TaxTMI 
TaxTMI 
2009 (9) TMI 1025
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.... 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. d) By virtue of the said order, certain assets of Cadila Chemical....
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....ers 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 minimal and such a consumer can easily distinguish between the appellant's and the respondent's product. (f) There, however, may be ....
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....ot 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 used in lieu of sugar. Such chemical compounds cannot be described free of sugar. "Sugar Free" is therefore not descriptive of a sugar substitute or Artificial Sweetener such as Aspartame/Sucralos....
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....gestive 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 Trade Marks (2007). iii) A generic term would answer the question "What are you? (What is this?)" If a powder of artificial sweetener is placed before a lay person, he will answer the above question by saying it is an artificial....
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.... 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 connected in some manner with such other entity. The appellant can take action against anyone who seeks to use their goods in such a manner that it would indicate some connection with the appellant. The appellant's mark "Sugar Free" has become distinctive in Indi....
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....ng 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 "Sugar Free Guilt Free Worry Free" in addition to "Sugar Free" in large lettering clearly indicating use in trademark sense and not in descriptive sense (7) If the only manner in which the respondent's product could be described is Sugar Free, it could be understood that the respondent has used Su....
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.... 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 of the appellant's well established mark. J) The learned Senior Counsel Shri Thakore concluded his arguments by emphasizing that a clear case of passing off arises and the arguments of the respondent that the respondent is using the words "Sugar Free" only to describe the product or that the respondent is entitled to ....
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.... 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 defendant has malafidely coined its corporate name as "HOME SOLUTIONS RETAIL (INDIA) LIMITED"which is identical and similar to the mark used by the plaintiff. In the first place, it is common ground that the defendant is using the mark "HOME TOWN" in respect of the services provided to its customers and not the mark "HOME SOLUTIONS". Moreover, the mark used ....
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....n 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 trader to claim a monopoly therein and the utmost difficulty should be put in the way of anyone who seeks to adopt and use exclusively as his own a merely descriptive term and more so, since it deprives the trader of a legitimate right to use words in the public domain. For the above contention, the learned Senior Counsel for the respondent relied upon the case of Home Solutions ....
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....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 merely descriptive name. If a person employing a word or term of well-known signification and in ordinary use, though he is not able to obtain a Patent for his manufacture, and although he has not got the protection of a registered Trade Mark for the goods he is proposing to sell, is yet able to acquire the right to appropriate a word or term in ordinary use in the English language to descri....
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....ular 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 meaning that the particular goods are goods made by the plaintiffs, and, as I have already indicated, it is in my view difficult to conceive cases in which the facts will come up to this. Unless that be proved, there is no room for a charge of violation of any right, or indeed for a charge of fraud for the defendants are only exercising the right which they possess as much as the plaintiffs do, and which eve....
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....scribing 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 respondent is not different. (iv) In the field of foods/drinks the target consumer is accustomed to a large number of products across all categories bearing the words Sugar Free and therefore there is no real possibility of deception that all such goods are connected with the appellant. (v) The words Sugar Free are always used along with the trademark AMUL of the respondent within the same visual matrix and there is no possibility ....
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....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 respondent is inappropriate does not justify imposing restrictions on the basis of affording solace to the appellant, in the absence of misrepresentation, deception, damage and the fact that the mark is used in a descriptive sense by the respondent. K) The mark is without any legal or factual basis whatsoever, commonly used in the trade as highlighting the characteristic/category of the product and use by the respondent including prominent sizing being a....
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....m 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 traders also using the said mark. That is precisely the reason for the denial of protection to such marks by refusing registration as envisaged by Sections 9, 30 and 35 of the Act. The said Sections read as follows: - "9. Absolute grounds for refusal of registration.-(1) The trade marks- (a) which are devoid of any distinctive character, that is to say, not capable of distinguishing the goods or services of one person from those of another person; (b) which consis....
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.... 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 subsequently removed or obliterated it, or has at any time expressly or impliedly consented to the use of the trade mark; or (ii) in relation to services to which the proprietor of such mark or of a registered user conforming to the permitted use has applied the mark, where the purpose and effect of the use of the mark is to indicate, in accordance with the fact, that those services have been performed by the proprietor or a registered user of the mark; (d) the use of a trade mark by a person in relation to goods adapted to form part of, or to be accessory to, other goods or services in relation to which the t....
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....the marketing of the drink "sugar free D'lite' cannot give the appellant the right to claim distinctiveness in the expression "Sugar Free" in relation to all the food products. 10. The learned Senior Counsel for the appellant has relied upon a plethora of judgments including the decision of the European Court of Justice in Baby Dry (supra) to claim that the expression "Sugar Free" is a coined word and is distinctive in nature. Apart from the fact that the law laid down in the case of Baby Dry is not binding on us, it is also relevant to notice that in the said case the court permitted the registration on the basis of the categorical findings that the expression "Baby Dry' was a syntactically unusual juxtaposition of two independent English words and was not a familiar expression in the English language. In our view, the expression "Sugar Free" is neither a coined word nor an unusual juxtaposition of two English words especially when such expressions are commonly used, both in written, as well as spoken English, for example, "hands-free" (for mobile phones) and "fat free" (for food articles) and thus cannot be permitted exclusive use for only the appellant's product. 11. The appel....
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....oduct. Being essentially a sweetener, the popularity of the sugar free range of product will have to be necessarily ascertained to be popular amongst the specific or limited class of consumers. "Sugar Free" is an item consumed by the elite class of consumers who are aware of the utility of such products or by those who by virtue of their affluence acquire weight related problems such as obesity, diabetes, high cholesterol. The learned Single Judge has also rightly in our view found that the popularity of the appellant's product is restricted to such kind of consumers only. The reach of the appellant's sweetener would largely be confined to such elite consumers. Thus, the factum of the specialized nature of the appellant's product vis-à-vis its specific reach, in fact, leads to the conclusion that the expression "Sugar Free" cannot be held to have acquired such distinctiveness qua the food products in general which may bar its user at least in a descriptive sense by any other competitors in the field of food products. Besides the above factors such an elite class of customers is well informed and is unlikely to be misled into believing the defendant's to be that of the plaint....
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....lity, though less likely, that such consumer may be misled into believing that the plaintiff's product being in the nature of an 'add on' has been used as an ingredient in the preparation of the defendant's Pro Biotic Frozen Dessert and, thus, may be gravitated to purchase the defendant's product. [See: para 48 of Sugarfree-I] 7) ...though the petitioner has prima facie been successful in establishing the distinctiveness of its trade mark "Sugar Free" in relation to its products, it has not been able to satisfy this Court why an embargo should be placed on the defendant from absolutely using the expression 'Sugar Free', especially when the defendant has prima facie satisfied this Court of its bona fide intention to use the said expression not as a trade mark but only in its descriptive or laudatory sense...." [See: para 55 of Sugarfree-I] 9. In view of the aforesaid conclusions which were, of course, of a prima facie nature, Sistani, J in Sugarfree-I, while directing that the defendant was free to use the expression "Sugar Free" as a part of a sentence or as a catchy legend so as to describe the characteristic feature of its pr....
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....es of the present case also, it must be reiterated that the "considerable degree of distinctiveness" relates only to artificial sweeteners / sugar substitutes and is limited to such products. Sugar Free, prima facie, has not attained any distinctiveness as alleged by the plaintiff, outside the field of sugar substitutes / artificial sweeteners. therefore, the plaintiff would not be entitled, prima facie, to appropriate the expression "Sugar Free" in respect of any field of activity beyond its range of artificial sweeteners / sugar substitutes. This is de hors the question as to whether the plaintiff can at all claim "Sugar Free" as a trademark, which question would have to be conclusively determined in the suit." The learned Single Judge in the above quoted decision of Shree Baidyanath Ayurved Bhawan Pvt. Ltd, noticed that while a considerable degree of distinctiveness in relation to the appellant's artificial sweetener was prima facie recognized by the learned Single Judge in the case of Sugar Free-I, nevertheless, the distinctiveness acquired qua the artificial sweetener by the appellant is, in our view, not sufficient enough to deny the respondent ....