“PASSING OFF” IN TRADE MARK: CUTIS BIOTECH VS SERUM INSTITUTE OF INDIA


This article has been authored by Biyanka Bhatia, a third year student at UPES, Dehradun.


In the modern competitive market economy, there is a constant flow of goods from competing enterprises. As a result, manufacturers and retailers have started using source identifications to identify and distinguish their products from those of rivals. In such situations, the trade mark serves as a source of product recognition, quality, and origin, becoming an important asset. Much like the commodities on which it appears and which it represents, trade mark, has become a property in itself, which has lead to advancement of the commerce of trade marks.


Consumer protection has always been one of the most important objectives of the Trade mark Law. With an aim to protect the welfare of consumers, and to avoid deceptions, Trade marks prevent such circumstances whereby goods may be passed off as having originated from one source whereas they actually belong to another. Since a good brand name has its own image, the trade mark gives the products a distinct personality, which attracts customer’s attention to the product. Most importantly, the goodwill gained by the brand, helps in extension of their businesses, as they already have a customer base due to previous product. Therefore, the importance of a trade mark cannot be denied. They have become the essence of competition, and protecting a trade mark means safeguarding customers against deception and misunderstanding.


In a recent case of Cutis Biotech vs Serum Institute of India, the Pune District Court dealt with the issue whether injunction should be given against a company to restrain it from committing an act of “passing off” of the trade mark, namely, “Covishield”.


Factual Background


Cutis Biotech (Plaintiff), a pharmaceutical company coined the term, “Covishield” and decided to use the same in respect of pharmaceutical and other related products. An application for registration was submitted under the class 5 category of goods to be registered in the trade marks register, and subsequently it started selling products in the market. The Serum Institute of India (Defendant) applied for the trade mark “Covishield” in the same Class 5 category but for the product i.e. vaccine for human use.


However, when the Plaintiff got to know of such action, it approached the Court, with the case of passing off of trade mark, requesting for injunction to restrain and prohibit the defendants from passing off medicinal and pharmaceutical products. The Plaintiffs argued that there was a risk of misunderstanding amongst the general public, doctors, and medical practitioners due to the trade mark's similarity to the extent that certain dealers of the Plaintiff are not ready to sell the product, thereby causing losses. Relying on the case of Neon Laboratories Ltd. Vs. Medical Technologies Ltd.,the Plaintiff argued that as it is the first user in the market, the injunction should be granted.


On the contrary, the Defendants argued that it is working on developing a vaccine for human use to avoid Covid-19 and that is what the trade mark protects, unlike the Plaintiff who is involved in antiseptic, disinfectant liquid, etc, production, showing no nexus between the two. Though they are covered under the same class 5 category, the visual appearance and the purposes are completely different, as a consequence, there is no risk of misunderstanding in the minds of ordinary people of average intelligence. As the Plaintiff has newly entered the market, there is no as such goodwill created, which the Defendants would take undue advantage of. Relying on N.R.Dongre vs Whirlpool Corporation & Anr, it stated that mere test of prior use is not sufficient, it is necessary to consider the time period since the Plaintiff’s product is in the market and whether there was any fraudulent intention of the Defendant to deceive the customer. Further the Defendants went onto emphasize on the importance of the vaccine being manufactured by them. In such dire situation, a restrain order would not only hamper the company but also the consumers in India and abroad.


The Court had to decide whether the Plaintiff proves the prima facie case, that is, it has goodwill in the market; the Defendant has misrepresented the trade mark which has resulted in loss to him? Secondly, whether balance of convenience lies in favour of the Plaintiff?


Doctrine of Passing off in India


The concept and principle on which passing off action is grounded is that a man is not to sell his own goods under the pretence that they are the goods of another man. It safeguards the trade mark holder's goodwill and credibility from the damage caused by defendant's misrepresentation. Moreover, ensuring that the buyers are not manipulated and dishonest trading is kept in check. Sections 27 (2) of The Trademarks Act, 1999(“Act”) provides for the protection of unauthorized use of an unregistered trademark.


In the case of Kishore Zarda Factory Ltd. vs J.P. Tobacco House, the Delhi High Court went onto explain the essentials of the doctrine of passing off. It stated that it is essential for the plaintiff to prove that there is a similarity in the trade names; secondly, the defendant is deceptively passing off his goods as those of the plaintiff due to which a man of average intelligence and of imperfect recollection would be confused.


In the case of Reckitt & Colman of India Ltd. vs Collector of Central Excise, the Supreme Court set out elements of passing off. Firstly, the plaintiff has to establish goodwill of his products; secondly, he must demonstrate a misrepresentation by the defendant to the public believing that goods offered are goods of the plaintiff; thirdly, he must demonstrate that he will suffer damage by reason of erroneous belief.


With cases involving misrepresentation of medical products, the Supreme Court has proposed a deceptive similarity test. Considering the threat, medical products carry compared to the rest, the Supreme Court has been inspired to broaden the scope of passing off. If the trademark of the two opponents is likely to confuse the general public and physicians, the suit can be brought up in the Court. However, even when the test is applied in the present case, there is no deceptive similarity and therefore no misrepresentation of the goods.


The Pune Court relying on the case of Nandhini Deluxe v. Karnataka Coop. Milk Producers Federation Ltd., held that the plaintiff cannot claim the monopoly over the entire class of goods in the Class 5 category. The visual appearance, the purpose, the consumer of the product of the Defendant is completely different from that of Plaintiff, therefore, creating no confusion in the mind of average man of ordinary intelligence. It also took notice of the fact that the Defendant applied for the trademark “Covishield” for a Covid-19 vaccine for human use, while the Plaintiff's product is a disinfectant spray, hand and vegetable washing liquid, etc.


Considering the Plaintiff’s standing in the market as a recent one and not so substantial, the goodwill is not strongly created that is alleged to be infringed by the Defendant. There has been no misrepresentation on the part of the Defendant as the products are completely different, have unique identities, thus causing no loss to the Plaintiff, therefore the essentials of passing off remained incomplete. Thus, the Court denied granting injunction against the Defendant.


Balance of Convenience


In cases where injunction is to be granted, the courts refer to the doctrine of balance of convenience. According to the doctrine, the plaintiff must demonstrate that the inconvenience caused to him by the denial of an interim injunction would be greater than the inconvenience caused to the defendant if the interim injunction is granted. It means, comparative mischief or inconvenience to the parties.


Not only India, but the entire world, has been dealing with the Covid­19 pandemic in the recent months. The desperation to find a disease-prevention drug is constantly increasing. In the present case, the Defendant’s product is a preventive medicine for disease Covid-19, a step towards getting the pandemic in control. Thus, any restraining order in relation to using the trade mark “Covishield” and selling this vaccine under the said trade mark, would lead to extreme difficulties among the public to recognize Defendant's product.


The Plaintiff company, on the other hand, can continue to sell its product in the market under the same trademark since the intent of both products is different. Moreover, it was unable to point out that individual customers are denying their products, and thus, there is no irreparable loss to the Plaintiffs. Therefore, comparatively, Defendant and its customer would suffer great hardship than the Plaintiff, if the injunction is granted.

Thus, in the present case the Pune District Court has clearly defined the principles of doctrine of passing off, considering the welfare of both, the consumers and the company.

 
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