Intellectual Property RightsTrademark’s Monetary Value can be Estimated based on the Investments made by the Proprietor in Building Reputation

The Delhi High Court in the case of Mr. Sanjay Chadha Trading as M/S Eveready Tools Emporium v. Union of India & Ors. [2022/DHC/004457], while dealing with a case of dilution of a well-known trademark has observed that apart from identifying the source of goods, trademarks have an investment value as well, which is to preserve the investments made by a proprietor of a trademark in publicity and building its reputation.

FACTS

M/s Eveready Tools Emporium (hereinafter referred to as the “Appellant”) is engaged in the business of manufacturing and marketing of hand tools under the trademark ‘EVEREADY’ since 1985. The Appellant claimed that his mother commenced the parent business and thereafter, moving forward, the same was assigned to the Appellant. The company had received registration for both the word mark and the device mark in the year 1985 and 1990 respectively, under Class 8 of trademark classes.

Eveready Industries India Limited (hereinafter referred to as “the Respondent”), a company incorporated in 1934, is a well-known brand in the Fast-Moving Consumer Goods sector, and is one of the largest manufacturers of dry cell batteries and flashlights in India. However, in 1994, the Respondent had attempted to register the trademark under Class 8, but had failed to do so as the Trademark Registry ruled in the favour of the Appellant.

Moving forward, the Intellectual Property Appellate Board (hereinafter referred to as “IPAB”) directed the cancellation of the Appellant’s trademark on account of infringement and passing off. The same was subsequently upheld by a single judge bench of the Delhi High Court (hereinafter referred to as the “High Court”) and hence the matter was preferred as an appeal before the division bench of the High Court.

ISSUES BEFORE THE DELHI HIGH COURT

1. Whether “EVEREADY” is a well-known trademark?
2. Whether the cancellation of registration of the Appellant’s mark by the IPAB was justified?
3. Whether the act of adopting the impugned trademark by the Appellant was a dishonest attempt to dilute the reputation of the Respondent’s well-known mark?

CONTENTIONS OF THE PARTIES

The Appellant contended that the High Court’s observation that the Appellant’s trademark had been abandoned on the account of non- use between 2000-2005 was erroneous as the Appellant had evidence of use in the year 2005 and that the necessary conditions under Section 47 of the Trademark Act, 1999 (hereinafter referred to as “the Act”) had not been fulfilled.

The Appellant also relied on the fact that the Respondent had filed for cancellation of the Appellant’s trademarks in 2009 which further signifies that the trademark was in use by the Appellant.

The Appellant submitted that the IPAB and the High Court had erred in interpreting that the Appellant’s trademark had expired in the year 2006 on account of non-renewal. Thereafter, the Appellant had filed for restoration on the ground that the statutory notice had not been received and subsequently, the registration was restored in 2018.

The Appellant further contended that the observation of the IPAB in declaring the assignment deed as sham is flawed as the deed merely assigned the rights in respect of the trademark from a date prior to its execution and that even the Respondent had not challenged the same.

DECISION AND FINDINGS

Observing the findings of IPAB, the High Court stated that the Respondent’s trademark “EVEREADY” is a well-known name with high reputational value.

The High Court further added that it was important to note that the letters in the Appellant’s mark were placed in a specific manner.  For example, the letters in the centre of the mark ‘EVEREADY’ were larger than the letters ‘E’ and ‘Y’ at the two ends. The High Court noted that such similarity between the Appellant’s mark with that of the Respondent’s well-known mark is not merely a coincidence.

The High Court also added that ‘Eveready’ is not a generic term, and it is impossible to assume that the Appellant discovered it merely by chance, without being aware of its use in relation to dry cell batteries and flashlights, as being prevalent in the relevant market due to the usage by the Respondent.

Thus, the High Court concluded that the Appellant’s mother, from whom he claimed his title, had adopted Eveready Industries India Limited’s trademark “to ride on the goodwill and to take undue advantage of its reputation” and held that the learned IPAB correctly determined that Respondent’s trademark was eligible for trademark protection.

AMLEGALS REMARKS

Trademarks play a very important role for any institution to make an identity in the competitive market. Trademarks not only help consumers find the right product, but also builds a value for the brand in the market and among the consumers.

The trademark owners also have to invest a lot to make their mark a reputed one which offers quality products. This continuous investment in quality and the communication of the mark makes a trademark well known and reputed, bringing higher revenues and consumers.

The investment aspect of a trademark helps to preserve the investments made by a proprietor of a trademark in publicity and building up its reputation. The High Court herein has made a pivotal observation by recognizing the investment aspect of a trademark and noting that the Act extends protection to reputed trademarks and does not permit use of similar or deceptive trademarks if their use is to take an unfair advantage or is detrimental to the distinctive character or repute of the registered senior trademark.

This judgement has given the proprietors an incentive to make their mark a well-known mark by investing in quality products and developing reputation and goodwill in the market and also ensure their protection against malicious registrations.

– Team AMLEGALS assisted by Mr. Niloy Ghosh (Intern)