Nandhini Deluxe v. Karnataka Co-operative Milk Producers Federation Ltd.

Supreme Court of India | Decided: 26 July 2018 Civil Appeal Nos. 2937–2942 & 2943–2944 of 2018 Bench: Hon’ble Mr. Justice A.K. Sikri & Hon’ble Mr. Justice Ashok Bhushan Citation: AIR 2018 SC 3516 | (2018) 9 SCC 183

Background

Karnataka Co-operative Milk Producers Federation Limited, the respondent, is a cooperative federation of milk producers of Karnataka. It adopted the trade mark NANDINI in the year 1985 for milk and milk products and obtained registration of this mark under Class 29 and Class 30 of the Trade Marks Rules, 2002. Over the years the respondent built up substantial goodwill in the mark NANDINI, which became associated in the public mind with its milk and milk products, sold in bottles, sachets, tetra packs, polythene containers and other packaging, with the device of a standing cow on a grass land having a rising sun in the background.

M/s Nandhini Deluxe, the appellant, is in the business of running vegetarian and non-vegetarian Andhra style restaurants. It adopted the trade mark NANDHINI in the year 1989 for use in its restaurant business and had opened as many as six branches across Bangalore under this mark. The appellant applied for registration of the mark NANDHINI DELUXE WITH LOGO in Kannada in respect of various foodstuff items sold in its restaurants falling under Class 29 and Class 30, as well as other classes. The mark as used by the appellant differed visually from that of the respondent the appellant’s mark incorporated a lamp device, the words NANDHINI DELUXE and the phrase “the real spice of life,” whereas the respondent’s mark consisted of the word NANDINI in a distinct style, encircled by an egg-shaped border with a cow device beneath the word.

The respondent opposed the appellant’s application for registration, contending that the mark NANDHINI was deceptively similar to its own mark NANDINI, likely to cause confusion among the public and that the respondent had exclusive rights in the mark by reason of its long and sustained use and the distinctiveness it had acquired. The Deputy Registrar of Trade Marks rejected the respondent’s opposition and allowed the appellant’s application by order dated 13 August 2007, subject to the direction that the appellant delete milk and milk products from the specification of goods, since the respondent had proved it was a well-established dairy products producer using the mark exclusively for milk and milk products.

The respondent appealed to the Intellectual Property Appellate Board. By an order dated 20 April 2010, a Bench of the IPAB dismissed the respondent’s appeal, applying the principle from Vishnudas Trading v. Vazir Sultan Tobacco Co. Ltd. that a proprietor cannot enjoy monopoly over an entire class of goods when it actually trades only in some specific goods within that class. However, in proceedings on other appeals involving the same parties on the same issue, a Coordinate Bench of the IPAB by order dated 4 October 2011 allowed the respondent’s appeals, held that NANDINI was a well-known trade mark and a household name in Karnataka, that the word NANDHINI had acquired distinctiveness associated exclusively with the respondent and that the use of an identical mark in respect of goods in the same class would cause confusion among average consumers. The IPAB cancelled the registration granted to the appellant. The appellant filed writ petitions before the High Court of Karnataka which were dismissed by the impugned judgment dated 2 December 2014, affirming the IPAB’s reasoning and conclusions. The appellant then preferred these appeals before the Supreme Court.

Issues for Determination

1. Whether the trade mark NANDHINI as used by the appellant in respect of foodstuff items sold in its restaurants was deceptively similar to the registered trade mark NANDINI of the respondent in respect of milk and milk products, so as to be likely to cause confusion or deception among the public within the meaning of Sections 9 and 11 of the Trade Marks Act, 1999.
2. Whether registration of a trade mark in respect of certain specific goods within a broad class can be refused or cancelled on the ground that another proprietor holds a well-known or distinctive mark under the same broad class of goods, even though the actual goods of the two proprietors within that class are entirely different from each other.
3. Whether the respondent’s mark NANDINI satisfied the requirements of a well-known trade mark under Section 11(2) of the Trade Marks Act, 1999 and specifically whether the use of the appellant’s mark NANDHINI in respect of its restaurant goods would take unfair advantage of or be detrimental to the distinctive character or repute of the respondent’s mark.
4. Whether the principle that a proprietor of a registered trade mark cannot claim monopoly over an entire broad class of goods when it actually uses its mark only in respect of specific goods within that class, as laid down in Vishnudas Trading v. Vazir Sultan Tobacco Co. Ltd., applied to the facts of this case so as to permit registration of NANDHINI in favour of the appellant for goods other than milk and milk products.
5. Whether the IPAB’s order dated 4 October 2011 was vitiated by its failure to take into account or give effect to the earlier order dated 20 April 2010 passed by a Coordinate Bench of the IPAB between the same parties on the same issue and whether the principle of issue estoppel applied.

Key Holdings of the Court

1. The Supreme Court allowed the appeals and set aside the orders of the IPAB dated 4 October 2011 and the impugned judgment of the High Court. The order of the Deputy Registrar of Trade Marks granting registration to the appellant was restored, subject to the modification that registration would not be granted in respect of milk and milk products, for which the appellant had abandoned its claim.
2. The court held that the two marks NANDHINI DELUXE WITH LOGO as used by the appellant and NANDINI as used by the respondent were not deceptively similar when considered in their totality. While there was a phonetic similarity between the words NANDHINI and NANDINI, the visual appearance, style, device, accompanying words and the overall commercial impression of the two marks were altogether different. The appellant’s mark incorporated a lamp device, the word Deluxe and the phrase “the real spice of life,” while the respondent’s mark used a cow device in a distinct style with no prefix or suffix. A bare perusal of the two marks showed that they were not similar when seen as a whole.
3. The court held that the goods of the appellant and the respondent, though falling within the same broad class numbers, were entirely different in nature. The respondent produced and sold only milk and milk products, while the appellant’s goods meat, fish, poultry and game, meat extracts, preserved fruits and vegetables, edible oils, salad dressings, preserves and related items were entirely distinct from milk products. The appellant had already agreed not to claim registration for milk and milk products. An average man of ordinary intelligence would not associate the goods sold by the appellant in its restaurants with the milk and milk products of the respondent.
4. Applying the principle from Vishnudas Trading v. Vazir Sultan Tobacco Co. Ltd., the court held that the respondent could not claim monopoly over the entirety of Classes 29 and 30 merely because its registered mark fell within those classes. A proprietor who actually uses its mark in respect of only some specific goods within a broad class and has no bona fide intention to trade in other goods within that class cannot prevent registration of a similar mark by another person in respect of those other distinct goods within the same class. The High Court’s reasoning that goods of the appellant and respondent fell in the same class and therefore registration must be refused was held to be contrary to this settled principle.
5. The court held that not all the ingredients necessary for the application of Section 11(2) of the Trade Marks Act, 1999 were satisfied. Section 11(2) requires that the registered mark be a well-known mark in India, that the use of the later mark be without due cause and that such use would take unfair advantage of or be detrimental to the distinctive character or repute of the registered mark. The court found that the appellant had adopted its mark in 1989, shortly after the respondent began using its mark in 1985 and that no material had been produced to show that by 1989 the respondent’s mark had already acquired the required level of distinctiveness within those four years. The case appeared to the court to be one of concurrent use of the trade mark by the appellant.
6. The court noted that the IPAB’s order dated 4 October 2011 had ignored its own earlier coordinate bench order dated 20 April 2010, which had been passed between the same parties on an identical issue and had attained finality. The court observed that this prima facie raised the issue of estoppel between the parties, though having decided the appeals on merits it did not find it necessary to make further observations on this aspect.

Statutory Provisions Involved

• Section 9 of the Trade Marks Act, 1999 provides for absolute grounds for refusal of registration. Section 9(1) prohibits registration of marks that are devoid of any distinctive character, consist exclusively of descriptive indications or have become customary in the current language or established trade practices, with a proviso that a mark shall not be refused if it has acquired distinctive character before the date of application or is a well-known trade mark. Section 9(2)(a) prohibits registration of a mark that is of such nature as to deceive the public or cause confusion.
• Section 11 of the Trade Marks Act, 1999 provides for relative grounds for refusal of registration. Section 11(1) prohibits registration of a mark where, because of its identity with an earlier trade mark and the similarity of goods or services covered or because of its similarity to an earlier trade mark and the identity or similarity of the goods or services covered, there exists a likelihood of confusion on the part of the public including the likelihood of association with the earlier trade mark. Section 11(2) provides that a trade mark which is identical with or similar to an earlier trade mark and is to be registered for goods or services that are not similar to those for which the earlier trade mark is registered, shall not be registered if the earlier trade mark is a well-known trade mark in India and the use of the later mark without due cause would take unfair advantage of or be detrimental to the distinctive character or repute of the earlier trade mark. Sections 11(6), 11(7) and 11(8) prescribe the factors to be considered in determining whether a mark is well-known and provide that a mark declared well-known by any court or Registrar shall be treated as well-known for registration purposes.
• Section 12 of the Trade Marks Act, 1999 permits the Registrar, in cases of honest concurrent use or other special circumstances, to allow registration of identical or similar marks in respect of the same or similar goods by different proprietors, subject to such conditions as the Registrar thinks fit.
• Section 18 of the Trade Marks Act, 1999 provides for applications for registration and empowers the Registrar to refuse or accept applications absolutely or subject to conditions.

Reasoning of the Court

The Supreme Court’s reasoning proceeded from a careful factual comparison of the two marks and the two businesses before applying the relevant legal principles.

On the comparison of the marks, the court noted the undisputed facts: the respondent adopted NANDINI in 1985 and the appellant adopted NANDHINI in 1989; both marks fell within Classes 29 and 30; but the goods of the two parties within those classes were entirely different. The respondent traded exclusively in milk and milk products. The appellant traded in foods served in its Andhra-style restaurants meat, fish, poultry, game, meat extracts, preserved and cooked vegetables, edible oils, salad dressings and similar items. The appellant had voluntarily agreed not to claim registration for milk and milk products. The visual appearance of the two marks was altogether different one featured a lamp device with the words NANDHINI DELUXE and the phrase “the real spice of life,” while the other featured a cow device with the single word NANDINI in a distinctive style. The court applied the test from National Sewing Thread Co. Ltd. v. James Chadwick and Bros. that the relevant question is how an average man of ordinary intelligence, looking at the trade mark, would react what association he would form and with what goods he would connect the mark. Applying this test, the court concluded that an average person of ordinary intelligence would not associate the appellant’s restaurant goods with the respondent’s milk products.

On the class-based monopoly argument, the court applied Vishnudas Trading to hold that registration of a trade mark is not absolute or perpetual over the entirety of a broad class merely because the registered proprietor falls within that class. Where a proprietor actually uses its mark in respect of only specific goods within a class and has no bona fide intention to expand to other goods within that class, it cannot claim monopoly over the entire class. The court noted that Section 11 of the Act prohibits registration in respect of similar goods or different goods in specified situations, but does not prohibit registration merely because the later mark falls within the same broad class as the earlier mark in respect of different specific goods.

On the well-known mark and Section 11(2) analysis, the court applied the four conditions identified by the Delhi High Court in Nestle India Ltd. v. Mood Hospitality Pvt. Ltd. the mark must be well-known in India, the later mark must be identical or similar, the later mark must be proposed for goods not similar to those of the earlier mark and use of the later mark must be without due cause and would take unfair advantage of or be detrimental to the earlier mark. The court found that these conditions were not cumulatively satisfied on the facts, primarily because the appellant appeared to be a concurrent user of the mark since 1989 and no evidence had been produced to show that the respondent had acquired the required level of distinctiveness within the first four years of its use by 1989 when the appellant adopted its mark. The Polaroid multi-factor test considering the strength of the mark, degree of similarity, proximity of products, likelihood of bridging the gap, actual confusion and the defendant’s good faith was also applied and found not to support the respondent’s case given the entirely different nature of the businesses.

Doctrinal Significance

This judgment makes several enduring contributions to Indian trade mark law.

The most significant is the court’s authoritative affirmation that a registered trade mark owner cannot claim monopoly over an entire broad class of goods when it actually uses its mark in respect of only specific goods within that class and has no bona fide intention to trade in other goods within that class. Applying Vishnudas Trading in the context of the Trade Marks Act, 1999, the court confirmed that this principle of limiting monopoly to the goods actually used and intended to be used applies with full force under the current legislation. The class system in the Trade Marks Rules is a classification mechanism, not a monopoly generator for an entire category. This is a practically important principle for businesses seeking to register marks in the same class as an existing registration but in respect of entirely different specific goods.

The court’s application of the totality comparison test to marks that are phonetically similar but visually and conceptually distinct confirms that the question of likelihood of confusion cannot be resolved by comparing only the verbal or phonetic elements of competing marks in isolation. The overall commercial impression of the marks as used in trade taking account of the device, style, accompanying words and the nature of the goods must be assessed as a whole. The addition of a single letter the H in NANDHINI versus NANDINI by itself cannot determine the outcome when the marks in their totality present a different impression to the average consumer.

The judgment provides important guidance on the application of Section 11(2) of the Trade Marks Act, 1999, which protects well-known marks even in respect of dissimilar goods. The court confirmed the four-condition test and made clear that all four conditions must be cumulatively satisfied before a later mark can be refused registration on this ground. Mere phonetic similarity or mere co-existence within the same broad class is insufficient without proof that the mark sought to be protected is well-known, that the use of the later mark is without due cause and that such use would actually be detrimental to the distinctive character or repute of the earlier mark.

The court’s observation that the IPAB’s coordinate bench order of 2010 which had dismissed the respondent’s appeal on the same issue between the same parties prima facie raised the principle of issue estoppel against the respondent, serves as a warning against the use of multiple rounds of proceedings to re-litigate settled issues between the same parties. While the court did not decide the estoppel issue having resolved the appeals on merits, the observation has relevance for the administration of intellectual property proceedings before the IPAB and its successor tribunals.

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