The Himalaya Drug Company v. S.B.L. Limited

High Court of Delhi at New Delhi (Division Bench) | Decided: 9 November 2012 | RFA (OS) No. 90 of 2010 Bench: Hon’ble Mr. Justice Pradeep Nandrajog & Hon’ble Mr. Justice Manmohan Singh

Background

The Himalaya Drug Company, the appellant, is the owner of the trade mark Liv.52, registered under registration number 180564 in Class 5 as of 10 July 1957 in respect of medicinal preparations for the treatment of disorders of the liver. The mark had been in use since 1955. Liv.52 is an ayurvedic proprietary medicine and over the decades it became one of the most commercially successful liver medications in India, with annual sales growing from Rs. 9.36 crores in 1987 to over Rs. 91 crores in 2008-09. The plaintiff had also obtained additional registrations under numbers 290061 and 401959 in Class 5.

M/s S.B.L. Limited, the respondent, is a manufacturer of homeopathic preparations and began using the trade mark LIV-T in relation to a homeopathic medicinal preparation for curing liver disorders. The plaintiff contended that the use of LIV-T by the defendant infringed its registered trade mark Liv.52 because the essential and distinguishable feature LIV which it described as the dominant and distinctive component of its mark was being used by the defendant, making LIV-T phonetically and structurally identical with or deceptively similar to Liv.52 in violation of Section 29(1) of the Trade and Merchandise Marks Act, 1958.

The defendant’s case was that the word LIV was generic and common to the trade in pharmaceutical products associated with the treatment of the liver an organ abbreviated in trade as LIV and that over fifty pharmaceutical companies used LIV as the first syllable of their trade marks. The defendant produced a list of marks including LIV CARD, LIV-UP, LIV-RIL-Z, LIVAPLEX, LIVOFIT, LIVA, LIVOL, LIVDRO and over twenty-five others. It contended that LIV had been adopted as a first syllable by various companies from a period prior to the plaintiff’s claimed adoption in 1955 and that there were over one hundred registrations in the trade mark registry containing the word LIV. The defendant therefore argued that no monopoly could exist in the word LIV and that it had become publici juris.

The suit was filed in 1996 as Suit No. 1305/1996. An interim order restraining the defendant from using the mark LIV was granted by the trial court on 23 May 1996 and confirmed on 12 July 1996, but was subsequently vacated by the Division Bench on appeal. The suit was tried by a learned Single Judge who dismissed the plaintiff’s claim by judgment and decree dated 3 June 2010, holding that there was no visual, phonetic or structural similarity between the two marks likely to cause confusion and deception and that the word LIV was publici juris and must therefore be treated as a generic and non-distinctive component to be disregarded when comparing the marks. The Himalaya Drug Company appealed to the Division Bench under Section 96 of the Code of Civil Procedure, 1908.

The proceedings were governed by the Trade and Merchandise Marks Act, 1958 not the Trade Marks Act, 1999 by virtue of Section 159(4) of the new Act, which preserved the application of the old Act to suit proceedings initiated prior to the 1999 Act coming into force on 15 September 2003.

Issues for Determination

Issues were framed by the trial court.

Whether the plaint is signed, verified and the suit is instituted by a duly competent and authorized person?
Whether this Court has no territorial jurisdiction to entertain the present suit?
Whether the suit is maintainable in its present form?
Whether there is no cause of action for institution of the present suit?
Whether the suit is barred by limitation?
Whether the suit is bad for non-joinder of necessary parties?
Whether the suit is barred by principles of estoppel and waiver?
Whether the products of the defendant company can be sold only through homeopathic outlets?
Whether the Plaintiff is the proprietor of the trade mark Liv.52. in respect of drugs and Pharmaceuticals?
Whether the use of trade mark LIV-T. by the defendant amounts to infringement of trade mark registration numbers 180564, 290061 and 401959 in class 5?
Whether the use of trade mark LIV-T. by the defendant amounts to passing off the goods of the defendant as that of the plaintiff?
Whether the word mark LIV. is Publici juris and if so, to what effect?
Whether the suit suffers from delay, laches and acquiescence and if so, to what effect?
Whether the plaintiff is entitled to relief for rendition of accounts and if so, its nature of relief?

The Division Bench focused its analysis on two issues which had been decided against the plaintiff and formed the basis for dismissal of the suit:

Issue No. 10: Whether the use of trade mark LIV-T by the defendant amounted to infringement of the plaintiff’s trade mark registrations numbered 180564, 290061 and 401959 in Class 5.

Issue No. 12: Whether the word mark LIV was publici juris and if so, to what effect.

The other issues had either been conceded or decided in the plaintiff’s favour at trial. Issue No. 11 on passing off had not been pressed by the plaintiff.

Key Holdings of the Court

the Division Bench allowed the appeal and set aside the judgment and decree of the learned Single Judge dated 3 June 2010. The suit for infringement of trade mark was decreed in favour of the plaintiff.
the court held that the registration of the trade mark Liv.52, granted under Part A of the Trade and Merchandise Marks Act, 1958 and undisputedly more than seven years old, was conclusive as to validity under Section 32 of that Act. No rectification proceedings had been initiated by the defendant to challenge the registration. No disclaimer had been placed by the Registrar of Trade Marks on the component LIV at the time of granting registration. In the absence of any successful challenge, the registration and the rights conferred by it including the exclusive right to use the mark under Section 28 had to be respected. The court held that the conclusiveness of the registration under Section 32 of the old Act was a significant feature that distinguished the old Act from the Trade Marks Act, 1999 and that the learned Single Judge had erred in failing to give proper effect to this provision.
the court held that the word LIV, written in isolation and forming an essential and dominant feature of the registered trade mark Liv.52, had not been proved by the defendant to be generic or publici juris. The burden of proving that LIV was a generic component and had become common to the trade rested on the defendant as the party setting up that defence. This burden was a heavy one, made heavier by the conclusiveness of the registration. The defendant failed to discharge this burden because it did not produce a single witness from among the traders alleged to be using LIV as a prefix to testify in court that they were using the mark LIV in isolation or that it had become a generic term in trade. The search reports from a private search firm and cartons of third party products were produced but none of the witnesses from those third party companies appeared in court to authenticate the use of LIV in isolation. Mere entries on the register of trade marks do not prove user. The search reports showed only that LIV appeared as a prefix in combination with longer suffixes there was no evidence of any trader using LIV in isolation in the same manner as the plaintiff.
the court held that the learned Single Judge had erred in applying the anti-dissection rule and the principle borrowed from American jurisprudence under the Lanham Act that where a mark includes a generic component, that component must be excluded from comparison, leaving only the non-generic or distinctive portion to be compared. The court held that no such principle of American law could be imported into proceedings governed by the Trade and Merchandise Marks Act, 1958, which is a self-contained code providing only limited grounds of scrutiny of validity under Section 32. The anti-dissection rule, as described by the Single Judge, was held not to be the correct approach under the Indian statute, particularly when the alleged generic character of the component had not been established on evidence.
the court held that the two marks Liv.52 and LIV-T were deceptively similar. Applying the settled test that marks must be compared as a whole and not dissected syllable by syllable and that the comparison must be made from the point of view of an average person of ordinary intelligence with imperfect recollection the court found that LIV, written in isolation, was the essential feature of Liv.52 and that its presence in LIV-T in the same isolated form created a likelihood of confusion and deception. The suffix 52 in the plaintiff’s mark and the suffix T in the defendant’s mark were inconsequential for the purposes of measuring deceptive resemblance. The court expressly followed the principles laid down by the Supreme Court in Cadila Healthcare Ltd. v. Cadila Pharmaceuticals Ltd., Amritdhara Pharmacy v. Satyadeo Gupta and Corn Products Refining Co. v. Shangrila Food Products Ltd.
the court held that the fact that the plaintiff’s sales turnover of Liv.52 had been increasing year by year after the introduction of LIV-T was irrelevant to the question of infringement. A finding that the defendant had made no commercial dent in the plaintiff’s market could not negate the statutory right of the registered proprietor to obtain relief for infringement under Section 29 of the Act. The statutory provisions cannot become a nullity merely because the proprietor’s sales are increasing despite infringement.
the court held that the distinction between the plaintiff’s ayurvedic product and the defendant’s homeopathic product did not negate the likelihood of confusion. Since the learned Single Judge had himself found on Issue No. 8 that the defendant’s products need not be sold only through homeopathic outlets but also through chemist shops selling all forms of medicine, both products were available across the same counter. All medicines whether allopathic, ayurvedic or homeopathic were goods of the same description under the Act. A consumer entering a chemist shop asking for Liv.52 could be misled into receiving LIV-T.
the defendant was restrained from using the mark LIV as part of its trade mark LIV-T while dealing in medicinal preparations. The court however clarified that the defendant was at liberty, if so advised, to use a mark containing the expression LIV not written in isolation but accompanied by suffixes of the type disclosed in its own written statement such as LIVOGEN, LIVAPLEX, LIVOFIT, LIVOL, LIVDRO, LIVAZOL, LIVERITE, LIVERJET, LIVERPOL and LIVUP. The defendant was granted six months to liquidate its pending stock, given that the litigation had been pending for more than fifteen years and the infringing mark had been in use for over twenty years.

No order as to costs was made.

Statutory Provisions Involved

Section 2(d) of the Trade and Merchandise Marks Act, 1958 defines deceptively similar as meaning that a mark so nearly resembles another mark as to be likely to deceive or cause confusion. Section 2(j) defines mark to include a device, brand, heading, label, ticket, name, signature, word, letter or numeral or any combination thereof. Section 2(v) defines trade mark to mean a mark used in relation to goods for the purpose of indicating a connection in the course of trade between the goods and some person having the right as proprietor or registered user to use the mark.
Section 28 of the Trade and Merchandise Marks Act, 1958 provides that registration of a trade mark in Part A or Part B of the register, if valid, gives the registered proprietor the exclusive right to use the trade mark in relation to the goods in respect of which it is registered and to obtain relief in respect of any infringement.
Section 29 of the Trade and Merchandise Marks Act, 1958 provides that a registered trade mark is infringed by a person who, not being the registered proprietor or registered user, uses in the course of trade a mark which is identical with or deceptively similar to the registered trade mark in relation to the goods in respect of which the trade mark is registered and in such manner as to render the use of the mark likely to be taken as being used as a trade mark.
Section 31 of the Trade and Merchandise Marks Act, 1958 provides that in all legal proceedings relating to a registered trade mark, the original registration and all subsequent assignments and transmissions shall be prima facie evidence of validity. A trade mark registered in Part A shall not be held invalid on the ground that it was not registrable under Section 9 except upon evidence of distinctiveness not having been submitted before registration.
Section 32 of the Trade and Merchandise Marks Act, 1958 provides that subject to Sections 35 and 46, in all legal proceedings relating to a trade mark registered in Part A, the original registration shall after the expiration of seven years from the date of registration be taken to be valid in all respects unless it is proved that the original registration was obtained by fraud, that the trade mark was registered in contravention of Section 11 or offends against Section 11 on the date of commencement of proceedings or that the trade mark was not at the commencement of proceedings distinctive of the goods of the registered proprietor.
Section 56 of the Trade and Merchandise Marks Act, 1958 empowers a High Court or the Registrar to cancel or vary registration of a trade mark and to rectify the register on an application by any person aggrieved.
Section 111 of the Trade and Merchandise Marks Act, 1958 provides for stay of suit proceedings where the validity of the registration of a trade mark is questioned and includes provisions requiring a defendant who raises invalidity to seek rectification before the appropriate authority within a prescribed period.
Section 159(4) of the Trade Marks Act, 1999 the saving clause preserving the application of the old Trade and Merchandise Marks Act, 1958 to proceedings initiated before the 1999 Act came into force on 15 September 2003.

Reasoning of the Court

The Division Bench’s reasoning addressed four distinct aspects of the impugned judgment.

On the conclusiveness of registration, the court noted that the learned Single Judge had found on Issue No. 9 that the plaintiff was the registered proprietor of Liv.52 but had not given proper effect to the conclusive nature of that registration under Section 32 of the old Act. The court held that once a trade mark had been registered in Part A for more than seven years without challenge through rectification proceedings, the burden on any person seeking to question the validity of the registration particularly on the ground of lack of distinctive character was very high. Since the defendant had neither filed rectification proceedings nor established any of the limited grounds of challenge specified in Section 32, it could not in the infringement proceedings treat the registration as open to challenge and it could not proceed on the a priori assumption that the LIV component was generic.

On the publici juris defence, the court applied the principles from Corn Products Refining Co. v. Shangrila Food Products Ltd. and Express Bottlers Services Pvt. Ltd. v. Pepsi Inc. and others to hold that the mere presence of marks on the register containing a common element does not prove user of those marks in the market and does not establish that the common element is generic. The defendant’s evidence consisting of search reports from a private agency, packaging samples of third party products and photographs was held to be wholly insufficient to discharge the burden. The defendant could not call any single witness from any of the alleged third-party users to testify to actual market use of LIV in isolation. Without such evidence, the register entries and search reports could not establish that LIV had become common to the trade or had lost its distinctive character as the essential feature of Liv.52.

The court also noted a significant inconsistency in the defendant’s own position: on the one hand, the defendant contended in its written statement that LIV was a generic word and unprotectable in law, while on the other hand it had applied for registration of LIV-T at the Trade Marks Registry before filing its written statement thereby seeking the exclusive rights it simultaneously argued could not exist. This inconsistency further undermined the defendant’s credibility on the publici juris plea.

On the comparison of marks and the essential features doctrine, the court applied the well-established principle from Amritdhara Pharmacy v. Satyadeo Gupta that marks must be compared as a whole from the perspective of an unwary purchaser of average intelligence with imperfect recollection who would not split a mark into its component parts and analyse them linguistically. Such a purchaser retains a general impression of the mark and is guided by the salient or essential feature that he associates with the goods. The court applied the test from the Pionotist Case that both the look and sound of the marks must be judged, having regard to the goods, the nature of the likely customers and what would happen if each mark is used in a normal way. Applying these tests, the court found that LIV was the dominant and essential component of Liv.52 written in isolation, represented in a particular form and identified by medical representatives’ survey reports as the feature by which customers recognised the product. Once that component was found to be the essential feature, its reproduction in LIV-T in the same isolated form constituted infringement regardless of the different suffix used.

The court expressly rejected the single judge’s approach of applying the anti-dissection rule treating LIV as generic, excluding it from comparison and then comparing only the residual portions 52 and T as contrary to settled Indian law and impermissibly importing American jurisprudential principles applicable under the Lanham Act into proceedings governed by the Indian Trade and Merchandise Marks Act, 1958. The court noted that Indian law provides its own self-contained scheme for testing validity under Section 32 and does not permit infringement courts to conduct open-ended scrutiny of validity that would be appropriate under American law.

On the pharmaceutical context, the court followed and applied Cadila Healthcare Ltd. v. Cadila Pharmaceuticals Ltd. extensively. It held that in pharmaceutical trade marks disputes, courts must apply a higher standard of care and exacting judicial scrutiny, since confusion in the identification of medicines could have life-threatening consequences. Drugs are available on verbal requests including over telephone and are dispensed by chemists across India, including in rural areas, under conditions where linguistic differences and imperfect communication heighten the risk of confusion. The fact that the plaintiff’s product was ayurvedic and the defendant’s was homeopathic was held irrelevant because both were sold through chemist shops across the same counter and were goods of the same description under the Act.

Doctrinal Significance

This judgment makes several important contributions to Indian trade mark law, particularly in the context of pharmaceutical marks and the defence of publici juris.

The court’s treatment of Section 32 of the Trade and Merchandise Marks Act, 1958 as conferring conclusive validity after seven years and its holding that this conclusiveness significantly raises the threshold for a defendant seeking to challenge the distinctiveness of a registered mark in infringement proceedings is an important clarification of the relationship between the validity of registration and the infringement inquiry under the old Act. The court’s observation that this provision is not replicated in the same form in the Trade Marks Act, 1999 signals to practitioners that registrations obtained under the old Act carry a higher degree of protection from collateral attack in infringement proceedings.

The court’s rejection of the anti-dissection rule as applied by the Single Judge is a significant doctrinal contribution. The Single Judge had treated LIV as a generic component to be excluded from comparison, leaving only the residual 52 and T. The Division Bench held firmly that this approach derived from American jurisprudence cannot be imported into Indian trade mark proceedings under the 1958 Act. The correct approach under Indian law, as established by the Supreme Court in Corn Products, Amritdhara and Cadila, is to compare the marks as a whole from the perspective of the average consumer. Only where the alleged generic character of a component has been strictly proved by evidence can that component be treated as non-distinctive for the purposes of comparison. Absent such proof, the registered mark is entitled to protection as a whole.

The judgment provides important guidance on the standard of proof required to establish the defence of publici juris. Drawing on Corn Products Refining Co. v. Shangrila Food Products Ltd. and Express Bottlers Services Pvt. Ltd. v. Pepsi Inc., the court held that mere entries on the trade mark register and search reports from private agencies are insufficient to establish that a component has become generic or common to the trade. The defence requires actual proof of substantial market use by multiple traders which means producing live witnesses from those traders who can testify to their use of the mark in the relevant form. This sets a demanding evidentiary standard that prevents defendants from relying on register entries alone to avoid infringement liability.

The court’s application of the Cadila principles to a dispute involving an ayurvedic mark versus a homeopathic product sold through the same chemist outlets reinforces the principle that the distinction between different systems of medicine allopathic, ayurvedic, homeopathic does not insulate a defendant from infringement liability when the products are available across the same counter and the marks are confusingly similar. All medicines are goods of the same description for the purposes of the Trade Marks Act and the confusion risk must be assessed in the actual conditions of the Indian pharmaceutical market. Finally, the court’s approach to quantitative sales evidence holding that increasing sales of the plaintiff’s product during the period of the defendant’s alleged infringement cannot negate infringement liability is a practically important restatement of principle. Infringement is a statutory wrong and the remedy conferred on the registered proprietor by Section 29 cannot be denied merely because the proprietor’s commercial position appears to have been unaffected. The court’s observation that sales might have been even higher absent the infringement gives practical content to this principle

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