Kerala High Court: Owner of Registered Trademark Cannot Sue for Infringement If Opposite Party Also Has Registered Trade Mark; May Sue for Passing Off

Kerala High Court: Owner of Registered Trademark Cannot Sue for Infringement If Opposite Party Also Has Registered Trade Mark; May Sue for Passing Off

The Kerala High Court has set aside a District Court order restraining M/S Mariyas Soaps and Chemicals (appellants/respondents/defendants) from using their registered trademark ‘Chandra’ for being prima facie similar to Wipro's (respondents/petitioners/plaintiffs) soap range ‘Chandrika.’

The division judge’s bench comprising of Justices Anil K. Narendran and P.G. Ajithkumar observed it is settled law that an owner of a registered trademark cannot sue for infringement of his registered trademark if the opposite party also has the trade mark which is registered. However, the bench clarified that an aggrieved party may bring action for passing off.

The factual matrix of the case is that ‘Chandrika’ is Wipro’s registered trademark for Ayurvedic soaps launched in 1940. The mark was registered in 1947 and an all-India registration was obtained in 1976. Wipro (Respondent herein) contended that appellant attempted to market washing soap and detergents with a deceptively similar name 'Chandra'. It was alleged that the appellants had no authority to market their products using such a trade mark, since that would infringe Wipro's registered trademark.

The District Court observed that the mark ‘Chandra’ was deceptively similar to Wipro's trademark ‘Chandrika’ and that the color combination, writing style and design used by the appellants also had close resemblance and amounted to infringement of Wipro’s trade mark.

The counsel for the appellants averred that since both the appellant and the respondent had valid registration for their respective trademarks, no injunction should have been ordered by the court below. It was added that the plea that Wipro obtained registration on an earlier point of time cannot be a ground for seeking an order of injunction alleging infringement of their trademark, when a registrant is vested with the right to use their registered trademark in relation to goods and services.

The contention of the respondents is that the products marketed by the appellants have close similarities with the products of the respondents and are of the same class, and therefore the appellants cannot be allowed to infringe their trademark.

The Court noted that soap is one of the products included in Clause 3 of Schedule IV to the Trade Marks Rules, 2002.

The pertinent question raised before the bench was whether the respondents had the right to claim a prohibitory injunction since both of them held valid trade mark registration for their respective products.

The Court referred to the decision passed by the Apex Court S. Syed Mohideen which described the effect and consequences of registration of a trade mark.

In this context, the bench observed that an owner of a registered trademark cannot sue for infringement of his registered trademark if the opposite party also has the trade mark which is registered. This certainly disentitles the respondents from claiming a prohibitory injunction restraining the appellants from using their registered trade mark on the ground of infringement.

The Court clarified that, in such a case the person who obtained registration of a trade mark at an earlier point in time is not remediless. He can certainly approach the Registrar or the High Court, as the case may be, for rectification or cancellation of the offending trade mark invoking the provisions contained in Chapter VII of the Trade Marks Act.

The next question which was determined by the bench was whether the respondents in the present case were entitled to claim relief based on the alleged passing off?

The bench perused Section 27 of the Trade Marks Act which provides that no action for infringement will lie in respect of an unregistered trade mark. However, Section 27(2) recognizes the common law rights of a trade mark owner to take action against any person for passing off his goods or services as the goods or services of the former.

The Court while following the precedent set by the Apex Court, held that right of action of a person for passing off his goods or services and remedies thereof are not affected by the provisions of the Trade Marks Act.

The Court elucidated that the registration of a mark shall give exclusive rights to the use of the trade mark subject to the other provisions of the Trade Marks Act.

The bench observed, “The rights granted by the registration in the form of exclusivity are not absolute but are subject to the provisions of the Act. Section 28(3) of the Trade Marks Act provides that the rights of two registered proprietors of identical or nearly resembling trademarks shall not be enforced against each other. However, they shall have the same rights as against the third parties. Further, the rights in passing off are emanating from the common law and not from the provisions of the Act and they are independent of the rights conferred by the Act.”

It was pertinently, pointed out by the Court that the respondents ought to prove all the three elements which are considered to be the ‘classical trinity’ - goodwill, misrepresentation and damage to get the appellants restrained from marketing their products.

Averting to the present case, the bench noted that insofar as ‘goodwill’ was concerned, there was no dispute, since the respondents started using the trade mark ‘Chandrika’ for their products, Ayurvedic soap, in 1940. They got the trade name registered in 1947.

The Court on record found that they got pan India registration in 1976 and their products could garner immense goodwill and reputation among the customers is prima facie evident from the data furnished by them. Not only the brand name 'Chandrika', but its labels and packaging also have trade mark registration and all of them have a distinct appearance and acceptance in the market, noted the bench.

Apropos to the issue that whether appellants marketing of ‘Chandra’ amounts to misrepresentation of ‘Chandrika,’ the Court noted the District Court’s view that the label, the color combination, writing style and design on the labels used by the appellants was deceptively similar to that used by Wipro.

Thus, the High Court found no ground to interfere with the said observation and affirmed that the appellants' marketing of their products would amount to misrepresentation of the products of the respondents.

With respect to the damage occurred to the goodwill of ‘Chandrika,’ the bench observed that although the products of both parties came under class 3 of the Schedule of products under the Trade Marks Rules, the purpose of the products was different. It further noted that the appellants started marketing their products in the year 2020.

The Court after analyzing the market share of Wipro’s products in the successive years, was of the considered opinion that it did not suffer any notable diminution after 2020, in which year the appellant had started to market their products.

The Court observed that despite the appellant's marketing their products, Wipro had not sustained any economic loss or damage, nor had their market share been affected.

“In that view of the matter, it cannot be said that the third element to attract a passing off action is not established by the respondents. Therefore, the respondents are not entitled to get an order of injunction based on the allegations of passing off,” the Court held.

Accordingly, the appeal was allowed.