Profit not necessary before trademark infringement

By Manisha Singh and Simran Bhullar, LexOrbis
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An action may be instituted against trademark infringement even if the defendant has not yet generated sales from a product or service bearing the impugned mark. Madras High Court confirmed this in an interim order in the case of Tirumala Milk Products Private Ltd v Swaraj India Industries Ltd and Ors. The court restrained the defendants from using any mark similar to the plaintiffs’ registered trademark Thirumala and Thirumala Milk. “Tirumala” is a well-known pilgrimage destination in India.

Manisha Singh,LexOrbis
Manisha Singh
Partner
LexOrbis

The defendants were using the mark Tirumalaa Daairy, which is similar to the plaintiffs’ mark. Even though the marks were spelt differently, the difference was not easily discernible. The plaintiff has used the brand name Thirumala Milk for dairy products since 1998. Related trademarks such as Tirumala Milk and Thirumala Milk – Source of Purity, have been registered in classes 16 and 29. The defendants, Kute Group, had applied for the registration of the mark Tirumalla Oil Refinery and the Tirumalla device in the same classes.

The plaintiffs objected to the registration and the defendants counterclaimed, asserting the mark to be their original creation. The defendants began to approach the plaintiffs’ customers and business partners and started publicizing their products under the impugned name Tirumalaa Daairy online and offline. Due to the phonetic similarity and the likelihood of deception, the plaintiffs sued the defendant companies and their directors for passing off and trademark infringement and asked for `10 million (US$135,000) in damages.

The defendants disputed the jurisdiction of Madras High Court to hear the case, refuted the claims and alleged that the plaintiff had misled the court by concealing important facts. The Trademark Registry had raised issues before registering the plaintiff’s mark, but the plaintiffs clarified that they were not related to dairy products. They further stated that since they conduct business within the territory of Chennai, the court has the jurisdiction to decide on the matter. The court supported the contention of the plaintiff.

Simran Bhullar,LexOrbis
Simran Bhullar
Associate
LexOrbis

The defendants also alleged that the plaintiffs had submitted inflated marketing and advertising figures in order to mislead the court with respect to the plaintiffs’ standing in the market. The court refused to examine the accounts, stating that “the plaintiff has produced a chartered accountant certificate and it will always be open to the defendants, during the trial, to cross-examine the chartered accountant with respect to the veracity of the figures given as sales turnover and as advertisement expenditure”.

The court agreed with the argument of the plaintiffs that the mark Tirumala had acquired distinctiveness and was directly associated with the plaintiffs’ products. The defendants had sought to counter this claim by stating that the plaintiffs could not monopolize the mark. The court noted that the defendants were aggressively marketing their products without actually launching them in the market for sale. The court held that they were trying to ride on the plaintiffs’ established reputation by using a similar mark. This amounted to passing off.

The Trademark Registry had raised an issue before registering the mark because it already existed for products and services in two different industries. The plaintiffs clarified that they would use the mark in separate areas of the industries, after which the registration was granted.

The court held that the plaintiffs were entitled to trademark protection after dismissing all the claims advanced by the defendants. The defendants offered to make substantial changes to their label- ling and packaging and submitted that they would use the mark Moosips for dairy products. They also submitted designs of the new packaging which bore the mark “Tirumalaa” in a smaller font. This was again challenged and the court held that the offer to make the changes was insincere. The court issued an absolute interim injunction binding on the defendants until a final decision.

This case shows that the unlawful use of a mark can have repercussions even if the infringer did not profit from it. Employing an infringing mark to market a product before starting sales is as much an act of infringement as actual sales. The court’s decision establishes that acts may amount to trademark infringement even if they do not benefit the infringer.

Manisha Singh is a partner and Simran Bhullar is an associate at LexOrbis

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