We’re pleased to bring to you a guest post by Nikhil Purohit, analysing the Delhi High Court’s recent grant of an interim injunction restraining an e-rickshaw manufacturer from using the mark ‘DMW’, in a trademark infringement action by the luxury car manufacturer BMW. Nikhil is a 4th year student at the National Law School of India University, Bangalore.
BMW v. ‘DMW’ E-Rickshaw: Did Delhi HC Grant Injunction Based on an Incomplete Assessment?
On March 23rd, the Delhi High Court in the case of BMW AG v. Om Balajee Automobile (India) Pvt. Ltd. passed an order granting an ad-interim injunction (‘Order’) against an Indian e-rickshaw manufacturer from using their mark. The plaintiff, BMW, is a leading automobile company and their mark (Figure 1) is registered in India in respect of, inter alia, goods in Class 12 (vehicles). The defendant, on the other hand, is involved in manufacturing, marketing, and selling of E-Rickshaw, Electric Cargo, and Electric Loader under the trademark DMW (Figure 2) (‘DMW Mark’).
In this post, I shall argue that the High Court erred in its reasoning, by incorrectly applying principles of trademark law and existing precedent. The plea, in this case, can broadly be said to have been made on two primary grounds: ‘deceptive similarity’ and ‘dilution of the mark’.
The plaintiff’s claim was that the defendant’s DMW mark was deceptively similar to their BMW marks. They highlighted that the only difference between the two marks was the first letter and even then, the letters ‘B’ and ‘D’ were visually and phonetically similar. Further, they argued that the use of the DMW mark was being made in respect of e-rickshaws, which were a type of automobile, similar to the goods as covered by their marks.
The court agreed [para 15] that the mark was deceptively similar, holding that the defendant had adopted the essential features of the plaintiff’s mark and that there was a visual and phonetic resemblance in the marks.
It must, however, be noted that the court overlooked a substantial difference in the two marks. The BMW mark is characteristically accompanied by their logo with concentric circles filled with alternate colours and the term ‘BMW’ is written within the said logo. No such logo accompanies the DMW mark. Further, as also argued by the defendant, there is a difference of “colour, font and size” of the two trademarks.
Which factors are applicable while determining deceptive similarity?
The defendant, then, submitted an argument that I consider to be vital in this analysis: that the nature of products being manufactured by both parties was substantially different, despite both marks being registered under the same class. They pointed out that their product, i.e. e-rickshaw, was not being manufactured by the plaintiff. They further highlighted the difference in the nature of the market for both the products as while the e-rickshaws were being sold under INR 1 lac, the entry-level vehicle of the plaintiff cost around INR 35 lacs.
In furtherance of this argument, the defendant placed reliance on the decision of the Supreme Court in Nandhini Deluxe v. Karnataka Cooperative Milk Producers Federation Ltd (‘Nandhini Deluxe’). In Nandhini Deluxe, the Supreme Court relied on the test as laid down in Polaroid Corporation v. Polaraoid Electronics Corporation (‘Polaroid’) with the relevant portion being as follows:
“Where the products are different, the prior owner’s chance of success is a function of many variables: the strength of his mark, the degree of similarity between the two marks, the proximity of the products, the likelihood that the prior owner will bridge the gap, actual confusion, and the reciprocal of the defendant’s good faith in adopting its own mark, the quality of the defendant’s product, and the sophistication of the buyers.” (emphasis supplied)
Pertinently, the instant Court, based on Nandhini Deluxe, acknowledged that all variables as mentioned above had to be considered in the determination of deceptive similarity [para 19]. Despite this, upon examining the strength of the plaintiff’s mark, the court directly concluded as follows:
“In these circumstances, the use of the mark DMW by the defendant prima facie appears to be a dishonest act with an intention of trying to take advantage of the reputation and goodwill of the brand of the plaintiff. It is likely to mislead an average man of ordinary intelligence.”
Should the Nandhini Deluxe principles have been applied?
In relation to the applicability of the Nandhini Deluxe factors, the Court merely observed that, “the facts of the present case are materially different”. I disagree that the facts were materially different, enough to permit the Court to avoid applying a test that holds binding value in the determination of infringement by way of deceptive similarity, particularly in cases involving different goods in the same class. Similar tests have been applied by the Delhi High Court itself and by the Supreme Court, giving support to the applicability of these factors.
On that note, I look at the other determinative factors (aside from the strength of the mark and similarity – which I have already elaborated on) laid down by the Nandhini Deluxe Court, which should have had a bearing in the instant Court’s reasoning:
- Actual confusion: No proof of actual confusion was shown in the instant case, thus weighing against BMW.
- Defendant’s good faith: In the present case, there was no proof or analysis as to the dishonest intention of the defendant, in attempting to deceive consumers by adopting a deceptively similar mark. The term, ‘motor works’ is a generic term for the nature of the products sold and the ‘D’ standing for ‘Deshwar’ represents the surname of the owner of the brand. The mere fact that BMW is a prior mark does not lead to a necessary presumption of dishonest intention as that of itself does not indicate bad faith of the defendant, and in any case, is overshadowed by the existence of other factors.
- Quality of the defendant’s products: There is no dispute that the defendant is manufacturing good quality products as can be seen from their growth and expansion over the years. In any case, the quality was not challenged by the plaintiff.
- Likelihood of prior owner bridging the gap: The plaintiff did not lead this argument in their pleadings. Even otherwise, it seems highly improbable for a manufacturer of high-end luxury products to enter into the rickshaw market.
- Proximity of products: Per this test, there is required to be a competitive proximity of the products sold under the two marks. In the instant case, there appears to be a significant difference in the nature of products (despite being of the same class) manufactured by the parties, which thereby lead to them being sold through different trade channels. The defendant’s products, thus, cannot be said to compete with those of the plaintiff’s and consumers would not substitute one’s product for the other.
- Sophistication of buyers: The court did not examine the nature of the consumer base of the defendant. Per DMW’s official website, they appear to cater to two different sets of consumers. They supply their e-rickshaws on a commercial basis to “major industries all over India & overseas”. Given the commercial nature of transactions, it is highly probable that these customers, being industry leaders, will have the capacity to differentiate the two marks. In respect of an economically weaker consumer base (which the defendant, per their website, also services), as claimed by the defendant, such section is not likely to have “any connect with the plaintiff” – significantly diminishing the argument of likelihood of confusion.
Dilution of the Mark
The next contention of the plaintiff was that the principle of dilution of a mark would be applicable, attracting Section 29(4) of the Trade Marks Act, 1999. Per Section 29(4), the three conditions that must be satisfied by an infringing mark are that it:
“(a) is identical with or similar to the registered trademark; and
(b) is used in relation to goods or services which are not similar to those for which the trademark is registered; and
(c) the registered trademark has a reputation in India and the use of the mark without due cause takes unfair advantage of or is detrimental to, the distinctive character or repute of the registered trademark.”
In the instant case, the court did not explicitly address conditions (b) and (c), and assumed them to be accepted. While the latter is non-contentious, the former raises certain doubts. This is because condition (b) requires non-similarity of goods with “those for which the trademark is registered”. In the instant case, since the descriptions for which the BMW mark is registered, include ‘vehicles’ or ‘automobiles’, the DMW goods are indeed similar to the same (they rather fall within that description). Thus, a claim under section 29(4) was untenable. Pertinently, here, the question concerns the description for which the trademark is ‘registered’ and not the goods for which the mark is actually used – as used to determine likelihood of confusion in a deceptive similarity claim.
“Parliament has consciously eschewed the “deceptively” similar standard-which is defined by Section 2, in relation to infringement claims under Section 29(4). This would mean that the identity or similarity standard is a notch higher — the claimant has to prove or establish that the two marks are identical with or similar to each other. The question of deception does not arise here. There must be a near identification of the two marks or they must have the closest similarity .” (emphasis supplied)
Although the court noted that the standard of similarity in a claim of dilution was a ‘notch higher’ than that in a claim of deceptive similarity, the Court still imported the same analysis as for deceptive similarity and merely noted that the DMW mark was visually and phonetically similar to the plaintiff’s mark. It did not examine whether the higher standard of similarity, to the extent of constituting ‘near identification’ or ‘closest similarity’, had been met. As highlighted above, the differences such as the use of a logo, the font style and size, and the colour point towards non-satisfaction of such a high threshold.
On the consideration of the final condition, the court merely noted as follows:
“The defendant is obviously seeking to encash upon the brand quality and goodwill which the mark BMW enjoys in the market. Such use by the defendant is detrimental to the reputation of the registered mark BMW of the plaintiff company.” (emphasis supplied)
The High Court, thus, did not go into the determination of whether the use of the DMW mark was deliberately to encash upon the goodwill of the BMW mark but considered it as “obvious”. It did not point to any material indicating that such use was a conscious choice or whether any advantage was being experienced by the defendant by using the DMW mark. Similarly, on the question of detriment to reputation as well, the High Court merely paid lip service to the statutory provision without indicating any reason why the plaintiff would be prejudiced by the use of the DMW mark.
In light of the above analysis, it is clear that the High Court failed to appropriately apply existing principles and case law, to arrive at its conclusion. Although admittedly, in an ad-interim injunction hearing, the court is merely required to form a prima facie opinion, this does not mean that the prima facie opinion should be formed based on an incorrect and incomplete assessment of the factual circumstances and existing legal principles.