Abbreviated Deceptive Similarity, Section 11(2) Blind Alleys, and Revisiting Vishnudas: The Indian Supreme Court Decision in Nandhini Deluxe
On Thursday, the Indian Supreme Court, in Nandhini Deluxe v. Karnataka Co-Operative Milk Producers Federation, issued judgment on a long-running trademark dispute over the ‘NANDHINI’/‘NANDINI’ food trademarks.
The Appellant claimed registration over its trademark label for ‘NANDHINI DELUXE’. Its application, claiming rights over a range of food items and use since 1989, was opposed by the Respondent, whose own use in relation to milk and milk products extends to 1985.
A 2009 ruling by the Registrar permitting the Appellant’s registration and returning a finding of no deceptive similarity between the trademarks was challenged by the Respondent through two sets of appeals before the IPAB.
Three decisions followed: a 2010 decision by the IPAB on the first set of appeals confirming the Registrar’s order, a 2011 decision by the IPAB travelling in the opposite direction on the second set of appeals, and a 2014 Karnataka High Court decision confirming the 2011 IPAB view. The Supreme Court received the appeals in 2015, and picked them up for hearing in February 2018.
(Early in the proceedings, the Supreme Court was confronted with an issue estoppel objection over the 2011 IPAB ruling, seeing as it was contrary to that of the 2010 IPAB bench of equal strength on the exact same issue. The Court does not rule on this at judgment. Its suggestion, however, that it did not need to because it was opting to set aside the 2011 ruling anyway does not settle the objection in the least.)
The (Abbreviated) Deceptive Similarity Finding
The first issue decided by the Supreme Court, ruling against deceptive similarity between the rival trademarks, is its most significant one.
It is also a ruling that is easily defensible upon a comparison of the trademarks:
The Court processes seven sets of differences between the trademarks, splitting them usefully between visually and phonetically persuasive elements. It draws crucial lines of distinction between the product categories, and the manner in which they are traded, though these are left as assertions. (The observation that the trademarks “even relate to different products” is especially relevant, since they are formally covered by the same classes, 29 and 30, under the Trade Marks Act and Rules. This is a point of some contention, since the Court also separately finds that the Appellant’s restaurant business encompasses products and services like visiting cards, stationery and bill books that have nothing to do with Classes 29 and 30.)
The Court’s finding that there is, therefore, no deceptive similarity is assumed to be self-evident. There is no application of tests or yardsticks to evaluate the degree to which the trademarks may be similar. This is, instead, substituted for by short reproductions from one of independent India’s earliest discussions on deceptive similarity under trademark law, 1953’s Supreme Court decision in National Sewing Thread Co, and a slightly left-field reference to 1960’s New York decision in Polaroid Corporation.
“It is difficult to imagine,” says the Court in closing what can, at best, be described as an abbreviated deceptive similarity discussion, “that an average man of ordinary intelligence would associate the goods of the Appellant as that of the Respondent.”
Down a Blind Alley: The Section 11(2) Conditions
With a deceptive similarity finding in the books, the Supreme Court finds that there remains but a solitary avenue to save the Respondent’s objection against the co-existence of the two registrations.
The Respondent, according to the Court, must demonstrate that its own registration falls within the extended protection offered by Section 11(2) of the Trade Marks Act to well-known trademarks. [The imprimatur for protecting well-known trademarks in opposition proceedings such as this one is actually directly provided for Section 11(10)(i) of the Act. The provision remains outside the Supreme Court’s field of vision here, though to no great detriment.]
In order to benefit as a well-known trademark, the Court says that the Respondent needs to demonstrate, at a minimum, that it had acquired distinctiveness in the four years (1985 through 1989) that it was the only such trademark in Classes 29 and 30. The Court finds no evidence on record to demonstrate that this was so, and authorizes the co-existence of the registrations on this basis.
This is confounding for several reasons.
First, the reference to Section 11(2) itself is miscast, if not misplaced. Adjusted for context, Section 11(2) requires three conjunctive conditions to be met on these facts:
(a) that the Appellant must seek registration of an identical or similar trademark for goods or services which are not similar to those of the Respondent;
(b) the Appellant’s use must be such that it takes unfair advantage of or is detrimental to the Respondent’s registration; and
(c) the Respondent’s trademark must be a well-known trademark in India.
Thus, in the first instance, Section 11(2) kicks in where proprietors of trademarks identical or similar to a well-known trademark seek to register their trademarks “for goods or services which are not similar” to those for which a well-known trademark is registered.
This, in turn, can be read in two ways: “not similar” goods or services can mean goods or services in another class, or it can mean goods or services in the same class but different from the goods or services claimed by the Applicant.
To apply to the present case, it must mean the latter. The Court proceeds to test the Respondent’s case on Section 11(2), though it does not confirm if the latter interpretation is preferable. Indeed, its only observation on the subject is that Section 11 “prohibits the registration of the [trademark] in respect of similar goods or different goods but the provisions of this Section do not cover the same class of goods”. This only begs the question of how Section 11(2) — which is a part of Section 11 — attaches to this case at all.
Second, the Court finds that it is unpersuaded that the Appellant’s trademark was used with a view to take unfair advantage of the Respondent’s trademark. Since the three parts of Section 11(2) are conjunctive, a positive finding here is necessary to stop the Appellant’s registration. No such finding is returned. This should have the result of terminating the Section 11(2) inquiry.
Instead, the Court goes further, and asks if the Respondent has demonstrated distinctiveness between 1985 and 1989. This is, of course, totally unnecessary since the Respondent’s claim has already failed on the “unfair advantage” plank.
It is possible that the Court labours on the point because the “unfair advantage” requirement is not neatly delineated from the well-known trademark requirement in Section 11(2) itself. [To be sure, both requirements are part of a long, slightly confusing sentence in Section 11(2)(b).] However, it does also endorse a February 2010 Delhi appeals court decision in Nestlé India, for the express purpose of breaking down Section 11(2) into its constituent requirements. To do so and yet miss the conjunctive character of the requirements is a clear error.
Even if persisting with questioning the well-known character of the Respondent’s trademark is somehow relevant, it is categorically outside the scope of the deceptive similarity inquiry ostensibly at issue here. Further, and more practically, it certainly cannot have been within the contemplation of a prior user Respondent defending two largely unobjectionable lower forum judgments before this Court.
Further still, on the arguendo, what would the endgame of a positive showing of distinctiveness by the Respondent in the 1985–1989 window have been? Would it have prima facie satisfied what is actually an elaborate set of standards drawn up by Sections 11(6)-(10) of the Trade Marks Act for securing well-known trademark status?
If so, why is the standard framed by the Court as one of “acquired distinctiveness” before the Appellant’s entry into the market? Surely the measure of distinctiveness sufficient to fulfill the well-known standard could be met even after the Appellant commenced use. (At a minimum, Section 11 itself contains no such stricture.)
If, instead, it was meant as a gateway inquiry into a full-fledged well-known trademark inquiry, the foreseeability objection reappears powerfully. Would it be fair to require an Opponent to a trademark application (the Respondent in this case) to demonstrate, in what is still an adjunct to an opposition proceeding, that its own trademark is well-known?
On balance, it is hard to argue that an appellate proceeding — which is, in most cases, constrained to run on the fumes of the original opposition petition — is the right vehicle to ask a question of this nature. A well-known trademark inquiry shifts a positive (and significant) burden of proof onto the Respondent that — it is worth repeating — has nothing to do with the Respondent’s own original challenge.
The Supreme Court could just as easily have issued a direction requiring the parties to persuade the Registrar of their credentials afresh for this purpose. However, it opted not to do so, and that is significant.
Finally, there is a suggestion in parting that since there is no Respondent material speaking to distinctiveness from 1985 to 1989, the facts therefore seem to point to concurrent use by the Appellant. This imputes causation where there is none: the concurrence of the Appellant’s use, of course, has nothing to do with whether the Respondent’s trademark was distinctive before the Appellant entered the market.
Revisiting Vishnudas v. Vazir Tobacco
This leaves the Court to mop up one surviving contention by the Respondent: that being part of the same class of goods ought to constitute a hard barrier to registrability of the Appellant’s trademark since to hold otherwise would interfere with the exclusivity of the Respondent’s registration. The Court correctly shuts this down with reference to the October 1996 Supreme Court decision in Vishnudas v. Vazir Tobacco.
The Vishnudas Supreme Court has, with the odd exception, long represented the exit route for trademark applicants caught in the same mark-same class hard case. It endorses, subject to Section 9 and 11 overrides, the simultaneous registration of a trademark in the same class by different proprietors for the reason that trademark classes are framed broadly enough to accommodate intra-class conflicts in certain cases. (On facts, it had permitted two identical trademarks to co-exist within tobacco products in Class 34.) On the comparative, therefore, Nandhini Deluxe, with its bona fide deceptive similarity finding, represents a factual far removed from the Vishnudas hard case.
However, there is another critical difference.
The reasons behind the intra-class accommodation by the Vishnudas Supreme Court were explained in the following words:
“The ‘class’ mentioned in the Fourth Schedule [to the Trade Marks Act and Rules] may subsume or comprise a number of goods or articles which are separately identifiable and vendible, and which are not goods of the same description as commonly understood in trade or in common parlance. Manufactured tobacco is a class mentioned in Class 34, but within the said class, there are number of distinctly identifiable goods which are marketed separately and also used differently. In our view, it is not only permissible but it will be only just and proper to register one or more articles under a class or genus if, in reality, registration only in respect of such articles are intended, by specifically mentioning the names of such articles, and by indicating the class under which such article or articles are to be comprised.” (Emphasis mine.)
This pulls at strings of reasoning that are altogether alien to Nandhini Deluxe. The Nandhini Deluxe dispute proceeded despite the Appellant undertaking to exclude milk and milk products — on which the Respondent’s business is founded — from the scope of its classes.
Vishnudas argues that there is a mismatch between the classification of goods and services under the Trade Marks Act and Rules, and the description and separability of such goods and services in markets in the real world. The tenor of the Vishnudas observations impresses the 1996 Supreme Court’s belief that it would be desirable for proprietors to affix descriptions more conservative than a whole class. [Today, Rules 23(5) and (6) of the Trade Marks Rules give effect to these observations, and hand the Registrar discretion to refuse applications that claim overbroad class protection. These are consistent with the phrasing of the Registrar’s discretionary powers under Section 18(4), and the wide latitude offered to defining “limitations” to trademark registrations under Section 2(1)(l). However, these provisions remain disappointingly underutilized in practice.]
The lesson drawn by the Nandhini Deluxe Supreme Court from Vishnudas, however, lies elsewhere.
The main object, says Nandhini Deluxe, is to prevent trademark proprietors from enjoying monopolies over an entire class of goods or services, particularly when their actual use is restricted to a subset of the class. This is markedly different from Vishnudas, which advises restraint on broad goods and services claims in trademark applications because of the limitations and rigidity of the classes themselves.
Compared as such, the scope of the Nandhini Deluxe restraints are decidedly more modest. They may even, in the words of the Vishnudas Supreme Court, be seen as the species to the Vishnudas genus. To conclude, therefore, that Nandhini Deluxe does not move the needle from Vishnudas in relation to same mark-same class conflicts would not be unreasonable.
Paths and Destinations
In the event, the confirmation by the Nandhini Deluxe Supreme Court of the Registrar’s order is very much a fair conclusion. However, the reasons most directly informing this conclusion are the finding on the absence of deceptive similarity, and the Appellant’s disavowal of “milk and milk products” from its class claim. (This is a point of no small significance. Early reactions to the decision — including by Live Law, The Times of India, and Deccan Herald — have mislaid the influence of these factors almost uniformly, focusing instead on the Court’s observations on eliminating class squatting. By contrast, a sharp, balanced summary of the facts informing the Court’s decision appears on Rudrajyoti Ray’s Supreme Court blog.)
The real talking point, though, remains the manner in which Nandhini Deluxe addresses the questions before it. As with the Indian Supreme Court’s last meaningful foray into trademark law last winter, a perfectly agreeable destination is arrived at. However, the Court’s adoption of an approach that is convoluted by errors that could so easily have been avoided makes it hard to endorse the path taken to get there.