“Trademark Infringement and Deceptive Similarity”

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DPIIT, MCI Chair on Intellectual Property Rights & Centre for Intellectual Property Rights Research and Advocacy National Law School of India University, Bangalore

Under the Guidance of Prof. (Dr) T. Ramakrishna, MCI Chair Professor on IPR

Submitted By Rinu Kallan Rizvi Law College, Mumbai

Certificate

This is to certify that Rinu Kallan, student from Rizvi Law College, Mumbai has successfully completed and submitted her report, Trademark Infringement and Deceptive Similarity. This has been submitted in fulfilment of her internship at the Centre for Intellectual Property Research and Advocacy (CIPRA) during the month of 1st December to 31st December 2020.

Bangalore, 21st January 2020

Prof. (Dr.) T. Ramakrishna DPIIT, MCI Chair Professor of IPR

Research Associate

DECLARATION

Certified that this research work is my original work and I have not borrowed any material from other’s work nor have I presented this partly or fully to any other institution/college/university.

I have completed with all the formalities prescribed in this regard.

Date: 21 January, 2020 Signature

Place: Bangalore NAME: Rinu Kallan

TRADEMARK INFRINGEMENT AND DECEPTIVE SIMILARITY

There are many types of intellectual property that are recognized all over the world. Some countries recognize more than others but the most renowned types include copyrights, patents, trademarks, and trade secrets. Trademark is a type of intellectual property that is legally recognized and comprises of an identifiable sign, design, or expression which recognizes products or services of a particular source, although trademarks used to recognize services are typically called service marks. It distinguishes the particular source from other sources present in the market. The trademark can be owned by an individual, a business establishment, or any legal entity. A trademark can be situated anywhere from a package, a voucher, a label, or even on the product itself. In the interest of corporate identity, trademarks are usually displayed on company buildings.

Trademark Infringement1 is a breach of exclusive rights that are linked with a trademark without the consent of the trademark holder or any licensee. A trademark is infringed when an individual, who, not being an allowable user, employs an identical/ similar/ deceptively similar sign/ design/ mark to the registered trademark without the approval of the registered holder of the trademark. Notwithstanding, it is pertinent to note that the Indian trademark law ensures the vested rights of a former user against a registered owner which depends on common law standards. Under the Indian Law2, infringement of registered trademark arises when –

1. A registered trade mark is infringed by an individual who, not being a registered holder or an individual using by way of permitted use, employs in the course of trade, a mark which is identical with, or deceptively comparable to, the trade mark in association with goods or services in respect of which the trade mark is registered and, in such manner, as to depict the use of the mark likely to be taken as being used as a trade mark.

2. A registered trade mark is infringed by an individual who, not being a registered proprietor or an individual using by way of permitted use, employs in the course of trade, a mark which because of-

a) its distinctiveness with the registered trade mark and the similarity of the goods or services covered by such registered trade mark; or b) its resemblance to the registered trade mark and the distinctiveness or resemblance of the goods or services covered by such registered trade mark; or

1 Trademark Infringement, available at http://www.companylawindia.com/trademark-infringement/. 2 Section 29 of The Trade Marks Act, 1999, as available at https://www.indiacode.nic.in/show- data?actid=AC_CEN_11_60_00004_199947_1517807323972§ionId=16814§ionno=29&orderno=2 9.

c) its distinctiveness with the registered trade mark and the distinctiveness of the goods or services covered by such registered trade mark is likely to cause confusion on the part of the public, or which is likely to have a connection with the registered trade mark.

3. In any case, falling under clause (c) of sub-section (2), the court shall assume that it is likely to cause misunderstanding on the part of the public.

4. A registered trade mark is infringed by an individual who, not being a registered holder or an individual using by way of permitted use, employs in the course of trade, a mark which –

a) is identical with or alike to the registered trade mark; and b) is employed in relation to goods or services which are not alike to those for which the trade mark is registered; and c) the registered trade mark has prominence in India and the usage of the mark without due cause takes unfair benefit of or is detrimental to, the distinctive character or repute of the registered trade mark.

5) A registered trade mark is infringed by an individual if he uses such registered trade mark, as his/her trade name or part of his/her trade name, or name of his/her business concern or part of the name, of his/her business concern dealing in goods or services in respect of which the trade mark is registered.

6) For the purposes of this section, an individual uses a registered mark, if in particular, he/she –

a) attaches it to goods or the packaging thereof; b) offers or discloses goods for sale, places them on the market, or stocks them for those purposes under the registered trade mark, or provides or supplies services under the registered trade mark; c) imports or exports goods under the mark; or d) makes use of the registered trade mark on business papers or in advertising.

7) A registered trade mark is infringed by an individual who applies such registered trade mark to a material meant to be used for labelling or packaging goods, as a business paper, or for advertising goods or services, provided such individual, when he/she applied the mark, had knowledge or had reason to believe that the application of the mark was not properly authorized by the holder or a licensee.

8) A registered trade mark is infringed by any advertising of that trade mark if such advertising –

a) takes unjust advantage of and is the opposite of honest practices in industrial or commercial matters; or b) is harmful to its distinctive character; or

c) is against the prominence of the trade mark.

9) Where the distinguishing elements of a registered trade mark comprise of or include words, the trade mark may be infringed by the verbal use of those words as well as by their visual portrayal, and reference in this section to the use of a mark shall be interpreted accordingly.

In Hiralal Prabhudas v. Ganesh Trading Company3, Mr. Justice Lentin addressing a Division Bench adverted to the prior decisions of the Supreme Court on the subject and stated that the Court must be guided by the following considerations when dealing with the question of resemblance between two marks –

 Marks are remembered by the public by its general impressions or by some noteworthy detail rather than by a photographic recollection of the whole.

 Overall resemblance is the touchstone.

 Marks must be observed from the view and first impression of an individual of average intelligence and imperfect recollection.

 Overall structure, phonetic resemblance, and resemblance of the idea are vital and both visual and phonetic tests must be applied.

 The buyer must not be put in a state of wonderment.

 Marks should be compared as a whole, the microscopic examination being impermissible.

 The broad and salient characteristics must be considered for which the marks must not be positioned side by side to find out differences in design.

 Overall resemblance is sufficient.

 Adding to that, indisputably the nature of the commodity, the class of purchasers, the manner of purchase, and other surrounding circumstances.

An action for passing off is based on the common law of tort and is originated on the principle that “no individual is entitled to represent his/her goods as being the goods of another individual; and no person is permitted to use any mark, sign or symbol, device or means, whereby without making a direct representation of himself to a purchaser who purchases from him, he enables such person to tell a lie or to make a false representation to somebody else who is the ultimate purchaser”.4

3 Hiralal Prabhudas v. Ganesh Trading Company, AIR 1984 Bom 218. 4 James L.J., in Singer Manufacturing Co. v. Loog, (1880) 18 Ch.D.395. p.412.

The law of passing off can be stated in a brief common proposition as- no individual may pass off his/her goods as those of another. More precisely, it may be stated in terms of the elements which the plaintiff in such an action has to demonstrate in order to succeed. They are frequently referred to as “Classical Trinity” and are mentioned as such: Firstly, the individual must establish goodwill or reputation of the goods or services which he/she supplies, in the mind of the purchasing community by association with the identifying getup under which his/her specific goods or services are offered to the community, such that the get-up is recognized by the community, a characteristic specifically of the plaintiff’s goods or services. Secondly, the individual must demonstrate a misrepresentation by the defendant to the community causing or likely to cause the community to believe that the goods or services provided by him/her are the goods or services of the plaintiff. Thirdly, the individual must demonstrate that he/she suffers or in a quia timet action, that he/she is likely to suffer damage due to the fallacious belief created by the defendant’s misrepresentation that the origin of the defendant’s goods or service is the same as that of the plaintiff.5

The first Trademark legislation was enacted in India in 1940, but before that protection of trademarks in the country was administered by general principles of Common Law based on English cases. The Division Bench of the Delhi High court in Rob Mathys India Pvt. Ltd. v. Synthes A.G. Chur6 held that “in cases of passing off action English authorities may prevail to a certain extent for we have borrowed from and following entire gamut of English Common Law developed in the light of local and statutory perception may not be a good guide. Of course, the law laid down by the Supreme Court being law of the land under Article 141 of the constitution, has to be followed.” Further in Commissioner of Income Tax v. Finlay Mills Ltd7, the Supreme Court stated that “prior to Trademarks Act 1940 there was no trademark legislation in India, but it was recognized that an action lay for infringement of trademark independently of an action for passing off goods.”

In an action for an alleged infringement of a registered trademark, it is first to be seen whether the impugned mark of the defendant is similar to the registered trademark of the plaintiff. If the mark is found to be similar, no further question emerges, and it has to be held that there was infringement. If the mark of the defendant is not similar, it has to be seen whether it is deceptively alike in the sense that it is likely to deceive or cause uncertainty in relation to goods in respect of which the plaintiff’s mark is been registered.8 Thus, infringement takes place not merely by exact imitation but by the use of the mark so nearly similar to the registered trademark as to be likely to deceive. In an action for infringement where the defendant’s trademark is identical with the

5 K. C. Kailasam, Ramu Vedaraman, Law of Trademarks and Geographical Indications, Wadhwa and Company, Nagpur, 2003, 1st edition, p.304. 6 Rob Mathys India Pvt. Ltd. v. Synthes A.G. Chur, (1997) PTC 669, p. 693 (Del) (DB). 7 Commissioner of Income Tax v. Finlay Mills Ltd, 1951 AIR 464, 1952 SCR 11 8 Atlas Cycle Industries Ltd v. Hind Cycles Ltd., ILR 1973 Del 393

plaintiff’s mark, the court will not enquire whether the infringement is such as likely to cause confusion.9

DECEPTIVE SIMILARITY

Section 2(1)(h) of The Trade Marks Act, 199910 defines ‘deceptively similar’ as “a mark shall be deemed to be deceptively similar to another mark if it so nearly resembles that other mark as to be likely to deceive or cause confusion.”

One of the ongoing cases is PayPal v. Paytm where PayPal Inc. filed an objection at the Indian Trademark Office on November 18, 2016, accusing Paytm, an Indian mobile wallet corporation, of trademark infringement. Paytm had been progressively becoming a household name in middle- class India for six years – until it really hit the bonanza on November 8, 2016, when the Indian Prime Minister Narendra Modi declared demonetization of currency notes of Rs. 500 and Rs. 1000 – nullifying overnight 80% of the country’s cash in circulation. This extreme move was taken to tackle the large amounts of unaccounted “black” money in the Indian economy that was being used for bribery, corruption, tax evasion, etc. A direct repercussion of the demonetization has been an out of the ordinary increase in electronic transactions – with Paytm being at the forefront. Paytm saw its daily transactions grow and there was a 10-fold rise in the amount of money added to Paytm accounts in the initial 14 days after the demonetization was declared.

Speedy growth in that short period of time earned Paytm not only great profits and valuation but also the attention of worldwide competitors like PayPal. In its complaint, PayPal accused Paytm of having implemented the two-tone blue colour combination of PayPal’s own logo in its entirety, and especially where “The first syllable in each mark is in dark blue colour and the second syllable in a light blue colour”. In addition, PayPal also noted that both the marks start with the term ‘PAY’ which consumers tend to recollect more than the second syllable, with the marks being of comparable length. The Indian Trademark law states that an applicant should publish and advertise their logo for a time-frame of 4 months in which third parties can raise their objections. Paytm registered for its trademark on July 18, 2016 – which means its four-month window ended on November 18, 2016. PayPal’s complaint on the last day has hence raised many questions on why a corporation like PayPal – with ample legal resources at hand – would wait until the very end of the window to lodge the complaint. Needless to say, it was only after the demonetization that PayPal felt threatened by the growth of Paytm in a market that until then had been ignored, underserved, and/or underperformed by PayPal.

9 Ruston and Hornsby Ltd v. The Zamindara Engineering Co, AIR 1970 SC 1649; Saville Perfumery Ltd v. June Perfect Ltd, 58 RPC 147/161. 10 Section 2(1)(h) of The Trade Marks Act, 1999, as available at https://www.indiacode.nic.in/handle/123456789/1993?locale=en

On a quick glance at both the logos, one can notice different features that represent the utmost resemblance between them. Here are some of those salient characteristics: -  Both the brand titles start with the same word ‘Pay’.  The logos of both establishments use the same colour scheme. In fact, it's very easy to get puzzled by the 2 logos.  Moreover, both the establishments deal with the same form of business activity i.e., online payments and transactions, which further broadens the conflict between the 2 parties in question.

There is precedent strongly in favour of Paytm here wherein Micronix India v. Mr. J.R. Kapoor11, the Supreme Court observed that micro-chip technology is the base of many of the electronic devices, the word “micro” has much importance in describing the devices and thus, no one can claim the monopoly over the usage of the said word. Implementing the same logic, in this case, the word “Pay” has little distinguishing relevance in the market to which PayPal and Paytm cater.

The Indian Trademark Law does safeguard colours to the extent the colours or different combinations of colours confer a distinctive feature to a product or service. Section 10 of the Trade Marks Act, 199912, relates specifically to the use of colours: 1) A trade mark may be limited wholly or in part to any combination of colours and any such limitation shall be taken into consideration by the tribunal having to decide on the distinctive character of the trade mark. 2) So far as a trade mark is registered without limitation of colour, it shall be deemed to be registered for all colours.

The Supreme Court in Parle Products (P) Ltd. v. J. P. & Co. Mysore13 stated that to conclude whether a mark is deceptively similar to another, the comprehensive and vital features of the two are to be considered. They should not be placed side by side to find out if there are any differences in the design and if so, whether they are of such character as to avoid one design from being mistaken for the other. It would be enough if the questionable mark bears such an overall resemblance to the registered mark as would be likely to deceive a person usually dealing with one to accept the other if offered to him.

In M/S Mahashian Di Hatti Ltd. v. Mr. Raj Niwas, Proprietor of MHS14, the plaintiff used the registered logo, MDH inside three hexagon devices on red colour background, in its business activity of manufacturing and selling spices & condiments. The aforementioned logo has been in

11 Micronix India v. Mr. J.R. Kapoor, 2003 IVAD Delhi 524 12 Section 10 of the Trade Marks Act, 1999, as available at https://www.indiacode.nic.in/show- data?actid=AC_CEN_11_60_00004_199947_1517807323972§ionId=16795§ionno=10&orderno=1 0 13 Parle Products (P) Ltd. v. J. P. & Co. Mysore, 1972 AIR 1359, 1972 SCR (3) 289 14 M/S Mahashian Di Hatti Ltd. v. Mr. Raj Niwas, Proprietor of MHS, 181(2011) DLT 55.

use since 1949 in respect of numerous products such as “Kashmiri Mirch” and “Kasoori Methi”. Registered since 31st May 1991, the plaintiff credits its goodwill and status to the long and continuous usage of the mark, several publicity programs, and quality of products. The plaintiff contended that the logo used by the defendant, MHS within hexagon device with the red colour background was similar to its logo. The plaintiff, therefore, pursued an injunction restraining the defendant who was also involved in the same business activity from using the infringing logo MHS or any other trademark identical or deceptively similar to its MDH logo. The defendant inter alia tried to weaken these arguments by contending the phonetic dissimilarity between MDH and MHS. The court held that as per Section 29(1) of Trademarks Act, 199915, a registered trade mark is infringed by an individual who, not being a registered proprietor or an individual user by way of permitted use, uses in the course of trade, a mark which is identical with, or deceptively similar to, the trade mark concerning goods or services in respect of which the trade mark is registered and, in such manner, as to render the use of the mark likely to be taken as being used as a trade mark. The Court compared the logos of both the plaintiff and the defendant and inter alia determined the following similarities: a) as in the logo used by the plaintiff, the defendant made use of three hexagons for structuring its logo; b) the letters of both MDH and MHS were in white colour and c) Similar to MDH, the background colour in MHS was red. In light of the above resemblances, the Court decided the presence of strong visual resemblance despite weak phonetic resemblance. Further, it was also noted that both the parties were involved in the same business activity of manufacturing and selling spices. Thus, the registered trademark of the plaintiff was held to be infringed by the defendant. The defendant was, hence, prevented from manufacturing, selling, or marketing any spices or condiments using the disputed logo MHS or any other trademark which was identical or deceptively similar to the registered trademark of the plaintiff.

Proprietors should be informed of their rights in order to protect their trademarks. With modern- day development, it has become essential for entrepreneurs to safeguard the goodwill of their brands. The Trade Marks Act provides a high-level protection against infringement of a registered trademark. Therefore, proprietors are directed to register their trademarks so as to utilize the remedies that have been laid down in the Act.

15 Supra note 2