M/S Alkem Laboratories Ltd. vs Mega International (P) Ltd.
2009 Latest Caselaw 3734 Del

*         IN THE HIGH COURT OF DELHI AT NEW DELHI

+                    RFA (OS) No.31/2007

                                    Date of Decision : 14.09.2009

M/s Alkem Laboratories Ltd.                     ......Appellant
                         Through:         Mr. Valmiki Mehta, Sr.
                                          Advocate   with    Mr.
                                          Sushant Singh & Mr.
                                          Manav Kumar, Advocates

                               Versus

Mega International (P) Ltd.                   ...... Respondent
                           Through:       Ms. Pratibha M. Singh,
                                          Advocate


CORAM :
HON'BLE MR. JUSTICE MUKUL MUDGAL
HON'BLE MR. JUSTICE V.K. SHALI

1.     Whether 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

V.K. SHALI, J.

1. This is a Regular First Appeal filed by the appellant against

the judgment dated 08.2.2007 passed by the learned Single

Judge in Civil Suit bearing No.1926/2003 titled M/s Alkem

Laboratories Ltd. Vs. Mega International (P) Ltd. By virtue

of the impugned judgment, the suit of the appellant for

permanent injunction, passing off, rendition of accounts, in

respect of trademark "GEMCAL" in relation to medicinal

preparations was dismissed by the learned Single Judge.

2. Briefly stated the case of the appellant/plaintiff (hereinafter

referred to as the appellant) is that it is company

incorporated under the Companies Act and is carrying

business inter alia as a manufacturer, seller and dealer of

pharmaceutical and medicinal preparations. It was alleged,

in the plaint that it had adopted a trademark "GEMCAL" in

August, 1999 and applied for registration of the said

trademark in respect of medicinal and pharmaceutical

preparations and substances on 17.4.2000. In the month

of July, 2000, the appellant started manufacturing and

marketing its products on a commercial scale, bearing the

said trademark. The appellant claims to have spent a

huge amount of money for popularizing the product

through advertisements, by circulation of trade literature

including pamphlets, product information brochures,

physician samples and the certified sales turn over and

promotional expenses of the appellant for the years 2000-

2001, 2001-2002, 2002-2003 were to the tune of 15.54,

24.37 and 62.12 lacs respectively. On the basis of this

steady progression of amount of the money spent, it was

claimed that the product of the appellant namely

"GEMCAL" was fast acquiring reputation and goodwill in

the market.

3. It is alleged that the appellant came to know about the use

of the said trademark by the respondent/defendant

(hereinafter referred to as the respondent) in February,

2003 and consequently it sent notices to the respondent

through its trademark attorney on 27.2.2003. A reminder

was sent on 27.3.2003.

4. It is alleged that the said notices were replied by the

respondent on 01.4.2003. The respondent is alleged to

have filed a suit in the District Court at Gurgaon against

the appellant for permanent injunction, for alleged issuance

of groundless threat of legal proceedings, passing off

damages against the respondent.

5. It may be pertinent here to mention that the appellant‟s

product was stated to be a formulation which is

combination of calcitrol, calcium carbonate and zinc which

is available in the form of tablets and syrup whereas the

defendant‟s product is the combination of calcium and

vitamin D-3 and is also stated to be available in the form of

tablets and syrup.

6. The case of the appellant is that the respondent was a

subsequent user of the trademark as the appellant had

obtained drug licence on 17.9.99 and commenced user in

November, 2000. The use of the trademark "GEMCAL" by

the respondent was alleged to be causing confusion in the

minds of consumers. It is alleged that it was being done

with a view to deceive the innocent purchasers by the

respondents having an identical trademark to that of the

appellant. This entire exercise was alleged to be done by

the respondent with a view to make quick money on the

basis of the goodwill earned by the appellant. Thus on the

basis of the prior user of the trademark, the appellant filed

the suit against the respondent for permanent injunction

passing off and rendition of accounts.

7. The respondent is also a company incorporated under

Companies Act, 1956. It has denied that it is guilty of

passing off. As a matter of fact, it claimed itself to be the

lawful or legal owner/proprietor of the trademark GEMCAL.

It claimed that it had been using the said trademark from

November, 2000 although it had applied for registration of

the said trademark on the proposed user basis in 2003. It

was also stated that it had obtained a drug licence on

17.9.1999. It is denied that the respondent was using the

trademark from April, 2000.

8. On the pleadings of the parties, the following five issues

were framed:

"i. Whether the plaintiff is the proprietor of the trademark „GEMCAL‟ in respect of pharmaceuticals and medicinal preparations? OPP ii. Whether the plaintiff is the prior user of the trademark „GEMCAL‟ in respect of pharmaceuticals and medicinal preparations? OPP iii. Whether the defendant has adopted the trademark GEMCAL prior to the adaptation/user of the plaintiff? OPD iv. Whether the defendant is guilty of passing off its goods as that of the plaintiff by use of the trademark GEMCAL in respect of similar goods? OPP v. Whether the suit is liable to be stayed under Section 10 of the Code of Civil Procedure (hereinafter referred to as the said code) in view of the prior suit filed by the defendant against the plaintiff in the District Courts at Gurgaon? OPD"

9. The parties adduced their respective evidence in support of

their case. The appellant filed an affidavit by way of

evidence by one Mr.Deepak Kumar, Zonal Distribution

Manager of the appellant. The affidavits of Sh.Pravin Shah

and Sh.Rakesh Sood were also filed. In addition to this,

the affidavit of one Mr. Arvind Manwati, the Director of M/s

Banner Pharmacaps (P) Ltd. was also filed. It may be

pertinent here to mention that before the appellant started

selling its pharmaceuticals preparations under the name of

„GEMCAL‟, it is the case of the appellant that the said name

„GEMCAL‟ belonged to M/s Banner Pharmacaps (P) Ltd.

which used to manufacture and sell the „GEMCAL‟

capsules. The appellant had allegedly purchased this

brand name. On behalf of the respondent, affidavit by way

of evidence of one Sh.Jimmi Jacob, Company Secretary in

the respondent company was filed.

10. After hearing the arguments, the ld. Judge dismissed the

suit of the appellant.

11. So far as the first issue as to whether the plaintiff is the

proprietor of the trademark GEMCAL in respect of

pharmaceuticals and medicinal preparations is concerned,

the learned Single Judge came to a conclusion that the

appellant was unable to prove that it was the proprietor of

the product bearing the trademark GEMCAL and

accordingly, decided the said issue against the appellant.

12. The second and third issue as to whether the appellant is

the prior user of the trademark GEMCAL in respect of

pharmaceuticals & medicinal preparations and whether the

respondent has adopted the trademark GEMCAL prior to

the user of the appellant, were dealt with together and the

learned Single Judge came to a finding that as the

trademark „GEMCAL" is not registered in favour of either of

the parties and both the parties namely the appellant as

well as the respondent have filed their applications for

registration of the said mark, therefore, it is the prior user

of the trademark that has to be considered as the basis of

deciding rights of the parties. With regard to the prior user,

the learned Single Judge came to a finding that both the

appellant and respondent were concurrent users of the

mark GEMCAL and no specific instances of confusion

between the products of the parties have been shown or

brought on record and accordingly, the said issue was also

decided against the appellant.

13. With regard to the fourth issue, as to whether the

respondent is guilty of „passing off‟ its goods as that of the

appellant by use of the trademark GEMCAL in respect of

similar goods, the finding had been given by the learned

Single Judge while deciding the issue Nos.2 and 3 that the

respondent was an „honest concurrent user‟ of the word

"GEMCAL" and therefore, there was no question of „passing

off‟. While arriving at such a finding, the learned Single

Judge had placed reliance on the annual sales and

promotional expenses incurred by the appellant towards

the product "GEMCAL" which showed the sales turnover of

the appellant for the year 2000-01, 2001-02 and 2002-03

to the tune of 15.54 lacs, 24.37 lacs and 62.12 lacs

respectively in comparison to the total amount of

Rs.45,691/- for the entire three years so far as the

respondent was concerned. Therefore, keeping in view the

vast difference in the turnover of the parties, the learned

Single Judge came to a finding that there was no question

of the respondent passing off its product GEMCAL for the

pharmaceutical preparations being sold by the appellant

under the said name of GEMCAL .

14. In the light of the aforesaid findings, the ld. Single Judge

dismissed the suit. The appellant feeling aggrieved has

challenged the said judgment by way of present appeal.

15. We have heard the learned Senior Counsel for the

appellant, Shri Valmiki Mehta as well as learned counsel

for the respondent, Ms. Pratibha M. Singh.

16. The learned counsel for the appellant has raised the

following submissions before this Court:

(i) That the learned Single Judge has grossly erred in observing that the appellant has been unable to prove that it is the proprietor of the product bearing trademark GEMCAL.

(ii) The learned Single Judge‟s finding that both the appellant and the respondent were the concurrent users of the trademark GEMCAL is not substantiated by the evidence on record as the learned Single Judge has failed to appreciate that it was

the appellant who had applied first in point of time, as compared to the respondent for registration of the trademark. In any case he was not bona fide concurrent user of the trademark as there was no pleading to this effect by him.

(iii) The learned Single Judge has grossly erred by not appreciating the fact that it was the respondent himself who had filed a suit before the District Court, Gurgaon against the appellant for allegedly issuing unlawful threats pertaining the passing of which tantamounted to an admission on the part of the respondent that the appellant alone was the owner of the trademark GEMCAL.

(iv) The learned Single Judge has failed to appreciate that there was no necessity for the appellant to produce the agreement between the appellant and M/s Banner Pharmacaps (P) Ltd. as an affidavit for and on behalf of M/s Banner Pharmacaps (P) Ltd. was duly submitted who had testified to the effect that they were manufacturing and selling pharmaceutical preparations under the name of GEMCAL before it was sold to the appellant in July, 1999.

(v) That the learned Single Judge has failed to appreciate that the respondent has not explained as to why it had consciously changed the trademark of its pharmaceutical preparations from CALDOSE to GEMCAL which in fact clearly established that the respondent was indulging in passing off the products being manufactured by the appellant. The respondent had obtained drug licence to manufacture the drug by trademark CALDOSE.

17. The learned counsel for the respondent refuted the

submissions of the appellant and contended that it was a

bona fide user of the trademark GEMCAL and for this

purpose, all the requirements of Section 12 of the Trade

and Merchandise Marks Act, 1958 were duly satisfied by

the respondent. The learned counsel for the respondent

has supported the finding arrived at by the learned Single

Judge in this regard. It was further contended that the

question of passing off the drug by the respondent did not

arise, as there was a vast difference in the sales figures of

the appellant and the respondent.

18. We have carefully considered the submissions of the

respective sides and perused the record.

19. The first question which arises for consideration is as to

whether the appellant was having the trademark GEMCAL

duly registered in its favour or not. In this regard, the

learned Single Judge has examined the evidence. It has

taken note of the fact that the appellant had applied for

registration of the trademark GEMCAL on 16.4.2000 on a

proposed to be used basis for which Ex.P-5 was brought on

record. The moment the appellant detected the user of the

said trademark by the respondent, it sent notice dated

27.2.2003 Ex.P-13 to the respondent. The respondent was

duly intimated that the trademark GEMCAL is pending

registration in favour of the appellant. Ex.P-6 is the search

report proved by the appellant which showed that on

17.4.2000 issued by the name of GAMCIL and GEMCYL

was also registered. As against this, the respondent had

applied for registration on the basis of its continued user

since 17.9.99 on 16.9.2003 Ex.D-1. The learned Single

Judge also observed that the appellant was not able to

establish the drug licence granted in its favour. The drug

licence Ex.P7 dated 17.6.2000 purported to have been

issued by the Drug Control Administration of Gujarat was

issued in favour of M/s Banner Pharmacaps (P) Ltd. and

not the appellant. The appellant had also filed an affidavit

of one Mr.Arvind Manwati, Director of M/s Banner

Pharmacaps (P) Ltd. who had stated that manufacturing of

the drug under the trademark GEMCAL was started in the

month of July, 2000. The said company namely Manwati

manufactured GEMCAL capsules for the appellant and the

same were delivered to the appellant under an invoice. On

the basis of this evidence, which has been adduced by the

respective sides, none of them established that the

trademark GEMCAL is registered trademark in favour of

either of them. Therefore, the finding of the learned Single

Judge on deciding the issue No.1 against the appellant

cannot be found fault with. The appellant cannot be said

to be proved to be proprietor of the trademark GEMCAL.

20. Since none of the parties were the registered owners of the

trademark GEMCAL consequently the question which fell

for consideration of the learned Single Judge was as to

whether there was a case of „passing off‟ involved or there

was a „concurrent user‟ by the both the parties of the said

trademark.

21. There is no doubt that a trademark is the property of a

manufacturer and the party of the trademark establishes a

connection between the goods and the source thereof which

would suggest the quality and the reputation of the goods.

If the trademark is registered, indisputably the user thereof

by a person, who is not otherwise authorized to do so

would constitute infringement. Originally under the law,

there can be only one mark, one source and one proprietor.

It has been also held in the above case that ordinarily the

persons are not entitled to use the same trademark unless

there exists an express licence in that half. But the honest

concurrent user is an exception to this rule (see Ramdev

Food Products (P) Ltd. Vs. Arvindbhai Rambhai Patel &

Ors. (2006) 8 SCC 726).

22. The next plea which was urged by the learned Senior

Counsel for the appellant was that even if the appellant is

not able to prove that as the trademark was duly

registered, still on account of the previous and first user of

the trademark GEMCAL, the respondent was guilty of

„passing off‟ and accordingly, deserves to be permanently

restrained by the learned Single Judge from using the said

trademark.

23. The learned counsel for the respondent on the other hand

contended that there is no dispute about the proposition

that the person or the Company which had been using the

trademark GEMCAL (in the absence of registration) first will

be entitled to the restraint order as against the user of the

said trademark and the opposite side would be guilty of

passing off the product. However, it was contended that

the respondent was admittedly the first user of the

trademark GEMCAL. In this regard, the learned counsel

for the respondent contended that it had proved before the

learned Single Judge the licence issued by the State Drug

Controller, Directorate General of Health Services,

Chandigarh dated 07.7.1999 Ex.DW1/C wherein the

respondent had applied for the change of the name of the

product from CALDOSE to GEMCAL. It was further

contended that the change was permitted by the State Drug

Controller vide letter dated 17.9.99 (Ex.DW1/D) and it was

on the strength of the said letter that the respondent was

manufacturing the product under the name of GEMCAL as

per their formula indicated in the written statement. It was

also contended that the appellant had only filed an

application before the State Drug Controller on the

proposed user basis on 17.4.2000 Ex.P-5 as against the

actual user by the respondent.

24. There is no doubt in the proposition that any action for

passing off, discharge of the prior user and not the

registration which is relevant test. Admittedly, in the

instant case, neither of the two parties were the registered

trademark owners of the GEMCAL. The concept of passing

off has been elaborated by Courts in number of judgments

as to when can the said principle be made applicable.

Notable in this regard, the observations of the Division

Bench by our own High Cout in Century Traders Vs.

Roshan Lal Duggar & Co. & Ors. AIR 1978 Delhi 250,

wherein it was held.

"...that a trader acquires a right of property in a distinctive mark merely by using it upon or in connection with his goods irrespective of the length of such user and the extent of his trade. The trader who acquires such mark is entitled to protection directly, the article having assumed vendible character is launched upon the market. In this case, it was observed that for the purpose of claiming such proprietorship of a mark, it is not necessary that the mark should have been used for a considerable length of time. As a matter of fact a single actual use with intent to continue such use confers a right to us such mark as a trademark. It is sufficient if the article with the mark upon it has actually become a vendible article in the market with intent on the part of the proprietor to continue its production and sales. It is not necessary that goods should have acquired a reputation for quality under such mark. Actual use of the mark under such circumstances showing an intention to adopt and use it as a trademark is a test rather than the extent or duration of time. A mere casual, intermittent or experimental use may be insufficient to show an intention to adopt the mark as a trademark for specific article or goods."

25. With regard to the concurrent user, the contention of the

learned counsel for the appellant is that the respondent

has not taken the plea of concurrent user in the pleading

and therefore, the same could not have been decided by the

learned Single Judge in favour of the respondent. It may be

pertinent here to reproduce Section 12 of the Trade and

Merchandise Marks Act, 1958, which reads as under:-

"12. Registration in the case of honest concurrent use, etc.--In the case of honest concurrent use or of other special circumstances which in the opinion of the

Registrar, make if proper so to do, he may permit the registration by more than one proprietor of the trademarks which are identical or similar (where any such is already registered or not) in respect of the same or similar goods or services, subject to such conditions and limitations, if any, as the Registrar may think fit to impose."

26. Although the plea of honest concurrent user was not taken

in the pleadings but the respondent had specifically

pleaded the prior user of the said trademark. Therefore,

the learned Single Judge has rightly observed that the plea

of the honest concurrent user being a lesser plea than the

plea of prior user can certainly be permitted to be raised by

the respondent and accordingly, the said plea of the

appellant does not have any merit. If a plea has not been

specifically taken in the written statement by a party and

the reading of the whole of the written statement would

make it amply clear that such a plea is reflected not only in

the pleadings but also from the evidence adduced by the

said party then in our considered opinion, the Court

instead of ousting the respondent on this technicality ought

to consider the substance of the pleading rather than the

form. Therefore, the contention of the appellant that the

plea of concurrent user is not available to the respondent

does not have any merit, particularly when the plea of prior

user is a wider plea incorporating the plea of concurrent

user.

27. The contention of the learned counsel for the appellant to

effect that the respondent had filed a suit for injunction

against the appellant in Gurgaon seeking a restraint order

against threatened action was indicative of the fact that

they were indulging in passing off, cannot be accepted. It

may be pertinent here to mention that the seeking

redressal, as is provided in law, by a party can by any

stretch of imagination be construed as an admission of the

fact that a party is indulging in „passing off‟ its product in

respect of which the other side is claiming the proprietory

rights. This fact has to be proved independently by the

party who is claiming a restraint order against a party

indulging in „passing off‟. Therefore, in the instant case,

the onus was on the appellant to prove by adducing

positive evidence that there was passing off on the part of

the respondent, which it had failed to establish on account

of the reasons mentioned hereinabove.

28. It has come in evidence that the appellant had filed an

application for the registration of the mark "GEMCAL" in

the month of April 2000 and started selling the products in

question bearing the said mark from the end of July 2000.

As against this, the defendant had obtained the drug

licence in September 1999, started the manufacturing and

sale of the product in November 2000. The plea of the

appellant that the trade name was changed from the

CALDOSE to GEMCAL does not in any manner show that

there was any mala fide intention on the part of the

respondent to indulge in passing off. Not sufficient

evidence was brought on record to show that in the three

month period between the commencement of user by the

appellant and the commencement of user by the

respondent, the appellant had acquired such reputation

which may be affected by the commencement of user by the

respondent.

29. Both the parties have been selling products under the said

mark for over two years prior to the notice sent by the

plaintiff to the defendant in February 2003. The actual use

by both parties has been thus almost concurrent except for

the period of about three months for which the plaintiff was

selling its product prior to sale by the defendant till the first

notice was sent by the plaintiff to the defendant. As the

mark has not been registered in the name of either party,

the search in the trademark registry also did not yield any

result in this regard.

30. No instances of confusion between the products of the

parties have been shown from any material on the record.

We had also seen the labels on the small boxes of the

medicine manufactured by the appellant and respondent

under the said mark which showed that they were visually

distinct from each other. Even the sales figures which were

produced by the respective sides before the learned Single

Judge belied the allegation that the respondents were guilty

of passing off. There is a tremendous difference in the

sales figures of the two, e.g. the sales figure of the appellant

was in lacs and that of the respondents in thousands.

31. This clearly shows that the appellants were only creating a

false image so as to marginalize and scuttle the functioning

of a small time pharmaceutical manufacturer only on

account of the fact that the appellant was a leading

pharmaceutical company. Therefore, this contention of the

learned counsel for the appellant that the respondent was

not a bona fide concurrent user or that it had not taken the

plea of concurrent user or that it was indulging in passing

off of its pharmaceutical preparations in the name of

pharmaceutical preparations of the appellant is not tenable

in law.

32. For the reasons mentioned above, we are of the considered

opinion that the appeal of the appellant does not have any

merit. Accordingly, the same is dismissed.

(V.K.SHALI) JUDGE

(MUKUL MUDGAL) JUDGE SEPTEMBER 14, 2009 RN