Express Bottlers Services Private Ltd. v. Pepsico Inc. and Ors.

Express Bottlers Services Private Ltd. v. Pepsico Inc. and Ors.

1989 (9) PTC 14 (Calcutta)

Brief Facts:

Respondent No. 1, Pepsico Inc., was a company incorporated under the appropriate laws of Delaware, in the United States of America and was the registered proprietor of the marks, “Pepsi Cola” “Pepsi” and “Pepsico”.

Petitioner claimed to be a manufacturer of ingredients and salts etc. for manufacture of non-alcoholic beverages, aerated water under the mark “Pepsi”. Petitioner also claimed to be selling beverages under the said mark and labels.

Respondent No. 3 Pepsi Soda Water Co. was one of the franchise holders of the Petitioner and as such Pepsi Soda also manufactured salts, beverages under the mark “Pepsi”.

It was an undisputed fact that since the date of registration of the marks “Pepsi Cola” and “Pepsi” in Calcutta in 1943 and 1957 respectively, Respondent No. 1 had made bonafide use of these marks in relation to the goods during the period between 1956 and 1960 when Pepsicola used to be bottled and sold by the Respondent No. 1 through Messrs. Jagjit Distilleries & Allied Industries Ltd., the permitted user of the said trademarks.

The present decision is on the application by the Petitioner under Section 46 of the Trade & Merchandise Marks Act, 1958 for removal of the marks “Pepsi Cola” “Pepsi” and “Pepsico” from the Register and for rectification of the Register which was made by the Petitioner on 4th September, 1985.

Arguments on behalf of the Petitioner:

• Since 1961 upto one month prior to the date of the present application which is 4th September 1985, the Respondent No. 1 did not make any bonafide use of the marks “Pepsi Cola” “Pepsi” and “Pepsico”. Thus, the present case fulfill all the requirements of Section 46(1)(b) of the Act and the marks of the Respondent No. 1 are liable to be taken off the register on the ground of non-use.

• Sales, if any, to the missions, diplomats and U. N. Agencies are not commercial sales.

• Relying on the definition of Trade Mark in Clause (v) of Section 2(1) of the Act, the words “marks used in relation to goods … .in the course of trade” clearly bring out the requirement of public use of the mark. Hence, supply to the privileged persons will not amount to trading with the public in India.

• Also, the definition of ‘goods’ in Section 2(g) of the Act envisages that the goods must be “subject of trade”.

• Moreover, the sales to embassies, diplomats, bonded warehouses would not amount to bonafide use of the mark in course of trade in India because the goods have not been put upon the market for sale to the public.

• Respondent No. 1 did not disclose what were the ingredients required for manufacture of Pepsicola in India. Unless those particulars are disclosed, it is not possible to come to any finding whether import of those ingredients were totally banned or prohibited.

• Non-user of the mark by the Respondent No. 1 was intentional in as much since 1961 the Respondent No. 1 did not want to invest money in India and refused to set up a concentrate plant in India.

Arguments on behalf of the Respondent:

• The Court has no jurisdiction to adjudicate in respect of the trade mark “Pepsico” which was registered at Delhi.

• In 1961, the Government of India imposed import restrictions on the consumer goods. Due to this trade restriction, it was not possible for Respondent No. 1 to import the ingredients and to manufacture or sell its products under these trade marks in the overt market to the general public in India. But the Respondent No. 1 made bonafide use of these marks in relation to these goods during this period in the available limited market, viz., to the bonded warehouses, foreign embassies, missions, diplomats and U. N. Agencies in India. Therefore, Section 46(1)(b) has no application on the facts and circumstances of this case.

• If within the span of time allowed by the statute, a single bonafide sale can be proved by the Respondent No. 1, the mark must be saved.

• During the statutory period, that is, between September 1980 to August 1985 (present application was taken out on 4th September 1985), Pepsicola was sold in India.

• The counsel relied on Electrolux Ltd. v. Electrix Ltd. (1953) 71 R.P.C. 23, and submitted that what is necessary is the proof of the use of the mark within the statutory period which must be a genuine use of the mark. The test is whether there was a commercial use of the mark during the statutory period.

• In the present case, there are overwhelming documentary evidences to prove commercial sale of Pepsi cola by the respondent No. 1 to M/s. Mohanlall & Co., and Empire Stores, both in New Delhi and to the embassies and other organizations, which will prove that there were bonafide users of the mark during that period.

• Requirements of Section 46(1)(b) of 1958 Act regarding the bonafide use of the mark may be fulfilled if the mark is used either in course of trade in a free and open and/or in a restricted or a limited or a controlled market whatever is available to the registered proprietor.

• Concept of “market” has undergone change and the concept of ‘limited market’ was introduced and recognised as recently as in 1984 in Budwieser’s case. It is submitted that sale of Pepsi cola to the privileged persons is ‘sales’ in the market restricted by the Government of India’s trade policy.

• The special circumstances under Section 46(3) of the Act are pleaded as an alternative defence. Since 1961, the Government of India imposed a total ban on the importation of consumer goods; as a result, Pepsicola, either in bottles or in cans could not be imported to India for sale to the general public. Also, in the Import Policies, there was complete ban on importation of basic ingredients for the manufacture of concentrate for soft drinks including Pepsicola. Hence, it was not possible for the Respondent No. 1 to manufacture Pepsicola in India.

• Further, the customs and import duties in excess of 100% also rendered the import of goods in India and sale of those goods in Indian market commercially unviable.

• Without the permission of the Reserve Bank, under Section 28 and 29 of the FERA, the Respondents could not have used its mark in India. Thus, such peculiar or abnormal circumstances making international trade impracticable amount to special circumstances within the meaning of Section 46(3) of the Act.

• Respondent No. 1 made positive attempt to re-enter the Indian market in 1985-86, long before the present petition was taken out, but was not allowed to do so by the Government of India. This fact clearly proved that the Respondent No. 1 had no intention to abandon the mark and had expressed its intention to keep its right over the mark within the statutory period.

Court’s observations:

Respondent No. 1 throughout the statutory period and longer, has made bona fide use of its mark in the course of trade in the limited and/or restricted market available to it in India by selling its products to the privileged persons mentioned above and has acquired both goodwill and reputation and the mark has not lost its distinctiveness.

Respondent No. 1 could not make bonafide use of its mark in the open market in India due to the special circumstances arising out of imposition of severe trade restrictions and the trade policy of the Government of India making it commercially impracticable and impossible for the Respondent No. 1 to carry on business in India. The Respondent No. 1 did not intentionally abandon its mark as otherwise it would not have endeavoured to come back to the Indian market as soon as the international trade policy of the Government of India was relaxed a little in 1984/85 and its said attempt clearly establishes that there was no intention to abandon the marks within the span of time fixed by the statute.

Thus, the present Petition was dismissed.

Author: Paazal Arora, ILS Law College, Pune