Wockhardt Limited v. Torrent Pharmaceuticals Ltd. and Ors.  – Supreme Court resettling and affirming the settled principles of Law of Trade Marks

Wockhardt Limited v. Torrent Pharmaceuticals Ltd. and Ors. 

 2018 (76) PTC 225 (SC)

Brief Facts:

• Plaintiff/Respondent had trade marks ‘CHYMORAL’ and ‘CHYMORAL FORTE’, used for a drug administered post-surgically for swellings that may arise and/or wounds that may arise.
• Plaintiff claimed use of the mark from the year 1988 through its predecessor in interest from whom the Plaintiff had acquired the mark in 2014.
• As per Plaintiff, it came to know in June, 2016 about the use of the mark CHRYMTRAL by the Defendant/Appellant.
• In June, 2016, Defendant received an oral demand to withdraw its product from the market. Defendant filed Caveats which expired in October, 2016. Plaintiff filed a suit before Bombay High Court on 30^th January, 2017 claiming violation of its trade mark rights.
• In the suit, the Defendant claimed it had been using the mark since 2009 and its application for registration was published in 2010. At the time of publication, no Opposition was received from any side.

Single Judge’s Observations:

• The Learned Single Judge at the time of hearing of application for interim relief refused injunction to the Plaintiff, inter alia, on the following grounds:

1. No reputation in favour of the Plaintiff;
2. No misrepresentation by Defendant, which as per Court is an essential attribute of passing off; and
3. Acquiescence

• The Learned Single Judge concluded his decision in the following words “Reputation as to source is not sufficiently demonstrated. The rival products have  long co-existed and I cannot and will not presume misrepresentation by Wockhardt as to source, even assuming there is similarity. There is no explanation at all for Torrent’s   past conduct and the inaction with knowledge, or deemed knowledge, of Wockhardt’s trade mark registration application, its advertisement and subsequent registration, with not a single objection from Torrent or its predecessor-in-title. There is no answer about the caveats or about the co-existence of other players in the market. There is simply no misrepresentation shown as required by law, at this prima facie stage”

Being aggrieved, the Plaintiff filed an appeal before the Division Bench of the High Court of Bombay. Division Bench reversed the decision and injuncted the Defendant.

Division Bench’s Observations:

• Reputation of the Plaintiff stood established from the sales figures provided in the plaint to the tune of 95 Crores.
• Since confusion on the ground of deceptive similarity would ensue, misrepresentation in law is also made out.
• On the issue of acquiescence, the Division Bench observed that “there is no positive act which can be attributed to the plaintiff so as to deny the relief. There is no acquiescence which can be culled out”
• The Division bench rejected the argument of the Defendant who argued that “‘positive act’ as referred to in the decision of the Hon’ble Apex Court in M/s Power Control Appliances and Ors. vs. Sumeet Machines Pvt. Ltd. reported in (1994) 2 SCC 448 (relied upon by the appellant) cannot mean that the plaintiff ‘green lighting’ the defendant’s action only to later complain of it. The ‘positive act’ is the ‘sitting by’ or ‘laying by’ i.e., not mere silence or inaction but a refusal or failure to act despite knowledge of invasion and opportunity to stop it”
• The Division Bench further observed “Thus, the attempt is to equate delay with acquiescence and which is not correct. We do not think that because the appellants stepped in the year 2014 with notice of the first respondent’s registration and use of the mark that means the appellant-plaintiff has acquiesced in the same. That is not a positive act and which is required to deny the relief on the ground of acquiescence.“

Defendant, filed an appeal against the said decision of the Division Bench before the Hon’ble Supreme Court of India.

Proceedings before Supreme Court:

Appellant’s Contentions:

• Division Bench has not considered Wander Limited And Another vs. Antox India P. Ltd. 1990 (Supp) SCC 727. The appeals before the Division Bench were against the exercise of discretion by the Single Judge. In such appeals, the Appellate Court will not interfere with the exercise of discretion of the court of first instance and substitute its own discretion except where the discretion has been shown to have been exercised arbitrarily, or capriciously or perversely or where the court had ignored the settled principles of law regulating grant or refusal of interlocutory injunctions. An appeal against exercise of discretion is said to be an appeal on principle. Appellate Court will not reassess the material and seek to reach a conclusion different from the one reached by the court below if the one reached by that court was reasonably possible on the material.
• The Division Bench could not have interfered with the observations of the Learned Single Judge who had observed that the three tests of grant of interim injunction had not been satisfied but it was also a case of acquiescence.

Respondent’s Contentions:

• Division Bench judgment, in fact, upset the learned Single Judge because of errors of law and, therefore, interfered on principle and not on fact.
• Reputation had been established by the sales figures from 1988 onwards.
• The word “misrepresentation” had been made out in the said sense understood in law, that is, that absence of an intention to deceive is not a defence in law.

Supreme Court’s Observations:

Though passing off is, in essence, an action based on deceit, fraud is not a necessary element of a right of action, and that the Defendant’s state of mind is wholly irrelevant to the existence of a cause of action for passing off. Reliance was placed on Laxmikant V. Patel v. Chetanbhai Shah and Anr.; (2002) 3 SCC 65.

Where the Division Bench and the learned Single Judge really locked horns was on the point of acquiescence.

The Hon’ble Supreme Court agreed with Division Bench’s reasoning on the issue of reputation, misrepresentation as well as acquiescence. As per the Supreme Court. “this was not a case where Wander Ltd. (supra) has not been heeded. On the contrary, the Division Bench has interfered on a matter of principle, pointing out errors of law by the learned Single Judge.”

The Supreme Court did not interfere with Division Bench order and rejected the appeal. One other reason why the Supreme Court did not exercise its discretion under Article 136 of the Constitution in favour of the Defendant as the Defendant had started to use another mark, Thus it was observed by the Supreme Court that the Division Bench judgment served the balance of convenience.

Author’s Comments: The Supreme Court re-affirms the law laid down in catena of judgments dealing with the issue of ‘Misrepresentation/Intention of Defendant’. Laxmikant V. Patel v. Chetanbhai Shah and Anr.; (2002) 3 SCC 65 observes that the intention of a Defendant is not material in an action for passing off. The Supreme Court in the present case, affirms the said situation.

Additionally, the Supreme Court also affirms the proposition of law in M/s. Power Control Appliances and Ors. vs. Sumeet Machines Pvt. Ltd.; (1994) 2 SCC 448  that acquiescence is completely separate from delay and requires a positive act on the part of the Plaintiff.

Interestingly, while re-affirming these propositions in Trade Marks law, Supreme Court also upholds that Sales Figures and Prior User is enough to establish Reputation/Goodwill. In our view, the decision by the Learned Single Judge was completely contrary to the decision in  Laxmikant V. Patel (supra) as well as M/s. Power Control Appliances (Supra). As the Learned Single Judge has completely ignored the settled principles of law, the Division Bench rightly interfered with the said order thus following Wander Ltd. (Supra).