ESSENTIAL INGREDIENTS TO ESTABLISH A PASSING OFF ACTION [BOMBAY HIGH COURT ELUCIDATES IN THE CASE OF TORRENT PHARMACEUTICALS LTD. V. WOCKHARDT LTD. & ANR.]

Introduction

In the recent judgment pronounced (on 15th March, 2017) by the Honorable Bombay High Court in the matter of Torrent Pharmaceuticals Ltd. v. Wockhardt Ltd. & Anr., which related to a passing off‟ action, the Court had to deal with the following interesting questions:
a) Where the plaintiff‟s and defendant‟s products are similar, is it always presumed that defendant intended to deceive the consumers?
b) Only because the plaintiff‟s products have high sales, does it necessarily means that the products carry reputation and goodwill to claim for a passing off action or whether something more must be shown?
c) If the plaintiff‟s and defendant‟s similar products co-exist for a substantial time, then is the plaintiff‟s inaction for a long time to sue the defendant for a passing off action sufficient to denude its claim for interim relief?

By applying the so called “Classical Trinity” Test, the Court held that:
a. In a passing off action, while confusion may be assumed, deceit or deception may not. Hence it is necessary for a plaintiff to show false representation to the public that leads it to believe that the goods or services of the defendant are those of the
plaintiff.
b. It was not enough for a plaintiff to only show volumes and sales, but emphasized that the plaintiff must prove goodwill and reputation of the kind that results in the association of the product with its source or maker.
c. Taking note of the fact that Wockhardt‟s application for registration of the mark was advertised in the Trade Marks Journal in June 2010 but there was no opposition to said mark till its registration by Torrent and an oral demand to withdraw its product by Torrent was made in June, 2016; the Court held that Torrent‟s inaction for a long time was sufficient to denude its claim for interim relief.

Facts of the Case

Torrent Pharmaceuticals Ltd. (“Torrent”) instituted a suit for trademark infringement and passing off of its registered marks “CHYMORAL” and “CHYMORAL FORTE”, against Wockhardt Ltd and Anr. (“Wockhardt”).

Contentions of Torrent

Torrent asserted that:-

Its mark was registered in India as far back as 1962 and that it discovered Wockhardt’s virtually identical mark to that of its own and that it was used in respect of the same pharmaceutical composition as that of its own, only in June 2016 and accordingly alleged that there existed a likelihood on consumers mistaking Wockhardt‟s product as one by Torrent, thereby resulting in passing off.

Wockhardt had fraudulently and contrary to the provisions of the Trade Marks Act 1999, obtained registration of the mark “CHYMTRAL FORTE” and as the same had been wrongfully registered and was wrongfully remaining on the Register, the Plaintiff reserves the right to challenge the aforesaid registration of the impugned mark.

In matters pertaining to pharmaceuticals, a higher degree of caution comes into play and that a commonplace consumer would be confused on seeing Wockhardt’s product.

The packs were so identical that there could not be any conceivable bona fide explanation for Wockhardt. If Wockhardt adopted its mark with knowledge of Torrent‟s mark, its use is not in ignorance of the prior registration by Torrent, and Wockhardt could claim no equity.

Defence of Wockhardt

Wockhardt defended its case on the following grounds:-

Products of both parties had co-existed in the market for a length of time and that Torrent, despite knowledge of Wockhardt‟s product did not take any action for a substantial time.

It is also a prerequisite for a passing off action that the misrepresentation has deceived or is likely to deceive the consumers and that the plaintiff is likely to suffer damage by such deception. Mere confusion which does not lead to a sale is not sufficient. There was nothing on record to show that Wockhardt at any time attempted to dupe, deceive or delude anyone into believing that products bearing the mark “CHYMTRAL FORTE” was a Torrent product.

A co-existence of the two products side-by-side in the market for a length of time, and material to show that the plaintiff knew of the defendant‟s product and did nothing to stop the defendant, were enough to unseat an action in passing off. There is a clear distinction between confusion and deception, and a passing off action is one in deceit or deception, not in confusion.

Issues

Given that an action in passing off is an action where the opponent attempts to masquerade his products as those manufactured by or originating from the claimant, can confusion, deception and deceit be simply presumed, and must an injunction in passing off
automatically follow? In other words, where similarity is shown between two products, is deception always to be presumed?

If the plaintiff‟s and defendant‟s similar products co-exist for a substantial time without any confusion or deception and if no legal action is taken by the plaintiff during that time; can the same be taken into consideration by the courts for adjudication in a suit alleging passing off? In other words, is not the claimant‟s passivity for a long time sufficient to denude its claim for interim relief of the equity that must be shown to obtain a restraint order?

Whether high sales or volumes of the plaintiff‟s products establish the necessary reputation for a passing off action or whether something more must be shown?

Judgment of the Honorable Bombay High Court (main points in brief)

Relying upon several landmark foreign judgments, the Court emphasised on the “Classical Trinity” test in case of passing off actions and as per which all passing off actions must contain the following 3 ingredients:-
(1) goodwill of the plaintiff,
(2) misrepresentation by the defendant and
(3) consequent damage.

With respect to establishing goodwill in passing off

it is not enough for a plaintiff to only show volumes and sales, but emphasized that the plaintiff must prove goodwill and reputation of the kind that results in the association of the product with its source or maker. The Court observed that there was no proof which could lead to believe that the “CHYMORAL” Marks had acquired and enjoyed significant reputation and goodwill. It was not necessary that reputation can only be linked with high sales.

Reputation and goodwill in passing off are not of the generalized kind such as might be shown by high sales. It must be shown that the public is moved to buy by source — that it wants or desires certain goods because of their origin. There may be many different ways to demonstrate this, but it must be shown, and cannot be assumed. There must be a one-ness, a unity, between the product and its source.

With respect to misrepresentation in passing off

The Court concurred with Wockhardt‟s submissions that while confusion may be assumed, deceit or deception may not. The Single Judge held that a plaintiff must show falserepresentation, though unintentional, to the public that leads it to believe that the goods or
services of the defendant are those of the plaintiff. While similarity tests used for infringement analysis have a role to play, they are not always necessarily determinative in “passing off‟ analysis. Factum of misrepresentation cannot simply be presumed in every
single case.

Actual damage need not be proved; its likelihood is enough; but a distinction must be made between likelihood of misrepresentation, likelihood of confusion and likelihood of damage.

With respect to substantial delay by Torrent in filing a suit for passing off action

The Court noted that Wockhardt’s application for registration of the mark “CHYMTRAL FORTE” was advertised in the Trade Marks Journal in June 2010 but there was no opposition to said mark till its registration by Wockhardt. The Court also noted that following an oral demand to withdraw its product by Torrent in June, 2016; Wockhardt filed and served caveats in High Courts of different jurisdictions, which expired in October, 2016, but Torrent instituted the instant suit only on 30th January, 2017. Based on the above facts, the Single Judge observed that it was difficult to accept that Torrent was made aware of Wockhardt‟s product only in June, 2016 and noted that this was enough to deny the Plaintiff interim relief.

If the plaintiff refuses or fails to act despite knowledge of invasion of its rights and opportunity to stop it, it would lead to an “acquiescence” and the plaintiff is prevented by his or her own conduct from enforcing a right to the detriment of another who justifiably acted on such conduct. Wockhardt’s silence and inaction for so long was not just a case of “pure delay‟, of delay or lateness in coming to court in ignorance of intervening events, but it was in fact tardiness with knowledge and in fact an assent to an invasion of its rights.

When a person with full knowledge of his own rights and of any acts which invade them has, either at the time of invasion or after, by his conduct leads his competitor believe he has no objection, he waives or abandons his rights to equitable relief.

Delay is not to be confused with acquiescence. The latter implies knowledge, and where knowledge of the defendant‟s mark and product is shown and this is coupled with a long period of inaction against the alleged invasion of a claim of exclusivity, it is no answer to say there is no positive act, for acquiescence is also not explicit consent, but is silent assent. Mere inaction is not acquiescence either, but prolonged inaction coupled with the knowledge of an invasion of that right might well is.

With respect to public enquiry when considering rival pharmaceutical products

Where the competitor is in the same market with the same formulation, and has been allowed to co-exist and develop without a grievance, no injunction ought to be granted, longer the period of such co-existence, the greater should be the reluctance to assume that the consumer is being deceived or is even likely to be deceived

There was no dispute that the competing marks were directed to the same pharmaceutical composition and thus there would be no threat of public injury if one was mistaken for the other.

It is one thing to speak of a consumer of average intelligence and imperfect recollection; it is another to take him for a fool.

Based on the facts and material on record, the Court did not find any prima facie case made out against the Defendants (Wockhardt) and accordingly gave the judgment in favour of the Plaintiffs (Torrent Pharmaceutical).

Our Comments (in brief)

The judgment is significant because it comprehensively lays down and explains the essential requirements which ought to be satisfied in case of a “passing off” action and also that it pertains to pharmaceutical sector where along with the commercial aspects, even the safety of consumers is considered by the courts. Another notable feature of the judgment is the extent of reliance placed by the Court on foreign legal jurisprudence on the subject, wherein a few foreign judgments being relied upon were given in Seventies. It would be interesting to see as to how the judgment is followed and relied upon by other courts in India in light of different facts.

In background of the principles laid down by the Court, it is very important for those who allege passing off to take timely legal action, as a substantial delay in doing so would be considered as an “implied consent” given by them to the alleged party to use the trade mark.

It would be pertinent for the alleging parties to demonstrate to the Court in different ways reputation and goodwill of the trade mark and not base the reputation only on high sales.

While the judgment is appreciated, we believe that the ruling of the Court to strictly prove a “misrepresentation” and not mere “confusion” in case of a passing off action may be vulnerable to be used as a strong argument by the defendants to shield themselves in case of a passing off action against them and a plaintiff would have to put forth a very strong evidence to convince the court about the deceitful intention of the defendant.


This document is not intended to address the circumstances of any particular individual or entity. It is recommended that professional advice be taken based on the specific facts and circumstances. This document does not substitute the need to refer to the original pronouncements and is also not intended to be a source of advertising or solicitation and the contents of the document should not be construed as legal advice.


 

 

 

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