[Case Brief] Cadila Healthcare Ltd. v/s Cadila Pharmaceuticals Ltd. – Supreme Court of India

Case Name Cadila Healthcare Ltd. v/s Cadila Pharmaceuticals Ltd.
Case Number Special Leave Petition (civil) 15994 of 1998
Court Supreme Court of India
Bench Justice B.N. Kirpal, Justice Doraiswamy Raju, Justice Brijesh Kumar
Author of the judgment Justice B.N. Kirpal
Relevant Act/Sections Trademarks Act, 1999  – Section 8, Section 10 and Section 12
Author of the case brief Praher Vaidya

Facts:

  • The appellant and the respondent, in the present appeal, are pharmaceutical companies manufacturing pharmaceutical products. After the restructuring of the Cadilla group, both the appellant and the respondent got right to use CADILA as their corporate name.
  • Appellant’s drug Falcigo was for the treatment of cerebral malaria- Falcipharum. The Drugs Controller General (India) granted permission to the appellant to market the said drug under the trademark of Falcigo.
  • The respondent company got permission, approximately a year after the appellants, to manufacture and import a drug containing Mefloquine Hydrochloride. The respondents used the word Falcitab to sell their product. The appellant filed a suit in the District Court at Vadodara seeking injunction against the respondent from using the trademark Falcitab as it was claimed that the same would be passed off as appellants drug Falcigo for the treatment of the same disease in view of confusing similarity and deception in the names and more so because the drugs were medicines of last resort.
  • The respondent company stated in the defence that the word Falci, which is the prefix of the mark, is taken from the name of the disease Falcipharum Malaria and it is a common practice in pharmaceutical trade to use part of the word of the disease as a trademark to indicate to the doctors and chemists that a particular product/drug is meant for a particular disease. The respondent added that admittedly the two products in question were Schedule L drugs which can be sold only to the hospitals and clinics with the result that there could not even be a remote chance of confusion and deception. Schedule H drugs are those which can be sold by the chemist only on the prescription of the Doctor but Schedule L drugs are not sold across the counter but are sold only to the hospitals and clinics.
  • The Extra Assistant Judge, Vadodara dismissed the interim injunction application, concluding that the two drugs Falcigo and Falcitab are differed in appearance, formulation, and price and could be sold only to hospitals and institutions and there was no case which had been made out for grant of injunction and there was no chance of deception or/of confusion especially as the drug was not meant to be sold to any individual. The High Court upheld and hence an appeal through Special Leave Petition has reached the Supreme Court.

Decision Held:

  • The Supreme Court did not incline to interfere with High court’s order for the reason being that there may be the possibility of evidence being required on merits of the case and directions were given for speedy trial of the suit. Expression of opinion on merits by the Supreme Court at this stage was not deemed to be advisable.
  • Section 27(2) provides that the Act shall not be deemed to affect rights of action against any person for passing off goods as the goods of another person or the remedies in respect thereof. In the case of unregistered trademarks, passing off action is maintainable. The passing off action depends upon the principle that nobody has a right to represent his goods as the goods of somebody. In other words, a man is not to sell his goods or services under the pretense that they are those of another person.
  • Tort of passing off has five elements i.e. (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 and (5) which causes actual damage to a business or goodwill of the trader by whom the action is brought or will probably do so.
  • The burden of proving that the trademark which a person seeks to register is not likely to deceive or to cause confusion is upon the applicant. It is for him to satisfy the Registrar that his trademark does not fall within the prohibition of Section 8 and therefore, it should be registered. For deceptive resemblance two important questions are: (1) who are the persons whom the resemblance must be likely to deceive or confuse, and (2) what rules of comparison are to be adopted in judging whether such resemblance exists. As to confusion, it is perhaps an appropriate description of the state of mind of a customer who, on seeing a mark thinks that it differs from the mark on goods which he has previously bought, but is doubtful whether that impression is not due to imperfect recollection.
  • The sound of one word resembles too nearly the sound of another so as to bring the former within the limits of Section 12 of the Trade Marks Act, 1938, must nearly always depend on the first impression.
  • It is important that the marks must be compared as a whole, in totality and not in a composite manner/ in portions.
  • In trademark matters, it is now necessary to go into the question of comparable strength of the cases of either party, apart from the balance of convenience.
  • The Court disagreed with the SM Dyechem Ltd. v/s Cadbury (India) Ltd. AIR 2000 SC 2114, which laid down the “dissimilarity in the essential features test”, disregarding the Similarity test. The similarity between the competing marks and to determine whether there is a likelihood of deception or causing confusion is to be seen in a passing-off action.
  • Accepting the appellant’s contention, exacting judicial scrutiny is required if there is a possibility of confusion over marks on medicinal products because the potential harm may be far harmful than that in confusion over ordinary consumer products. Schedule H drugs are those which can be sold by the chemist only on the prescription of the Doctor but Schedule L drugs are not sold across the counter but are sold only to the hospitals and clinics. Nevertheless, it is not uncommon that because of lack of competence or otherwise, mistakes can arise especially where the trade-marks are deceptively similar. Although both the drugs are sold under prescription, this fact alone is not sufficient to prevent confusion which is otherwise likely to occur. In view of the varying infrastructure for supervision of physicians and pharmacists of medical profession in our country due to linguistic, urban, semi-urban and rural divide across the country and with high degree of possibility of even accidental negligence, strict measures to prevent any confusion arising from similarity of marks among medicines are required to be taken. The test of confusing similarity is modified when the goods involved are medicinal products. The public interest would support a lesser degree of proof showing confusing similarity in the case of the trademark in respect of medicinal product as against other non-medicinal products. Confusion between medicinal products may be life-threatening, not merely inconvenient.
  • The principles of Trademark Laws in England, like the one, relied upon in the Dyechem case are not relevant in India because of the level of literacy and the diversity of language is different in India and England.
  • In an action for passing off on the basis of the unregistered trademark, for deciding the question of deceptive similarity the following factors are to be considered:
    • The nature of the marks i.e. whether the marks are word marks or label marks or composite marks, i.e. both words and label works;
    • The degree of resemblances between the marks, phonetically similar and hence similar in idea;
    • The nature of the goods in respect of which they are used as trade-marks;
    • The similarity in the nature, character, and performance of the goods of the rival traders;
    • The class of purchasers who are likely to buy the goods bearing the marks they require, on their education and intelligence and a degree of care they are likely to exercise in purchasing and/or using the goods;
    • The mode of purchasing the goods or placing orders for the goods, and;
    • Any other surrounding circumstances which may be relevant in the extent of dissimilarity between the competing marks. Weightage to be given to each of the aforesaid factors depends upon facts of each case. The trial court will now decide the suit keeping in view the observations made in this judgment. The appeal was accordingly disposed of.

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