Raj Kumar Prasad & Anr. v. Abbott Healthcare Pvt. Ltd.

Decided: 10 September 2014 FAO(OS) 281/2014 Bench: Hon’ble Mr. Justice Pradeep Nandrajog & Hon’ble Ms. Justice Mukta Gupta

Background

Abbott Healthcare Pvt. Ltd. is a wholly owned subsidiary of Abbott Laboratories, Chicago and is engaged in the manufacture and sale of pharmaceutical products in India. The trademark ‘ANAFORTAN’ had originally been used by Khandelwal Laboratories Pvt. Ltd. in relation to Camylofin Dihydrochloride formulations since the year 1988 and Khandelwal held a valid registration of the mark under Serial No. 501608 in Class 5 in respect of medicinal and pharmaceutical veterinary preparations. On April 15, 2008, Khandelwal entered into a Brand Transfer and Know How License Agreement with Nicholas Piramal India Ltd., under which the trademark ‘ANAFORTAN’ was assigned to Nicholas. On May 13, 2008, Nicholas Piramal India Ltd. changed its name to Piramal Healthcare Ltd. and subsequently to Piramal Enterprises Ltd. On September 8, 2010, Piramal assigned the trademark ‘ANAFORTAN’ to Abbott Healthcare Pvt. Ltd., through which chain of assignments Abbott claimed to have inherited the goodwill and reputation in the mark that had been built up since 1988.

Abbott contended that since September 2010 it had been extensively using the trademark ‘ANAFORTAN’ in the market and had sold pharmaceutical products under the mark worth Rs. 7.84 crores between September and December 2010 and Rs. 23.047 crores between January and December 2011, demonstrating the substantial commercial value and consumer recognition associated with the mark.

The first appellant, Raj Kumar Prasad, was carrying on business as the sole proprietor of Birani Pharmaceuticals and was selling pharmaceutical products containing Camylofin Dihydrochloride the same active compound as that used in Abbott’s ‘ANAFORTAN’ under the brand name ‘AMAFORTEN’. The second appellant, Alicon Pharmaceuticals Pvt. Ltd., was manufacturing the medicinal preparations for Raj Kumar Prasad to be sold under the mark ‘AMAFORTEN’. Abbott alleged that Raj Kumar Prasad had surreptitiously obtained registration of the mark ‘AMAFORTEN’ vide Registration No. 1830060 under Class 5, applied for on June 17, 2009 and granted on July 12, 2011. Abbott indicated its intention to file rectification proceedings against this registration. An additional grievance concerned trade dress: Abbott alleged that Raj Kumar Prasad had slavishly imitated its golden coloured tablet strips by adopting a similar golden colour for his product packaging.

Abbott filed a suit before the Delhi High Court seeking a permanent injunction restraining the appellants from selling pharmaceutical preparations under the trademark ‘AMAFORTEN’ or any other mark deceptively similar to ‘ANAFORTAN’ and from using packaging similar to that of Abbott. Simultaneously, Abbott applied for an interim injunction under IA No. 23086/2012. The learned Single Judge granted the interim injunction by order dated April 25, 2014, restraining the defendants from selling products under the trademark ‘AMAFORTEN’ or any other mark deceptively similar to ‘ANAFORTAN’, finding ex-facie phonetic and visual deceptive similarity between the two marks. The Single Judge did not return a finding on the trade dress issue. The appellants challenged this order before the Division Bench in FAO(OS) 281/2014, raising the central legal question of whether a registered proprietor of a trademark can sue another registered proprietor of a trademark alleging deceptive similarity.

Issues for Determination

Whether a registered proprietor of a trademark is entitled to maintain a suit for infringement against another registered proprietor of a trademark on the ground of deceptive similarity between the two marks, having regard to the protection conferred upon registered proprietors under Section 28(3) of the Trade Marks Act, 1999.
Whether Section 28(3) of the Trade Marks Act, 1999, which confers mutual rights upon two or more registered proprietors of identical or nearly resembling trademarks as against third parties but not as against each other, operates as an absolute bar to a suit for infringement between two registered proprietors of deceptively similar marks.
How Section 124 of the Trade Marks Act, 1999 which contemplates suits for infringement involving challenges to the validity of the plaintiff’s or defendant’s trademark registration and provides for interlocutory orders during the stay of the suit bears upon and qualifies the rights conferred under Section 28(3) and how the two provisions are to be read harmoniously.
Whether the Delhi High Court had prima facie territorial jurisdiction to entertain the suit, given the appellants’ denial that they sold products in Delhi and whether Abbott’s branch office for sales in Delhi sufficed to establish prima facie jurisdiction at the interim stage.
Whether the appellants’ plea that the assignment deeds in the chain of title leading to Abbott’s ownership of ‘ANAFORTAN’ were drawn on stamp papers of inadequate value had been sufficiently substantiated so as to undermine Abbott’s prima facie title to the mark at the interim stage.
Whether the trademark ‘AMAFORTEN’ was ex-facie phonetically and visually deceptively similar to Abbott’s registered trademark ‘ANAFORTAN’, having regard to the nature of the competing goods, the class of goods, the consumer base and the trade channels involved.
Whether the interim injunction granted by the Single Judge by order dated April 25, 2014 disclosed any infirmity when tested against the principles laid down by the Supreme Court in Wander Ltd. & Anr. v. Antox India P. Ltd., 1990 (Supp.) SCC 727, governing the appellate review of interlocutory orders.

Key Holdings of the Court

The Division Bench affirmed the consistent view of learned Single Judges of this Court that a suit filed by a registered proprietor of a trademark against another registered proprietor of a deceptively similar trademark is maintainable and that by way of an interim injunction the defendant can be restrained from marketing goods under the offending trademark.
The court held that Section 28(3) of the Trade Marks Act, 1999, while conferring mutually exclusive rights upon two or more registered proprietors of identical or nearly resembling marks such that none can sue the other merely by virtue of registration does not operate as an absolute bar to a suit for infringement between registered proprietors. The court held that Section 28(3) must be read harmoniously with Section 124 of the Trade Marks Act, 1999, in accordance with the principle that every attempt must be made, as long as the language of the statute permits, to give effect to every phrase and sentence used by the legislature and to iron out apparent conflicts by interpreting provisions harmoniously.
The court held that Section 124 of the Trade Marks Act, 1999 clearly contemplates a suit for infringement between parties where the validity of one party’s trademark registration is questioned and that Sub-Section 5 of Section 124 expressly empowers the court to pass interlocutory orders including injunctions even during the pendency of a stay of the suit for the purposes of rectification proceedings. This provision would be rendered otiose if a registered proprietor were absolutely barred from suing another registered proprietor, confirming that such suits are maintainable.
The court affirmed the Single Judge’s finding on territorial jurisdiction, agreeing that Abbott’s branch office for sales in Delhi established prima facie territorial jurisdiction at the interim stage, pending evidence to be led at trial.
The court affirmed the Single Judge’s finding that the appellants had not substantiated their plea of inadequate stamp duty on the assignment deeds in any particular manner and therefore this ground did not undermine Abbott’s prima facie title.
The court held that there was ex-facie visual and phonetic deceptive similarity between the trademark ‘AMAFORTEN’ and Abbott’s trademark ‘ANAFORTAN’, taking into account that the competing goods were pharmaceutical preparations in the same class, sold to the same consumer base through the same trade channels. The court noted that through its predecessors-in-interest Abbott had been in the market since 1988, while the appellant entered the market with ‘AMAFORTEN’ only around 2012 and had consciously refrained from disclosing the date of commencement of sales in its written statement.
The Division Bench found no infirmity in the order of the learned Single Judge dated April 25, 2014 when tested against the principles laid down by the Supreme Court in Wander Ltd. & Anr. v. Antox India P. Ltd., 1990 (Supp.) SCC 727 and accordingly dismissed the appeal with costs payable by the appellants to Abbott.

Statutory Provisions Involved

Section 28(1) of the Trade Marks Act, 1999 confers upon the registered proprietor of a trademark the exclusive right to use the mark in relation to the goods or services in respect of which it is registered and to obtain relief in respect of infringement in the manner provided by the Act. Abbott’s infringement claim was grounded upon the exclusive rights conferred by this provision, inherited through the chain of assignments from Khandelwal Laboratories to Piramal to Abbott.

Section 28(2) of the Trade Marks Act, 1999 provides that the exclusive right to use a trademark conferred under Sub-Section (1) is subject to any conditions and limitations to which the registration is subject, qualifying the absolute nature of the right conferred.

Section 28(3) of the Trade Marks Act, 1999 provides that where two or more persons are registered proprietors of trademarks that are identical with or nearly resemble each other, the exclusive right to use any of those marks shall not be deemed to have been acquired by any one of those persons as against any other of those persons merely by registration of the trademarks, but each of those persons has otherwise the same rights as against persons other than registered users. This provision was the central basis of the appellants’ defence, which contended that as registered proprietors of ‘AMAFORTEN’ they could not be sued by Abbott for infringement.

Section 124 of the Trade Marks Act, 1999 governs the procedure in suits for infringement where the validity of the registration of either party’s trademark is questioned. Sub-Section (1) provides for a stay of the suit to enable the concerned party to apply for rectification before the Registrar or the Appellate Board. Sub-Section (5), which was given decisive weight by the Division Bench, provides that the stay of a suit for infringement shall not preclude the court from making any interlocutory order, including an order granting an injunction, during the period of the stay. The court’s harmonious reading of Section 28(3) and Section 124 was the doctrinal centrepiece of the judgment.

Reasoning of the Court

The Division Bench approached the appeal against the backdrop of a recurring question in this Court: whether a registered proprietor of a trademark can sue another registered proprietor of a deceptively similar trademark. The court noted that the consistent view of learned Single Judges had been that such a suit was maintainable and that the present appeal required the Division Bench to examine whether this position was correct as a matter of statutory interpretation.

The court began its analysis by acknowledging the apparent conflict between Section 28(3) and Section 124. A plain reading of Section 28(3) appeared to suggest that two registered proprietors of identical or nearly resembling marks held mutually exclusive rights as against third parties but no enforceable rights as against each other by virtue of registration alone. If taken in isolation, this provision would have supported the appellants’ argument that Abbott could not maintain an infringement suit against them as fellow registered proprietors.

However, the court invoked the cardinal principle of statutory interpretation that every attempt must be made, as long as the language of the statute permits, to give effect to every phrase and sentence used by the legislature and that where an apparent conflict emerges between two provisions, the duty of the court is to iron out the creases and interpret them harmoniously. Applying this principle, the court examined Section 124 and found that it unmistakably contemplated the filing and prosecution of infringement suits between parties where the validity of one party’s trademark registration was under challenge. Sub-Section (5) of Section 124 specifically empowered the court to grant interlocutory injunctions even during the stay of the suit for rectification proceedings. This sub-section would be entirely deprived of operative meaning if a registered proprietor were absolutely barred by Section 28(3) from suing another registered proprietor for there could be no interlocutory order in a suit that was not maintainable at all. The harmonious reading of both provisions therefore led to the conclusion that Section 28(3) did not impose an absolute bar but only governed the inter se rights of registered proprietors in the context of a valid suit.

On the facts, the court found that ex-facie visual and phonetic deceptive similarity existed between ‘AMAFORTEN’ and ‘ANAFORTAN’. The court observed the material identity of the active pharmaceutical ingredient, the identical class of goods, the same consumer base and the same trade channels all factors that heightened the risk of confusion in the market. The court further noted that Abbott’s predecessor had been in the market since 1988 while the appellants had entered only around 2012 and found it significant that the appellants had deliberately not disclosed in their written statement the exact date on which they commenced selling their product, an omission the court drew an adverse inference from.

The court affirmed, on the basis of the Supreme Court’s test in Wander Ltd. v. Antox India P. Ltd., that the appellate court should not interfere with the exercise of discretion by the learned Single Judge in granting an interim injunction unless the Single Judge had acted on a wrong principle of law, ignored relevant material, took into account irrelevant matters or the decision was plainly wrong. Finding no such infirmity, the Division Bench dismissed the appeal with costs.

Doctrinal Significance

The judgment in Raj Kumar Prasad & Anr. v. Abbott Healthcare Pvt. Ltd. is a significant appellate authority on the long-contested question of whether two registered proprietors of deceptively similar trademarks can sue each other for infringement under the Trade Marks Act, 1999. While the question had been consistently answered in the affirmative by learned Single Judges of the Delhi High Court, the Division Bench’s endorsement of that position and its reasoned statutory analysis lends it greater precedential weight and doctrinal clarity.

The most enduring contribution of the judgment lies in its harmonious reading of Section 28(3) and Section 124 of the Trade Marks Act, 1999. The court’s reasoning that Section 28(3) cannot be read in isolation as an absolute bar to suits between registered proprietors, because such a reading would render Sub-Section (5) of Section 124 entirely otiose, is a sound and coherent application of the principle of harmonious construction. This interpretive framework resolves what had appeared to be an irreconcilable conflict between two provisions of the same statute and provides courts with a principled basis for entertaining infringement suits between registered proprietors, subject to the procedural safeguards of Section 124 including the stay for rectification proceedings.

The judgment also reinforces the principle, well established in Indian trademark jurisprudence, that the registration of a mark does not confer immunity from an infringement action where the mark has been obtained in circumstances suggesting bad faith or deceptive similarity with an older and better-established mark. The court’s observations regarding the appellants’ conscious failure to disclose the date of commencement of sales, read alongside its finding that ‘AMAFORTEN’ was registered only in 2011 while ‘ANAFORTAN’ had been in the market since 1988, signal that courts will scrutinise with care the conduct of a defendant who enters the market with a mark that closely resembles one with a long and well-established commercial history.

The pharmaceutical context of the dispute adds further significance to the judgment. The court’s emphasis on the identity of the active compound, the same class of goods, the same consumer base and the same trade channels reflects the heightened standard of care that courts apply in evaluating deceptive similarity in pharmaceutical trademark disputes, where the risk of confusion can have consequences not only for the commercial interests of the trademark proprietor but also for patient safety. This contextual sensitivity is consistent with the broader approach of Indian courts in pharmaceutical trademark litigation.

Finally, the Division Bench’s application of the Wander v. Antox standard for appellate review of interlocutory orders serves as a useful reminder of the high threshold that an appellant must clear to disturb an interim injunction granted by a Single Judge in trademark matters. By affirming that appellate interference is warranted only where the Single Judge has acted on a wrong principle, ignored relevant material or taken an irrelevant consideration into account, the court reinforced the principle that the discretion of the court of first instance in granting or refusing interim injunctions in trademark cases is entitled to considerable deference.

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