed the court can still examine validity at the interlocutory stage in terms of Section 124(5).
The court drew a clear distinction between the three provisions dealing with evidence of distinctiveness. The proviso to Section 9(1) requires distinctiveness as on the date of the application. Section 31(2) extends this by allowing evidence of distinctiveness from the date of the application up to the actual date of registration. Section 32 allows evidence of distinctiveness post registration but only in cancellation proceedings before the Registrar or Appellate Board and not in infringement proceedings before a civil court. Therefore evidence of use by Marico between 2005 and 2009 could not be considered to justify the validity of the registration.
Even assuming the registration to be valid Agro Tech was fully entitled to use the expression “WITH LOW ABSORB TECHNOLOGY” under Section 30(2)(a) as a descriptive indication of the quality and intended purpose of its product. The court noted that Section 30(2)(a) unlike Section 35 does not require proof of bona fides separately because the very act of using a purely descriptive expression in relation to the goods is inherently bona fide.
On passing off the court held that Marico could claim no exclusive right in the unregistered mark “LOW ABSORB” since it is a generic and descriptive expression. The prominent use of Agro Tech’s own independent trademark “Sundrop” and the entirely different colour scheme of the packaging made it impossible to conclude that there was any misrepresentation or likelihood of confusion in the market.

Reasoning of the Court

The court’s reasoning throughout this judgment is directed at one central concern which is the tendency of traders to appropriate common descriptive words and expressions as trademarks and then use their registration to shut out competitors from using those words even in a purely descriptive sense.

The court observed that when a person registers a minor variation of a purely descriptive word and then claims that the plain English version of that word is deceptively similar to the registered mark the result is an absurdity. What the law does not permit directly it ought not to permit indirectly. A trader who succeeds in registering a tweaked form of a descriptive word cannot thereby monopolise the use of the straightforward descriptive version of that same word by other traders who are merely describing the qualities of their products.

On the question of distinctiveness the court laid down that descriptive trademarks require a far higher threshold of evidence to establish distinctiveness compared to arbitrary or invented marks. An invented mark achieves distinctiveness through ordinary use over time. A descriptive mark on the other hand can only claim distinctiveness if it has been used undisturbed for a very long period of many years and has in that time come to be associated exclusively with one source in the minds of the public. Seven years of use since 2001 was held to be clearly insufficient to meet this standard particularly when the sales figures relied upon by Marico were referable also to its prominent brands Sweekar and Saffola and not necessarily to the marks LOSORB and LO-SORB alone.

The court also addressed the question of Agro Tech having previously used the “TM” symbol after the expression “LOW ABSORB TECHNOLOGY” and held that this past conduct did not erase Agro Tech’s statutory defences. Once those statutory defences under Sections 30(2)(a) and 35 were available the prior use of “TM” was not enough to disentitle Agro Tech from relying on them.

Doctrinal Significance

This judgment is one of the important decisions from the Delhi High Court on the law of descriptive trademarks and the limits of protection that registration can confer on such marks.

The judgment makes it absolutely clear that registration of a trademark does not grant an unqualified monopoly. Where the registered mark is inherently descriptive the registrant must accept that others in the trade have a right to use the same words to describe their products and that registration will not shield the registrant from this consequence.

The court’s reconciliation of the proviso to Section 9(1) with Sections 31(2) and 32 is an important contribution to the understanding of how evidence of distinctiveness operates across different proceedings. The ruling that post-registration evidence of use can only be considered in cancellation proceedings and not in infringement proceedings in a civil court is a significant clarification that had not been clearly laid down before.

The judgment also reinforces the point that courts at the interlocutory stage are not bound to grant injunction merely because a trademark is registered. The prima facie validity of registration is always open to scrutiny at the interim stage and a court can and must examine whether the registration is genuinely valid before deciding whether to grant an injunction that could put a competitor out of the market.

For brand owners and trademark practitioners in India this case is a reminder that choosing a descriptive word or expression as a trademark is a decision that carries real risk. The protection available to such marks is limited and courts will not allow the trademark system to be used as a tool to corner ordinary English words that other traders in the same field legitimately need to use to describe their products.

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