2016 (3) TMI 787 - SC - Indian Laws

Supreme Court Upholds Injunction in Trademark Case, Prior User Rights Emphasized

Neon Laboratories Ltd. Versus Medical Technologies Ltd. & Ors.

The Supreme Court upheld the decision to grant an injunction in favor of the Plaintiffs in a trademark infringement case. The Court found that the ... Temporary injunction - infringement of trademark - Held that:- As world shrinks almost to global village, the relevance of the transnational nature of a trademark will progressively diminish into insignificance. The attainment of valuable goodwill will have ever increasing importance. At the present stage, the argument in favour of the Defendant-Appellant that we find holds more water is that in both Milmet and Whirlpool, as distinct from the case before us, the prior user of the successful party predated the date of application for registration of the competing party. The question to examine, then, would be whether prior user would have to be anterior to the date of application or prior to the user by the Defendant-Appellant. In other words, the question before the Court would remain whether the situation on the date of application for registration alone would be relevant, or whether the developments in the period between this date and the date of grant of registration would have any bearing on the rights of the parties. All these considerations will be cast into a curial cauldron to be appreciated by the Court before which the suit is being contested. In these premises, we cannot conclude that a prima facie case has not been disclosed by the Plaintiff-Respondents. It is important to note that litigation was initiated by Plaintiff-Respondents, not Defendant-Appellant, even though the latter could have raised issue to Plaintiff-Respondents using a similar mark to the one for which it had filed an application for registration as early as in 1992. The Defendant- Appellant finally filed a Notice of Motion in the Bombay High Court as late as 14.12.2005, in which it was successful in being granted an injunction as recently as on 31.3.2012. We may reiterate that every High Court must give due deference to the enunciation of law made by another High Court even though it is free to charter a divergent direction. However, this elasticity in consideration is not available where the litigants are the same, since Sections 10 and 11 of the CPC would come into play. Unless restraint is displayed, judicial bedlam and curial consternation would inexorably erupt since an unsuccessful litigant in one State would rush to another State in the endeavour to obtain an inconsistent or contradictory order. Anarchy would be loosed on the Indian Court system. Since the Division Bench of the Bombay High Court is in seisin of the dispute, we refrain from saying anything more. All that we would say in the present Appeal is that since the Plaintiff-Respondents have alleged, and have prima facie supported with proof, that they had already been using their trademark well before the attempted user of an identical or closely similar trademark by the Defendant-Appellant, the former would be entitled to a temporary injunction, in light of the abovementioned ‘first in the market’ test. We find that the Plaintiff-Respondents have made out a prima facie case. The two other factors in an interim injunction, namely the balance of convenience and an irreparable loss, are both in favour of the Plaintiff- Respondents, given the potential loss of goodwill and business they could suffer should an injunction be denied. The Defendant-Appellant has been injuncted from using the mark ROFOL since 2005, after having launched products bearing the mark only in the previous year, so the balance of convenience is in favour of allowing the injunction to continue. In Milmet, this Court had taken note of the fact that the unsuccessful litigating party had in the duration of the litigation started using another mark, and found that this would prima facie assume significance in assessing “irreparable loss”. Decision of the Trial Court, as affirmed by the First Appellate Court, is reasonable and judicious Issues Involved:1. Grant of injunction by the Trial Court.2. Prima facie case for the applicant.3. Balance of convenience.4. Irreparable loss or damage.5. Prior registration versus prior user.6. Applicability of Section 34 and Section 47 of the Trade Marks Act, 1999.7. Judicial discretion and appellate interference.Detailed Analysis:1. Grant of Injunction by the Trial Court:The Supreme Court reviewed the judgment dated 19.12.2005 by the Learned Single Judge of the High Court of Gujarat, which upheld the Trial Court's decision to grant an injunction in favor of the Plaintiffs (Respondents). The Plaintiffs had filed a suit for injunction, damages, and account of profits, claiming that their trademark 'PROFOL' was being infringed by the Defendant's (Appellant's) use of the trademark 'ROFOL.'2. Prima Facie Case for the Applicant:The Court examined whether a prima facie case in favor of the applicant (Plaintiffs) was established. The Plaintiffs argued that they had been using the trademark 'PROFOL' since 1998 and had built substantial goodwill. The Defendant, although having applied for registration of 'ROFOL' in 1992, only began using it in 2004. The Court noted that a prima facie case was made by the Plaintiffs based on their prior use and the potential for confusion between the trademarks.3. Balance of Convenience:The Court considered the balance of convenience, which lies in favor of the Plaintiffs. The Plaintiffs had been using the trademark 'PROFOL' since 1998, and the Defendant's delayed use of 'ROFOL' could cause significant confusion and damage to the Plaintiffs' established goodwill. The balance of convenience favored maintaining the injunction to prevent potential harm to the Plaintiffs.4. Irreparable Loss or Damage:The Court evaluated whether irreparable loss or damage would occur if the injunction were denied. The potential loss of goodwill and business for the Plaintiffs, who had been using the trademark for several years, outweighed the Defendant's recent use of 'ROFOL.' The Court found that denying the injunction could result in irreparable harm to the Plaintiffs.5. Prior Registration Versus Prior User:The legal issue of whether prior registration (Defendant's 1992 application) would override the Plaintiffs' prior user (since 1998) was examined. The Court emphasized the significance of the Plaintiffs' continuous use and goodwill built over the years. The Defendant's inactivity for twelve years before using the trademark 'ROFOL' in 2004 weakened their position. The Court highlighted the importance of the 'first in the market' test, favoring the Plaintiffs' prior user rights.6. Applicability of Section 34 and Section 47 of the Trade Marks Act, 1999:The Court referred to Section 34, which protects the rights of a prior user against a registered proprietor. The Plaintiffs' use of 'PROFOL' since 1998, prior to the Defendant's use in 2004, was protected under this section. Section 47, which allows for the removal of a trademark from the register if not used for five years, was also relevant. The Defendant's inactivity for over five years supported the Plaintiffs' case.7. Judicial Discretion and Appellate Interference:The Court reiterated that appellate courts should not interfere with the discretion exercised by subordinate courts unless it is palpably perverse. The Trial Court's decision to grant the injunction was found to be reasonable and judicious, without any perversity. The Supreme Court emphasized that temporary injunctions in trademark cases have far-reaching consequences and should be carefully considered.Conclusion:The Supreme Court upheld the decision of the Trial Court and the First Appellate Court to grant an injunction in favor of the Plaintiffs. The Plaintiffs established a prima facie case, and the balance of convenience and potential for irreparable loss favored maintaining the injunction. The Defendant's delayed use and inactivity weakened their position, and the Plaintiffs' prior user rights were protected under the Trade Marks Act. The appeal was dismissed with no order as to costs.