American Home Products Corporation v. Mac Laboratories Pvt. Ltd. and Anr.

American Home Products Corporation v. Mac Laboratories Pvt. Ltd. and Anr.

1986 (6) PTC 71(SC)

Brief Facts:

American Home Products Corporation (Appellant), was an American multi-national corporation dealing in the manufacture of pharmaceuticals. Geoffrey Manners & Co. Ltd. (“the Indian Company”) was a company registered as a public limited company in India.

In 1956 the Appellant introduced ‘DRISTAN’ tablets in the American market and got the trade mark ‘DRISTAN’ registered in the United States of America and in several other countries.

In 1956, Appellant acquired a 40% share in the Indian Company and introduced a respiratory drug called ‘DRISTAN’.

In 1957, Appellant entered into a technical collaboration agreement with the Indian Company, wherein the rights of a registered user would be extended to the latter in respect of each product by the Appellant, including ‘DRISTAN’.

Thereafter, the Indian Company manufactured and marketed these products and got itself registered as the registered user in respect of the trademarks relating to the goods of which the Appellant was the registered proprietor.

In 1958, the Appellant filed an application for registration of the trademark ‘DRISTAN’, claiming to be its proprietor and by whom the said mark was filed on a proposed to be used basis.

The mark was registered in 1959.

Indian Company applied on September 23, 1960, to the Central Government under Section 11 of the Industries (Development and Regulation) Act, 1951, for a licence to manufacture the tablets ‘DRISTAN’.

In 1960, Mac Laboratories Private Limited, the first Respondent, applied for registration of the trademark “TRISTINE’ for respiratory ailments.

In 1961, Appellant filed a notice of opposition to registration of the mark of the first Respondent. This opposition was rejected and the trademark ‘TRISTINE’ was registered. On April 10, 1961, the first Respondent filed an Application for Rectification to remove the Appellant’s trademark ‘DRISTAN’ from the Register of Trade Marks.

On October 22, 1961, the ‘DRISTAN’ tablets were first marketed in India by the Indian Company.

In 1962, the Appellant and the Indian company jointly applied to register the Indian Company as the registered user of the trademark ‘DRISTAN’.

The rectification proceeding filed by the first Respondent was dismissed in 1964. On appeal, the Learned Single Judge of the Calcutta High Court set aside the order of the Registrar. The order of the Learned Single Judge was upheld by the Division Bench of the Calcutta High Court.

Hence, the present Appeal was filed before the Supreme Court.

Important statutory provisions:

Section 18(1) of the Trade and Merchandise Marks Act, 1958 – Section 18(1) of the Trade and Merchandise Marks Act, 1958, stated that “any person, claiming to be the proprietor of a trademark used or proposed to be used by him, shall apply in writing to the Registrar” for registration of the trademark”.

Section 46(1)(a) of the Trade and Merchandise Marks Act, 1958 – Section 46(1)(a) provided for the removal of a registered trademark from the Register if it is proven that the trademark was registered without any bona fide intention to use the same and there has, in fact, been no bona fide use of that trade mark in relation to those goods by any proprietor thereof for the time being up to a date one month before the date of the application under Section 46(1).

Section 46(1)(b) of the Trade and Merchandise Marks Act, 1958 – Section 46(1)(b) provided for the removal of a registered trademark from the Register if it is proven that that up to a date one month before the date of the application for rectification, a continuous period of five years or longer had elapsed during which the trade mark was registered and during which there was no bona fide use thereof in relation to those goods by any proprietor.

Section 48 of the Trade and Merchandise Marks Act, 1958 – Section 48(1) stated that “a person other than the registered proprietor of a trademark may be registered as the registered user”.

Section 48(2) stated that “The permitted use of a trade mark shall be deemed to be use by the proprietor thereof, and shall be deemed not to be use by a person other than the proprietor, for the purposes of Section 46 or for any other purpose for which such use is material under this Act or any other law”

Submissions of the Appellant:

• The legal fiction created by Sub-section (2) of Section 48 is for the purposes of Section 46 or for any other purpose for which such use is material under the 1958 Act or any other law and applies to cases where the mark is proposed to be used. To confine this fiction to a case of an actual use of a trade mark by a registered user is to confine it only to use for the purposes of Clause (b) of Section 46(1) which deals with the period of non-use for five years and not with bona fide intention to use, which is contrary to the purpose to which the said fiction was created and, therefore, when Section 18(1) of the 1958 Act uses the words “proposed to be used”, these words must be read as “proposed to be used by a proposed registered user”.

• Thus, in Section 18(1) of the Act, the words “proposed to be used” must be read as “proposed to be used by a proposed registered user”.

• To register a trademark which is proposed to be used by a registered user, does not amount to trafficking in trademarks.

• The facts and circumstances of the case show that the Appellant had at the date of the making of the application for registration a bona fide intention to use the trademark ‘DRISTAN’ through a registered user, i.e., the Indian company.

Submissions of the first Respondent:

• The words “proposed to be used” in Section 18(1) of the 1958 Act mean “proposed to be used by the applicant for registration, his servants and agents” and not by any person who is proposed to be got registered as a registered user and, therefore, the legal fiction enacted in Section 48(2) cannot be imported into Section 18(1).

• A registered user can only come into being after a trademark is registered. Therefore, at the date of an application for registration of a trademark, there cannot be any person in existence who is a registered user, the words “proposed to be used” cannot possibly mean “proposed to be used by a proposed registered user”.

• To permit a trademark to be registered when the applicant himself does not propose to use it but proposes to use it through someone else who would subsequently be registered as a registered user would be to permit trafficking.

Observations of the Supreme Court:

To answer the rival contentions, the court looked at three questions:

• Whether the Appellant had any bona fide intention that the trademark ‘DRISTAN’ should be used in India in relation to the concerned goods.

• If yes, whether this bona fide intention to use the mark will be restricted to the intention of the registered proprietor to use the mark only through itself or will also cover cases, where the registered proprietor does not intend to use the mark by itself but through a registered user. In other words, would the intention to use the mark through a registered user be bona fide intention to use the mark under Section 46(1)(a) and consequently a ground for dismissal of rectification petition.

• Whether, ‘proposed to be used by him’ in Section 18(1) includes ‘proposed to be used by registered proprietor’.

The Court answered the first question in the affirmative. Rejecting the contention of the first Respondent, it stated that the continuous chain of events in the case – from the collaboration agreement to the registration of the user – established that the Appellant had an intention to use the trademark ‘DRISTAN’ in India.

When looking at the second and third questions, the Court rejected the argument of the first Respondent wherein it was stated that the Appellant should have got the trademark registered with the intention that it will itself use it and to effectuate that intention, it should have set up a factory and manufactured and marketed ‘DRISTAN’ and then either assigned the trademark to the Indian Company or got the Indian Company registered as the registered user. The Hon’ble Court observed that, because of India’s foreign exchange policies, it is not possible for a foreign company to establish its own industry in India without entering into collaborations. This collaboration was considered enough to assign the trademark to the Indian Company or to make jointly with the Indian Company an application for registration would be to destroy the Appellant’s proprietorship in that trademark.

The Hon’ble Court held that, the addition of the words ‘for the purposes of Section 46’ in Section 48(2) not only does not make any difference but clarifies the scope of the legal fiction in Section 48(2) . As we have seen, Clause (a) of Section 46(1) refers both to ‘bona fide intention on the part of the applicant for registration that it (that is, the trade mark) should be used in relation to those goods by him’ as also to ‘bona fide use of the trade mark in relation to those goods by any proprietor thereof for the time being.’ It cannot possibly be that when Section 48(2)expressly provides that the permitted user of a trade mark by a registered user is to be deemed to be user by the proprietor of the trade mark for the purposes of Section 46, the fiction is intended only to apply to the use of the trade mark referred to in the second condition of Clause (a) of Section 46(1) and not to the use of that trade mark referred to in the first condition of the said Clause (a). Under Section 18(1), an application for registration of a trade mark can only be made by a person who claims to be the proprietor of that trade mark. Therefore, the words “applicant for registration” in Clause (a) of Section 46(1) would mean ‘the person claiming to be the proprietor of the trade mark who is the applicant for registration of that trade mark’. The first condition of Clause (a) would, therefore, read ‘that the trade mark was registered without any bona fide intention on the part of the person claiming to be the proprietor of that trade mark who has made the application for registration that it should be used in relation to those goods by him’. So read, there can be no difficulty in reading the words ‘by him’ also as ‘by a registered user’. Similarly, we see no difficulty in applying the legal fiction in Section 48(2) to Section 18(1). Section 18(1) in the light of the said legal fiction would read as ‘any person claiming to be the proprietor of a trade mark used or proposed to be used by him or by a registered user’.

The Hon’ble Court also observed that “The purposes for which the fiction has been enacted in Section 48(2) are the purposes of Section 46 or for any other purpose for which such use is material under the 1958 Act or any other law. To confine the purpose only to a part of Section 46 would be to substantially cut down the operation of the legal fiction. The purpose for which the legal fiction is to be resorted to is to deem the permitted use of a trade mark, which means the use of the trade mark by a registered user thereof, to be the use by the proprietor of that trade mark. Having regard to the purposes for which the fiction in Section 48(2) was created and the persons between whom it is to be resorted to, namely, the proprietor of the trade mark and the registered user thereof, and giving to such fiction its full effect and carrying it to its logical conclusion, no other interpretation can be placed upon the relevant portions of Section 18(1) and of Clause (a) of Section 46(1) than the one which we have given.”

The Hon’ble Court also that this should not be understood to mean that a person, who does not intend to use a trademark himself can get it registered and when faced S. 46(1)(a) to have that trademark removed, turn round and say that he intended to use it through some person who was proposed to be registered as a registered user. This would clearly amount to trafficking. To prevent this, it must be ascertained that the proprietor of the trademark had in mind at the date of his application for registration, a ‘registered user’.

Hon’ble Court stated that the facts on record showed that only when it was decided to introduce ‘DRISTAN’ tablets in India through the Indian Company, did the Appellant make its application to register the trademark. Therefore, in the absence of trafficking, this was a case of bona fide intention.

The Appeal was allowed and the judgment of the Division Bench of the Calcutta High Court was reversed and the order set aside.

Author: Pavani Nath, Gujarat National law University