A few months back, a Single Judge bench of the Bombay High Court delivered what has now been revealed to be a very problematic decision on deceptive similarity in alcoholic beverage trademarks. Brought to light upon being set aside by the Division Bench, this decision rendered findings that threatened to set dangerous precedents on what constitutes a trademark, and how deceptive similarity is evaluated. In this post, I revisit the Single Judge’s ruling and underscore the ways in which the Division Bench corrects the approach.
Factual Background
Meher Distilleries (‘Plaintiff’) has sued Radico Khaitan (‘Defendant’) for manufacturing and selling its single malt whiskey under the name ‘ASĀVA’ or ‘RAMPUR ASĀVA’, allegedly infringing the former’s ‘THE ASWA’ trademark registered under Class 33 for alcoholic beverages. It claims that the name is derived from its distillery located in Aswa village, Maharashtra. The Defendant argues that it’s ‘ASĀVA’ is a transliteration of the Sanskrit term meaning an alcoholic beverage or fermented drink. The interim injunction was refused on two grounds:
- ‘ASWA’ and ‘ASĀVA’ are not visually, phonetically or structurally similar as the Defendant’s mark consists of the words ‘RAMPUR’, which is the brand name, followed by ‘ASĀVA’, which is the sub-brand.
- The Plaintiff suppressed that it has applied for registration of ‘ASĀVA’ as well. This amounts to admission that the two marks are not deceptively similar as the filing of the application operates as estoppel against it.
Functioning as a Trademark
The defendant’s primary argument was that it does not use ASĀVA as a trademark in itself. It claimed that its brand of whiskey was called RAMPUR, for Rampur Distilleries, under which it sold its products such as ‘RAMPUR Sherry PX Finish’ and ‘RAMPUR Double Cask’. ‘ASĀVA’ merely suggested the process of herbal fermentation, for making the product. Accepting this, the Single Judge had held that ‘RAMPUR ASĀVA’ read together could not be held to be deceptively similar to Plaintiff’s THE ASWA.
One would think this is an application of the Anti-dissection rule, but that is not the case as the Defendant’s claim is that ASĀVA is not a trademark at all!
Echoing well-established principles of trademark law, the Division Bench pointed out that even if RAMPUR was the brand and ASĀVA the product description, there was nothing to suggest that the latter, being a sub-brand, did not operate as a trademark as well. When a proprietor (like the Defendant) markets multiple products, the brand identifies the enterprise from which the products emanate whereas the sub-brand distinguishes a particular product from the others within the range. The Division Bench reiterated that what makes something a trademark is the power to distinguish a product from others. If a sub-brand performs the function, as ASĀVA possibly does, it must be treated as a trademark.
Furthermore, citing Hem Corporation v. ITC, the Division Bench underlined the fact that the proprietor’s intention (or lack thereof) to use a sign as a trademark is irrelevant if the sign is found to be functioning as one regardless.
“If a mark is not used as a description of the process; but to narrow down the product within the range, then it is used for the “purpose of indicating” as envisaged under Section 2(1)(zb).”
Considering ASĀVA adopted from Sanskrit is not a common term, the Division Bench also invoked McCarthy on Unfair Competition to clarify that consumers’ perception of special, lesser-known words (as trademark) may differ from the user’s intended meaning. That is to say, since most consumers may not know the Sanskrit meaning of ASĀVA, they might not understand it as the description of a process [Rather, it might appear to them as an ‘arbitrary/fanciful’ word that, on the Abercrombie spectrum of distinguishing power, would lean towards strong trademark protection].
This reasoning gives primacy to actual consumer perception in the market, as opposed to the proprietor’s intention behind the use, which would have been a dangerous position to support. Entities in the market would be able to claim that a certain sign is not used as a trademark and thus escape the legal responsibilities of using that trademark while enjoying the market benefits of the same. Ultimately, this would harm consumers by causing confusion.
The Division Bench’s focus on whether a sign performs the function of a trademark is extremely significant. We have previously analysed marks whose performance of the source-indication and distinctiveness function is doubtful – often in case of non-conventional smell marks, shape marks and layout marks. This decision reinforces that a sign which refuses to be a trademark but performs these functions, effectively operating as and availing the benefits of a trademark in the market, must be treated as such by the law to protect consumer interest.
Phonetic Similarity for the Average Consumer
The Single Judge found the trademarks to not be phonetically or structurally similar as the diacritical mark in ‘ASĀVA’ created a different sound, rendering it apart from the Plaintiff’s ASWA. The Division Bench not only disagreed and set aside the finding, it also pointed out that such a claim had in fact not been made by the Defendant at all.
The phonetic perception of a trademark depends on the first impression it creates on the mind of the perceiver. It should thus be evaluated from the perspective of consumers who would be purchasing the product. Importing from the Supreme Court’s principles in Amritdhara Pharmacy, the Division Bench directed focus on how the average Indian consumer with imperfect recollection would pronounce the word. In Encore Electronics v. Anchor Electricals, the difference in original British pronunciation of the terms ‘Encore’ and ‘Anchor’ was disregarded as in ordinary Indian English, the two pronunciations weren’t distant enough.
Evaluating Likelihood of Confusion
The assessment of likelihood of confusion based on an Australian precedent applied directly in Indian context was also criticized. The finding that ‘purchasers of single malt whiskey are always discerning and there is no likelihood of confusion in this class of products’ does not account for the nuances that characterize alcoholic beverage consumption in India. Bombay High Court in its own previous decision in Gorbatschow Wodka v. John Distilleries (see here), has pointed out that ‘gullibility is a character that pans across social or economic attributes and capacity to discern is not necessarily relatable to social class or financial status’. Highlighting that there cannot be an absolute proposition when it comes to likelihood of confusion, the Division Bench emphasized that the full spectrum of potential purchasers, the manner of purchase and the pattern of consumption would have to be considered before arriving at a conclusion.
Registration of Mark and Estoppel
When a defendant in an infringement suit applies for registration of the contested mark, it is deemed to be an acknowledgement of similarity and thus operates as estoppel. On this basis, the Defendant had argued that the reverse of this would also be true and the Plaintiff’s attempt to separately register the mark used by the Defendant amounts to admission of dissimilarity between the marks.
Thoroughly unimpressed, the Division Bench cautioned that in the absence of any legal precedent or statutory provision, the converse of a statement could not be automatically accepted by substituting completely opposing concepts. It also refused to accept that because it was the Defendant who brought certain facts on record in the defence, the Plaintiff was guilty of suppressing facts.
With this, the Division Bench set aside the Single Judge’s decision and remanded the matter back for reconsideration.
While this appellate stage analysis did not bring about a conclusion to the interim application, it goes a long way in clarifying important principles in trademark infringement litigation. A common theme in all the issues is that it focuses on the various tests from the perspective of actual impact on consumers who would interact with the products in the market. While it remains to be seen what the outcome of the infringement suit would be, the Division Bench has cleared the air on what the adjudicating court must inquire into while deciding the case.
The Hon’ble Supreme Court in the SLP against the Order of the Division Bench has observed that “It cannot be disputed that as such the impugned judgment and order passed by the Commercial Appellate Court is a remand order and the matter is remanded to the Commercial Court to decide the Exhibit 5/interim injunction application afresh. It is true that the Commercial Appellate Court has observed that on remand, the Commercial Court to consider the observations made in the said order. To the aforesaid, we observe that all the submissions which may be available to the original plaintiff and even all the defences which may be available to the
defendants including Registration of the Trademark on behalf of the plaintiff and the prior user on behalf of the defendants are kept open and to be considered by the Learned Commercial court in accordance with law and on its own merits.”
Apart from the fact that the SC has now left everything open, the comment here is thoroughly off-base. In fact, the DB was wrong on two critical counts: one, the plaintiff was not in the market at all; and, two, the plaintiff had sought registration of the very same mark after the defendant entered the market. Both are determinative. Besides, the single judge referenced an earlier decision by one of the two judges on this DB, which specifically dealt with the question of sub-brands. As to discerning consumers, it is well-settled that there are goods where consumers are so careful that within a brand they choose sub-brands. Single malt whisky probably leads in this segment, as do motor cars. Last, this obsession of law schools that nothing is correct without precedent is wrong-headed and without basis. First principles first.