S.M. Dyechem Ltd. v. Cadbury (India) Ltd.

Supreme Court of India | M. Jagannadha Rao & Y.K. Sabharwal JJ. | 9 May 2000 AIR 2000 SC 2114 | 2000 (5) SCC 573

Background

The appellant, S.M. Dyechem Ltd., claimed to have commenced business in 1988 in food products including potato chips, potato wafers, corn-pops and preparations made of rice and rice flour. From January 1989 it began using the trade mark PIKNIK for these products and applied for registration on 17 February 1989 in three classes Class 29 (preserved/dried/cooked fruits and vegetables), Class 30 (tea, coffee, confectionery, chocolates) and Class 33 (beverages). Registration was granted on 29 July 1994 and was subsequently renewed.

The respondent, Cadbury (India) Ltd., introduced chocolates in 1998 under the mark CADBURY’S PICNIC. The respondent’s parent company had the word PICNIC registered in over 110 countries worldwide and the respondent claimed trans-border reputation and goodwill in the mark. The respondent had also held a registration for PICNIC in India in 1977 (Class 30) which had expired and was not renewed. In August 1999, the respondent applied afresh for registration of CADBURY PICNIC.

On receiving notice, the respondent contended that: (a) PIKNIK was merely a misspelling of the ordinary dictionary word “picnic” and not a distinctive mark capable of trade mark protection; (b) the plaintiff’s label registration was of the label as a whole not the word PIKNIK alone; (c) CADBURY’S PICNIC was a different and distinct mark given the prominent use of “Cadbury,” a household name synonymous with chocolates in India; and (d) the products were different the appellant sold snack foods while the respondent sold chocolates. The respondent also filed a rectification application in the Bombay High Court on 19 March 1999.

The appellant filed a suit on 18 February 1999 in the District Court alleging infringement of trade mark registration No. 505532 and passing off. The trial court granted a temporary injunction on 25 February 1999, confirmed on 23 March 1999, finding phonetic similarity between the marks, prima facie case in the appellant’s favour and balance of convenience favouring the appellant. The Gujarat High Court reversed this order on 24 August 1999, holding that the essential features of the two marks were different and that there was no scope for deception or confusion. The appellant appealed to the Supreme Court by special leave.

Issues for Determination

Whether the defendant could, in interlocutory proceedings for infringement, raise a defence that the plaintiff’s registered trade mark was invalid for lack of distinctiveness under Section 9(1) of the Trade and Merchandise Marks Act, 1958.
Whether the plaintiff could rely on the presumption of validity under Section 31 and the bar to invalidity challenge after seven years under Section 32 of the Act and whether any exceptions applied.
Whether, assuming the registration was valid, the word PIKNIK satisfied the requirements of distinctiveness under Section 9(1)(e).
What is the applicable standard for grant of temporary injunction in trade mark cases triable issue, prima facie case or comparative strength of the parties’ cases?
Whether, on the question of infringement, the comparative strength of the case favoured the plaintiff or the defendant.
Whether the plaintiff had made out a case for temporary injunction on the basis of passing off.
Whether there was unreasonable delay by the plaintiff and whether the High Court was justified in interfering with the trial court’s discretion.

Key Holdings of the Court

Points 1, 2 and 3 left undecided. The court declined to decide the question of validity or distinctiveness of the plaintiff’s trade mark, as those issues were pending in the rectification proceedings before the Bombay High Court. The case was resolved on the merits of infringement and passing off.
Comparative strength of the parties’ cases is the applicable standard for temporary injunction in trade mark matters. The court affirmed the approach adopted in Colgate Palmolive v. Hindustan Lever and the observations of Laddie J. in Series 5 Software v. Clark, holding that courts must examine the relative strength of each party’s case and not merely whether a triable issue exists alongside balance of convenience, when deciding applications for temporary injunction.
Dissimilarity in essential features of device/composite marks is more important than similarity in common elements. The court held, drawing on English authorities, that where a mark involves a device, label or composite mark, greater weight must be given to the dissimilar essential features than to common elements. The three tests applied were: (i) whether any peculiar or special aspect of the common feature has been copied; (ii) whether the mode in which the parts are put together is different enough to make the whole thing dissimilar; and (iii) whether more regard is to be paid to the parts that are not common.
No infringement established on facts. Applying these three tests, the court found that the essential features of the plaintiff’s mark the peculiar block-letter script, the curved arrangement of letters and the caricature of a boy with a hat between “K” and “N” had not been copied by the defendant. The defendant’s mark used normal script, straight lettering and the prominent word “Cadbury.” The dissimilarities outweighed the phonetic similarity and the use of a related word.
No passing off established on facts. The court held that the prominence of the word “Cadbury” on the defendant’s product was a material factor negating passing off. Relying on Fisons Ltd. v. E.J. Godwin and Cadbury-Schweppes Pty Ltd. v. The Pub Squash Ltd., the court held that the presence of the defendant’s own name on the goods is an indication that there was no passing off. The court also held that the trial court had applied wrong principles by focusing on the ignorant or careless purchaser rather than the customer who knows the distinguishing characteristics of the plaintiff’s goods.
High Court justified in interfering with trial court’s discretion. Since the trial court had applied wrong principles over-emphasising phonetic similarity and overlooking differences in essential features the appellate court was entitled to interfere.
Appeal dismissed. The High Court’s vacation of the temporary injunction was upheld, with a direction that the defendant maintain accounts and furnish an undertaking as to damages if the suit ultimately succeeds.

Statutory Provisions Involved

Section 2(d), Trade and Merchandise Marks Act, 1958 defines “deceptively similar” as a mark that so nearly resembles another mark as to be likely to deceive or cause confusion.
Section 9(1), Trade and Merchandise Marks Act, 1958 sets out the requisites for valid registration in Parts A and B of the Register, including the requirement of distinctiveness under clause (e).
Section 28, Trade and Merchandise Marks Act, 1958 confers exclusive rights on a registered proprietor to use the trade mark in relation to registered goods.
Section 29, Trade and Merchandise Marks Act, 1958 defines infringement as the use, in the course of trade, of a mark identical with or deceptively similar to the plaintiff’s registered mark in such manner as to be likely to be mistaken for it.
Section 31, Trade and Merchandise Marks Act, 1958 makes original registration prima facie evidence of validity in all legal proceedings.
Section 32, Trade and Merchandise Marks Act, 1958 makes registration conclusive as to validity after seven years from the date of registration, subject to specified exceptions including fraud, contravention of Section 11 and lack of distinctiveness at the commencement of proceedings.
Section 111, Trade and Merchandise Marks Act, 1958 governs stay of proceedings where validity of a trade mark is questioned; subsection (5) preserves the plaintiff’s right to seek interlocutory relief even where the main suit is stayed.

Reasoning of the Court

On the standard for temporary injunction, the court reviewed the evolution from the American Cyanamid “triable issue” standard through Wander v. Antox, Gujarat Bottling v. Coca Cola and ultimately Colgate Palmolive v. Hindustan Lever, concluding that Indian courts must go beyond merely identifying a triable issue and must assess the comparative strength of the rival parties’ cases in trade mark matters. This approach, endorsed by Laddie J. in Series 5 Software v. Clark, was accepted as correctly reflecting what American Cyanamid had intended.
On infringement, the court drew a careful distinction between word marks and device/composite/label marks. For word marks, phonetic and visual similarity as a whole has historically been the primary test. But for devices and composite marks where the mark is a combination of words, script, images and get-up the English authorities establish that dissimilarity in essential features is more decisive. The court applied three tests derived from Broadhead’s Application and the Coca-Cola v. Pepsi-Cola line of cases. On the facts, the plaintiff’s mark had three features not replicated by the defendant the peculiar block-letter curved script and the caricature boy. These dissimilarities, taken together, made the marks as a whole dissimilar, despite phonetic overlap. The court also noted that the word “PICNIC” was arguably an ordinary dictionary word and that the plaintiff’s mark, if valid at all, derived its distinctiveness more from the artistic elements than from the word itself.
On passing off, the court distinguished the applicable consumer standard from that used in the infringement analysis. Citing Payton & Co. v. Snelling Lampard and Schweppes v. Gibbens, the court held that the relevant consumer in a passing off action is not the ignorant or careless purchaser but one who knows the distinguishing characteristics of the plaintiff’s goods. Given that “Cadbury” was prominently displayed on the defendant’s product a name virtually synonymous with chocolates in India no reasonable purchaser familiar with either product would be confused or misled.

Doctrinal Significance

Primacy of dissimilarity in essential features for device and composite marks. The court’s detailed three-part test examining whether peculiar features of a common element were copied, whether the mode of arrangement of parts renders the whole dissimilar and whether greater weight must go to non-common parts significantly developed Indian trade mark law for label and composite marks. This was a departure from the general “common features” approach that had prevailed and was expressly noted (and subsequently overruled on this point) in Cadila Healthcare v. Cadila Pharmaceuticals.
Comparative strength standard for temporary injunctions in trade mark matters. The court’s affirmation of the Colgate Palmolive approach requiring courts to assess the relative strength of each party’s case and not merely whether a triable issue exists has had lasting influence on how interlocutory injunction applications are decided in intellectual property litigation in India.
Distinction between infringement and passing off in the context of the relevant consumer. The court sharpened the difference between the two causes of action: in infringement, the focus is on whether the essential features of the registered mark have been copied, without reference to consumer sophistication; in passing off, the court considers the purchaser who actually knows the distinguishing characteristics of the plaintiff’s goods, not the uninformed or careless buyer. This distinction has continuing relevance in trade mark litigation.
Subsequent treatment partial overruling by Cadila Healthcare. This decision’s holding on the relative importance of dissimilarity in essential features over phonetic similarity was expressly disapproved by the Supreme Court in Cadila Healthcare Ltd. v. Cadila Pharmaceuticals Ltd. (2001), particularly insofar as it applied to word marks and pharmaceutical products. The overruling is limited to the merits of the phonetic similarity analysis and to the consumer standard adopted in passing off; the broader procedural principles on temporary injunctions remain good law.

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