Trademark Case Brief – Cadila Health Care Ltd. v. Cadila Pharmaceuticals

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Citation – 2001 (21) PTC 541 SC

Facts:
§ The appellant and the respondent are pharmaceutical companies. They had taken over the assets and business of the erstwhile Cadila Group after its restructuring under Sections 391 and 394 of the Companies Act.
§ Under the restructuring scheme both the appellant and the respondent got the right to use the name “Cadila” as a corporate name.
§ The appellant manufactured a drug “Falcigo” containing artesunate for the treatment of cerebral malaria commonly known as “Falcipharum”. On 7-10-1996, the Drugs Controller General (India) granted permission to the appellant to market the said drug under the trademark of “Falcigo”.
§ On 10-4-1997, the respondent got permission from the Drugs Controller General (India) to manufacture a drug containing “Mefloquine Hydrochloride”. This drug was also used for the treatment of “Falcipharum Malaria” and was being sold by the respondent under the trademark of “Falcitab”.
§ The appellant filed a civil suit for injunction against the respondent from using the trademark “Falcitab” on the ground that the same would be passed off as the appellant’s drug “Falcigo” for the treatment of the same disease in view of confusing similarity and deception in the names and more so because the drugs were medicines of last resort.
§ The respondent contended, inter alia, that the two products in question were Schedule ‘L’ drugs which could be sold only to the hospitals and clinics with the result that there could not even be a remote chance of confusion and deception.

Procedural History:
§ The trial court refused to grant an interim injunction.
§ The High Court upheld the order of the trial court.

Laws Involved:
§ In the case of unregistered trade-marks, a passing-off action is maintainable. The passing off action depends upon the principle that nobody has a right to represent his goods as the goods of somebody. In other words, a man is not to sell his goods or services under the pretence that they are those of another person.
§ What has to be seen in the case of a passing-off action is the similarity between the competing marks and to determine whether there is the likelihood of deception or causing confusion. It is not correct to say that the difference in essential features is more relevant. The principle of phonetic similarity cannot be jettisoned when the manner in which the competing words are written are different.
§ Broadly stated, in an action for passing off on the basis of unregistered trade-mark generally for deciding the question of deceptive similarity the following factors are to be considered:
i. The nature of the marks i.e. whether the marks are word marks or label marks or composite marks i.e. both words and label works.
ii. The degree of resemblance between the marks, phonetically similar and hence similar in idea.
iii. The nature of the goods in respect of which they are used as trade-marks.
iv. The similarity in the nature, character and performance of the goods of the rival traders.
v. The class of purchasers who are likely to buy the goods bearing the marks they require, their education and intelligence and the degree of care they are likely to exercise in purchasing and/or using the goods.
vi. The mode of purchasing the goods or placing orders for the goods.
vii. Any other surrounding circumstances which may be relevant in the extent of dissimilarity between the competing marks.
Weightage to be given to each of the aforesaid factors depending upon facts of each case and the same weightage cannot be given to each factor in every case.

Issue: 
Whether the respondent’s trade-mark could be passed off as the appellant’s trade-mark?

Analysis:
§ Drugs have a marked difference in the compositions with completely different side effects, and therefore, the test should be applied strictly as the possibility of harm resulting from any kind of confusion by the consumer can have unpleasant if not disastrous results. The courts need to be particularly vigilant where the defendant’s drug, of which passing off is alleged, is meant for curing the same ailment as the plaintiff’s medicine but the compositions are different. The confusion is more likely in such cases and the incorrect intake of medicine may even result in loss of life or other serious health problems. Schedule ‘H’ drugs are those which can be sold by the chemist only on the prescription of the doctor but Schedule ‘L’ drugs are not sold across the counter but are sold only to the hospitals and clinics. Nevertheless, it is not uncommon that because of lack of competence or otherwise, mistakes can arise especially where the trade-marks are deceptively similar.
§ In the present case, although both the drugs are sold under prescription this fact alone is not sufficient to prevent confusion which is otherwise likely to occur. In view of the varying infrastructure for supervision of physicians and pharmacists of the medical profession in India due to linguistic, urban, semi-urban and rural divide across the country and with high degree of possibility of even accidental negligence, strict measures to prevent any confusion arising from similarity of marks among medicines are required to be taken.
§ Trademark is essentially adopted to advertise one’s product and to make it known to the purchaser. It attempts to portray the nature and, if possible, the quality of the product and over a period of time the mark may become popular. It is usually at that stage that other people are tempted to pass off their products as that of the original owner of the mark. That is why it is said that in a passing-off action, the plaintiff’s right is against the conduct of the defendant which leads to or is intended or calculated to lead to deception.
§ Public interest would support a lesser degree of proof showing confusing similarity in the case of the trademark in respect of medicinal products as against other non-medicinal products. Drugs are poisons, not sweets. Confusion between medicinal products may, therefore, be life-threatening, not merely inconvenient. Noting the frailty of human nature and the pressures placed by society on doctors, there should be as many clear indicators as possible to distinguish two medicinal products from each other. It is not uncommon that in hospitals, drugs can be requested verbally and/or under critical/pressure situations. Many patients may be elderly, infirm or illiterate. They may not be in a position to differentiate between the medicine prescribed and bought which is ultimately handed over to them.
§ The decisions of English courts would be relevant in a country where literacy is high and the marks used are in the language which the purchaser can understand.
§ While examining such cases in India, what has to be kept in mind is the purchaser of such goods in India who may have absolutely no knowledge of English language or of the language in which the trademark is written and to whom different words with a slight difference in spellings may sound phonetically the same. While dealing with cases relating to passing off, one of the important test which has to be applied in each case is whether the misrepresentation made by the defendant is of such a nature as is likely to cause an ordinary consumer to confuse one product for another due to the similarity of marks and other surrounding factors. What is likely to cause confusion would vary from case to case. A stricter approach should be adopted while applying the test to judge the possibility of confusion of one medicinal product for another by the consumer. Stringent measures should be adopted especially where medicines are the medicines of last resort as any confusion in such medicines may be fatal or could have disastrous effects. The confusion as to the identity of the product itself could have dire effects on the public health.
§ Keeping in view the provisions of Section 17-B of the Drugs and Cosmetics Act, 1940, it is but proper that before granting permission to manufacture a drug under a brand name the authority under that Act is satisfied that there will be no confusion or deception in the market. The authorities should consider requiring such an applicant to submit an official search report from the Trade Mark Office pertaining to the trademark in question which will enable the Drug Authority to arrive at a correct conclusion.

Conclusion: The Supreme Court refused to interfere with the orders of the courts below but gave directions for expeditious disposal of the suit. In the instant judgment, the Supreme Court gave the reasons for non-interference with the impugned orders while setting out the principles which are to be kept in mind when dealing with an action for infringement or passing off, especially in the cases relating to medicinal products.

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