Recently, the Delhi High Court temporarily injuncted the handset giant Intex Technologies from using the trademark “Aqua” based on passing off charges made by AZ Tech (India). The judgement is available here. This well-reasoned and lucid judgement is one of the few in India which deal with arbitrary marks. This is an interesting case where a much smaller company has been able to prima facie prove passing off against a leading corporation in the field.
The plaintiffs sought an ad interim injunction against the defendant from using the trademark “Aqua” used in respect of mobile phones.
During the pendency of the suit, the defendants alleged that in fact, the plaintiffs had themselves imitated the logo of the defendant’s mark. This led to the filing of another suit, which was consolidated with the present suit. That suit was disposed of pursuant to a settlement between the parties, according to which the plaintiffs herein gave an undertaking not to use the logo of the defendants herein. This undertaking was however, given without prejudice to the rights and contentions sought by the plaintiffs in the present suit.
Contentions of Parties
The plaintiffs claimed that they were prior users of the “Aqua” mark in India since 2009, and their product had been an instant hit as it was economically priced. They claimed that in 2012, the defendants launched phones under the brand name “Intex Aqua” in an attempt to exploit the goodwill of the plaintiff’s mark and cause a likelihood of confusion in the minds of the consumers. It was contended that the defendant’s products are also deceptively similar in both looks and features.
On the other hand, the defendants claimed that the plaintiffs could not claim exclusive rights over the impugned trademark as it was descriptive and devoid of any distinctive character. It was contended that the suit was not maintainable owing to the added features such as the addition of the house mark “Aqua”, its get-up, colour-combination, placement, writing style etc. which make the goods of both parties distinguishable and negate any possibility of confusion between the marks. It was also argued that the plaintiffs had acquiesced to the use of the mark as the suit was filed after a delay of 14 months. Further, the defendants contended that the inspiration for the term “Aqua” came from the fact that the display was crystal clear and the defendants have been aggressively advertising the mark, with sales of the “Intex Aqua” phone exceeding 200 crores.
The defendants claimed that the plaintiff had not come to court with clean hands. The 104 service centers as claimed by the plaintiffs did not service the products of the plaintiffs, as per their investigation. They also claimed that despite the fact that the plaintiff’s application for registration of trademark was still pending, they were wrongly using the ® mark with their logo, amounting to misrepresentation. The plaintiffs claimed that the investigations carried out by the defendant were a sham and the use of the ® mark was a bona fide mistake.
Reasoning of the Court
First, the court dealt with the question of whether the mark “Aqua” was entitled to trademark protection when applied to mobile phones and their accessories. It observed that a mark is distinctive and capable of being protected if it is either inherently distinctive or has acquired distinctiveness through secondary meaning. The court referred to the classifications of increasing distinctiveness as laid down in Abercrombie & Fitch Co. v Hunting World Inc. which are (1) generic; (2) descriptive; (3) suggestive; (4) arbitrary; or (5) fanciful. In a later judgement of Two Pesos Inc. v Taco Cabana Inc., the court held that the latter three categories of marks were deemed inherently distinctive and were entitled to protection. It was observed that “Aqua” means water and water does not readily conjure up the image of a mobile phone. Therefore, the mark was arbitrary and thus inherently distinctive and there was no need to prove that the mark had acquired secondary meaning.
The court referred to the judgement in Sohan Lal Nem Chand Jain v Triden Group and Ors, where it was held that in order to prove the defence of “common marks to the trade”, the party must produce clear and cogent evidence of third-party users, failing which the defendant’s submissions could not be accepted.
The court referred to the judgement in Automatic Electric Limited v. R.K. Dhawan, and held that defendants who have claimed proprietary rights in the mark cannot be allowed to turn around and claim that the mark is not capable of distinguishing the goods of the plaintiffs. Since the defendant had also applied for registration of the “Aqua” mark, its contentions were rejected.
Second, the court addressed the question of whether the plaintiff could establish priority right over the defendants in order to prove the claim of passing off. The court was satisfied that the plaintiffs had been using the mark since 2009, and it was admitted that the defendants started using the sub-brand “Aqua” in 2012. Further, it observed that sales must be shown to prove priority. In view of the fact that the plaintiff’s sales, albeit smaller than those of the defendants, took place first, coupled with the plaintiff’s intention to adopt the mark were sufficient to establish prior use.
Third, the court considered whether the added material in the mark can be said to be sufficient to dispel the likelihood of confusion in the minds of the public. The court was of the view that the usage of the word “Intex” may not be sufficient to dispel the likelihood of confusion especially when “Aqua” is being marketed as a separate sub-brand. The public may get the impression that the plaintiff’s business has been acquired by the defendant. Further, the intention of the defendants to use the mark “Aqua” in isolation was clear from the fact that they had applied for registration of the term “Aqua” unaccompanied by the word “Intex”.
Fourth, the court addressed the defendant’s claims that the plaintiff’s conduct was dishonest with respect to the adoption of the logo of the defendant, that they had made false claims regarding service centers, and their wrong usage of the symbol ® on their packaging. The defendants claimed that the plaintiffs had not come to court with clean hands, and would not thus be entitled to a relief of injunction. However, the court was of the view that there was no misrepresentation by the plaintiffs which would disentitle them to such relief. First, the court held that adoption of the “Aqua” mark cannot be said to be fraud committed on the general public, especially when they claim that they are lawful proprietors of the mark. Secondly, it held that the alleged mis-statement of service centers was a matter of trial and could not be could be looked into at this stage. Thirdly, the court held that even the usage of the ® symbol could not disentitle the plaintiffs of equitable relief as the same would not amount to misrepresentation in the mark itself or the business associated with it. The court referred to the judgement of In re: Arthur Fairest Ltd’s application (1951) 68 RPC 197 and concluded that such use of the word “registered” was the result of an honest and stupid blunder and no improper advantage was gained by the user.
Last, the court considered the aspect of balance of convenience. It held that the balance of convenience would obviously be in favour of the prior user. The impressive sales and advertising expenditure of the defendants could not entitle them to seize the property of another. The defendants were thus restrained from using the infringing trademark “Aqua”.