Dr. Reddy: Honest and Concurrent Use?

The IPAB recently ordered for the removal of the trademark ‘Reddy’ registered in favour of Reddy Pharmaceuticals Limited (respondent) pursuant to an application filed by Dr. Reddy Laboratories (applicant).

Background:

Dr. Reddy Laboratories was established by Dr. K. Anji Reddy to create and deliver innovative pharmaceutical health solutions and is the second largest pharmaceutical company in India. As claimed, ‘Dr. Reddy’ was a mark adopted and used by Dr. Reddy Laboratories since 1984 and has acquired reputation and goodwill. However, application for registration of this mark was filed only in 2001 under various classes.

Reddy Pharmaceuticals Limited, the respondent, was the agent of Dr. Reddy Laboratories for 10 years. This association was terminated on 1^st April 2003 and on 17^th April 2003 the respondent filed the impugned trademark application for the mark ‘Reddy’. Though the respondent’s application was filed subsequent to the applicant’s application, the mark was registered in favour of the respondent in 2005 under ‘medicinal and pharmaceutical preparations’.

Applicant’s contentions:

It is the case of the applicant that the impugned mark is hit by Section 9 and the Registrar was bound to refuse registration as the case squarely fell under Section 9(2)(a): (2) A mark shall not be registered as a trade mark if : (a) it is of such nature as to deceive the public or cause confusion.

Alternatively, the application was hit by Section 11(3) (which prevents registration of a mark based on ‘passing off’ an unregistered mark) and could not be saved under Section 12 as the adoption and use of the mark by the respondent was not concurrent and was dishonest. Moreover, there were no ‘special circumstances’ which could justify both marks to exist concurrently.

Respondent’s contention:

Likelihood of confusion

It was argued that the goods sold by the respondents could not be bought off the self and the competing packages were not similar in get up or lay out. Therefore, there was no likelihood of confusion taking place between the competing goods merely by the use of the impugned mark ‘Reddy’.

Honest and Concurrent Use

Reddy Pharmaceutical Limited argued that they were in the business of marketing pharmaceutical preparations, basic drugs and medicinal formulations since 1996.   The name of their company is based on the name of its founder and its present Managing Director Mr. Konda Raghu Rami Reddi. Moreover, the applicant has allowed the respondent to use the mark Reddy for over 10 years as an agent. For all these reasons the respondent is entitled to the protection of Section 12 of ‘honest’ user.

The applicant also argued that they adopted the mark since 2002 by advertising the mark on an all India basis. Also, as contended, Dr. Reddy Laboratories started advertising their mark only in 2001. This argument was probably taken to show ‘concurrent’ use i.e. both the respondent and applicant concurrently used the mark and there was no ‘prior’ user.

IPAB:

The IPAB held that “We in the Board at first got the impression that the respondent was an affiliate or subsidiary company of the applicant and not a competing business rival.  There is little doubt in our mind that the presence of the respondent mark ‘Reddy’  is bound to cause material confusion and deception in the market.” Thereby, ruling out the contention of the respondent of there being no likelihood of confusion. The IPAB did not examine any another evidence to come to this conclusion, even though the question on ‘likelihood of confusion’ is a mixed question of law and fact.

The IPAB then observed that the Registrar of Companies should not have registered the respondent’s name as this was in contravention of S. 20(2) of the Companies Act which prohibits the use of someone else’s trademark as part of a corporate name.

Next, the honest and concurrent user argument was examined. The IPAB observed that the applicant was the first to apply for the mark in 2001 and the respondent’s application was subsequent to the applicant’s in 2003. Therefore, the registry erred in accepting the respondent’s subsequent application. The IPAB remarked “The applicant company headed by a scientist/technocrat have indulged in benign neglect of not seeking timely protection for their brand name and are now ruing its decision.”

The IPAB further stated “It is true law recognizes and preserves the right which every man has to use his own name including for carrying on trade or business provided such use is not fraudulent.” In the present case it was held that all the facts point towards the fact that the respondent deliberately adopted the impugned mark to deceive the public. It was not a bona fide user and therefore the respondent could not take support of honest and concurrent use under S. 12.

Analysis

Likelihood of confusion

Though the IPAB did not dwell on this issue, in the case of Cadila Healthcare Limited, the Supreme Court observed that in assessing likelihood of confusion the ‘nature of goods’ become important. Even though medicines may not be bought off the shelf and are purchased through prescriptions, similarity of marks has to be treated strictly given that the nature of the product is a medicine and purchasing the wrong product may have harmful effects. 

Another test for likelihood of confusion is whether the mark is inherently distinct or has acquired distinctiveness. In the present case, the name ‘Reddy’ is a predominant part of the both the applicant’s as well as the respondent’s mark. Reddy is a common Indian surname and hence it is not ‘inherently’ distinctive. We can compare this surname to the surname ‘Honda’ which is not a common Indian surname and hence may be inherently distinctive. However, the name Reddy as associated with Dr. Reddy Laboratories has acquired distinctiveness over the years. Therefore, the use of the same by the respondent is likely to cause confusion. This also links up to the ‘honesty and concurrency’ of use.

Honest and concurrent use

Even though the respondent did not actively mislead the public into believing his goods were that of the plaintiff’s, the question of honest and concurrent use was decided against him. This may be because the respondent was not able to sufficiently justify why he used the name ‘Reddy’ after being fully aware of the reputation the plaintiff’s mark had attained.

In contradistinction to this case, in Goenka Institute of Education and Research v. Anjani Kumar Goenka and Anr (2009, Del). honest and concurrent use was established. Both the applicant and respondent had “Goenka” as a predominant part of their trademarks: the competing marks were “Goenka Public School” and “G.D. Goenka Public School”.  Honest and concurrent use was established because of the following facts: first, it was established that both parties started using the word “Goenka” around the same time, secondly, one institution was based in Delhi and the other in Rajasthan so the appellant could not have known of the respondent’s mark when he started using the same and thirdly, the fact that Goenka forms part of the appellant’s trust name, all pointed to honest and concurrent adoption. Therefore, the Registrar allowed both marks to be registered with certain conditions, such as, the appellant was directed to insert the name of their trust in brackets below the name of their school in order to clarify and differentiate between the two marks.

 We had also blogged about the ‘The Royal Orchid v The Orchid’ trademark case, which can be useful to assess what amount to ‘honest and concurrent use’.