India: ´Cadila´ Contention Crashes!

Last Updated: 29 August 2008

Commercial viability, reputation, brand association and like aspects often leave trademark owners worrisome. The extent of concern rises, when the mark under threat associates itself with higher levels of health and well-being. Not only do issues of quality and content come to light, but more so does the fear of misuse by closely associated industries come to play. Cadila Healthcare Ltd.' artificial sweetener "SUGAR FREE" found itself appear on a range of goods, which induced Cadila to file a suit for a "passing off" against three major Indian Corporations, viz. Diat Foods (India) (CS(OS) 222/2008) and Shree Baidyanath Ayurved Bhawan Pvt. Ltd. (CS(OS) 223/2008) and Dabur India Ltd. (CS(OS) 224/2008).

Cadila, claiming to be the owner of the brand "Sugar Free" along with variants namely, "Sugar Free Natura", "Sugar Free Gold" and "Sugar Free D'lite", contended that the name "Sugar Free" had been coined by its predecessor Cadila Chemicals Ltd. They stated that as the product underwent compositional changes and the variants were floated in the market, suffixes were appended to distinguish the products. About 74% of the market share in the sugar substitute segment belongs to Cadila' products.

Cadila proposed the suit against the three major corporations to challenge the use of "Sugar Free" in a prominent manner in the promotional literature of the product by each one of them. It was further alleged that the same was not used to describe a characteristic of the product, but as a brand name but to bring about a connection between the product and Cadila' goodwill. They substantiated this argument stating that once the contents mentioned of its characteristic, there was no need to prominently display the term "Sugar Free".

As regard distinctiveness, Cadila stated that "Sugar Free" was a suggestive expression and, therefore, was inherently distinctive. In the alternative, they proposed that "Sugar Free" was a descriptive expression and even if be considered non-inherently distinctive, it had acquired distinctiveness through the establishment of a secondary meaning.

Dabur contended that passing off offence could not be alleged, since the term "Sugar Free" did not possess even a remote connection with its product CHYAWANPRAKASH. It was further contended that in any event, the expression "Sugar Free" was neither intended nor was it used as a trademark by Dabur. It was only used as a description of an attribute or characteristic of its product. The attribute/characteristic being that the product did not contain any sugar. Dabur also presented examples of several other products using the mark "Sugar Free".

Diat Foods (India), propagators of "Cookies", were also faced with similar allegations. They rebutted the same stating that it was contended the expression "Sugar Free" is a generic expression and, therefore, no claim of distinctiveness could be made. Shree Baidyanath Ayurved Bhawan Pvt. Ltd., the third corporation against whom Cadila voiced its grievance, holds the mark CHYAWANPRASH. The propositions made therein were also on similar lines.

The Court took notice of an earlier judgment, in a case filed by Cadila, Cadila Healthcare Ltd v. Gujarat Co-operative Milk Marketing Federation Limited and Others: 2008 (36) PTC 168 (Del.),yet again for the use of the term "Sugar Free". The expression under the speculative eye therein was "Amul – Sugar Free – Pro Biotic Frozen Dessert". Taking into consideration, the dicta laid down therein, the Judge, pronouncing the three matters at hand to be falling under the tort of passing off reiterated the well-established dicta in the regard. Lord Diplock'1 test of passing off, which has found a place in several Indian decisions, was relied upon,.

The Court concluded that in all the three suits, Cadila had failed to establish a prima facie case of misrepresentation in the course of trade to his prospective or ultimate customers which can be said to be calculated to injure the business or goodwill of the plaintiff. Furthermore, they failed to depict actual damage to their business or goodwill or the probability of such damage. In the absence of any one of these elements a passing off action was stated to be non-maintainable. The Court held that prima facie, none of these elements had been established, and the application for interim injunction was dismissed.

Footnote

1 Lord Diplock's test, first laid down in Erven Warnink BV v. J. Townend & Sons: (1979) 2 All ER 927 states the following to be the elements of a Passing Off offence:
(1) a misrepresentation, (2) made by a trader in the course of trade, (3) to prospective customers of his or ultimate consumers of goods or services supplied by him, (4) which is calculated to injure the business or goodwill of another trade (in the sense that this is a reasonably foreseeable consequence), and (5) which causes actual damage to a business or goodwill of the trader by whom the action is brought or (in a qua timet action) will probably do so.

© Lex Orbis 2008

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