TaxTMI 
TaxTMI 
2009 (9) TMI 1025
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....ed cross objections to a limited extent. 2. The brief facts of the case as per the appellant are as follows: - a) In 1988, Cadila Chemicals Ltd. an erstwhile company of Cadila Group developed and launched in the market, a product containing "Aspartame" an artificial sweetener as a low-calorie table-top sweetener, which is as sweet as sugar containing only 2% of its calories. b) The appellant's product containing 'aspartame', a protein derivative, was launched under the brand name/trademark 'Sugar Free' in the year 1988. The product under the trademark 'Sugar Free' was originally coined and adopted as aforesaid by Cadila Chemicals Ltd., predecessors of the appellant. c) In the year 1995, consequent upon the restructuring of the "Cadila Group" of businesses, the business of Cadila Chemicals Ltd. was transferred and bifurcated between two transferee companies viz.Cadila Healthcare Ltd., i.e., the appellant and Cadila Pharmaceuticals Ltd. with all its property, rights and trademarks, both registered and unregistered, vide a judgment and order dated 2nd May 1997 of the Gujarat High Court passed in Company Petition No.82/1996. ....
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....dicate that the trademark "Sugar Free" acquired a considerable degree of distinctiveness among the traders and consumers but that is not ipso facto conclusive of an action of passing off which requires that not only there is an acquisition of secondary meaning by trademark or distinctiveness associated with it, but in fact also requiring that the respondent has misrepresented his products as those of the appellant's and caused damage to the distinctiveness associated with the trademark used in relation to the appellant's product. At this interim stage the respondent's goodwill and the typical style and packaging coupled with the well aware customer base which can easily distinguish between the appellant's and the respondent's product and deception is thus, prima facie, ruled out. (d) While there is no perceptible similarity between the two different packaging in terms of colour scheme and get up, sugar free has been written in more prominent form than that of Amul, thus focusing on the word "Sugar Free" by overshadowing the respondent's trademark Amul. (e) The chances of the consumer, who is the regular purchaser of the appellant's products, being deceived are min....
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....tted that: i) The appellant's trade mark "Sugar Free" is a coined word and an ungrammatical combination of two English words. Even assuming that it is not a coined word, even then it is not descriptive of the appellant's product but merely suggestive. The appellant's product which is an artificial sweetener cannot be directly consumed or eaten. Sugar Free would not be apt to describe an item which is not directly consumed but is merely an additive. The appellant has adopted it as a mark for a sugar substitute since 1988, when no products containing artificial sweeteners were manufactured or marketed in India or imported into India, there was absolutely no use of Sugar Free, or any other similar word to describe the products which did not contain sugar. A sugar substitute or artificial Sweetener cannot be described as Sugar Free, even if the meaning "free of sugar" is given to the ungrammatical phrase Sugar Free", since that which is used as a substitute for sugar in foods or beverages cannot be termed free of sugar and only the foods or beverages so made could be described as free of sugar. Aspartame or Sucralose are artificial sweeteners or sweetening agents which can be ....
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....rthy on Trademarks. A suggestive mark is entitled to the same protection accorded to a coined and fanciful mark. Even a "fair use" defense is a defense only against descriptive, not a suggestive, trademark. Suggestive mark is thus protected without any necessity for providing secondary meaning. B) The submission of the respondent that "Sugar Free" is generic and has no trademark significance is untenable, as this argument apart from being raised for the first time cannot be sustained for the reasons herein below: i) The Sweeteners cannot be divided by creating two classes - sugar based and sugar free. The correct criteria for describing the sweeteners would be - natural sweeteners and artificial sweeteners. Natural sweeteners are substances like sugar, jaggery, brown sugar etc. Artificial sweeteners are the genus of which Saccharine, Aspartame, Sucralose are species. These artificial sweeteners can never be termed as sugar free sweeteners either colloquially or otherwise. ii) Generic terms are generally nouns and only in very rare cases they can be adjectives. Reliance is placed for the above reasoning on Gilson on Trademarks Edition (2007) and McCarthy on Trad....
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....not contain sugar, the use of "Sugar Free" purportedly to describe them is only after the amendment of the Prevention of Food Adulteration Act, 2004 and much after the appellant had acquired huge reputation and goodwill in respect of its product. Such user clearly is tantamount to passing off. D) The word "Sugar Free" has become distinctive of the sugar substitute and has acquired a secondary meaning in the sugar substitute (Artificial Sweetener) market namely as the appellant's sugar substitute. The appellant adopted the mark for its sugar substitute in 1988 and has since then been continuously using it exclusively. There was almost no use of "Sugar Free" in India till 2004. The appellant has also marketed a drink containing Aspartame namely "Sugar Free Dlite". The appellant has 74% market share in the sugar substitute market in India. Even a common English word descriptive of the product can become distinctive by a long and continued use and is entitled to similar protection, and that a man has no right to put off his goods for sale as the goods of a rival trader and induce purchasers to believe that the goods which he is selling are manufactured by another entity or are conne....
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....ishonest for the following reasons: (1) The respondent knew that it is the appellant's trade mark for sugar substitutes such as Aspartame and Sucralose. (2) The respondent knew that appellant is marketing a drink under the trademark "Sugar Free Dlite" containing sugar substitute and is already in the Food and Beverage market. (3) The manner and size of writing on the packaging clearly indicates use in the trademark sense and not merely to describe the characteristics of the product. If it was only to describe the product characteristics, it could have been used in any other manner. In fact, the packet of Frozen Dessert already contains the following words "INDIA'S FIRST SPECIALLY CREATED LOW FAT DIABETIC DELIGHT" which is sufficient to describe the product and there was absolutely no need to use the word "Sugar Free". (4) The Gujarati advertisement translates all other words including the word "INDIA'S FIRST SPECIALLY CREATED LOW FAT DIABETIC DELIGHT", but "SUGAR FREE" continues to be stated as such in Gujarati clearly indicating the use of these words in the trade mark sense. (5) The hoardings show the use of Sugar Free also in slogan "....
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....act that AMUL is written and for that reason no person is likely to believe that the product is the product of the appellant does not answer the other tests of Passing Off. I) Thus, permitting the respondent to use the mark Sugar Free will lead to passing off, confusion and deception in the following manner: (1) Consumers or at any rate some of them will believe that there is a connection with the appellant or that appellant's product are used in the manufacture of the respondents frozen dessert. It would appear to the consumer or at least to some of them that the product is endorsed, approved or recommended by the appellant thus creating a misrepresentation by connection. (2) The Appellants are already in the Food and Beverage market with a product called Sugar Free Dlite which is a ready to drink beverage. The Appellant's legitimate extensions would be to enter into other Foods and Beverages for Diabetics market like Sugar Free Dlite Jello/Ice-cream/Frozen desserts/Cake mix etc. There could be serious confusion in the market which can cause damage to the reputation of the appellant. If everyone is allowed to use "Sugar Free", there will be not only confusion but dilution....
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.... to the English language. ii. The combination of the words Sugar and Free is common and used extensively in a wide variety of contexts to indicate a category of food. iii. The claim that sugar free products were available in India only recently, even if correct, is irrelevant to counter the fact that the same is a combination of common English words which was widely used prior to the purported adoption by the appellant, and in any case even a mark which may be used in a descriptive sense is not considered distinctive as per Section 19(b) of the Trade Marks Act, 1999 (hereinafter referred to as the TM Act). iv. The judgment in the case of Baby Dry (supra) is inapplicable since the combination was permitted registration in view of their "syntactically unusual juxtaposition which was not a familiar expression in the English language' and was a "lexical invention.' B) The mark is in fact inherently generic and is not entitled to protection since it can never function as a trademark to indicate origin. In the case of Home Solutions Retail (India) Limited, reported in 2007 (35) PTC 697, it was held as under: "8. In this context the plaintiff contended that the defend....
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....e red and white colour combination is quite generic in nature and common to toothpaste trade as demonstrated by the various products and their labels relied upon by the defendants. Moreover, there is nothing innovative or distinctive in using the colour, "white' for writing the word mark "COLGATE", since white is a colour commonly used for writing alphabets/numerals on coloured backgrounds." The mark is not "suggestive' which is defined as indicating certain characteristics of the product that the consumer can ascertain only on reflection, through a reasoning process requiring several steps. In any case the words are so utterly descriptive of the goods concerned as to be totally incapable of distinctiveness. It is also a term which describes an aspect of the product and is an unprotectable generic name. Thus, "Sugar Free" is a simple word extensively and commonly used, which by its very nature is incapable of losing its primary meaning. D) Assuming that the mark is capable of acquiring distinctiveness, the fact that the primary meaning of the word is simple and easy and coupled with the fact that it is commonly and extensively used, sets the bar extremely high for a tra....
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....ch are to be sold under that name" on the one hand and to a totally different principle which must apply in the case of goods which are sold under a merely descriptive name. It was observed as follows: If a person employing a word or term of well-known signification and in ordinary use....is yet able to acquire the right to appropriate a word of term ordinary use in the English language to describe his goods, and to shut others out from the use of this descriptive term, he would really acquire a right much more valuable than either a patent or a trade mark for he and his successors in business would gain the exclusive right, not for a limited time as in the case of patent, but for all time coming, to use the word as applicable to goods which others may be desirous of manufacturing and are entitled to manufacture and sell as much as he is. That being so, it appears to me that the utmost difficulty should be put in the way of any one who seeks to adopt and use exclusively as his own a merely descriptive term." In the case of Cellular Clothing, 1899 A.C. 326, it was held as follows: "A totally different principle must apply in the case of goods which are sold under a....
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....from using similar words which are part of common language. Viewed from that angle, it is clear that the Plaintiffs mark AYUSHAKTI is not to exclusive or so inevitably associated with the Plaintiffs product that the word AYUSH standing alone cannot be used by anyone else. 21. Dr. Tulzapurkar, the learned counsel for the defendants has relied on a decision of the House of Lords reported in The Cellular Clothing Company Limited v. Maxton and Murray, reported in 1899, AC 326, where the following observations are made: "If it can be shown that representations to the effect that the goods were manufactured by the plaintiffs be made directly or by implication, by the language used, the plaintiffs would of course be entitled to a remedy. But where the plaintiffs proof shows that the only representation by the defendants consists in the use of a term of terms which aptly and correctly describe the goods offered for sale, as in the present case, it must be a conditions of the plaintiffs success that they shall prove that these terms no longer mean what they say or no longer mean only what they say or no longer mean only what they say but have acquired the secondary and further m....
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....ame analogy, the other ways would also be entitled to protection. Reliance was placed on the case of Profit Maker Trade Mark (1994) RPC 613 wherein it was held as under: - "It is just the sort of combination of two common words which others traders might well wish to use. Indeed, the similar expression "MONEYMAKER" is to be found in the dictionary. The fact that honest traders have a number of alternative ways of describing a product which will make profits is no answer to the criticism of the mark." F) There is no passing off since the use of the mark by the respondent does not amount to a misrepresentation nor is there a likelihood of deception, and damage in view of the reasons given below: (i) The adjective "Sugar Free" is a true description of the goods of the respondent and conveys the real meaning to the purchasing public. (ii) The mark is not used in the trademark sense of seeking to distinguish the goods of the respondent from similar goods of other traders. (iii) The term "Sugar Free" is used in a prominent, stand-alone short and snappy manner in the trade to highlight the class/category to which the foods/drinks belong, and the manner of use by the r....
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....fusion precise copying would be required and the slightest distinction would be sufficient to avoid confusion. In any case mere confusion is insufficient and in the absence of misrepresentation or deception, no action for passing off can be maintained. I) Moreover, the appellant, having adopted such an inherently descriptive word must be prepared to tolerate some degree of confusion even if the same is assumed to occur. Moreover, such a conclusion of the Court would grant a complete monopoly in the words to the appellant since it would be applicable to the entire range of products available throughout the world which bear the mark Sugar Free. The case of Glucovita (AIR 1960 SC 142) relied upon by the appellant was a case where the appellant's mark was registered and the respondent had sought registration of a trademark in respect of goods of the same description, which mark was held to be sufficiently similar so as to be reasonably likely to cause deception and was therefore refused registration, and the principle of a trade connection was applied in that context and not in relation to its descriptive usage. J) The conclusion that the size of the mark on the product(s) of the....
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....e sense and not as a trade mark, and even otherwise, when the use of this expression is widespread in relation to foods and beverages." We fully agree with and reaffirm the said finding. 9. We are unable to hold that the appellant's trademark "Sugar Free" is a coined word; at best it is a combination of two popular English words. The mere fact that the appellant's product cannot be directly consumed or eaten and merely is an additive does not detract from the descriptive nature of the trade mark. Once a common phrase in the English language which directly describes the product is adopted by a business enterprise, such adoption naturally entails the risk that others in the field would also be entitled to use such phrases provided no attempt is made to ride on the band wagon of the appellant's indubitably market leading product "Sugar Free". In this connection, merely because the attributes of "sugar Free" can be described by other phrases cannot detract from the common usage of the phrase "Sugar Free" as denoting products which do not contain sugar and any trader which adopts such mark in the market place, does so with the clear knowledge of the possibility of other trad....
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....r be detrimental to the distinctive character or repute of the trade mark. (2) A registered trade mark is not infringed where- (a) the use in relation to goods or services indicates the kind, quality, quantity, intended purpose, value, geographical origin, the time of production of goods or of rendering of services or other characteristics of goods or services; (b) a trade mark is registered subject to any conditions or limitations, the use of the trade mark in any manner in relation to goods to be sold or otherwise traded in, in any place, or in relation to goods to be exported to any market or in relation to services for use or available or acceptance in any place or country outside India or in any other circumstances, to which, having regard to those conditions or limitations, the registration does not extend; (c) the use by a person of a trade mark- (i) in relation to goods connected in the course of trade with the proprietor or a registered user of the trade mark if, as to those goods or a bulk or which they form part, the registered proprietor or the registered user conforming to the permitted use has applied the trade mark and has not subs....
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....s own name or that of his place of business, or of the name, or of the name of the place of business, of any of his predecessors in business, or the use by any person of any bona fide description of the character or quality of his goods or services." &nbs....
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....that a descriptive trademark may be entitled to protection if it has assumed a secondary meaning which identifies it with a particular product or has been from a particular source. It is also relevant to mention here the judgment of Home Solutions (supra) was also relied upon by the respondents, wherein it was held that "the expression "HOMESOLUTIONS" is inherently incapable of becoming distinctive of any single person with respect of any single product or service. It is generic and publici juris. It describes the nature of services offered." Thus, in our view, the mark "Sugar Free" is inherently incapable of becoming distinctive applicable. Even if it is assumed that the mark of the appellant has become distinctive qua the artificial sweetener, however, the protection to the mark qua the product artificial sweetener cannot be extended to all the food products of any competitor in the market. We also affirm and reiterate the view taken by the learned Single Judge that the appellant's product is a sweetener/sugar substitute, and sweeteners are generally understood in their functional sense, that is, in terms of utility when added to foods and beverages. To an average consumer, a swe....
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....rved Bhawan Pvt. Ltd., decided on 9th July 2008, the learned Single Judge reiterated the view taken by the learned Single Judge in the impugned judgment challenged in this appeal and held as follows: "8. In the Sugarfree-I case, Sistani J, considered in detail the various factors and arguments pointed out on behalf of the plaintiff as well as the defendant therein. The following conclusions in the Sugarfree-I case are relevant for the purposes of the present case: 1) "Prima facie, it is difficult for me to accept the plaintiff's claim of the expression "Sugar Free" being a coined word. "Sugar Free" cannot, in the least, be a coined word and neither does "Sugar Free" appear to me an unusual combination or juxtaposition of words...." [See: para 24 of Sugarfree-I] 2) ...Thus, the expression "sugar free", when used in relation to a sweetener/sugar substitute, may not be "descriptive in meaning" but it is certainly "descriptive in understanding". [See: para 26 of Sugarfree-I] 3) ...There is all possibility or likelihood, and in fact it is usually the case, that words which in the course of time acquire secondary meanings as trade marks are also used and understood in ....
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....s claim in respect of the expression "Sugar Free" has been examined threadbare in Sugarfree-I, it is neither necessary nor appropriate for me to have a relook. There is no need to reinvent the wheel, as it were. From Sugarfree-I, it is apparent that the prima facie view is that the expression "Sugar Free" is not a coined word. It is also clear that in making the observations with regard to "Sugar Free" having acquired a considerable degree of distinctiveness, Sistani J, was only referring to a specific class of consumers and that too in respect of the plaintiff's products, i.e., sugar substitutes / artificial sweeteners. The distinctiveness that is spoken of in Sugarfree-I, therefore, has to be limited to the plaintiff's products. It must also be noted that, while the considerable degree of distinctiveness of "Sugar Free" in relation to the plaintiff's products was prima facie recognized, the court also took the view that no embargo could be placed on the defendant from absolutely using the expression "Sugar Free", particularly in a descriptive sense. 11. It has been contended on the part of the defendant that the expression "Sugar Free" is in public domain and canno....
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.... food products of the other competitors from using the phrase "Sugar Free" in a purely descriptive sense. 14. In consonance with the above view we are also not in a position to agree with the appellant that the word "Sugar Free" has become so distinctive of the sugar substitute and has acquired such a secondary meaning in the sugar substitute market that it cannot refer to any other food product except the appellant's sugar substituted product labelled "Sugar Free". There cannot be any doubt that the word "sugar Free" is not inherently distinctive and is clearly descriptive in nature. In fact, the word "Sugar Free" in essence clearly only describes the characteristics of the appellant's product and therefore, cannot afford it the protection sought in the plaint by restraining the respondent from using the phrase "sugar Free". "Sugar Free", prima facie has not attained any distinctiveness, as alleged by the appellant outside the field of sugar substitute artificial sweeteners and the appellant would not be entitled to exclusively claim the user of the expression "sugar Free" in respect of any product beyond its range of products and the respondent cannot be restrained from absolu....