Rhizome Distilleries P. Ltd & Ors. v. Pernod Ricard S.A. France & Ors.

10. Learned counsel for the Appellants has also contended that the impugned Order tramples upon the statutory power of the Intellectual Property Appellate Board (IPAB), to which an Appeal against a registration under the Trade Marks Act, 1999 („TM Act‟ for short) has been provided for in Section 124. Section 124 of the TM Act has also been relied upon to canvass that decision viz.-a-viz. objections pertaining to the invalidity of such a registration is the preserve of the IPAB. The first subsection of Section 124 directs that where there is a plea in a plaint for invalidating a trademark, in the event that rectification proceedings are pending, the suit would be stayed and if no such proceedings are pending and the Court is satisfied that the plea regarding the invalidity of the registration of the subject trademark is prima facie tenable, the Court would raise an issue regarding the same and thereupon adjourn the case for a period of three months from the framing of the issue in order to enable the concerned party to apply to the IPAB for rectification of the registration. The Appellants have buttressed arguments by referring to Section 28 of the TM Act, the first sub-section of which reposes the right to obtain relief in respect of infringement of a registered trademark to the person in whose favour the registration has been granted. Where both parties have received registration of their respective trademarks, the third sub-section ordains that neither of them would be able to setup a case against the other based only on the registration. It seems to us that it was for these reasons that the Plaintiffs had given up its challenge predicated on infringement, and had rested its case for the grant of an injunction on the common-law relief of passing off. This is evident from paragraph 12 of the impugned Judgment where it has been mentioned that though the suit is for infringement of trademark as well as for passing off, for the purpose of the interlocutory application, the plaintiffs are pressing for injunction on account of passing off alone and the relief of injunction may be granted in favour of the plaintiffs and against the defendants on account of passing off. It is, therefore, not permissible to permit Mr. Sudhir Chandra, learned Senior Counsel for the Respondents, to press the argument that the use of the word IMPERIAL by the Appellants amounts to infringement as well as passing off. In these circumstances, it is significant that the legal opinion, as it presently stands, is that while the use of IMPERIAL may not be important when considering the relief of infringement, since both adversaries have received registration for this word, it assumes grave proportions for the purposes of the relief of passing off.

10. The learned Single Judge has passed a detailed Judgment after perusing a plethora of precedents cited at the Bar, returning a finding that the Defendants are clearly guilty of passing off. The conclusion is based on several considerations, including that “it is undisputed that the plaintiffs adopted the trademark IMPERIAL BLUE in the year 1997 and since then the said trademark has become distinctive of the plaintiffs‟ product; the plaintiffs have a huge turnover in the sum of Rupees 317 crores in the year 2007; the plaintiffs have registered trademark for IMPERIAL BLUE and IMPERIAL RED; that the defendants have either used discarded bottles of the plaintiffs with Seagram embossed on the bottom of the bottle or have wilfully, fraudulently and dishonestly manufactured the same”. It has been noted that, on the contrary, the Defendants have emerged in the market in April, 2006, that is, a decade after the launch of the Plaintiffs‟ product. As both the parties are manufacturing and selling whisky in the same area and targeting the same section of consumers, the learned Single Judge was not impressed with the aspect of delay and laches for the reason that the market research disclosed that the Defendants‟ product was not available even in the year 2000 and that it was only in September, 2008 that the Plaintiffs have come across the Defendants‟ trademark Imperial Gold. The learned Single Judge has commented that there is not an iota of evidence on record to prima facie indicate the launch of the Defendants‟ product in the year 2006. Reliance has been derived from Midas Hygiene Industries(P) Ltd.-vs- Sudhir Bhatia, (2004) 3 SCC 90, wherein it has been opined that “in cases of infringement either of trademark or of copyright, normally an injunction must follow. Mere delay in bringing action is not sufficient to defeat grant of injunction in such cases. The grant of injunction also becomes necessary if it prima facie appears that the adoption of the mark was itself dishonest”. Most significantly, the learned Single Judge has held that the argument on behalf of the Defendants/Appellants is untenable that the word “IMPERIAL” is a generic term and hence publici juris. In its opinion, the word IMPERIAL would be “generic only if it is used by a member of the royal family, but certainly it will be arbitrary when applied to a whisky and that too, a whisky other than scotch, and furthermore a whisky in the lower price segment”. The learned Single Judge has found the employment of the prefix RHIZOME irrelevant, keeping in view the overall trade dress of the rival bottles. The learned Single Judge has also rejected the argument that Section 124(5) precludes the Court from granting an injunction, but in view of the specific noting that the claim for infringement had been given up, this debate, in our opinion, has become superfluous. The learned Single Judge voiced the opinion that sub-standard whisky may prove to be more injurious than a sub-standard medicinal or pharmaceutical product, and may lead to lethal consequences, even a wholesale disastrous one. With respect to the learned Single Judge, this is not the case presented by the Plaintiffs and may not be factually correct since neither product is injurious to health due to their respective quality, without prejudice to the general debate relating to the pernicious nature of alcohol in general. These observations are indeed a window to the reasons which pervaded the mind of the learned Single Judge to grant the injunction.

11. We will first deal with the contentions centring upon the trade dress of the Plaintiffs ROYAL STAG and the Defendants‟ RHIZOME IMPERIAL BLUE. It seems to us that the similarities of both labels are such that a customer of modicum memory and mental capacity would become confused in distinguishing between them. Learned counsel for the Appellants had immediately conceded the point, and had offered to change the label as well as the shape of the bottle. Bottles can be of myriad configuration; they can be round, square, rectangular, flat or cylindrical bodied, or slim or tall. Bottles can have a long neck or otherwise, and can be of clear glass or burgundy or green or any other colour. Learned counsel for the Appellants has stated that the Appellants are willing to colour their bottles amber and make them in a short neck shape. Indeed, photographs of the bottles in which the Appellants are presently marketing its whisky, have been placed on record and it appears that one of them is amber with a red cap. So far as the label is concerned, learned Senior Counsel has filed a variety of samples, one of which is in gold and amber with RHIZOME Imperial Gold written in the same font and size on a Shield in contradistinction to the impugned label in which RHIZOME was in a different colour and smaller size than Imperial Gold which was also written in a swirl or ribbon style which was conceivably confusing with the ROYAL STAG label. Since there is now no similarity between the ROYAL STAG and RHIZOME Imperial Gold labelling, we are satisfied that the Defendants can no longer be accused of passing off so far as these two marks/labels are concerned.

12. The question still remains whether passing off is possible predicated on the Plaintiffs‟ other product, viz.

IMPERIAL BLUE, and the fact that the Appellants/Defendants product is RHIZOME Imperial Gold. Although it has not been argued by Mr. Sudhir Chandra, it is worthy to note that the registration accorded to the Appellants is Rhizome Imperial Gold (not in block letters), whereas the Plaintiffs mark is in block letters IMPERIAL BLUE. We should not be understood to hold that such a difference would be sufficient to distinguish one product from another, but when several such features exist, even a consumer of average intellect may be able to make segregation. In this light, the Appellants are directed to adhere to the start case style in contradistinction to block/all uppercase/all capital style.

13. We are reminded of the decision of the Court of Appeal in McCain International Limited –vs- Country Fair Foods Limited, 1982 PTC 156. The learned Single Judge had granted interlocutory relief in a passing off action. The Plaintiff avowedly was the first to launch „chipped potatoes‟ in the market which rather than being fried could be baked in the oven or cooked in a grill. The competing brands were „McCain Oven Chips‟ and „Country Fair Oven Chips‟. The Court of Appeal was of the opinion that the case was similar to the term „Flaked Oatmeal” in Parsons –vs- Gillespie, 1898 AC 239 which was seen as descriptive. Reference was also made to the use of the word “slip-on” which was also found to be descriptive; or Hedley‟s Malted Milk as against Horlicks Malted Milk. We think it noteworthy that it was reiterated that it was essential for a trader to add a prefix or suffix, preferably showing origins in order to get any protection in respect of a word which is descriptive. Reference was also made to Office Cleaning Service Ltd. –vs- Westminster Window and General Cleaners Ltd., (1946) 63 RPC 39 where the rivals were using “Office Cleaning Services” and “Office Cleaning Association”. The opinion was that where a fancy word has been chosen as a part of the name and if another trader adopts that fancy name that may be seen as inviting confusion. Keeping all these precedents in view, the Court of Appeal concluded that the use of the word „Oven Chips‟ was descriptive and the prefix of „McCain‟, „Country Fair‟ or „Birds Eye‟ were sufficient to distinguish the products. We are not faced with the employment of descriptive words but the underlying rationale is apposite, namely, that if words of common parlance are used, exclusivity cannot be claimed and secondly the use of a prefix would invariably result in distinguishing the rival products.

14. S.M. Dychem Ltd. –vs- Cadbury (India) Ltd., (2000) 5 SCC 573 is pressed into support by learned counsel for the Defendants. In that case the Plaintiffs used the word „Piknik‟ for some time and when it discovered that the Defendants was marketing „Cadbury Picnic‟, an injunction was prayed for and granted. The Division Bench, however, reversed the Order and this has received the imprimatur of the Supreme Court by a detailed judgment. The presence of „Cadbury‟ was, in their Lordships‟ opinion, sufficient reason to decline injunction. The learned Single Judge has reproduced 54th paragraph of S.M. Dychem Ltd., but with due respect, had not applied the Judgment to the extent that it compelled. The said paragraph reads as follows and is extracted for obvious reasons:-

54. As to scope of a buyer being deceived, in a passing off action, the following principles have to be borne in mind. Lord Romer, LJ has said in Payton & Co. v. Snelling Lampard & Co. (1900) 17 RPC 48 that it is a misconception to refer to the confusion that can be created upon an ignorant customer. The kind of customer that the Courts ought to think of in these cases is the customer who knows the distinguishing characteristics of the plaintiff's goods, those characteristics which distinguish his goods from other goods in the market so far as relates to general characteristics. If he does not know that, he is not a customer whose views can properly be regarded by the Court. [See the cases quoted in N.S. Thread & Co. v. Chadwick & Bros. AIR 1948 Mad. 481, which was a passing off action]. In Schweppes' case, Lord Halsbury said, if a person is so careless that he does not look and does not treat the label fairly but takes the bottle without sufficient consideration and without reading what is written very plainly indeed up the face of the label, you cannot say he is deceived.

15. Very recently, the Division Bench of this Court in Cadila HealthCare Ltd. –vs- Gujarat Co-operative Milk Marketing Federation Ltd., MANU/DE/2282/2009 upheld the decision of a Single Judge of this Court refusing an injunction against the use of the word „Sugar Free‟. The Plaintiff is the manufacturer of the artificial sweetener sugar free, where as the Defendant had stated that its ice creams were sugar free or free of sugar. It was held that exclusivity could not be claimed in respect of ordinary words (or if we may say descriptive words) which are publici juris. The Division Bench also quoted with the approval the decision of the High Court of Bombay in Asian Paints Limited –vs- Home Solutions Retail (India) Ltd., 2007 (35) PTC 697, wherein the learned Single Judge had declined an injunction holding that the words „Home Solutions‟ are to be commonly found. Jural opinion, therefore, is an averse to granting exclusivity to ordinary words. Our esteemed and learned Brother, Mukul Mudgal, J., had noted that „Sugar Free‟ is neither a coined word nor an unusual juxtaposition of two English words especially when such expressions are commonly used. Although the Bench expressed their reservations for the decision of the European Court of Justice in Proctor & Gamble – vs- Office of Harmonisation in the International Market (OHIM), (2002) RPC 17 (famously known as “Baby Dry Case”), it was noted that the proprietary character could be accorded to expressions which are syntactically unusual. In other words, there must be something unique to the choice of the word; it should neither be descriptive nor laudatory since everyone would be entitled to use such word(s). It would be wise, therefore, for any trader or manufacturer to use a coined or unique word if he expects proprietary right over and a consequent injunction to issue in respect of the user of such trademarks by rivals. If a new venture dealing in computers adopts the name „Apple‟, we would expect Courts not to hesitate to grant an injunction against its user by third parties since the choice of the word „Apple‟ has no connection whatsoever with computers. Obviously, if a party adopts the mark „Imperial Apples‟ in connection with the apple trade, Courts would be loathe to grant an injunction for either word.

16. It seems to us that the regime which applies to descriptive words would apply equally to laudatory words. No one can claim exclusive or proprietary rights over such words. However, this would not inexorably lead to the consequence of the relief of passing off not being available. That relief would invariably depend and be determined by the manner in which both products are being marketed. Learned counsel for the Appellants has reason to rely on Hiram Walker Inc. –vs- Penn- Maryland Corporation. Coincidentally, in that case also the word „Imperial‟ was being used as a trademark for whisky. It was held that it would be improvident to grant an injunction because the trademark IMPERIAL could not be registered and secondly because a secondary meaning had not been established. Very recently, in Khoday India Ltd. –vs- Scotch Whisky, AIR 2008 SC 2737 their Lordships took note of the difference in the pricing of the Indian made foreign liquor PETER SCOT and other Scotch whiskies introduced in the market by the Defendant. This was one of the grounds on which grant of an injunction was found to be inappropriate. So far as the case in hand is concerned, in the Hyderabad region it is the undisputed case that IMPERIAL BLUE is much higher priced than Imperial Gold.

17. In Madhuban Holiday Inn –vs- Holiday Inn Inc., 100(2002) DLT 306 the Division Bench, (of which one of us Sen, J. was a member), had upheld the Order of the learned Single Judge interdicting the use of the name Madhuban Holiday Inn. Dalveer Bhandari, J., as his Lordship then was, had opined that the adoption of the word HOLIDAY INN was ex facie fraudulent and mala fide; the intention was to “ride on the reputation of the respondent and derive pecuniary benefit from it”. The Bench