AO/240/2005 : CAV Judgement Dated :20.07.2005 - 1 - IN THE HIGH COURT OF GUJARAT AT AHMEDABAD APPEAL FROM ORDER No. 240 of 2005 with CIVIL APPLICATION NO. 4241 OF 2005 For Approval and Signature: HON'BLE MS.JUSTICE H.N.DEVANI ======================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ======================================================= CADBURY LTD & 2 - Appellant(s) Versus ITC LTD & 1 - Defendant(s) ======================================================= Appearance : Shri Mihir Thakore, Sr.Advocate, Shri Dushyant Dave, Sr. Advocate, with Mr.Y.J.Trivedi, Advocate and Ms.Bhagwati Trivedi, Advocate for the Appellant. Shri S.B.Vakil, Sr. Advocate with Mr.Nandish Chudgar and Ms.Sushma Sharma, Advocates for Nanavati Associates for respondent No.1 Shri T.R.Andhyarujina, Sr.Advocate with Mr.S.Majmudar, Mr.Nandish Chudgar and Ms.Sushma Sharma for Nanavati Associates, Advocates for respondent No.2 ======================================================= AO/240/2005 : CAV Judgement Dated :20.07.2005 - 2 - CORAM : HON'BLE MS.JUSTICE H.N.DEVANI Date : 20/07/2005 CAV JUDGMENT 1. This plaintiffs' appeal is directed against the order of the learned City Civil Judge, Ahmedabad, dated 16th May 2005, rejecting the plaintiffs' Notice of Motion for grant of temporary injunction. 2. The appellants No.1, 2 and 3 are the original plaintiffs No.1, 2 and 3 in the suit and the respondents are the original defendants. (For the sake of convenience, the appellants and the respondents are referred to as the plaintiffs and defendants respectively. 3. The facts leading to this appeal are that the plaintiffs No.1 and 3 are Companies incorporated under the laws of the United Kingdom, whereas the second plaintiff is a Company incorporated under the Indian Companies Act, 1913. Cadbury Schweppes Plc. is a Company incorporated under the laws of United Kingdom, carrying on business as manufacturers, sellers and exporters of inter alia confectionery, beverages and other allied products. Cadbury Schweppes Plc., the plaintiffs and other affiliated companies incorporated in different countries of the world form a group of companies known as Cadbury Schweppes group. AO/240/2005 : CAV Judgement Dated :20.07.2005 - 3 - 3.1 The first defendant is a Company incorporated under the Indian Companies Act, 1913 and carries on the business, inter alia, as manufacturers and sellers of cigarettes/tobacco, confectionery, food articles, etc., and is the alleged owner of the trademark “Candyman/Candyman Choco Eclairs” and the second defendant is, inter alia, a manufacturer of confectionery items and is the manufacturer of “Candyman Choco Éclairs”. 3.2 It is the case of the plaintiffs that the second plaintiff introduced a product under the name “Cadbury Chocolate Éclairs/Éclairs” in India in the year 1972, in respect of the which it had got a label mark prepared, which was registered as a trade mark. The said label mark was slightly modified by the second plaintiff and the same was also registered and the said registration is valid and subsisting. That, in or about June 1994, the second plaintiff modified the soft chocolate cream centre of CADBURY CHOCOLATE ECLAIRS with CADBURY DAIRY MILK milk chocolate centre which is a milk chocolate of a particular specification unique to the Cadbury Schweppes Group, the unique characteristic being that the chocolate is processed directly from cows’ milk along with the other ingredients. That, in keeping with the traditional trade dress of purple and/or purple and gold always associated with CADBURY DAIRY MILK milk chocolate of the Cadbury Schweppes AO/240/2005 : CAV Judgement Dated :20.07.2005 - 4 - group Companies, a new design of the trade dress of Gold and Purple was devised for the product which was relaunched to the consumers as CADBURY DAIRY MILK ECLAIRS. 3.3 It is the case of the plaintiffs that the trade dress for their chocolate products and products containing chocolate such as Éclairs has consistently been the purple and gold colour combination, bearing the registered trademark CADBURY in a distinctive stylized form on it. That, similarly, the plaintiffs and its group Companies the world over have been using the purple and gold colour combination on their labels of chocolate confectionery products, including the second plaintiffs' ‘Eclairs’ having the distinctive ‘Dairy Milk’ milk chocolate centre. It is further the case of the plaintiffs that the said label has a distinctive colour scheme, get up and lay out and that the same has been extensively used by the second plaintiff and that the said products have been advertised under the said trade marks and label marks on an extensive scale. Consequently, the said label marks and the said trade marks have come to be associated by the traders and members of the public exclusively with the plaintiffs. That, the word “Cadbury” written in a specialized stylized manner in gold colour with a purple background is distinctive and has acquired distinctiveness. Similarly, the plaintiffs' label, being Ex.9 (item No.9 in the list of Documents Exhibit 4 filed with the AO/240/2005 : CAV Judgement Dated :20.07.2005 - 5 - pliant) has acquired distinctiveness and the same have come to be associated by the traders and members of the public exclusively with the plaintiffs. The marks “Cadbury”, “Cadbury Chocolate Eclairs” and “Cadbury Dairy Milk Eclairs” have become a household mark in India. 3.4 It is the case of the plaintiffs that in or about March, 2005, the plaintiffs' representative came across a product of the defendants sold under the mark “Candyman Choco Eclairs”, and found that the defendants had adopted an identical colour scheme, get up and lay out in respect of their mark as that of the plaintiffs and the manner of writing of the words “Candyman” and “Eclairs” were also identical and/or deceptively similar to that of the plaintiffs. That, the plaintiffs learnt that not only were the defendants' product “Candyman Choco Éclairs” and the plaintiffs' products “Cadbury Dairy Milk Éclairs” sold by the traders in the same shop but that the products for sale were kept in the same transparent plastic jar containers of “Cadbury Dairy Milk Éclairs” provided by the second plaintiff. On making further inquiries in the market place, and on referring to the first defendant's website and annual report of 2004, the plaintiffs came to know that the defendants' product “Candyman Choco Éclairs” was launched in 2003 with an orange and gold wrapper. However, it appears that towards the end of the year 2004, the defendants changed their wrappers and labels to AO/240/2005 : CAV Judgement Dated :20.07.2005 - 6 - the impugned label, Ex.12. It is alleged that the defendants have adopted the mark “Candyman Choco Éclairs” and the impugned label, Ex.12, with a deliberate and malafide intent with a view to trade upon the reputation acquired by the plaintiffs in respect of their chocolates and confectionery, and especially that of their well known colour scheme, get up, lay out and the distinctive trade dress of “Cadbury Dairy Milk Éclairs”. 3.5 It is the case of the plaintiffs that, by using the mark “Candyman Choco Eclairs”, the defendants have infringed and/or are continuing to infringe the plaintiffs' registered trade marks bearing Nos.15813, 318934, 327607 and 353398. That, the impugned mark as shown in Ex.12 is deceptively similar to the plaintiffs' registered trade marks. That, by using the impugned mark “Candyman Choco Eclairs”, as shown in Ex.12, the defendants have infringed and/or are continuing to infringe the plaintiffs' aforesaid registered marks. That, the traders and members of the public have come to associate the aforesaid trade marks as also the device marks in respect of which the application for registration is pending under No.1339185, exclusively with the plaintiffs. That, the defendants, by using the impugned marks “Candyman Choco Eclairs” in the same letter and style as that of the plaintiffs, are passing off their goods as and for the goods of the plaintiffs. That the impugned mark, Ex.12 is AO/240/2005 : CAV Judgement Dated :20.07.2005 - 7 - deceptively similar to the aforesaid trade marks of the plaintiffs. 3.6 In the aforesaid circumstances, the plaintiffs have filed the present suit for restraining the defendants by way of perpetual injunction from in any manner using in relation to any chocolates or confectionery or any chocolates either plain or containing nuts, fruits, raisins, caramel, nougat etc., chocolate confectionery or any type of confectionery the impugned mark “Candyman” and/or “Candyman Choco Eclairs” and/or “Eclairs” or any other deceptively similar trade marks : (i) so as to infringe the plaintiffs' registered trade marks bearing Nos.15813, 318934, 327607 and 353398; (ii) so as to pass off or enable others to pass of the defendants' goods as that of the plaintiffs' goods; (iii) so as to infringe the plaintiffs' artistic work; and (iv) for other consequential reliefs. 3.7 It is the case of the plaintiffs that there is no delay on the part of the plaintiffs in filing the suit. That, the plaintiffs came to know AO/240/2005 : CAV Judgement Dated :20.07.2005 - 8 - about the impugned label of the defendants in March 2005. That, the adoption of the impugned label by the defendants is dishonest as the defendants were aware of the plaintiffs' trade marks and the plaintiffs' label, and there are no equities in favour of the defendants. It is the case of the plaintiffs that the goods in respect of which the impugned label is used are available across the counter at the same price of Re.1/- each and particularly the manner of keeping the defendants' goods and the plaintiffs' goods in the same container of the plaintiffs, will cause deception and confusion, especially to children who are frequent consumers of the said confectionery products. That, unless the aforesaid reliefs are granted, grave and irreparable loss and harm will be caused to the plaintiffs. 4. A Notice of Motion was also moved by the plaintiffs, for grant of temporary injunction restraining the defendants from using the mark “Candyman” and/or “Candyman Choco Eclairs” and/or “Eclairs” or any other deceptively similar trade marks so as to infringe the plaintiffs' registered trade marks. It was also prayed that the defendants be restrained from using the identical or similar trade mark so as to pass off or enable others to pass of the defendants' goods as that of the plaintiffs' goods. It was also prayed that defendants, their agents, servants, may be restrained from using the impugned labels or any other identical AO/240/2005 : CAV Judgement Dated :20.07.2005 - 9 - deceptively similar labels or any other colourable imitation or substantial reproduction of the plaintiffs' artistic work. 4.1 By an order dated 1st April 2005, the trial Court had granted exparte interim injunction in terms of paragraph No.35(A) and 35(B) of the Notice of Motion. 4.2 The defendants preferred appeal from the said order dated 1st April 2005, and this Court, by its order dated 7th April 2005, while refusing to vacate the said order, directed the Notice of Motion to be heard on a day-to-day basis and to be completed by 16th May 2005. However, it was made clear that there is no restraining order in respect of any other products of the plaintiffs except the defendants “Candyman Choco Eclairs” sold for Rs.1/- in retail. 5. In response to the suit and injunction application, the defendants filed a written statement opposing the suit. It is the case of the defendants as stated in the written statement, that the suit and injunction deserve to be dismissed on the ground of lack of jurisdiction and lack of cause of action. That, the plaintiffs' have failed to make out a prima facie triable case. That, the trade mark of the defendant no.1 is “CANDYMAN”, whereas the plaintiffs' is “CADBURYS”. That, the term “eclairs” is generic and common to the trade and AO/240/2005 : CAV Judgement Dated :20.07.2005 - 10 - the plaintiffs cannot claim exclusive rights to the same. Hence, no case of infringement of registered trade mark is made out by the plaintiffs. That, the colour scheme of purple and gold in the wrapper of the plaintiff, which is claimed to be its distinctive trade dress is the sole basis of the present action of passing off. 5.1 It is also the case of the defendants that the plaintiffs have no exclusive right in the word ‘éclairs’ and/or in respect of wrappers/packing for Éclairs which have the combination of purple and gold colours. That, the plaintiffs do not hold any registration under the Trademarks Act which give them exclusive rights in the colour purple or the colour combination of purple and golden. That, a number of competitors have been using the purple colour as well as the colour scheme of purple and golden for their éclair products openly, continuously and extensively. That the plaintiffs have not obtained any registration that go to protect the combination of purple with golden colour. That the plaintiff No.1 has made an application for registration of its latest label as recent as February 2005 but the application does not make any claim for the protection of any specific colour or colours. 5.2 It is the case of the defendants that, in order to ascertain the actual likelihood of confusion and deception, the defendants had engaged an independent and leading market research company, AO/240/2005 : CAV Judgement Dated :20.07.2005 - 11 - M/s IMRB International to conduct a research amongst consumers in Ahmedabad. That, the said survey revealed that 95% of the potential consumer did not have any confusion in identifying CADBURY DAIRY MILK ECLAIRS when asked to do so from amongst éclairs of others, including the defendant No.1. That the instances of confusion were extremely negligible, and such stray instances of confusion were in relation to products of many other competitors of the plaintiffs. 5.3 It is the case of the defendants that the impugned label/wrapper of the defendant no.1 is distinct from the label/wrapper of the plaintiffs. The wrapper of the plaintiffs' product comprises of a middle section being gold, flanked on both the sides by purple bands with lines passing through the said purple band. The words “CADBURY'S DAIRY MILK ECLAIRS” appear prominently in the centre of the golden band in the middle portion of the wrapper. The plaintiffs sell the said product in either poly pouches which are partly transparent with a purple colouring on all sides on the pouch. The words “Cadbury Dairy Milk” appearing prominently on the same. The plaintiffs also sell the products in transparent jars bearing a label on which the word “Cadbury's Dairy Milk Eclairs” appear prominently. The wrapper of CANDYMAN Choco Eclairs is golden in colour and the same comprises of the words “CANDYMAN” written in a stylised manner in capital letters written AO/240/2005 : CAV Judgement Dated :20.07.2005 - 12 - conspicuously on top followed by the words “Choco” and the word “Eclairs” written beneath in a unique stylised font. The said elements of the wrapper are flanked on both sides by 2 white wave lines on the sides of the wrapper. That the brand name “CANDYMAN” appears multiple times on the wrapper as used. That, the trademark of the plaintiff is CADBURYS, whereas that of the defendant No.1 is CANDYMAN. There is no visual, structural or phonetic similarity between the two marks. That, the golden colour which finds predominance in the defendant's label signifies and indicates a premium product. That, as such there is no deceptive similarity in the marks of the plaintiff and the defendant and that there is no likelihood of confusion in the minds of the consumers, and accordingly, the suit is required to be dismissed. 6. The trial Court, after considering the rival submissions and perusing the documentary evidence, observed that though the plaintiffs have filed the case for infringement and passing off, but during the course of arguments, it has become clear that the main stress of the plaintiffs is regarding trade dress. The trial Court found that : 1.the plaintiff has failed to establish prior use; 2.there are no deceptive similarities, and the trade dress is not so similar that it may cause confusion in the mind of AO/240/2005 : CAV Judgement Dated :20.07.2005 - 13 - buyers; 3.the plaintiff has come with ambiguous pleadings; and 4.the balance of convenience is not in favour of the plaintiffs, but, tilts in favour of the defendants. Accordingly, the Trial Court dismissed the Notice of Motion with a direction to the defendants to produce their half-yearly accounts regularly in the month of April and October, every year, to the Trial Court. 7. By its order dated 7th April 2004, passed in the Appeal from Order preferred by the Defendants against the exparte interim injunction, this Court, on the basis of a consensus arrived at between the parties, had directed as follows: "The appellants will file their written statement before the Trial Court on or before 15th April 2005. The respondents will file their rejoinder on or before 19th April 2005." Accordingly, it appears that after the Defendants filed their written statement, the Plaintiffs filed an Affidavit in rejoinder. Subsequently an affidavit made by an employee of the Plaintiff company was filed on behalf of the Plaintiffs, and an additional affidavit was filed on behalf of the Defendant No.1. The AO/240/2005 : CAV Judgement Dated :20.07.2005 - 14 - Plaintiffs also filed a reply to the said additional affidavit, all of which appear to be forming part of the record before the Trial Court. 8. Heard, Mr. Dushyant Dave, learned Senior Advocate for the appellant/Plaintiff. Mr. T.R.Andhyarujina learned Senior Advocate for the Defendant No.2, Mr. S.B. Vakil, learned Senior Advocate for the Defendant No.1. Mr. Mihir J. Thakore made submissions on behalf of the Plaintiff in rejoinder. 8.1 Mr. Dushyant Dave, learned Senior Advocate appearing on behalf of the appellants submitted that the impugned order passed by the Trial Court is wholly perverse and against the well known canons of exercise of the power of granting interim injunctions. Placing reliance upon the decision of the Supreme Court in the case of Colgate Palmolive versus Hindustan Lever,(1999) 7 SCC 1, it was submitted that that interim applications are not expected to be converted into mini-trials and that an order of injunction must follow if triable issues are raised. It was submitted that undisputedly triable issues were raised before the Trial Court, hence, the appellant/Plaintiff was entitled to an order of injunction. 8.2 Learned Counsel argued that interim relief is required to be granted to protect honest traders, and that the denial thereof by the AO/240/2005 : CAV Judgement Dated :20.07.2005 - 15 - Trial Court, has resulted in encouraging dishonesty. 8.3 It was submitted that the Trial Court had erroneously appreciated the facts of the case in recording in paragraph 1 of the judgement that the appellant/Plaintiff has adopted its label in the first place in March 1998, whereas the appellant/Plaintiff had adopted the first label with its gold and purple trade dress in June 1994 as clearly set out in paragraph 13 of the plaint and that a copy of the label had been annexed as Ex-9 to the rejoinder affidavit. The learned counsel referred to the copies of the wrappers adopted by the Plaintiff at Ex. 8 and 9 and submitted that essentially the issue in question at present is confined to an action of passing off. 8.4 Referring extensively to the contents of paragraph 13,14, 15 and 16 of the plaint, it was pointed out that there was no ambiguity in the pleadings and that, on a plain reading of the facts as stated in the said paragraphs it is clear that the Plaintiffs had started using the gold and purple wrapper since June 1994 when the 2nd Plaintiff modified the soft chocolate cream centre of CADBURY’S CHOCOLATE ÉCLAIRS with CADBURY DIARY MILK milk chocolate centre which is a milk chocolate of a particular specification unique to the Cadbury Schweppes group, the unique characteristic being that the AO/240/2005 : CAV Judgement Dated :20.07.2005 - 16 - chocolate is processed directly from cows milk along with other ingredients. It was submitted that in keeping with the traditional trade dress of purple and/or purple and gold always associated with Cadbury Diary Milk milk chocolate of the Cadbury Schweppes group companies, a new design of the trade dress of Gold and Purple was devised for the product which was re-launched to the consumers as Cadbury Diary Milk Éclairs. The new wrapper was designed for the 2nd Plaintiff by Lintas India Ltd. and that the artistic work on the wrapper was changed from time to time. In 1998 the artistic work was created by Ogilvy & Mather Private Limited, Mumbai, an advertising company, which was used as a wrapper or a label in which the 2nd Plaintiff’s confectionary Cadbury Diary Milk Éclairs was packed and sold. That, thereafter in or about September, 2003 the Plaintiff engaged the services of Contract Advertising (India) Private Limited, Mumbai, an advertising company, for creating a new artistic work which was to be used by the Plaintiff for its product Cadbury Diary Milk Éclairs. An employee of the said company created an artistic work, which was a slight variation of the earlier artistic work, while retaining the gold and purple colour scheme. That, the said artistic work was used as a wrapper or a label in which the 2nd Plaintiff’s confectionary Cadbury Diary Milk Éclairs is presently sold and packed. The learned Counsel also referred to and AO/240/2005 : CAV Judgement Dated :20.07.2005 - 17 - relied upon the contents of paragraph 24.9 of the written statement to submit that the label of 1994 was not denied by the Defendants. 8.5 Referring to paragraph 105 of the impugned judgement, it was contended that the Trial Court had completely misread and ignored the visual similarity between the marks Cadbury and Candyman where the first two letters in both the marks are the same and the letter ‘D’ appearing third in Cadbury is appearing fourth in Candyman and the words when written in the same purple colour in small letters on a small pack which is approximately one inch in length and half an inch in breadth with a small area of display panel would be deceptively similar when used on the same type of product i.e. sugar candy such a éclairs in the market place along with the word éclairs. 8.6 It was emphasized that the Trial Court had completely disregarded the oral and written submissions made by the Plaintiffs that the complete text Candyman Choco Éclair and Cadbury Diary Milk Eclairs written in purple colour on a golden coloured background on the rival labels mentioned in three separate rows one below the other on the small labels of each individual wrapper there would be confusing similarities between the two labels which would easily deceive consumers, especially young children who are predominant purchasers of these products. AO/240/2005 : CAV Judgement Dated :20.07.2005 - 18 - 8.7 While contending that what has to be seen is as to whether the discretion has been exercised judicially and reasonably, it was submitted that the finding recorded by the Trial Court is perverse in view of what has been stated in paragraph 24.11 of the written statement wherein it has been stated on behalf of the Defendants that "Copies of the Plaintiff No.2’s packing material as used over a period of time had been filed as Item No.10 in the separate list of documents filed". Referring to Item No.10 of the said list, the learned Counsel pointed out the copies of the poly pouches as well as wrappers of the Plaintiffs’ Cadbury Diary Milk Eclairs in the purple and gold combination, which as per the say of the Defendants had been used by the Plaintiff No.2 over a period of time and emphasized that as per the Defendants’ own say, the Plaintiff No.2 has been using the purple and gold label over a period time. While submitting that the case of