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                                                                          REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPEALLATE JURISDICTION

CIVIL APPEAL NO. 1018 OF 2006

Neon Laboratories Ltd. ... Appellant

Versus

Medical Technologies Ltd. & Ors. ... Respondents

J U D G M E N T

VIKRAMAJIT SEN, J.

1 This Appeal assails the Judgment dated 19.12.2005 of the Learned Single

Judge of the High Court of Gujarat at Ahmedabad, who returned the opinion

that the Trial Court had rightly granted an injunction in favour of the Plaintiffs

(Respondents before us) till the disposal of the suit.    

   2 Briefly  stated,  the  Plaintiff-Respondents  1  &  2  had  filed  a  suit  for

injunction,  damages  and  account  of  profits.   The  Plaintiff-Respondents  are

engaged  in  the  business  of  manufacture  and  marketing  of  pharmaceutical

products and medicinal preparation, and as pleaded by them, have acquired high

reputation and goodwill in the market.  Hematal Biologicals Ltd. or Core Health

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Care  Ltd.,  the  predecessor-in-title  of  Plaintiff-Respondents  is  stated  to  have

introduced the molecular preparation and generic drug “Propofol” in India, in

respect of which an application had been filed before the Drug Controller of

India  on  22.4.1998. Product  Permission  was  received  on 2.5.1998  from the

Commissioner of Food and Drugs Control Administration.  It has been pleaded

that  the  predecessor-in-title  of  Plaintiff-Respondent  No.1  had  coined  and

invented the trademark PROFOL in April 1998 and not applied for registration

of the said trademark on 24.5.1998 in Class V.  However, it seems to us that this

claim may not find acceptance inasmuch as PROFOL is almost an anagram of

and  is  phonetically  almost  indistinguishable  from the  molecular  compound,

namely “Propofol”.  In our opinion, to claim exclusivity of user, the trademark

should normally partake of a new creation, or if an existing word, it should not

bear descriptive characteristics so far as the product is concerned, nor should it

be of an extolment or laudation.  It would be surprising if exclusivity is given to

marks such as ‘bestsoap’ etc.  Having said this, we must accept the reality that

in the pharmaceutical industry it is commonplace that trademarks reproduce and

resonate the constituent composition.  While this aspect and feature may be a

good ground for  declining registration of  the trademark,  it  may nevertheless

remain a favourable determinant in a passing-off action.  So far as the subject

trademarks are concerned, not only do their names constitute part of the generic

drug “Propofol”, but they are also so similar that even the concerned medical

practitioner/anaesthesiologist could fail to discern the difference between them.

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It  has  been  pleaded  in  the  plaint  that  the  said  predecessor-in-title  has  been

openly employing this  mark since April  1998.  After  amalgamating with its

predecessor-in-title on 17.2.2000, Plaintiff-Respondent No. 1 became the owner

of  the  trademark PROFOL, and has  been using it  since  2000,  when it  also

applied  for  its  registration.   Plaintiff-Respondent  No.  2  is  a  licensee  of

Plaintiff-Respondent No. 1.    On coming to learn that Defendant No. 1, the

Appellant before us, had introduced into market the same generic drug under

the  trademark  ROFOL,  the  Plaintiff-Respondents  filed  the  present  suit  on

17.7.2005, on the predication that ROFOL is identical and deceptively similar to

the  Plaintiff-Respondents’  trademark  PROFOL.   As  is  to  be  expected,  the

assertion in the plaint is that the Defendant-Appellant is marketing and passing

off its products as that of the Plaintiff-Respondents.

3 This  Court  does  not  normally  entertain  appeals  against  interlocutory

orders.  In the case of trademarks, however, keeping in perspective the endemic

delay in concluding cases/suits in India because of the exponentially increasing

docket  explosion,  temporary  ad  interim injunctions  are  of  far  reaching

consequences,  oftentimes  effectively  deciding  the  lis and  the  disputes

themselves.   Possibly for this reason ‘Leave’ has already been granted in the

present Appeal.  However, it is now well entrenched in our jurisprudence that

the Appellate Court should not flimsily, whimsically or lightly interfere in the

exercise of discretion by a subordinate court unless such  exercise is palpably

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perverse.  Perversity can pertain to the understanding of law or the appreciation

of pleadings or evidence.  We shall restrict ourselves to reference in Wander

Ltd. v. Antox India P. Ltd. 1990 Supp SCC 727, wherein it has been adumbrated

that the Appellate Court ought not to “reassess the material and seek to reach a

conclusion different from the one reached by the court below if the one reached

by that  court  was  reasonably  possible  on  the material.   The  appellate  court

would normally not be justified in interfering with the exercise of discretion

under appeal solely on the ground that if it had considered the matter at the trial

stage it would have come to a contrary conclusion.  If the discretion has been

exercised by the trial court reasonably and in a judicial manner the fact that the

appellate court would have taken a different view may not justify interference

with  the  trial  court’s  exercise  of  discretion”.    We shall  be  careful  not  to

transgress these frontiers.   

4 Before  granting  an  ad  interim  injunction,  the  Court  in  seisen  of  the

litigation  has  to  address  its  attention  to  the  existence  or  otherwise  of  three

aspects – (a) whether a  prima facie case in favour of the applicant has been

established;  (b)  whether  the  balance  of  convenience  lies  in  favour  of  the

applicant; and (c) whether irreparable loss or damage will visit the applicant in

the event injunctory relief is declined.  We shall cogitate on the first factor first

– is the law favourable to the applicant.

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5 The primary argument of the Defendant-Appellant is that it had received

registration for its trademark ROFOL in Class V on 14.9.2001 relating back to

the date of its application viz. 19.10.1992.  It contends that the circumstances as

on  the  date  of  its  application  are  relevant,  and  on  that  date,  the

Plaintiff-Respondents  were  not  entities  on  the  market.   However,  the

Defendant-Appellant  has conceded that  it  commenced user  of  the trademark

ROFOL only from 16.10.2004 onwards.  Furthermore, 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.

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The Plaintiff-Respondents filed an appeal against the Order dated 31.3.2012 and

the Division Bench has, by its Order dated 30.4.2012, stayed its operation.   

6 It  may  be  reiterated  that  the  Plaintiff-Respondents  asserts  that  their

predecessor-in-interest  had initiated user of the trademark PROFOL in 1998,

when it commenced production thereof and Plaintiff-Respondents succeeded to

the user of the mark upon amalgamation with their predecessor-in-title in the

year 2000.  The position that emerges is that whilst the Defendant-Appellant

had  applied  for  registration  of  its  trademark  several  years  prior  to  the

Plaintiff-Respondents,  (1992  as  against  26.5.1998  at  the  earliest),  the  user

thereof had remained dormant for twelve years.  We can appreciate that this

passivity may be the result  of research of the product or the market, but the

Defendant-Appellant will have to explain its supineness through evidence. In

this interregnum, the Plaintiff-Respondents had not only applied for registration

but had also commenced production and marketing of the similar drug and had

allegedly built up a substantial goodwill in the market for PROFOL.  The legal

nodus is whether the prior registration would have the effect of obliterating the

significance  of  the  goodwill  that  had  meanwhile  been  established  by  the

Plaintiff-Respondents.   Would  a  deeming  provision  i.e.  relating  registration

retrospectively prevail on actuality – competing equities oscillate around prior

registration and prior user.

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7 Section 34 of the Trade Marks Act, 1999 (the Act) deserves reproduction

herein:

34. Saving for vested rights.—Nothing in this Act shall entitle the proprietor or a registered user of registered trade mark to interfere with or restrain the use by any person of a trade mark identical with or nearly resembling it in relation to goods or services in relation to which that person or a predecessor in title of his has continuously used that trade mark from a date prior—

(a) to the use of the first-mentioned trade mark in relation to those goods or services be the proprietor or a predecessor in title of his; or (b) to the date of registration of the first-mentioned trade mark in  respect of  those  goods  or  services  in  the  name  of  the proprietor of a predecessor in title of his;  

whichever is the earlier, and the Registrar shall not refuse (on such use being proved), to register the second mentioned trade mark by reason only of the registration of the first mentioned trade mark.

This Section palpably holds that a proprietor of a trade mark does not have

the right to prevent the use by another party of an identical or similar mark

where that user commenced prior to the user or date of registration of the

proprietor.  This “first user” rule is a seminal part of the Act.  While the case

of  the  Plaintiff-Respondents  is  furthered  by  the  fact  that  their  user

commenced  prior  to  that  of  the  Defendant-Appellant,  the  entirety  of  the

Section  needs  to  be  taken into  consideration,  in  that  it  gives  rights  to  a

subsequent user when its user is prior to the user of the proprietor and prior

to the date of registration of the proprietor, whichever is earlier.  In the facts

of the case at hand, the Defendant-Appellant filed for registration in 1992,

six years prior to the commencement of user by the Plaintiff-Respondents.

The  Defendant-Appellant  was,  thus,  not  prevented  from  restraining  the

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Plaintiff-Respondents’ use of the similar mark PROFOL, but the intention of

the Section, which is to protect the prior user from the proprietor who is not

exercising the user of its mark  prima facie appears to be in favour of the

Plaintiff-Respondents.   

8 Section 47 of the Act is in the same vein and statutory strain inasmuch as

it postulates the possibility of a registered mark being taken off the register on

an application being made by any aggrieved person,  inter alia, on the ground

that for a continuous period of five years and three months from the date on

which the trademark was registered, there was no bona fide use thereof.  In the

case in hand, prima facie, it appears that for over five years after a registration

application  was  made  by  the  Defendant-Appellant,  the  mark  was  not  used.

Facially,  the  Act  does  not  permit  the  hoarding  of  or  appropriation  without

utilization  of  a  trademark;  nay  the  Defendant-Appellant  has  allowed  or

acquiesced  in  the  user  of  the  Plaintiff-Respondents  for  several  years.   The

legislative  intent  behind  this  Section  was  to  ordain  that  an  applicant  of  a

trademark does not have a permanent right by virtue of its application alone.

Such a right is lost if it is not exercised within a reasonable time.   

9 We must hasten to clarify that had the Defendant-Appellant commenced

user of its trademark ROFOL prior to or even simultaneous with or even shortly

after the Plaintiff-Respondents’ marketing of their products under the trademark

PROFOL, on the Defendant-Appellant being accorded registration in respect of

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ROFOL  which  registration  would  retrospectively  have  efficacy  from

19.10.1992, the situation would have been unassailably favourable to it.   What

has actually transpired is that after applying for registration of its  trademark

ROFOL in 1992, the Defendant-Appellant took no steps whatsoever in placing

its product in the market till 2004.  It also was legally lethargic in not seeking a

curial restraint against the Plaintiff-Respondents.  This reluctance to protect its

mark could well be interpreted as an indication that the Defendant-Appellant

had  abandoned  its  mark  at  some  point  during  the  twelve  year  interregnum

between its application and the commencement of its user, and that in 2004 it

sought to exercise its rights afresh.  It would not be unfair or fanciful to favour

the view that the Defendant-Appellant’s delayed user was to exploit the niche

already created and built-up by the Plaintiff-Respondents for themselves in the

market.  The ‘first in the market’ test has always enjoyed pre-eminence.  We

shall not burden this Judgment by referring to the several precedents that can be

found apposite to the subject.  In the interest of prolixity we may mention only

N.R. Dongre v. Whirlpool  Corporation (1996) 5 SCC 714 and Milmet Oftho

Industries v. Allergan Inc. (2004) 12 SCC 624.  In  Whirlpool, the worldwide

prior user was given preference nay predominance over the registered trademark

in India of the defendant.  In Milmet, the marks of pharmaceutical preparation

were similar but the prior user worldwide had not registered its mark in India

whereas  its  adversary  had  done  so.   This  Court  approved  the  grant  of  an

injunction in favour of the prior user. Additionally, in the recent decision in S.

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Syed Mohiden v. P. Sulochana Bai (2015) 7 SCALE 136, this Court has pithily

underscored that the rights in a passing-off action emanate from common law

and  not  from statutory  provisions,  nevertheless  the   prior  user’s rights  will

override  those  of  a  subsequent  user  even  though  it  had  been  accorded

registration of its trademark.  Learned counsel for the Defendant-Appellant has

endeavoured to minimise the relevance of  Whirlpool as  well  as  Milmet by

drawing  the  distinction  that  those  trademarks  had  attained  worldwide

reputation.  However, we think that as world shrinks almost to global village,

the  relevance  of  the  transnational  nature  of  a  trademark  will  progressively

diminish  into  insignificance.  In  other  words,  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

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premises, we cannot conclude that a prima facie case has not been disclosed by

the Plaintiff-Respondents.

10 Since  we  are  confronted  with  the  legal  propriety  of  a  temporary

injunction,  we must  abjure  from going into  minute details  and refrain  from

discussing the case threadbare, in order to preclude rendering the suit itself an

exercise in futility and the decision therein a foregone conclusion.  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

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using another mark, and found that this would prima facie assume significance

in assessing “irreparable loss”.  

11 For manifold and myriad reasons, we are of the opinion that the decision

of the Trial Court, as affirmed by the First Appellate Court, is reasonable and

judicious,  and  does  not  suffer  from  perversity  by  any  dialectic  that  the

Defendant-Appellant  may proffer.  The Appeal  is  accordingly dismissed,  but

with no order as to costs.  

……………………………..J. (VIKRAMAJIT SEN)  

……………………………..J. (SHIVA KIRTI SINGH)

New Delhi, October 5, 2015.