Intellectual Property RightsDelhi High Court Imposes Rs. 10 lakh Costs on Sun Pharma for Concealing Facts to obtain injunction against DWD Pharma

INTRODUCTION

The Delhi High Court, in the case of Sun Pharmaceutical Industries v. DWD Pharmaceuticals Ltd, [2022/DHC/005037] decided on 22.11.2022, held that Sun Pharma is liable to pay Rs. 10 lakhs as penalty for concealing facts in order to obtain injunction against DWD Pharmaceuticals Ltd.

FACTS

Sun Pharmaceutical Industries (hereinafter referred to as “the Plaintiff”) registered and adopted the trade mark ‘FORZEST’ in the year 2003 and has been using it ever since.

The Plaintiff claimed that DWD Pharmaceutical’s (hereinafter referred to as “the Defendant”) application for registration of the mark “FOLZEST” on a “proposed to be used” basis in Class 5 was not discovered by the Plaintiff until 2022.

The Defendant, on the other hand, claimed to be the registered owner of multiple “ZEST” trademarks since 1983. When the Plaintiff’s mark “FORZEST” was included in the Examination Report against the Defendant’s trade mark application, the Defendant responded that the Plaintiff’s mark was phonetically and visually distinguishable from the Defendant’s mark.

The Plaintiff alleged that the Defendant’s use of a mark that was confusingly similar to the Plaintiff’s amounted to trademark infringement, and also led to unfair competition. As a result, based on the Plaintiff’s statements and the documents filed, the Delhi High Court (hereinafter referred to as “High Court”) issued an ad-interim ex-parte injunction on 19.05.2022, prohibiting the Defendant from selling its medical preparations under the contested mark ‘FOLZEST’.

However, later on the Defendant asserted that the Plaintiff withheld critical information from the High Court in order to obtain an ad-interim ex-parte injunction and further added that the Plaintiff was well-aware of not only the registration of the mark “ZEST” in the Defendant’s favor, but also of the other marks registered and used by the Defendant.

Furthermore, the Defendant claimed that because the Plaintiff had previously applied for registration of the mark “EXEZEST,” which the Defendant had opposed back in 2009 and another application for its mark “TRIOLMEZEST” in 2014, on the grounds that the Defendant was the registered owner of the “ZESTfamily of marks”, the Plaintiff in vengeance decided to file the present application.

ISSUES BEFORE THE HIGH COURT

1. Whether the Plaintiff had concealed the facts?
2. Whether the ad-interim order should be allowed in favor of the Plaintiff, in the light of the above?

CONTENTIONS OF THE PARTIES

The Plaintiff  placed reliance on the judgment of the Supreme Court in Cadila Health Care Ltd. v. Cadila Pharmaceuticals Ltd., [(2001) 5 SCC 73]; and in Novartis AG v. Crest Pharma Pvt. Ltd. and Anr.,[2009 SCC Online Del 4390]; and submitted that the marks of the Plaintiff and the Defendant were deceptively similar, but the use of the medicinal preparations by them were largely different.

As the medicinal preparation of the Plaintiff targeted erectile dysfunction in men, while the medicinal preparation of the Defendant was a multivitamin for pregnant women for lowering the risk of pre-term births. Thus, any confusion between the two marks could lead to wrongful consumption and cause grave harm to the consumer.

It was submitted by the Plaintiff that there were third parties in the market who use the word ‘ZEST’ and therefore, the Defendant could not claim any exclusivity over the word ‘ZEST’.

On the other hand, the Defendant submitted that the Plaintiff have concealed material facts by stating that the Plaintiff learned of the Defendant and their use of the mark ‘FOLZEST’ only in 2022. However, in fact, the Plaintiff is very well aware of the registrations of the Defendant with the word ‘ZEST’, because of the previous oppositions by the Defendant to the Plaintiff’s use of the present mark.

Hence, the Defendant contended that the ad-interim ex-parte injunction order given by the High Court should be reversed due to the Plaintiff’s misrepresentation, concealment, and suppression of facts and material documents. For the same, the Defendant  placed reliance on the judgments of the Supreme Court in  Phonographic Performance Limited v. Azure Hospitality Private Limited and Ors., [CS(COMM) 714 of 2022] and  K.D. Sharma v. Steel Authority of India Limited and Others, [(2008) 12 SCC 481].

DECISION AND FINDINGS

The High Court held that the Plaintiff had suppressed essential and relevant facts that should have been included in the plaint itself because doing so would likely alter the decision of the High Court to grant the Plaintiff an ad interim ex-parte injunction in its favor.

The High Court observed that prima facie, the mark of the Plaintiff ‘FORZEST’, was deceptively similar to the mark of the Defendant ‘FOLZEST’, and it was also important to note that the medicine of the Plaintiff was for treating erectile dysfunction in men, while the medicinal preparation of the Defendant was a multivitamin for pregnant women for lowering the risk of pre-term births.

In relation to this, the High Court relied on Cadila Health Care Ltd. v. Cadila Pharmaceuticals Ltd., [(2001) 5 SCC 73] and Novartis AG v. Crest Pharma Pvt. Ltd., [2009 SCC OnLine Del 4390] and held that “in a medicinal good, the right of not only the private litigants but also public interest has to be kept in mind, and, in fact, be given prominence. Even a remote chance of deception or confusion arising because of similarity in the marks was to be avoided and prevented, as it may lead to disastrous consequences for unwary consumers. Therefore, despite the concealment and misstatement of the plaintiff, the plaintiff shall be entitled to an ad-interim relief if the marks of the medicinal goods are deceptively similar to each other.”

The High Court further held that the following factors would still be in favor of the Plaintiff for the grant of an ad-interim injunction against the Defendant:

• The Plaintiff, through its predecessor-in-interest, has been the registered proprietor of the mark ‘FORZEST’ since the year 2003. Though such registration is suspect, at least at this stage, it is worthy of weight;
• The said mark has been used by the Plaintiff through its predecessor-in-interest since the year 2003 and has substantial sales;
• Though the Defendant had registered its ‘ZEST’Family of Marks, it had started the use of the impugned mark ‘FOLZEST’ in June 2021/May 2022 only;
• Use of the medicine of the Plaintiff and the Defendant were different;
• Two marks are deceptively similar and any confusion in the same can lead to disastrous consequences.

However, the High Court held the Plaintiff cannot be allowed to escape the consequences of having concealed material facts from the Court of Law to obtain an ex-parte injunction order.  The Plaintiff cannot be allowed to escape the consequences of having concealed material facts and therefore imposed costs of Rs. 10 Lakh (Rupees Ten Lakh only).

The High Court held that despite the costs, the ad-interim ex-parte order of injunction stands confirmed during the pendency of the present suit.

AMLEGALS REMARKS

The present suit was concerning medicinal products, where the public interest is of utmost importance and the threshold of confusion is to be kept at low but the test of misleading likeliness is rigorous.

The Plaintiff’s and the Defendant’s medical preparations are used for distinct health purposes. Therefore, any confusion between the two marks could result in unwary consumers using  pharmaceutical products improperly, which would have disastrous effects.

Further, the word “zest” is a common word which is used by not only the Plaintiff but many other third parties co-existing in the market using different trademarks as prefix or a suffix and hence, no one can claim exclusivity over a common dictionary word.

– Team AMLEGALS assisted by Ms. Rishita Agarwal (Intern)

For any queries or feedback, please feel free to get in touch with mridusha.guha@amlegals.com or falak.sawlani@amlegals.com.