ITC Limited v. Nestle India Ltd. – Curious case of ‘The Magic Noodles’

ITC Limited v. Nestle India Ltd.

Decided on: 29.04.2015

In the High Court of Madras

Image from here

Facts:

Plaintiff, being India’s foremost private Sector Companies, entered the Indian instant noodles market with Sunfeast Yippee! In two variants: (a) Yippee! Magic Masala and (b) Classic Masala. In March, 2013 Plaintiff came to know that the Defendant has launched instant noodles under a similar mark being ‘MAGICAL MASALA’.

Plaintiff filed a suit for passing off against the Defendant alleging that the use of the mark ‘MAGICAL MASALA’ by the Defendant amounts to passing off of the Defendant’s goods as that of the Plaintiff sold under the mark ‘MAGIC MASALA’.

The present judgment is an interim order passed in the said suit. The trial is still to be concluded and final judgment is still to be rendered.

Plaintiff’s Case:

• Owing to its excellent quality, geographical reach and reputation, ‘MAGIC MASALA’ has attained distinctiveness and is associated with Plaintiff alone.

• Retailers in the trade and public ask for applicant’s noodles by the mark ‘Magic Masala’.

• Defendant has been losing market share to Plaintiff’s noodles and has therefore resorted to unfair competition by using ‘MAGICAL MASALA’.

• Defendant has many variants of its noodles and therefore there is no need of the Respondent to use the mark ‘MAGICAL MASALA’.

Defendant’s Case:

• The use of ‘MAGICAL MASALA’ by the Defendant falls within permitted use as per provisions of Section 30(2)(a) of the Trade Marks Act, 1999.

• Defendant is using ‘MAGICAL MASALA’ as a flavor descriptor. ‘MAGICAL MASALA’ conveys flavor and not origin.

• ‘MAGICAL MASALA’ is a laudatory and descriptive epithet lauding the spicy characteristics and quality of Masala, which is sold along with the product in a sachet by the name of ‘tastemaker magical masala’.

• Law of Trade Marks or common law of passing off does not permit any interference in use of expressions, marks or terms, marks, which are an apt description of character, quality, kind of product, and not used as indication of source, or original of the product, and the use of the product descriptor in terms of its characteristic such as flavour, ingredients, benefits, quality, etc, cannot be considered as trade mark or mark.

• Defendant’s product is sold under the mark ‘MAGGI’, having 80% market share.

• ‘MAGICAL MASALA’ or ‘MAGIC MASALA’ are common expressions which cannot be a subject matter of any proprietary rights.

• Defendant is using the word ‘MAGIC’ prior to Plaintiff for its products and as far as ‘MASALA’ is concerned, the same is common word to describe spices. Therefore, combined use of ‘MAGIC’ and ‘MASALA’ by the Plaintiff is not proprietable.

• Both the parties are selling their noodles under their respective brands namely, ‘Sunfeast ITC Yippee’ and ‘Maggi’ which appear very prominently on the labels. Therefore, there cannot be any confusion. This is more so in the light of the fact that the products are sold in an entirely different packaging.

• The words ‘MAGIC MASALA’ is widely used not only by the Defendant, but also by other manufacturers, like i) Lay’s Magic Masala, ii) Balaji Magic Masala, iii) Hello Just 2 Good! Magic Masala iv) Samrudhni Kitchen Magic Masala, v) SDS Magic Masala, vi) Bindass Masala Magic.

Issues:

1. Whether the Plaintiff’s mark ‘MAGIC MASALA’ is inherently distinctive or is descriptive but has acquired secondary meaning ?

2. Whether the Plaintiff has made out a prima facie case for grant of injunction?

Observations of the Court:

Issue 1:

The Hon’ble Court relied on McCarthy on Trademarks and Unfair Competition (3rd Edition), to hold that the mark ‘MAGIC MASALA’ is a ‘suggestive trade mark’ as imagination is required on the part of the customers to get some direct description of the product from the term.

The Court observed that “descriptive term directly and clearly conveys information about the ingredients, qualities, or characteristics of the product or service, the ‘suggestive term only indirectly suggests these things.”

The Court further observed that word/mark ‘MAGIC MASALA’ indirectly suggests magical change by consuming the Plaintiff’s product and therefore, the word/mark ‘Magic’ or ‘Magical’ cannot be considered as descriptive and it is only distinctive word or mark, having secondary meaning.

The Court also observed that having regard to the fact that the word ‘MAGIC MASALA’ is distinctive, the Plaintiff is entitled to the relief of injunction even accepting the case of the Defendant that the trade dress of the two products are entirely different.

Issue 2:

On the second issue, the Court observed that the Plaintiff’s product is popularly known as ‘MAGIC MASALA’, though it is marketed under the brand Sunfeast Yippee, admittedly, Plaintiff is the prior user of the word ‘MAGIC MASALA’, and Plaintiff has proved its market share, and considering all these aspects, a prima facie case has been made out by the Plaintiff.

The Defendant was restrained from using the mark ‘MAGICAL MASALA’ or any other deceptively similar mark to Plaintiff’s mark ‘MAGIC MASALA’ till the pending disposal of the suit.

Author’s Comments: From my experience of practicing Intellectual Property rights, I am of the opinion that the order suffers from a number of fallacies. Though it is only a prima facie finding and may be reversed after trial, the conclusions and findings in the order appear far from being correct.

A bare perusal of both the products of the parties shows that the mark ‘MAGIC MASALA’ or the mark ‘MAGICAL MASALA’ do not perform source identifying functions. Primary function of a trade mark is to identify the source of the product. The manner of writing the words ‘MAGIC MASALA’ in the Plaintiff’s products does not indicate the same to be a trade mark. The trade mark in such a case appears to be ‘Yippee’ or the house mark ‘Sunfeast’. This is also evident from the fact that the words ‘MAGIC MASALA’ do not appear to be prominent on the product of the Plaintiff and appear to be indicative of the fact that the same pertains to a particular type of flavor. The said fact is also corroborated from the Plaintiff’s case itself that they launched two products (a) Yippee Magic Masala and (b) Classic Masala. The distinguishing feature between the two is the type of Masala/spice being used. Therefore, Plaintiff’s usage of the words ‘MAGIC MASALA’ is directed towards the contents of the product and thus appears to be descriptive and not in a trade mark sense.

Further, the Hon’ble Court relies on the bare pleadings that the product of the Plaintiff is referred in the trade and by public as ‘MAGIC MASALA’, the Hon’ble Court cites no documentary evidence filed by the Plaintiff in support of the same and such an observation has been made only on the basis of mere pleading. In our opinion, before making an opinion that the product of a particular party is referred by a name which is not the primary trade mark, Court should require a minimal amount of evidence. Even in the Atlas Cycle Industries Ltd. v. Hind Cycles Limited; (1973) ILR 1 Delhi 393, the Court while considering the trade marks ‘EASTERN STAR’ and ‘ROYAL STAR’, held the mark ‘STAR’ per se to be protectable when evidence was lead by the Plaintiff towards the fact that the cycle of the Plaintiff have to come to be known as ‘STAR’ Cycles because of the device of the Star. In this case, there is no evidence, and such a strong opinion appears to be grossly incorrect.

Moreover, even considering for argument’s sake that ‘MAGIC MASALA’ is protectable as a trade mark, the use by the Defendant is totally descriptive. Defendant is not using the mark in a trade mark sense and thus should be entitled to use the same. The principles as laid down in Automatic Electric Ltd. v. R.K. Dhawan & Anr.; 1999 (19) PTC 81 and also in Pidilite Industries Ltd. v. Jubilant Agri & Consumer Products Ltd.; 2014 (57) PTC 617 (Bom) are also not applicable to this case as the Defendant has not applied for the mark ‘MAGICAL MASALA’ or any label of which ‘MAGICAL MASALA’ appears to be prominent. The Hon’ble High Court of Delhi  in  Automatic Electric Ltd. v. R.K. Dhawan & Anr. had held that when a Defendant applies for a mark it cannot plead the same to be generic or common to trade. The said judgement has been uphold even by the Division Bench of the Delhi High Court. Pidilite Industries Ltd. v. Jubilant Agri & Consumer Products Ltd. extends the principle further and states that when a Defendant applies for a composite mark, it cannot state that the prominent feature of the said mark is descriptive, generic or common to trade.

The observation of the Hon’ble Court that ‘MAGIC MASALA’, is a suggestive mark appears to be incorrect. It is correct that suggestive marks merit the same degree of protection as arbitrary trade marks and do not require any proof of secondary meaning but the question is whether ‘MAGIC MASALA’ is a suggestive mark. In our opinion, ‘MAGIC MASALA’ is not a suggestive mark. The reason for the same is as follows, a ‘suggestive mark’ may not impart information directly but indirectly towards the product or its features. For example, a bus service by the name of ‘GREYHOUND’ (for speed) and/or ‘FACEBOOK’ for online social networking are suggestive trade marks as they require some imagination to connect them with a good or service. ‘GREYHOUND’ for shirts would be arbitrary as it has nothing to do with the product in question. Therefore, the words ‘MAGIC MASALA’ does not impart any information indirectly in respect of the goods in question, i.e. ‘Noodles’, in fact, it imparts, information directly as to the flavor of the Noodles. ‘MAGIC MASALA’ cannot be a suggestive trade mark for any food related product the flavor of which is enhanced by use of spices. If Plaintiff would have been using ‘MAGIC CIRCLES’ for noodles owing to the nature of their consumption through forks into a circle, the same would have been a suggestive mark.

Further, the expression ‘MAGIC’ is something which is used all over the world as an expression of enhancing a saleability of a product. The expression ‘MAGIC’ may not be strictly laudatory but has come to be used with vendible articles that its usage is nothing but laudatory, i.e. used to enhance the saleability of a particular product. Some of the examples to demonstrate that ‘MAGIC’ should be construed as laudatory are as follows:

Lastly, even disregarding, that the word ‘MAGIC’ is laudatory. Expression ‘MAGICAL’ as being used by Defendant comes more closer to being laudatory as it gives an impression of leading the consumer into a magical world after consumption of the Defendant’s product.

The order of the Hon’ble Court also does not take into account third party use, considering the fact that it is a passing off action and the Defendant had provided details of third party use. No observation in this regard has been made by the Hon’ble Court.

In our opinion, the order needs to be reviewed or set aside.