On 10.03.2017, A Division Bench of Delhi High Court pronounced a judgment whereby the Division Bench vacated the Single Judge order of interim injunction dated 24.12.2016 so granted to AZ Tech (India) and Ors., the Plaintiffs in the suit.

Brief facts:

The Plaintiffs claim to have been marketing and selling phones under the trademark ‘AQUA’ in India since 2009 and have also expanded into the market of phone accessories such as earphones, mobile chargers, USB cables and mobile batteries. The Plaintiffs claim that the mark ‘AQUA’ was randomly coined and is an arbitrary mark in application to mobile phones and merits trademark protection.

The Plaintiffs aggrieved by the act of adoption of identical mark and use as INTEX AQUA for identical goods by the Defendants/Appellants in the year 2012, filed the present suit. The Single Judge was pleased to pass an order for interim injunction in favour of the Plaintiffs on 24.12.2016. Intex technologies, The Defendants/Appellants, being aggrieved by the said order whereby the Single judge restrained the Defendants/Appellants from using the trade mark AQUA or any other deceptive similar trade mark in respect of cellular/mobile phones and their accessories, filed appeal.

Major issues involved:

1. Whether mere prior use of the trade mark is enough to succeed in a passing off claim or is it the goodwill /reputation in addition to prior use which is essential for establishing a case for passing off?
2. Whether added matters in the product are sufficient to dispel the likelihood of confusion in the minds of public at large?

Court observation

Issue-1:

Whether mere prior use of the trade mark is enough to succeed in a passing off claim or is it the goodwill /reputation in addition to prior use  which is essential for establishing a case for passing off?

Single Judge:   

“It is settled law that in order to succeed in a case of passing off, the Plaintiff must establish priority right over the Defendant” (Para 43)

“It is clear that in an action of passing off, prior user remains the ultimate test. Accordingly, for establishing priority at an interim stage it may not be necessary to show substantial sales or advertisements but, at the same time, sufficient enough for the courts to come to a strong prima facie opinion that there was a clear intention to adopt the mark for the particular goods” (Para 54)

Division Bench:

“Insofar as the question of goodwill in the present case is concerned, we find that as on August, 2012, when Intex started selling its mobile phones under the mark, “AQUA”, it cannot be stated with any degree of confidence that the mark ‘AQUA’ had acquired a goodwill or reputation in respect of the respondents mobile phones. The property which is protected in an action of passing off is not the Plaintiffs proprietary right in the mark which the defendant allegedly misappropriates, but the goodwill and reputation of his business, which is likely to be harmed by the Defendants misrepresentation” (Para 19)

“Thus, insofar as this point is concerned we are of the view that AZ Tech has not been able to establish that it had a goodwill/reputation in India in the mark in August 2012 when Intex launched its product under the mark ‘AQUA’” (Para 20)

Issue-2:

Whether added matters in the product are sufficient to dispel the likelihood of confusion in the minds of public at large?

Single Judge :

“In the present case, learned counsel for the Defendants has primarily submitted that the use of the words ‘Intex’ in conjunction with ‘AQUA’ dispels the likelihood of confusion and consequently, no interim injunction should be granted” (Para 61)

“I am of the view that the usage of the word ‘Intex’ may not be sufficient to dispel the likelihood of confusion especially when ‘AQUA’ is being marketed as a separate sub-brand. This may even create an impression upon the public that the plaintiffs’ business has been acquired by the defendants and consequently, is not sufficient to disentitle the defendants from an interim injunction Learned counsel had also submitted that there is other added material, but has failed to substantiate on the same” (Para 62)

Division Bench:

“Insofar as the issue of added matter is concerned, there is no doubt that if the added matter is so prominent as to completely distinguish one product from the other, then there would be no case for confusion whether it be confusion proper or, initial confusion or reverse confusion. In the present case, we find that the mark “Intex” is as prominent, if not more, than the mark “AQUA” in the appellant’s product packaging” (Para 26)

 Insofar as the question of initial interest confusion is concerned, that, in our view, does not arise in the facts of the present case. The added matter in the form of the word mark ‘INTEX‘ is so prominent and distinct as to dispel any chance of even an initial confusion. (Para 28)

“It is clear in the present case which is one of passing off, the appellant/defendant would escape liability inasmuch as the added matter is, in our view, sufficient to distinguish the appellant’s products from those of the respondents” (Para 29)

Analysis:

It is a landmark judgment and the Division Bench observations are path breaking in view of the fact that despite the Plaintiffs/Respondents being the prior adopter and user of the mark AQUA, the Division Bench went ahead and vacated the initial interim injunction so granted in their favour.

It is noteworthy that despite of Division Bench Judgment Century Traders vs. Roshan Lal Duggar & Co. AIR 978Delhi250, wherein the Court observed that “For the purpose of claiming proprietorship of a mark, it is not necessary that the mark should have been used for considerable length of time. As a matter of fact, a single actual use with intent to continue such use confers a right to such trade mark as trade mark “ and the Supreme Court Judgment S. Syed Mohideen vs. P. Sulochana Bai, 2016 (66) PTC 1 (SC) wherein the Supreme Court has observed that “essentially the right of the prior user is considered to be superior than that of any other rights,  being in the favour of  the Plaintiffs/Respondents, the Division Bench observed that the Plaintiffs/Respondents could not establish goodwill/reputation, a necessary ingredient of the tort of passing off, in India on relevant date i.e. August 2012,  when the Defendants/Appellants launched their product under the mark AQUA.

Hence, in view of such observation of the Division Bench, one is required to establish goodwill in the mark along with the claim of prior adoption and use on the relevant date i.e., the date on which the other party commences with the infringing activities under the impugned mark.