Durga Dutt Sharma v. Navaratna Pharmaceutical Laboratories

Kaviraj Pandit Durga Dutt Sharma v. Navaratna Pharmaceutical Laboratories

Supreme Court of India | N. Rajagopala Ayyangar, P.B. Gajendragadkar CJ & J.C. Shah JJ. | 20 October 1964 1965 AIR 980 | 1965 SCR (1) 737 | Civil Appeals Nos. 522 and 523 of 1962

Background

Navaratna Pharmaceutical Laboratories (respondent) is a firm carrying on business at Ernakulam since 1926, manufacturing medicinal products under the name and style “Navaratna Pharmacy” later changed to “Navaratna Pharmaceutical Laboratories” from January 1945. From the very beginning, the respondent used the trade mark “Navaratna” on its pharmaceutical products. In December 1928, the word “Navaratna” and the name “Navaratna Pharmacy” were registered by declaration of ownership before the Registrar of Assurances, Calcutta. The respondent subsequently registered “Navaratna” and “Navaratna Pharmaceutical Laboratories” as trade marks under the Cochin Trade Marks Act in 1947 and 1948 respectively. After the Trade Marks (Amendment) Act, 1946 enabled reciprocal recognition of trade marks registered in Indian States, the respondent applied for registration of “Navaratna Pharmaceutical Laboratories” in the Trade Marks Registry at Bombay, which was granted without opposition.

Kaviraj Pandit Durga Dutt Sharma (appellant) carried on business at Jullundur City in the preparation of Ayurvedic pharmaceutical products under the name “Navaratna Kalpa Pharmacy” and sold medicines under the name “Navaratna Kalpa.” In October 1946, the appellant applied for registration of the words “Navaratna Kalpa” as a trade mark. This application was opposed by the respondent on the ground that “Navaratna” was a descriptive word incapable of registration. The opposition prevailed and registration was refused. The appellant then moved the Registrar of Trade Marks to remove the respondent’s trade marks “Navaratna” and “Navaratna Pharmaceutical Laboratories” from the register.

Meanwhile, the respondent filed a suit in the District Court, Anjikimal, seeking a permanent injunction restraining the appellant from advertising or selling any preparations under a trade mark containing the word “Navaratna.” The Registrar directed the appellant to move the High Court for rectification of the register. The appellant accordingly filed Original Petition No. 19 of 1952 in the High Court of Travancore-Cochin. Both the suit and the Original Petition were heard together by the High Court.

The District Court decreed the suit in the respondent’s favour with respect to the trade mark “Navaratna Pharmaceutical Laboratories,” finding: (i) the appellant was not guilty of passing off given the distinct packing and get-up; (ii) the word “Navaratna” alone was a common Ayurvedic term incapable of exclusive appropriation; but (iii) the composite mark “Navaratna Pharmaceutical Laboratories” had through long use since 1926 acquired factual distinctiveness and was validly registered under the proviso to Section 6(3) of the Trade Marks Act, 1940. The High Court confirmed these findings. Both appeals came to the Supreme Court by special leave.

Issues for Determination

Whether the trade mark “Navaratna Pharmaceutical Laboratories” was validly registered under the Trade Marks Act, 1940, despite the word “Navaratna” being a descriptive word in common use in Ayurvedic trade specifically, whether the proviso to Section 6(3) of the Act permitted registration of an “old mark” used continuously since before 25 February 1937 on the basis of acquired factual distinctiveness, even where the mark would otherwise be disqualified under Section 6(1)(d) for having a direct reference to the character or quality of goods.
Whether the finding that the respondent’s mark was validly registered was inconsistent with the finding that “Navaratna” was a descriptive word in which the respondent could claim no exclusive right.
What is the correct legal distinction between an action for infringement of a registered trade mark and an action for passing off in particular, what role does the defendant’s packing, get-up and label play in each action?
Whether the marks “Navaratna Pharmaceutical Laboratories” and “Navaratna Pharmacy/Navaratna Kalpa Pharmacy” were deceptively similar within the meaning of Section 21 of the Trade Marks Act, 1940.
Whether the finding of deceptive similarity in the infringement action was inconsistent with the finding that the appellant’s packing and get-up were not likely to cause confusion the basis for rejecting the passing off claim.

Key Holdings of the Court

Acquired distinctiveness under the proviso to Section 6(3) can save a mark otherwise disqualified under Section 6(1)(d). The court held that a mark which is “not adapted to distinguish” under the tests in Sections 6(1) and 6(2) can still qualify for registration by proof of acquired factual distinctiveness, provided it has been continuously used from a date prior to 25 February 1937. To hold otherwise would render the proviso otiose it would add nothing to the section and would place old marks and new marks on the same footing, contrary to the evident legislative purpose of giving special treatment to old marks.
“Acquired distinctiveness” in the proviso means factual distinctiveness in the market, not the abstract test of “adapted to distinguish.” The court rejected the argument that “distinctiveness” in the proviso must be read back into the definition in Section 6(2) which defines it as “adapted to distinguish.” Such a construction would make the proviso meaningless. The proviso creates an exception: old marks need not satisfy the standard tests of distinctiveness if they have in fact become associated exclusively with the goods of the applicant through long user.
Proof of user is not ipso jure proof of acquired distinctiveness. The court affirmed that mere user alone, without evidence of factual association in the market, would not suffice. A mark might have been used before the specified date but still fail to qualify if it has not acquired the degree of distinctiveness which the Registrar considers sufficient. Here, however, concurrent findings of both courts established that through user from 1926 onwards the mark “Navaratna Pharmaceutical Laboratories” had become exclusively associated in the market with the respondent’s products.
The findings regarding validity and descriptiveness of “Navaratna” are not inconsistent. The court held that while “Navaratna” alone may be a descriptive word incapable of exclusive appropriation, the composite mark “Navaratna Pharmaceutical Laboratories” acquired distinctiveness through long combined use the whole being greater than the sum of its parts. The court further held that the appellant could not insist on a disclaimer of “Navaratna” in the registered mark since no prayer for disclaimer had been made before the courts below. The entire registered mark including the word “Navaratna” had to be compared with the appellant’s mark.
Action for infringement of a registered trade mark and action for passing off are fundamentally different. This is the most significant jurisprudential contribution of the case. The court held: (a) a passing off action is a common law remedy in substance an action for deceit; its gist is a misrepresentation that leads to the defendant’s goods being passed off as those of the plaintiff; (b) an infringement action is a statutory remedy under Section 21 of the Act, giving the registered proprietor an exclusive right to the trade mark and a statutory remedy to vindicate it; (c) while use of the defendant’s mark is not essential in a passing off action, it is the sine qua non of an infringement action; (d) in an infringement action, once the essential features of the plaintiff’s mark have been adopted by the defendant, the fact that the defendant’s packing, get-up, labelling or other surrounding matter clearly distinguishes the trade origin of his goods is immaterial; (e) in a passing off action, by contrast, the defendant may escape liability by showing that the added matter is sufficient to distinguish his goods from the plaintiff’s.
The finding of deceptive similarity and the finding of no passing off are not inconsistent. The court held there was no inconsistency in finding the marks deceptively similar for purposes of infringement while simultaneously finding no passing off on account of dissimilar packing. These are two separate causes of action governed by different legal tests. The packing and get-up evidence was directly relevant to passing off but played only a limited role in the infringement action.
The test for infringement is deceptive similarity of the marks as wholes. Where the marks are not identical, the plaintiff must establish that the defendant’s mark so nearly resembles the plaintiff’s registered mark as to be likely to deceive or cause confusion. Resemblance may be phonetic, visual or in the basic idea. The object is to determine whether the mark used by the defendant as a whole is deceptively similar to the plaintiff’s registered mark. Common elements must not be disregarded; the marks must be compared as wholes. Deceptive similarity is a question of fact; the degree of resemblance required is incapable of objective definition.
Appeals dismissed. The concurrent findings of both lower courts on acquired distinctiveness and deceptive similarity were upheld. The respondent’s registration was valid and the injunction was confirmed.

Statutory Provisions Involved

Section 6(1), Trade Marks Act, 1940 sets out the positive qualifications for registrability of a trade mark, including the requirement under clause (d) that the mark must not have “a direct reference to the character or quality of the goods” and must not be a geographical name, surname or name of a sect, caste or tribe. Clause (e) permits registration of “any other distinctive mark.”
Section 6(2), Trade Marks Act, 1940 defines “distinctive” as “adapted, in relation to the goods in respect of which a trade mark is proposed to be registered, to distinguish goods with which the proprietor of the trade mark is or may be connected in the course of trade from goods in the case of which no such connection subsists.”
Section 6(3) and its proviso, Trade Marks Act, 1940 provides that in determining whether a mark is “adapted to distinguish,” the tribunal may consider both inherent adaptability and factual distinctiveness through use. The crucial proviso states that in the case of a mark continuously used from before 25 February 1937, the Registrar shall not refuse registration by reason only of the fact that the mark is not adapted to distinguish and may accept evidence of “acquired distinctiveness” as entitling the mark to registration.
Section 13, Trade Marks Act, 1940 empowers the High Court to order a disclaimer of exclusive rights to a part of a registered mark.
Section 20, Trade Marks Act, 1940 restricts proceedings to prevent infringement of unregistered trade marks to marks in continuous use since before 25 February 1937 for which an application for registration has been refused; preserves the common law right of action for passing off.
Section 21, Trade Marks Act, 1940 the substantive provision on infringement, giving the registered proprietor the exclusive right to use the mark in relation to registered goods and the right to sue for infringement where another person uses the same or a deceptively similar mark.

Reasoning of the Court

On the proviso to Section 6(3), the court undertook a careful purposive analysis. The appellant’s argument was that “distinctiveness” in the proviso must mean the same thing as “adapted to distinguish” as defined in Section 6(2), which would render the proviso incapable of saving any mark disqualified under Section 6(1)(d). The court rejected this reasoning as self-defeating: a construction that renders a statutory provision otiose and meaningless cannot be accepted. The proviso was enacted precisely to give old marks those in use since before 25 February 1937 a path to registration through factual acquired distinctiveness, even if they could not satisfy the abstract tests of “inherent adaptability.” Proof of user is not by itself proof of acquired distinctiveness; the Registrar must be satisfied that the mark has in fact become associated exclusively with the applicant’s goods. On the facts, concurrent findings on this point were not challengeable before the Supreme Court.

On the distinction between infringement and passing off, the court drew a fundamental line. Passing off is a common law tort grounded in deceit its gist is that the defendant’s conduct, through misrepresentation, causes consumers to believe his goods are those of the plaintiff. In such an action, evidence of packing, get-up, labelling and surrounding matter is directly relevant: if these features sufficiently distinguish the defendant’s goods, no confusion arises and the action fails. Infringement, by contrast, is a statutory tort. The registered proprietor has a property right in the mark which the statute protects. Once it is established that the defendant is using, in the course of trade, a mark identical with or deceptively similar to the plaintiff’s registered mark judged by comparing the marks as wholes the statutory right is violated regardless of whether the defendant’s get-up, packing or other distinguishing features would prevent actual consumer confusion. The use of the mark itself is the wrong in infringement; the surrounding packaging does not cure it. This explains why the two findings below no passing off because of distinct packing, but infringement because of deceptively similar marks were not inconsistent.

On deceptive similarity, the court affirmed the test of comparing the marks as wholes, including all their features, even those in common use in the trade. Since no disclaimer had been sought by the appellant in the courts below, the entire registered mark “Navaratna Pharmaceutical Laboratories” including the word “Navaratna” had to be compared with “Navaratna Pharmacy/Navaratna Kalpa Pharmacy.” The court endorsed the principle that where common marks are included in the marks to be compared, the proper course is to look at the marks as wholes without disregarding the common parts.

Doctrinal Significance

Definitive articulation of the distinction between trade mark infringement and passing off. This case is one of the most frequently cited authorities in Indian intellectual property law for the fundamental difference between these two causes of action. The court’s holding that get-up, packing and distinguishing matter on packaging is immaterial to an infringement action but directly relevant to a passing off action has been consistently applied by courts at all levels, including the Supreme Court in Cadila Healthcare v. Cadila Pharmaceuticals (2001) and S.M. Dyechem v. Cadbury (2000).
Infringement is a statutory wrong requiring only deceptive similarity of the marks not consumer confusion from surrounding features. The case establishes that in an infringement action the plaintiff need only show deceptive similarity of the marks themselves; it is no defence that the defendant’s overall packaging, labelling or get-up clearly distinguishes the trade origin. This principle has profound consequences for the scope of registered trade mark protection.
Acquired factual distinctiveness as a ground for registration of old descriptive marks. The case is a leading authority on the proviso to Section 6(3) of the Trade Marks Act, 1940 and its counterparts in successor legislation establishing that a mark which fails the standard “adapted to distinguish” test can qualify for registration if it has in fact become exclusively associated with the applicant’s goods through long use from before the specified date.
Marks must be compared as wholes including common elements. The endorsement of the principle that common elements cannot be carved out and ignored when comparing marks is a foundational statement of the “whole mark” approach in Indian trade mark law, consistently applied since.
Concurrent findings on questions of fact deceptive similarity and acquired distinctiveness will not be disturbed in second appeal. The case reinforces the appellate principle that where two courts below have concurrently found deceptive similarity or acquired distinctiveness and no error of law is identified in the tests applied, the Supreme Court will not re-examine those findings of fact.