Introduction:

Judicial systems across various jurisdictions aim to reduce multiplicity of judicial/quasi-judicial proceedings. It is done to ensure that the outcomes of such proceedings are not contradictory, giving rise to several rights vested in different parties, albeit concerning the same factual matrix. This principle has been duly incorporated in the Indian trademark regime as well. As per Section 124 of the Trade Marks Act, 1999 (‘Act’), a suit for infringement of a trade mark must be stayed while a rectification proceeding in respect of any of the marks in the suit is pending before the Registrar of Trade Marks or the High Court.

The rationale behind said provision is to ensure that the decision in the infringement proceeding is only taken once the validity of the concerned mark in question is ascertained. In light of the same, the High Court of Delhi (‘Court’), in an Order dated 6 January 2022, in Hamdard National Foundation (India) & Anr. v. Sadar Laboratories Pvt. Ltd.[1] has reiterated the principle encapsulated in Section 124, while also clarifying the scope of Section 124(5) of the Act.

Facts of the case:

Hamdard National Foundation (India) and Hamdard Dawakhana (‘Plaintiffs’) are engaged in the business of Unani and Ayurvedic medicines, oils, syrups, and beverages. They have obtained registration for the trademarks ‘Hamdard’ and ‘Rooh Afza’, which they have been using for their products for over 100 years. The mark ‘Rooh Afza’ has been registered since as early as 1942, and the sharbat sold under said mark has a unique lay-out, getup and arrangement, which gives it a distinctive visual impression.

Sadar Laboratories (‘Defendant’) is also engaged in the business of Unani medicines, syrups, and beverages. The Defendant has a registered trademark ‘Sharbat Dil Afza’, which was filed in July 2018, claiming use since 1949. In March 2020, the Plaintiffs were apprised of a syrup/sharbat being launched by the Defendant bearing the mark ‘Dil Afza’, the adoption of which, along with the alleged deceptively similar get-up of the product, contended by the Plaintiffs, was done with a mala fide intention to exploit their goodwill. The Plaintiffs additionally stated that it was due to an oversight that the Defendant’s mark ‘Dil Afza’ was not opposed at the time of registration, and subsequently, filed an application for rectification before the Trade Marks Registry.

Pursuant to this, the Plaintiffs filed a suit for infringement on the ground that the Defendant was not only infringing the well-known trademarks ‘Hamdard’ and ‘Rooh Afza’ of the Plaintiffs but was also passing off its products as those of the Plaintiffs by using the mark ‘Dil Afza’, and a similar product design and get-up. In the suit, the Plaintiffs sought a relief seeking permanent injunction, restraining the Defendant from infringing their registered trademarks and seeking protection against disparagement, dilution and tarnishment of trademarks, and damage to reputation.

Arguments advanced:

• On the well-known status of Plaintiffs’ marks

The Plaintiffs relied on Unani Dawakhana v. Hamdard Dawakhana[2], in which the Lahore High Court had observed that the trademark ‘Rooh Afza’ is a well-known trademark. In response to this, the Defendant contended that the judicial precedent was not applicable in the present case as it was based on an erstwhile statute and the present Act provides for certain pre-requisites to be met for a mark to be considered as ‘well-known’, which have not been met in the present case.

• Whether the law contemplates granting an interim injunction under Section 124(5) of the Trade Marks Act, 1999

The Defendant relied on Section 124(1)(b)(i) of the Act and stated that since the Plaintiffs had initiated a rectification proceeding against the Defendant’s application for the mark ‘Dil-Afza’ before the Registrar of Trade Marks, the suit for infringement, and any subsequent action therein, must be stayed. The Defendant further brought to light the fact that since the relief sought in the interim application is fundamentally the same as that in the main suit, the Court cannot grant an interim injunction as that would essentially lead to a decision on the main suit. On the contrary, the Plaintiffs contended that the rule under Section 124(1) is not without exceptions. In certain cases, Section 124(5) allows an interim injunction to be granted.

• Whether an interim injunction could be granted on the facts of this case

It was contended by the Defendant’s counsel that the Plaintiffs and Defendant have registration for their respective marks and therefore, a suit for infringement cannot be instituted taking into account Section 29 of the Act. The Defendant further contended that the term ‘Afza’ had become a common term used by many entities in the sharbat market and had not acquired a secondary meaning so as to be associated solely with the Plaintiffs. Further, there were significant differences in the packaging of the bottles, where the Plaintiffs’ label contained flowers, the Defendant’s label depicted fruits and showed the house-mark Sadar distinctively. Further, the Defendant has acquired its own reputation through the extensive and continuous use of its mark. It also contended that the Plaintiff has belatedly filed the present suit as it has been aware of the Defendant’s reputation as both parties were members of the Unani Drug Manufacturers Association and were known to each other.

On the other hand, the Plaintiffs asserted that ‘Rooh Afza’ had obtained a secondary meaning and the Defendant obtained registration of their mark ‘Dil-Afza’ by deception as documents related to prior use of the mark were not submitted before the Registrar of Trade Marks. In addition to this, the Plaintiffs stated that on an overall comparison there were minor differences in the two labels, and the visual impression of the Defendant’s product was substantially similar to cause confusion to the public.

Held:

The Court, at the outset, agreed with the Plaintiffs that they had acquired a vast reputation and goodwill with respect to their trademark ‘Rooh Afza’. However, it categorically noted that this goodwill did not extend to the word ‘Afza’, neither had they applied for and/or obtained registration for only this word. Therefore, their exclusivity extended only to the complete name ‘Rooh Afza’, and not to either of the words constituting the mark. With regards to the Defendant’s contention that the Plaintiff is barred from requesting interim injunction in view of Section 124(5), the court disagreed and confirmed that an interim order can be passed even if the infringement suit has been stayed in view of Section 124. However, the Court stated that in order to analyze whether an interim order can be passed under Section 124(5) of the Act, it is imperative to look at the question whether the use of the Defendant’s mark would result in confusion to the consumers.

On this point, the Court stated the standard to be adopted while determining confusion arising in the mind is of a consumer of imperfect memory or recollection and of ordinary sensibilities. Turning to the factual matrix of the present case, it was held that in the context of a common consumer, the words ‘Rooh’ and ‘Dil’ do not denote the same thing. The Court relied on the case of Cadila Laboratories Ltd. v. Dabur India Limited[3], to discuss the importance of prefixes in marks where the suffix is common. It reiterated that where the suffix is common, the prefix becomes the distinctive feature of the mark. Applying the same principle to this case, the Court noted that the prefix ‘Rooh’ and ‘Dil’ would not cause confusion due to their different meaning. 

The Court further noted that since the Plaintiffs had failed to show that the word ‘Afza’ had acquired a secondary meaning denoting only their product ‘Rooh Afza’, it cannot be said that the Defendant’s product ‘Dil Afza’ is passing off as Plaintiffs’ product and reputation. Lastly, the Court considered that the Plaintiffs’ and Defendant’s products bearing their respective marks had been co-existing in the market for a long time, the simultaneous use of the Defendant’s mark shall not prejudice the Plaintiffs’ business.

The Court observed that no case was made out for an interim order as per Section 124(5) of the Act and dismissed the present interim application, with a direction that a true account of sales of ‘Dil Afza’ syrup be maintained during the pendency of the suit. The Court further directed the stay of the suit of infringement, till the final disposal of the rectification application filed by the Plaintiffs, in light of Section 124(1)(b)(i) of the Trade Marks Act, 1999.

Conclusion:

While the Court reaffirmed the statutory principle enunciated in Section 124, an important aspect of the case is the applicability of Section 124(5). The Court re-emphasized that a stay of a suit of infringement proceedings does not automatically mean that an interim order cannot be passed. Consumer protection and avoidance of consumer confusion/deception lies at the heart of trademarks law. Therefore, even where there are ongoing rectification proceedings, the Court has clarified through its analysis in this case, that an interim order could be passed if the factual matrix indicates that consumer confusion is caused.

[The authors are Joint Partner, Senior Associate and Associate, respectively, in IPR practice team at Lakshmikumaran & Sridharan Attorneys, New Delhi]

1. [1] 2022 (89) PTC 342 (Del).
2. [2] 1930 SCC OnLine Lah 300.
3. [3] 1997 SCC OnLine Del 360.