FAO(OS) 352/2010 Page 1 of 50 * IN THE HIGH COURT OF DELHI AT NEW DELHI + FAO(OS) No. 352/2010 % Reserved on: 28th September, 2010 Pronounced on: 1st November, 2010 MARICO LIMITED ...... Appellant/Plaintiff Through: Mr. Sudhir Chandra Agarwal, Senior Advocate with Mr. Sandeep Sethi, Senior Advocate, Mr. Rahul Chaudhry, Advocate, Mr. Sumit Wadhwa, Advocate and Mr. Amritesh Mishra, Advocate. VERSUS AGRO TECH FOODS LIMITED ....Respondent/Defendant Through: Mr. V.P. Singh, Senior Advocate with Mr. Dhruv Anand, Advocate. CORAM: HON’BLE MR. JUSTICE SANJAY KISHAN KAUL HON’BLE MR. JUSTICE VALMIKI J.MEHTA 1. Whether the Reporters of local papers may be allowed to see the judgment? Yes 2. To be referred to the Reporter or not? Yes 3. Whether the judgment should be reported in the Digest? Yes JUDGMENT VALMIKI J. MEHTA, J 1. The present appeal has been filed with a prayer to set aside the order passed by the learned Single Judge of this court on 23.4.2010 disposing of an application for injunction filed by the appellant/plaintiff FAO(OS) 352/2010 Page 2 of 50 in a suit for infringement of trademark, passing off, dilution etc., and by which order the learned Single Judge dismissed the injunction application of the plaintiff. By the impugned order, the learned Single Judge also allowed the application of the respondent/defendant for vacation of the injunction and vacated the ex parte interim order dated 28.8.2009. By the impugned order the learned Single judge has held that no case for infringement is made out on account of the use of the expression “LOW ABSORB” by the respondent-defendant which was alleged to be deceptively similar to the registered trademarks “LOSORB” and “LO-SORB” of the appellant-plaintiff. The learned Single Judge also held that use of the expression “LOW ABSORB” by the defendant will not amount to passing off although the plaintiff also claimed a right in the unregistered trademark “LOW ABSORB”. 2. The relevant facts of the case are that appellant-plaintiff got registered the Trademarks “LOSORB” and “LO-SORB” for different products in class-29 viz Oil, Ghee etc. effective from 28.05.2001. The appellant claimed that it coined the word marks which have been registered by it. The registered marks were used in relation to edible oil inasmuch as the edible oil contained an ingredient/anti foaming agent by which less or low oil was consumed by the product made by use of the edible oil. The edible oil sold also used the trademarks “Sweekar” & “Saffola” besides the subject registered trademarks “LOSORB” and LO-SORB”. The appellant in the plaint has referred to its extensive sales of the product by using of the registered trademarks FAO(OS) 352/2010 Page 3 of 50 and also reference has been made to large amounts spent towards advertisements. The relevant paras of the plaint are paras 11 and 12 which read as under: “11. Given below are the sales figures for the edible oil on which LOW ABSORB and/or LOSORB marks(s) were used for the period October 2001-Quarter I of FY 2010: FINANCIAL YEAR MONTHS VOLUME VALUE (IN CRORES) 2001-02 April to March 21898 102.48 2002-03 April to March 19665 92.41 2003-04 April to March 20865 120.86 2004-05 April to March 19797 116.10 2005-06 April to March 31414 195.55 2006-07 April to March 46554 323.49 2007-08 April to March 54097 424.11 2008-09 April to March 57235 515.43 2009-10 Quarter I 16766 131.10 The above figures have been taken from the books and records maintained by the Plaintiff in the ordinary course of business and have been verified to be correct. 12. The Plaintiff has incurred huge amounts in promoting its edible oil bearing trademarks LOW ABSORB and/or LOSORB and in popularizing the said trademarks. Given below are the sales promotional figures incurred by the Plaintiff in advertising its edible oil bearing the aforesaid trademark(s) for the period October, 2005-March, 2009: FINANCIAL YEAR MONTHS TELEVISION ADVERTISEMENTS TOTAL (IN LAKHS) POS MATERIAL AND VISIBLITY TOTAL (IN LAKHS) FAO(OS) 352/2010 Page 4 of 50 2005-06 October to March 390 49 2006-07 April to March 999 83 2007-08 April to March 891 383 2008-09 April to March 954 559 The above figures have been taken from the books and records maintained by the Plaintiff in the ordinary course of business and have been verified to be correct.” 3. The defendant is selling its edible oil/Sunflower seeds oil under the trademark “Sundrop” and since this edible oil also contains an anti- foaming agent, which in turn, retards the absorption of oil during the process of frying food stuffs, therefore, the packaging also contains the expression “WITH LOW ABSORB TECHNOLOGY”. 4. Two basic issues arise for decision in the present appeal along with incidental and related issues. The first issue is on the aspect of infringement i.e. whether the appellant‟s registration gives it exclusive right to use the subject trademarks “LOSORB” and “LO-SORB” and consequently whether an action for infringement is maintainable if a person such as the respondent uses a trademark which is deceptively similar or nearly identical or identical to the registered trademarks. Included in this first issue is the aspect of whether registration only confers prima facie validity and thereby does not prevent the court from denying the injunction in spite of registration. Further, assuming FAO(OS) 352/2010 Page 5 of 50 that registration is final would the appellant be entitled to the reliefs of injunction with regard to its claims of infringement once the respondent lays out a valid defence under the applicable provisions of the Trademarks Act, 1999 (hereinafter referred to as the “Act”) which inter alia, include Section 30(2) (a) and Section 35 thereof i.e. the use of the words by the respondent, which words are claimed by the appellant as its trademarks are statutorily permissible as the use is only in a descriptive manner. The second issue is the issue with regard to claim of the appellant pertaining to passing off and the issue is whether the respondent‟s user of the expression “LOW ABOSORB TECHNOLOGY” in relation to its edible oil product amounts to passing off the goods of the appellant which uses the unregistered trademark “LOW ABSORB”. We also would like to state that on quite a few aspects of “passing of” and “infringement” there will be commonality of the ratios and thus dovetailing on these common aspects. PASSING OF ACTION 5. Since, the second issue is now almost entirely covered by a decision of a Division Bench of this Court reported as Cadila Healthcare Ltd. Vs. Gujrat Co-operative Milk Marketing Federation Ltd & Ors 2009 (41) PTC 336: 2009 (8) AD (Delhi) 350 we shall therefore deal with it first. We are consciously using “almost entirely” because there is one major difference in the case of Cadila Healthcare Ltd. (supra) and the present case on the issue of FAO(OS) 352/2010 Page 6 of 50 passing off being that the products in the case of Cadila Healthcare Ltd. of the two parties were different, but in the present case the products are identical. The Division Bench in the judgment of Cadila Healthcare Ltd. (supra) was concerned with a passing off an action with respect to the trademark “Sugar Free” which was used by the plaintiff therein with respect to an artificial sweetener acting as a substitute for natural sugar and the defendant was selling a frozen desert with the Trademark “Amul” and describing its product as “Sugar Free”. The Division Bench has held that expression “Sugar Free” is basically a descriptive and generic expression. The Division Bench has further held that it cannot be said to be a coined word. The Division Bench in effect has held that there cannot an exclusive ownership granted to a person with respect to expression “Sugar Free”, i.e., there cannot be claim of exclusive user of the expression “Sugar Free” as a trademark with respect to all other products which were not artificial sweeteners assuming that the plaintiff may have distinctiveness with respect to its trademark for artificial sweeteners. The relevant paras of the judgment Cadila Healthcare Ltd. (supra) which contain the ratio are para Nos.8 to 11 and 14 which read as under: 8. In our view, at this juncture i.e. at the interim stage, even assuming distinctiveness claimed by the appellant in its favor qua its artificial sweetener, the appellant has rightly been declined an injunction by the learned Single Judge since it is evident and has indeed been found by the learned Single Judge that the use of the term „Sugar Free„ by the respondent is not in the trademark sense but as a common descriptive adjective. The learned Single Judge has found and in our view rightly that the FAO(OS) 352/2010 Page 7 of 50 respondent has not used the expression in a trademark sense but only in a descriptive sense in the following passage: - “54. It is important to be borne in mind that use of a descriptive expression as a trademark by a trader, irrespective of the said trademark having acquired a secondary meaning and distinctiveness in relation to the trader's products, does not entitle such trader from precluding other traders from using the said expression for the purposes of describing the characteristic features of their products. I have no hesitation in stating, albeit without prejudice to the rights and interests of the plaintiff in the present suit, that by adopting such a purely descriptive and laudatory expression 'Sugar Free' as its trademark, the plaintiff must be prepared to tolerate some degree of confusion which is inevitable owing to the wide spread use of such trademark by fellow competitors. Simply because the plaintiff claims to be using the expression 'Sugar Free' as a trademark much prior to the launch of the defendant's product Pro Biotic Frozen Dessert in the market does not give this Court a good ground for imposing a blanket injunction on the defendant from using the expression 'Sugar Free', especially when the defendant intends to use this expression only in its descriptive sense and not as a trademark, and even otherwise, when the use of this expression is widespread in relation to foods and beverages” We fully agree with and reaffirm the said finding. 9. We are unable to hold that the appellant„s trademark „Sugar Free‟ is a coined word; at best it is a combination of two popular English words. The mere fact that the appellant„s product cannot be directly consumed or eaten and merely is an additive does not detract from the descriptive nature of the trademark. Once a common phrase in the English language which directly describes the product is adopted by a business enterprise, such adoption naturally entails the risk that others in the field would also be entitled to use such phrases provided no attempt is made to ride on the band wagon of the appellant„s indubitably market leading product „Sugar Free‟. In this connection, merely because the attributes of „sugar free‟ can be described by other phrases cannot detract from the common usage of the phrase „Sugar Free‟ as denoting products which do not contain sugar and any trader which adopts FAO(OS) 352/2010 Page 8 of 50 such mark in the market place, does so with the clear knowledge of the possibility of other traders also using the said mark. That is precisely the reason for the denial of protection to such marks by refusing registration as envisaged by Sections 9, 30 and 35 of the Act. The said Sections read as follows: - “9. Absolute grounds for refusal of registration.— (1) The trademarks— (a) which are devoid of any distinctive character, that is to say, not capable of distinguishing the goods or services of one person from those of another person; (b) which consist exclusively of marks or indications which may serve in trade to designate the kind, quality, quantity, intended purpose, values, geographical origin or the time of production of the goods or rendering of the service or other characteristics of the goods or service; (c) which consist exclusively of marks or indications which have become customary in the current language or in the bona fide and established practices of the trade, shall not be registered: Provided that a trademark shall not be refused registration if before the date of application for registration it has acquired a distinctive character as a result of the use made of it or is a well-known trademark. 30. Limits on effect of registered trademark.—(1) Nothing in Section 29 shall be construed as preventing the use of a registered trademark by any person for the purposes of identifying goods or services as those of the proprietor provided the use— (a) is in accordance with honest practices in industrial or commercial matters, and (b) is not such as to take unfair advantage of or be detrimental to the distinctive character or repute of the trademark. (2) A registered trademark is not infringed where— (a) the use in relation to goods or services indicates the kind, quality, quantity, intended purpose, value, FAO(OS) 352/2010 Page 9 of 50 geographical origin, the time of production of goods or of rendering of services or other characteristics of goods or services; 35. Saving for use of name, address or description of goods or services.—Nothing in this Act shall entitle the proprietor or a registered user of a registered trademark to interfere with any bona fide use by a person of his own name or that of his place of business, or of the name, or of the name of the place of business, of any of his predecessors in business, or the use by any person of any bona fide description of the character or quality of his goods or services.‖ (emphasis supplied) Thus, it is clear that the mark or indication which serves to designate the quality of the goods of the appellant, which indeed the phrase „Sugar Free‟ does, would be an absolute ground for refusal of registration of a mark unless it has acquired a distinctive character. The expression can at best be said distinctive qua the artificial sweetener of the appellant and mere starting of the marketing of the drink „sugar free D„lite‟ cannot give the appellant the right to claim distinctiveness in the expression „Sugar Free„ in relation to all the food products. 10. The learned Senior Counsel for the appellant has relied upon a plethora of judgments including the decision of the European Court of Justice in Baby Dry (supra) to claim that the expression „Sugar Free‟ is a coined word and is distinctive in nature. Apart from the fact that the law laid down in the case of Baby Dry is not binding on us, it is also relevant to notice that in the said case the court permitted the registration on the basis of the categorical findings that the expression „Baby Dry‟ was a syntactically unusual juxtaposition of two independent English words and was not a familiar expression in the English language. In our view, the expression „Sugar Free‟ is neither a coined word nor an unusual juxtaposition of two English words especially when such expressions are commonly used, both in written, as well as spoken English, for example, ― “hands-free” (for mobile phones) and “fat free” (for food articles) and thus cannot be permitted exclusive use for only the appellant„s product. FAO(OS) 352/2010 Page 10 of 50 11. The appellant has relied upon the case of Godfrey Philips India Ltd. (supra) wherein it was held that a descriptive trademark may be entitled to protection if it has assumed a secondary meaning which identifies it with a particular product or has been from a particular source. It is also relevant to mention here the judgment of Home Solutions (supra) was also relied upon by the respondents, wherein it was held that ―the expression “HOMESOLUTIONS” is inherently incapable of becoming distinctive of any single person with respect of any single product or service. It is generic and publici juris. It describes the nature of services offered.” Thus, in our view, the mark „Sugar Free‟ is inherently incapable of becoming distinctive of the product of the appellant and hence the ratio of Godfrey Philips would thus not be applicable. Even if it is assumed that the mark of the appellant has become distinctive qua the artificial sweetener, however, the protection to the mark qua the product artificial sweetener cannot be extended to all the food products of any competitor in the market. We also affirm and reiterate the view taken by the learned Single Judge that the appellant„s product is a sweetener/sugar substitute, and sweeteners are generally understood in their functional sense, that is, in terms of utility when added to foods and beverages. To an average consumer, a sweetener is known to exist only when added to food and beverages, and its own identity gets merged in the food and beverages to which it is added. Thus, the expression „Sugar Free„ when used in relation to a sweetener may really describe a sweetener in the sense of its generic meaning, and what it connotes is the specific nature and characteristics of the product. xxxxxxxxx 14. In consonance with the above view we are also not in a position to agree with the appellant that the word „Sugar Free„ has become so distinctive of the sugar substitute and has acquired such a secondary meaning in the sugar substitute market that it cannot refer to any other food product except the appellant„s sugar substituted product labelled „Sugar Free„. There cannot be any doubt that the word „sugar free‟ is not inherently distinctive and is clearly descriptive in nature. In fact, the word „Sugar Free„ in essence clearly only describes FAO(OS) 352/2010 Page 11 of 50 the characteristics of the appellant„s product and therefore, cannot afford it the protection sought in the plaint by restraining the respondent from using the phrase „sugar free„. „Sugar Free„, prima facie has not attained any distinctiveness, as alleged by the appellant outside the field of sugar substitute artificial sweeteners and the appellant would not be entitled to exclusively claim the user of the expression „sugar free„ in respect of any product beyond its range of products and the respondent cannot be restrained from absolutely using the expression „Sugar Free‟, particularly in the descriptive sense. A mere descriptive usage of the expression „Sugar Free‟ by the respondent may thus blunt the edge of claim of distinctiveness by the appellant. However, we make it clear that if any party enters into the domain of artificial sweeteners with the trademark „Sugar Free‟ the appellant may have a just cause in seeking restraint.” (Emphasis has been added by us) 6. In view of the judgment of the Division Bench in the Cadila Healthcare Ltd. (supra), and with which we respectfully agree, the appellant in the facts of the present case can have no exclusive ownership rights on the trademark “LOW ABSORB”. The expression “LOW ABSORB” is quite clearly a common descriptive expression/adjective. The expression “LOW ABSORB “ is not a coined word and at best it is a combination of two popular English words which are descriptive of the nature of the product as held by the Division Bench in Cadila Healthcare Ltd. (supra) case that such adoption naturally entails the risk that others in the field would also be entitled to use such phrases. Low Absorb is not an unusual syntax and the same can almost be said to be a meaningful part sentence or phrase in itself. The expression “LOW ABSORB” surely and immediately conveys the meaning of the expression that something which absorbs less, and FAO(OS) 352/2010 Page 12 of 50 when used with respect to edible oil, it is descriptive in that it refers to less oil being absorbed or low oil being absorbed. Similar to the expression “Sugar Free” being not an unusual juxtaposition of two English words the expression “LOW ABSORB” equally is not an unusual juxtaposition of words in that the same can take away the descriptive nature of the expression. The expression “LOW ABSORB” is used in the functional sense for the character of the product viz edible oil. With respect to the unregistered trademark “LOW ABSORB” we are of the firm opinion that in essence the expression “LOW ABSORB” only describes the characteristic of the product edible oil and ordinarily/ normally incapable of being distinctive. We are also of the view that it is high time that those persons who are first of the blocks in using a trade mark which is a purely descriptive expression pertaining to the subject product ought to be discouraged from appropriating a descriptive expression or an expression which is more or less a descriptive expression as found in the English language for claiming the same to be an exclusive trademark and which descriptive word mark bears an indication to the product‟s kind, quality, use or characteristic etc. This in our view is in accordance with the spirit of various sub sections of Section 9 and Section 30 besides also Section 35 of the Act. The very fact that in terms of Section 9 of the Act, in cases falling therein, there is an absolute ground for refusal of registration of the trademark, the same clearly is an indication of ordinarily a disentitlement from claiming FAO(OS) 352/2010 Page 13 of 50 exclusive ownership of a descriptive expression as a trademark. We are in this entire judgment for the sake of convenience only using the expression „descriptive expression‟ or „descriptive word‟ or „descriptive trademark‟ „descriptive‟ etc. but these expressions are intended to cover cases with respect not only to a descriptive word mark used as a trademark but to all word marks used as trademarks which refer to kind, quality, intended use or other characteristics etc of the goods, and also other ingredients of Section 9(1) (b) and Section 30 (2) (a). The aforesaid observations are made by us mindful of the proviso of Section 9 as per which on account of distinctiveness, the absolute bar against registration is removed, but, we are for the present stressing on the intendment of the main part of the Section and which is to basically prevent descriptive terms from being registered as trademarks. The proviso no doubt does state that such marks can be registered as a trademarks, however, the Act itself also contains provisions for cancellation of registered trademarks including Section 57 whereby registration obtained is cancelled being violative of the applicable provisions of the Act. Our belief is further confirmed by the provision of Section 31(1) which clearly states that registration is only prima facie evidence of the validity of registration. It is only when cancellation proceedings achieve finality of the same being finally dismissed can it be said that a mark for which ordinarily there is an absolute ground for refusal of registration that it has acquired a distinctive character i.e. a secondary meaning or is a well known FAO(OS) 352/2010 Page 14 of 50 trademark. Section 124 of the Act is also relevant in this regard. Sub section 5 of Section 124 clearly provides that in spite of registration, the Court before which an action is filed seeking protection of the trademark is not precluded from making any interlocutory order it thinks fit in spite of the registration and also the fact that the suit may have to be stayed till decision of the rectification/cancellation proceedings before the Registrar/Appellate Board filed in terms of Section 57 of the Act. This aspect of Section 124(5) and related aspects are dealt in details in the following portions of this judgment. The facts of the present case are not such that a cancellation proceeding has been dismissed and that which dismissal has obtained finality and it cannot be said that the validity of registration has been finally tested. 7. An important aspect with respect to the issue of passing of is that the respondent is selling its product with a prominent trademark “Sundrop” and which appears on the packaging of the respondent in a very prominent size, much larger than the size of the expression “LOW ABSORB