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21 March 2017

The Trademark & Corporate name conundrum

Summary :

Before the Full Bench of High Court of Bombay, in the case of Cipla Limited v. M/s Cipla Industries Pvt. Ltd., the question pertaining to the use of a registered trademark as a corporate name in case of dissimilar goods was brought by way of reference from the Single Judge, for determination. The Court, following the precedent in the matter, upheld the judgement in Raymond case and reiterated that no cause of action will lie where a registered mark has been adopted by a third party as its corporate name where the goods/services of the right holder are different from the goods being offered by the third party.

 

Facts :

In the case of Cipla Limited v/s M/s Cipla Industries Pvt. Ltd. on March 1, 2017, the full judge bench of High Court of Bombay, consisting of Justices A.S. Oka, A.A. Sayed and A.S. Gadkari pronounced their decision on the issue of whether a company is permitted to use the registered trademark of a third party, as their corporate name where the goods in question are dissimilar. This judgement comes pursuant to the reference made to a Full Bench by the Single Judge (Justice Patel) on the said issue since he was of the opinion that order of the Division Bench in Raymond Limited v. Raymond Pharmaceuticals (which is the precedent in the matter) needs reconsideration.

 

Background :

In the Raymond case, the infringement proceedings were initiated by the right holder (who uses the mark for clothing materials and clothes) for the use of ‘Raymond’ as part of a corporate name by Defendants for dissimilar goods i.e., pharmaceutical products. The Division Bench of Bombay High Court upheld the order of the Single Judge, and refused an injunction to the Plaintiffs. The Court drew distinction between infringement suits that were in relation to use of registered trademarks on goods or services which were identical/similar/dissimilar to those in question, and cases involving use of a registered trademark as a corporate or trade name. The Court held that use of a registered trademark as corporate name for dissimilar goods did not amount to infringement under Section 29(5).

New Ruling of the Bombay High Court and Analysis :
In present case, the registered mark “CIPLA” was being used by the Defendants as their corporate name for offering household items such as photo frames, soap dishes etc. whereas the Plaintiff was using the trademark for selling pharmaceutical products. The single Judge, in his order of April 24, 2016, stated that while he is bound by the precedent laid down in Raymond case, the question of whether the use of registered trademark as corporate name for dissimilar goods will amount to infringement needs to be determined by a larger bench. The Single Judge was of the opinion that the interpretation that registered trademarks can be used as corporate name for dissimilar goods fails to protect the well-known trademarks which are to be protected across all classes, irrespective of the classes under which the well-known marks are registered.

The Full Bench deliberated upon the questions placed before it by the Single Judge. The Trade Marks Act, 1999, in Section 29, considers various types of infringement. Section 29(1) deals with infringement by use in the course of trade, of registered marks in relation to goods or services for which the registration has been granted; Section 29(2), inter alia, covers cases such instances where the goods are similar, but not identical. Section 29(4) places no limitation on the class of goods / services involved and generally covers infringement of well-known marks where the mark is used in relation to goods / services but on dissimilar goods. All these provisions cover the use of a mark “in the course of trade”, “in, relation to goods or services”. Section 29(5) specifically covers use of mark as a trade name or business name, but is limited in its scope to only situations where the such business concern is dealing with the class of goods / services as the registered trademark. 

Importantly, Section 29(5) does not include the limitations “in the course of trade”, “in relation to goods or services”.

Given this statutory framework, the Full Bench of the Bombay High court reached the following conclusion:

  1. There exists no cause of action for infringement when a registered trade mark is used only as a corporate or trading name in respect of dissimilar goods. This is the case irrespective of whether the registered mark is a well-known mark or otherwise.;
  2. Sub-section (1), (2) & (4) of Section 29 allow for infringement action to be brought when the registered trademark is, without consent, being used “in the course of trade”, “in relation to goods or services” and does not include use of registered mark solely as a corporate name or trade name;
  3. With regards to the correctness of the decision in the Raymond case, the Court stated that this question does not need to be answered separately. The Full Bench then remanded the suit to the Single Judge, having answered the questions referred to it.

This decision has definitely left holders of well-known trademarks in the lurch where an un-licensed third party dealing in dissimilar goods, uses it as a corporate name. Ultimately, even by using it in a corporate name, such third parties may exploit value of the well-known mark or otherwise bring disrepute to that well-known mark by poor quality products.

It bears to mention that the trade name / name of business concern will also typically find place on the packaging / labelling of the product / marketing of the service. The dividing line between when such use only amounts to use as a trade name versus when it may also amount to use “in the course of trade”, “in relation to goods or services” is a fluid one. Thus, it is recommended that right holders play closer attention to how prominently the trade name / business name is used in the packaging / labelling / marketing in such cases.

It may also be important for well-known mark holders to ensure that their mark is properly registered in every class in which they do business, rather than merely banking on the fact that they are well-known.

 

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