Case Review: Hypnos Ltd. v. PEPS Industries Pvt. Ltd. & Ors

Citation: ORA/126/2012/TM/CH, Order dated 16^th April, 2015

Parties Involved:

Applicant:

1. Hypnos Limited (UK)

Respondents:

1. Hosur Coir Foam Pvt. Ltd.

2. Peps Industries Pvt. Ltd.

3. The Registrar of Trademarks, Trademarks Registry, Chennai

Brief Facts:

The Applicant, a UK based family run bed manufacturing company, filed a rectification petition to cancel the registration of the ‘HYPNOS’ trademark owned by Respondent No. 1 under Class 20. The HYPNOS mark owned by Respondent No.1 is associated with mattress, pillows, cushions, seats and other related products. The Applicant had also filed a trademark application for HYPNOS (Label) which is pending before the Trademark Registry.

The rectification petition was filed by the Applicant on the grounds that their mark was known worldwide and this trans-border reputation had spilled over to the territory of India. The Applicant further claimed that the Respondent had dishonestly adopted and applied for registration of the impugned trademark ‘HYPNOS’, which was internationally exclusively associated with the Applicant. The Respondents, in turn, filed a civil suit before the Karnataka District Court which remains pending.

The Intellectual Property Appellate Board (IPAB), Chennai after analyzing the evidence and the arguments submitted by both the Parties decided in favour of the Respondents with no orders as to costs.

Arguments Advanced:

Applicant:

1. The Learned Counsel for the Applicant argued that the mark of the Applicant had trans-border reputation owing to its usage in various countries. He further argued that this trans-border reputation enjoyed by the Applicant’s mark had spilled over to India, thereby rendering the requirement of localized use in India inconsequential for the purposes of the Applicant’s mark attaining rights under Common law.
2. He further argued the Right of Priority of worldwide use in case the reputation spilling over to India has precedence over the priority of use in India.
3. The Counsel for the Applicant also relied on the principle of Classical Trinity in a passing off action which laid down the three requirements for a valid passing off action, i.e. goodwill, misrepresentation and the resultant damage. The Applicant claimed that their mark was eligible for protection under the Indian Trademark Law owing to the spill over of its trans-border reputation making it a well-known mark and that the existence of the impugned mark created a likelihood of confusion between the two marks. Further claims were made that the consumers primarily associate the mark HYPNOS with the Applicant and that the Respondents’ mark being associated with similar products was causing misrepresentation in the course of trade and causing dilution in the form of erosion and tarnishing of the reputation of the Applicant.

Respondents:

1. The Respondents 1 and 2, represented by BananaIP Counsels, primarily relied on the principle of Territoriality, claiming that local use was mandatory to claim spill-over of reputation. The Respondents further argued that a claim of well-knownness is valid only if the well-knownness of the mark in the territory of the impugned mark is established for a few decades.
2. Pointing out that the onus in a rectification proceeding is on the Applicant and the Applicant would need to prove its case by submitting cogent evidence, the Respondents argued that the Applicant had failed to establish the well-knownness of the mark among the substantial segments of consumers.
3. With regard to applicability of Section 11(2) of the Trade Marks Act, 1999, the Respondents argued that the Applicant had failed to prove the first two requisites of the provision, i.e., unfair advantage and detriment to the distinctive character of the mark. A mere submission that there is a likelihood of detriment, devoid of actual proof, would not be sufficient.
4. The Respondents also countered every piece of evidence submitted by the Applicant in support of its claims. The Respondents also submitted voluminous evidence to establish the popularity of the impugned mark in India.

Issues Considered:

1. Whether the trademark ‘HYPNOS’ of the Applicant is a well-known trademark and carries trans-border reputation?
2. If yes, what is the effect of spill over reputation of the trademark ‘HYPNOS’ in India?
3. Whether the Respondents’ adoption is contrary to Section 12 of the Trade Marks Act, 1999?

Judgment:

1. With regard to issues 1 and 2, the Appellate Board held that a mark of a foreign entity must be well-known to a substantial segment of consumers in India to be eligible for claiming spill over of trans-border reputation in India. Furthermore, the Court noted that multinational companies with no intention of introducing their products in India should not be allowed to throttle an Indian company that has genuinely adopted the mark and developed their products and was the first in the market using the mark. The Board observed that the Applicant had failed to adduce substantial proof to corroborate their claims of trans-border reputation. Hence, the issue 1 was answered in the negative, thereby rendering issue 2 as irrelevant to the present dispute.
2. Relying on several precedents laying down the relevant factors to be considered while deciding the issue of honest concurrent use, the Board concluded that there was no likelihood of confusion which could arise as a result of the resemblance of the mark of the Appellant with the impugned mark.

Reasoning:

1. The Appellate Board stated that trans-border reputation of a mark can be claimed in India only if the mark is well-known to a substantial segment of consumers in India.
2. Relying on various precedents that mandate furnishing of cogent evidence to show actual use of a mark in India to establish trans-border reputation in India, the Board noted that the Respondents had failed to submit persuasive evidence to establish the well-knownness of their mark.
3. Referring to the decision in Tata Sons Ltd. Manoj Dodia and Ors., MIPR 2011 (1) 341, the Board observed the various conditions to be satisfied for establishing well-knownness of a mark including: (i) the extent of knowledge of the mark to, and its recognition by the relevant public; (ii) the duration of the use of the mark; (iii) the extent of the products and services in relation to which the mark is being used; (iv) the method, frequency, extent and duration of advertising and promotion of the mark; (v) the geographical extent of the trading area in which the mark is used; (vi) the state of registration of the mark; (vii) the volume of business of the goods or services sold under that mark; (viii) the nature and extent of the use of same or similar mark by other parties; (ix) the extent to which the rights claimed in the mark have been successfully enforced, particularly before the Courts of law and the Trademark Registry and (x) actual or potential number of persons consuming goods or availing services being sold under that brand. It further observed that the controlling factor should be the reputation of the mark in the local jurisdiction, substantiated by evidence of long, extensive and continued use of the impugned mark.
4. The Board also stated that multinational companies that have no intention of introducing their product in India should not be allowed to throttle an Indian company preventing them from using their mark, a company that has genuinely adopted the mark and developed products and was the first in the market.
5. Noting that the Applicant had failed to prove any association or link between their mark and the impugned mark that may cause unfair advantage or detriment to the distinctive character or repute of the Applicant’s mark or create a likelihood of confusion between the two marks, the Board held that the Respondents’ adoption of the mark was not contrary to Section 12 of the Trade Marks Act, 1999.

In light of the aforementioned reasoning, the Court has passed an order in favour of the Respondents dismissing the Rectification Petition.

This decision of the IPAB provides a good example to explain the admissibility of evidence in a Trademark dispute. The Appellate Board, in its order, has explained in detail how the counsels of the Respondents had countered each and every piece of documentary evidence submitted by the Applicant. The order is indeed worth a read, particularly for law students interested in Trademark Litigation. The Order dated 16^th April, 2015 of the IPAB can be accessed at: http://www.ipabindia.in/pdfs/Order662015.pdf.

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