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Order 39 Rule 1 and 2 read with Section 151 of the Code of Civil Procedure, 1908.
Order 39 Rule 1 and 2 of the said Code

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Legal Opinion Summary — FAO(OS)386/2008

Factual and Procedural Background

The appellant (plaintiff in the original suit) filed a suit seeking a permanent injunction restraining passing off of the trade mark "SUGAR FREE", along with damages, rendition of accounts and delivery. The appellant alleges that it is a leading Indian pharmaceutical company which in 1988 developed and launched a low-calorie table-top sweetener (a product without natural sugar, containing an artificial sweetener) under the trade mark "SUGAR FREE". The trade mark is not registered; the appellant claims that the expression "SUGAR FREE" acquired secondary meaning in relation to its product.

The defendant manufactures and markets ayurvedic medicines, proprietary medicines and food products. The appellant contended that the defendant had adopted the mark "SUGAR FREE", thereby eroding the distinctiveness associated with the appellant's mark.

Along with the plaint the appellant filed an application for interim relief under Order 39 Rules 1 and 2 read with Section 151 of the Code of Civil Procedure, 1908. That application was dismissed by the learned Single Judge by an order dated 09.07.2008. This appeal (FAO(OS)386/2008) challenges that interlocutory order. The Single Judge's order referred to and took note of the interlocutory judgment in IA No. 3847/2007 in C.S.(OS) No. 605/2007 — Cadila Healthcare Ltd. v. Gujarat Co-operative Milk Marketing Federation Ltd. (Amul) — and discussed its ratio.

The present appellate judgment is dated September 12, 2008 and is authored by SANJAY KISHAN KAUL, J. and MOOL CHAND GARG, J. The appeal was finally dismissed in the terms recorded in the opinion, and an interim application CM 13138/2008 (stay) was dismissed as infructuous.

Legal Issues Presented

Whether the appellant was entitled to interlocutory (interim) injunctive relief restraining the defendant from using the expression "SUGAR FREE" in relation to its product(s) on the basis of the tort of passing off.
Whether the distinctiveness or secondary meaning allegedly acquired by the unregistered expression "SUGAR FREE" in respect of the appellant's product entitled the appellant to exclusive use of that expression at the interlocutory stage.
Whether the interim directions issued in Cadila Healthcare Ltd. v. Gujarat Co-operative Milk Marketing Federation Ltd. (relating to font size and prominence of "Sugar Free" vis-à-vis a trade mark) were required to be applied in the present case.
What is the proper scope of appellate scrutiny of an interlocutory order granting or refusing interlocutory relief in intellectual property / passing off disputes (i.e., limits on appellate interference with exercise of discretion by the Single Judge)?

Arguments of the Parties

Appellant's Arguments

The expression "SUGAR FREE" had acquired distinctiveness and secondary meaning in respect of the appellant's product and, therefore, entitled the appellant to exclusive use of that expression and to interlocutory protection against the defendant's use.
The Single Judge, while referring to the Cadila judgment and following its course, failed to notice or give effect to the interim directions in paragraph 59 of that earlier judgment (which restrained a defendant from using "Sugar Free" in a font larger than its trade mark) and thereby erroneously permitted the respondent to sell goods with the expression "SUGAR FREE".

The opinion does not set out detailed affirmative arguments advanced on behalf of the defendant; rather, the court's narrative describes features of the defendant's packaging and the Single Judge's findings about lack of deception.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Cadila Healthcare Ltd. v. Gujarat Co-operative Milk Marketing Federation Limited and Others (2008 (36) PTC 168 (Del.))	The observation that "SUGAR FREE" cannot be treated as a coined word; when used for a sweetener it may not be descriptive in meaning but is descriptive in understanding; it has acquired some degree of distinctiveness; acquisition of secondary meaning is not ipso facto conclusive for an action of passing off. In that case, specific interlocutory directions were issued restraining use of "Sugar Free" in a font conspicuously bigger than the trade mark and permitting descriptive use in other contexts.	The Single Judge in the present case took note of the Cadila judgment and its ratio; the appellate court discussed Cadila but concluded that the specific directions given in Cadila were fact-dependent (font size, prominence, interplay with the trade mark on a cartoon) and were not required in the present case because packaging and presentation differed.
Wander Ltd. & Anr. v. Antox India Pvt. Ltd., 1990 Supp. (1) SCC 727	The appellate court should not interfere with the exercise of discretion by a Single Judge in interlocutory matters unless the discretion was exercised arbitrarily, capriciously, perversely or in ignorance of settled principles; an appeal against exercise of discretion is an appeal on principle and the appellate court will not reassess material to reach a different conclusion if the lower court's conclusion was reasonably possible on the material.	The bench applied these principles to frame the scope of its review of the Single Judge's interlocutory order, concluding that there was no basis to interfere because the Single Judge's conclusions were reasonably possible on the material and there was no arbitrary or perverse exercise of discretion.
Printers (Mysore) Private Ltd. v. Pothan Joseph	Cited as part of authority illustrating established principles governing appellate reversal of discretionary orders (as reproduced in the Wander judgment extract). The opinion reproduces reference to these principles as illustrative authorities.	The court reproduced the reference to Printers (Mysore) as part of the judicial exposition of limits on appellate interference with discretionary orders. The opinion does not record a separate, case-specific application beyond that reproduction.
Charles Osention & Co. v. Johnston	Cited (via the Wander reproduction) for the proposition that the law regarding reversal by an appellate court of an order made in the exercise of judicial discretion is well established; used to illustrate how settled principles should be applied in individual cases.	The case is quoted (through the Wander passage) as part of the court's discussion on appellate scope and is relied upon to support the proposition that appellate interference with discretionary interlocutory orders is constrained. The opinion does not record further fact-specific application.

Court's Reasoning and Analysis

The court's analysis proceeded along these main lines, using only the material and reasoning present in the opinion:

The court began by identifying the correct standard of appellate scrutiny for interlocutory orders in intellectual property and passing off matters, relying on the Apex Court's decision in Wander Ltd. v. Antox India Pvt. Ltd. That precedent limits appellate interference to cases where the lower court's discretion was exercised arbitrarily, capriciously, perversely, or in ignorance of settled principles.
Applying that standard, the court emphasised that it was not to substitute its own view for that of the learned Single Judge merely because it might have reached a different conclusion; interference is justified only if the Single Judge's exercise of discretion was legally flawed in the specified manner.
The court then examined the factual findings made by the Single Judge concerning the defendant's packaging. The Single Judge had observed that:
- The case is one of passing off at common law (unregistered trademark) and not registered trademark infringement, so the distinction is material;
- The defendant's packaging contained sufficient added matter to distinguish it from the appellant's product;
- The respondent's trade mark "Baidyanath" was prominently displayed;
- The expressions "SUGAR FREE" and "GRANULES" were used in the same blue font and size, while "Chyawanprash" was in red—indicating that "SUGAR FREE" described the nature of the product ("Chyawanprash Granules" free from sugar) rather than functioning as a badge of origin causing deception.
The court personally compared the two product packagings/cartoons (as the Single Judge had) and agreed with the Single Judge's conclusion that, even assuming arguendo that "SUGAR FREE" had an associated distinctiveness in respect of the appellant's product, the manner of the respondent's use was not such as to make the purchasing public perceive the respondent's goods as originating from the appellant.
The court stressed that the interlocutory stage is prior to the leading of evidence; the appellant was free to lead evidence at the trial to prove passing off. The court's present role was limited to assessing whether there was a prima facie likelihood of deception on the packaging as presented at this interlocutory stage.
Finally, the court addressed the relevance of the Cadila directions (which had restrained prominent use of "Sugar Free" in that case). It found those directions to be fact-specific to the Cadila matter—dependent on relative font sizes, prominence of the trade mark and the manner of interposition on the cartoon—and therefore not automatically applicable in the present case where the packaging and presentation differed.

Holding and Implications

Holding: The appeal was DISMISSED.

Direct implications for the parties:

The impugned interlocutory order of the learned Single Judge (dismissing the appellant's application for interim relief) is upheld.
Any interim application for stay (CM 13138/2008) was dismissed as infructuous.
The appellant remains free to prove its claim of passing off at the stage of the final hearing; the observations made in this appellate decision will not prejudice the appellant at the final hearing.

Broader implications:

The court reiterated the established appellate principle (from Wander) that an appellate court will not normally substitute its own discretion for that of a trial court in interlocutory matters unless the discretion below was exercised in an arbitrary, capricious or perverse manner or in ignorance of settled principles. The opinion did not purport to set any new legal precedent beyond the application of these established principles to the facts of this case.

Miscellaneous

Final order language in the opinion: "We find no reason to interfere in the appeal. Dismissed." The bench recorded that "any observation made herein would not in any manner prejudice the appellant at the stage of final hearing of the suit."

Judges: SANJAY KISHAN KAUL, J. and MOOL CHAND GARG, J.

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Cadila Health Care Ltd. v. Shree Baidyanath Ayurved Bhawan

Exemptions allowed subject to all just exceptions. FAO(OS)386/2008

1. The appellant filed a suit for permanent injunction restraining passing off of the trade mark "SUGAR FREE", for damages, for rendition of account, delivery etc. The plaintiff claims to be a leading pharmaceutical company of India and claims that in the year 1988 they developed and launched in the market a product without natural sugar, containing an artificial sweetner, as a low calorie table top sweetner under the trade mark "SUGAR FREE". The trade mark of the plaintiff is not registered but it is the case of the plaintiff that the expression "SUGAR FREE" came to occupy a secondary meaning in respect of the product of the plaintiff.

2. The defendant is manufacturing and marketing ayurvedic medicines, proprietory medicines and food products. It is the claim of the appellant that the defendant has dishonestly adopted the mark "SUGAR FREE" which completely erodes the distinctiveness which is associated with the mark "SUGAR FREE".

3. The plaintiff along with the plaint filed an application for interim relief under Order 39 Rule 1 and 2 read with Section 151 of the Code of Civil Procedure, 1908. It is this application which has been dismissed by the learned Single Judge in terms of the impugned order dated 09.07.2008. It may be noticed that the claim of exclusive right of the plaintiff to "SUGAR FREE" forms subject matter of adjudication at the interlocutory stage in another application filed under Order 39 Rule 1 and 2 of the said Code being IA NO. 3847/2007 in C.S.(OS) No. 605/2007 Cadila Healthcare Ltd. V. Gujarat Co-opeartive Milk Marketing Federation Limited and Others. 2008 (36) PTC 168 (Del.) It is this judgment which has been taken note of in the impugned order and after discussing the ratio of the said judgment the learned single judge in the impugned order has decided to follow the same course of action though there is some difference in the final directions passed by the two learned Judges.

4. In Cadila Healthcare Ltd. V. Gujarat Co-opeartive Milk Marketing Federation Limited and Others (Supra) the conclusion arrived at have been reproduced in para 8 of the impugned judgment. The prima facie finding is that the plaintiff‟s claim of the expression "SUGAR FREE" being a coined word could not be accepted but the said expression when used in relation to a sweetner/sugar free substitute may not be descriptive in meaning but is certainly descriptive in understanding. The word Sugar Free has been held to have acquired a suitable degree of distinctiveness amongst traders and consumers but simultaneously it has been observed that the acquisition of a secondary meaning by a trade mark or distinctiveness associated with it are not ipso facto conclusive for an action of passing off. It was held that there could be no complete embargo placed on the defendant in the suit from using the expression "SUGAR FREE" but taking into consideration the fact that the goods in question being ice cream with the trade mark Amul were being sold with Sugar Free written in a very large font as compared to the trade mark Amul, the following operative directions were passed:

"59. The ex parte order dated 3.4.2007 is accordingly varied to incorporate the following directions:

(i) The defendant is restrained from using the expression „Sugar Free‟ in the present font size which is conspicuously bigger than its trade mark „Amul‟.

(ii) The defendant is free to use the expression „Sugar Free‟, as part of a sentence or as a catchy legend, so as to describe the characteristic feature of its product."

5. The learned Single Judge in the impugned order has taken into account the fact that the case of the plaintiff is one founded on the common law or tort of passing off and not one based on infringement of a registered trade mark and the distinction between two has to be kept in mind. The packaging of the defendant‟s product was found to have sufficient added matter therein to distinguish the defendant‟s product from that of the plaintiff. The trade mark in question „Baidyanath‟ was prominently displayed and the expression "SUGAR FREE" and the word "GRANULES" were used in the same blue font and size while the expression „Chyawanprash‟ is in red. It was concluded that the expression "SUGAR FREE" has been used to describe the kind of Chyawanprash Granules. It was thus held that there is no possibility of any deception.

6. Learned counsel for the appellant seeks to contend that the distinctiveness acquired by the expression "SUGAR FREE" in respect of the product of the petitioner, specially keeping in mind the observations made by the learned single judge in Cadila Healthcare Ltd. V. Gujarat Co-opeartive Milk Marketing Federation Limited and Others (supra) entitles the appellant to the exclusive use of the expression. It was further pleaded that the learned Single Judge in the impugned order while following the said judgment has failed to notice the interim directions issued in para 59 referred to above and has given a clean chit to the respondent to sell its goods with the expression "SUGAR FREE"

7. We may at the initial stage itself keep in mind the scope and ambit of the scrutiny of an appeal against an interlocutory order especially in the context of infringement of any intellectual property right in view of the judgment of the Apex Court in Wander Ltd. and Anr. Vs. Antox India Pvt. Ltd. 1990 Suppl. (1) SCC 727. The Apex Court impressed upon the appellate court not to interfere with the orders of the learned Single Judge on the ground that the appellate Court would, on assessment of the material, have come to a different conclusion than the one reached by the Court below as long as the conclusion reached by the Court was reasonably possible on the material on record. It was thus held that there was a misdirection in understanding the scope and nature of appeal before it and discussed the limitation on the powers of the appellate court to substitute its own opinion in appeal preferred against the discretionary order. We consider it useful to reproduce the observations made in para 9 of the said judgment:

"9. The appeals before the Division Bench were against the exercise of discretion by the Single Judge. In such appeals, the Appellate Court will not interfere with the exercise of discretion of the court of first instance and substitute its own discretion except where the discretion has been shown to have been exercised arbitrarily, or capriciously or perversely or where the court had ignored the settled principles of law regulating grant or refusal of interlocutory injunctions. An appeal against exercise of discretion is said to be an appeal on principle. Appellate Court will not reassess the material and seek to reach a conclusion different from the one reached by the court below if the one reached by the court was reasonably possible on the material. The appellate court would normally not be justified in interfering with the exercise of discretion under appeal solely on the ground that if it had considered the matter at the trial stage it would have come to a contrary conclusion. If the discretion has been exercised by the Trial Court reasonably and in a judicial manner the fact that the appellate court would have taken a different view may not justify interference with the trial court's exercise of discretion. After referring to these principles Gajendragadkar, J. in Printers (Mysore) Private Ltd. v. Pothan Joseph said :

... These principles are well established, but as has been observed by Viscount Simon in Charles Osention & Co. v. Johnston the law as to the reversal by a court of appeal of an order made by a judge below in the exercise of his discretion is well established, and any difficulty that arises is due only to the application of well settled principles in an individual case.

The appellate judgment does not seem to refer to this principle."

8. The aforesaid observations leave no doubt on the scope and ambit of scrutiny by this Court. It is not the function of this Court to sit and substitute the opinion of the learned Single Judge and endeavour to find out as to what decision it would have taken in the given facts and circumstances. It is only a power exercised arbitrarily or capriciously or perversely or in ignorance of the settled principles of law regulating grant or refusal of interlocutory injunctions would interference be called for.

9. If the present appeal is scrutinized within the aforesaid parameters we find no reason to interfere with the impugned order. The stage of leading evidence by the parties to establish their case has yet not arrived. It is always open to the appellant to prove its case of passing off by leading appropriate evidence. What has to be seen at this stage is whether the packaging of the two products is in such a manner that assuming that the expression "SUGAR FREE" has a distinctiveness associated with the product of the appellant, there is any chance of misleading the purchasing public. The learned Single Judge has compared the two cartoons and we have also had the benefit of seeing the packaging of the two products. We are in agreement with the view taken by the learned Single Judge that the use of the expression "SUGAR FREE" is not carried out in such a manner as for a purchasing public to perceive it as the product of the appellant. The expression "SUGAR FREE" is written in the same font as the expression "Chyawanprash" thereafter in a similar font the expression "Special Granules" has been used. The trade mark of the respondent Baidyanath is prominently displayed. It is thus, clear that the expression "SUGAR FREE" in the sentence is to define the fact that the Chyawanprash is free from sugar.

10. It is in view of the aforesaid that we are of the view that the directions as contained in the order in Cadila Healthcare Ltd. V. Gujarat Co-opeartive Milk Marketing Federation Limited and Others.(Supra) are not required to be passed in the present case. Those directions were required in the facts of that case dependent on the font of the "SUGAR FREE", the font of the trade mark and the manner in which both have been interposed on the cartoon of the respondent.

11. We find no reason to interfere in the appeal.

12. Dismissed.

13. Needless to say that any observation made herein would not in any manner prejudice the appellant at the stage of final hearing of the suit.

CM 13138/2008(stay) In view of the above, dismissed as infructuous.

SANJAY KISHAN KAUL,J MOOL CHAND GARG,J SEPTEMBER 12, 2008/anb

Cadila Health Care Ltd. v. Shree Baidyanath Ayurved Bhawan

Legal Opinion Summary — FAO(OS)386/2008

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Appellant's Arguments

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Miscellaneous

Cadila Health Care Ltd. v. Shree Baidyanath Ayurved Bhawan

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