M/S Valesco Health Care (P) Ltd vs M/S Valice Healthcare (P) Ltd

**IN THE HIGH COURT OF KERALA AT ERNAKULAM** **THE HONOURABLE MR. JUSTICE A.HARIPRASAD** **WEDNESDAY, THE 8TH DAY OF AUGUST 2018 / 17TH SRAVANA, 1940 FAO.No. 130 of 2018** **AGAINST THE ORDER DATED 05.06.2018 IN IA 4216/2017 IN OS 28/2017 OF VI ADDITIONAL DISTRICT COURT, ERNAKULAM** **APPELLANTS/RESPONDENTS NO.1,3 AND 4 IN I.A.** - **1 M/S.VALICE HEALTHCARE (P) LTD** **HAVING REGISTERED OFFICE AT HOUSE NO.14/40A, NEAR SEBASTIAN'S KOCHUPALLY,NADAKKAVU.P.O,UDAYAMPEROOR, KOCHI-682305,AND FUNCTIONING AT MADATHIPARAMBIL BUILDING, KUREEKKAD,KOCHI-682305, REP.BY ITS DIRECTOR,MOHAMMED VAKAYIL PAZHAKKAT SAMIR.** - **2 PANNIPARAMBIL CHANDRAN REJIMON, DIRECTOR,M/S.VALICE HEALTHCARE(P)LTD, S/O CHANDRAN NARAYANAN,PANNIPARAMBIL HOUSE, UDAYANAPURAM,VAIKOM, KOTTAYAM-686143.** **3 MOHAMMED VAKAYIL PAZHAKKAT SAMIR, DIRECTOR,M/S VALICE HEALTHCARE(P)LTD, S/O.MOHAMMEDALI,KONHATH HOUSE,NEAR SRO ANDATHODE, THRISSUR-679564.** **BY ADVS.SRI.S.RENJITH** **SRI.K.R.PRATHISH** ## **RESPONDENTS/PETITIONER & RESPONDENTS NO.2 IN I.A.:** **1. M/S.VALESCO HEALTH CARE (P) LTD TMC 32/49F,MADATHIPARAMBIL BUILDINGS,THEKKUMBHAGOM, PUTHIYAKAVU,THRIPUNITHURA-682301. COCHIN,REPRESENTED BY ITS DIRECTOR.** **2. JINU SASIDHARAN, AGED 36,S/O BALAN SASIDHARAN,VEEDU HOUSE,KARUVELI ROAD, AYAMANAM,KOTTAYAM, PIN-686015.** **R1 BY ADVS. SRI.N.N.SUGUNAPALAN (SR.) SRI.R. SANJITH SMT.SINDHU KRISHNAH CS** **THIS FIRST APPEAL FROM ORDERS HAVING COME UP FOR ADMISSION ON 08-08-2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** ## **FAO.No. 130 of 2018** ## **APPENDIX** ## **APPELLANTS' ANNEXURES: N I L** ## **RESPONDENTS' ANNEXURES:** **R1(A) : COPY OF THE COMPANY DETAILS TAKEN FROM THE WEBSITE OF MINISTRY OF CORPORATE AFFAIRS BOTH OF THE OLD REGISTERED OFFICE AND NEW OFFICE** |**R1(B) :**|**COPY OF THE AFFIDAVIT SWORN BY THE 2ND RESPONDENT AS AVAILABLE IN**| |---|---| |**THE WEBSITE**|**OF THE MINISTRY OF CORPORATE AFFAIRS**| |**R1(C) :**|**COPY OF THE LICENSE ISSUED BY THE ASSISTANT DRUGS CONTROLLER DATED**| |**19.2.2018**|| |**R1(D) :**|**COPY OF THE FINAL REPORT IN CRIME NO.1783/17 DATED 07.11.2017**| |**R1(E) :**|**COPY OF THE CORPORATION LICENSE**| ## **//TRUE COPY//** ## **PA TO JUDGE** ## **A. HARIPRASAD, J. ------------------------------F.A.O.No.130 of 2018 ---------------------------------------------Dated this the 08[th] day of August, 2018** ## **JUDGMENT** Aggrieved by the order of temporary injunction passed by the IV Additional District Court, Ernakulam in I.A.No.4216 of 2017 in O.S.No.28 of 2017, the respondents 1, 3 and 4 have come up in appeal. 2. Heard the learned counsel for the appellants and the learned Senior Counsel appearing for the contesting respondent (petitioner in the application). 3. Facts in brief for disposal of the appeal are as follows: A petition has been filed under Section 135(2) of the Trademarks Act, 1999 (in short, the Act) read with Order 39 Rule 1 CPC. The relief sought for in the petition is a temporary injunction restraining the defendants (appellants and others), their agents, servants and distributors from offering any products or services or advertising or using in any manner the plaintiff's trademark or any other colourable imitation of the **2** ## **FAO 130/2018** plaintiff's existing trademark mentioned therein for the products and services provided by the defendants or for any other purpose. 4. Plaintiff is a company registered under the Companies Act. It is engaged in the business of marketing several pharmaceutical and medicinal preparations for human consumption. 1[st] defendant company is also a company engaged in the business of marketing medicines. Defendants 2 and 3 are the Directors of 1[st] defendant company. The plaintiff company was incorporated in the year 2015. The company has adopted the trade mark “VALESCO” along with a device to market its goods and services. The 1[st] defendant company was incorporated in the year 2016. At the time of incorporation, the defendant company adopted a deceptively similar mark “VALICE” along with a device to market its products. Plaintiff company was incorporated in 2015 with two Directors. Thereafter in 2016, two other Directors were also inducted into the company. All the Directors, except the 2[nd] defendant, were working abroad and the 2[nd] defendant was managing the affairs of the plaintiff company. Plaintiff company's products were well **3** ## **FAO 130/2018** received in the market and it had a steady growth. While so, the 2[nd] defendant incorporated another company by name M/s.Valice Healthcare (P) Ltd., with two other Directors, namely defendants 3 and 4. According to the plaintiff, defendants 3 and 4 were employees of the plaintiff company. It is the contention in the affidavit that apart from the trade name was deceptively copied by the 1[st] defendant, the trade names of 18 drugs distributed by the plaintiff were also adopted illegally by the 1[st] defendant. It is contended by the plaintiff company that it is the first user of the trade name and the product name. Therefore, plaintiff sought for an injunction on the ground of passing off and infringement. 5. Appellants filed a counter affidavit disputing the averments in the petition. According to the appellants, no company having name Valesco Healthcare (P) Ltd. is functioning in the address shown in the plaint. Moreover, at the time of filing the suit, no drug licence was available in the name to the plaintiff company. Other statutory licences were also not available to the plaintiff. Hence, the plaintiff has no right to file a temporary injunction application. 6. It is further contended that the plaintiff has not **4** ## **FAO 130/2018** produced any documents before the trial court to substantiate their rights in respect of 18 medicines mentioned in the plaint. Averments in the affidavit that label of the plaintiff company and the 1[st] respondent company are deceptively similar, is untrue. While the plaintiff formed a company, they contacted the 3[rd] respondent to set up and materialize a new pharmaceutical company by using his expertise. The 3[rd] respondent's rights were given to the 1[st] respondent company and they have applied for trade mark and the same is under process. Since the trade names do not belong to the plaintiff company, the plaintiff cannot claim any right of the same and hence, there is no infringement as alleged. No action for passing off could be initiated against the appellants. 7. The trial court raised the following points for determination: 1. Whether the petitioner has made out a primafacie case ? 2. Whether the balance of convenience is in favour of the petitioner ? 3. Whether irreparable injury or hardship will be caused to the petitioner, if the injunction is not **5** **FAO 130/2018** granted ? 4. Reliefs and costs ? 8. The materials placed on record for consideration are Exts.P1 to P17 and Exts.R1 to R4. 9. Learned counsel for the appellants contended that the trial court failed to find that there is no prima facie case for the plaintiff to seek an order of temporary injunction. It is also contended that balance of inconvenience is not in favour of the plaintiff because the defendants/appellants are doing business in pharmaceutical preparations and they have invested a huge money. By virtue of the injunction order, their business has been blocked, causing irreparable injury to them. It is the contention of the learned counsel for the appellants that the plaintiff has no trade mark registration in respect of the medicinal preparations. In reply to this argument, learned Senior Counsel for the respondent, relying on Ext.P7, contended that trade marks Germia, UDC-300, Neugest 200 SR and Hi-Wash are registered under the Act. It is the allegation of the respondent that the 2[nd] defendant, without obtaining any permission from the company **6** ## **FAO 130/2018** or without assent of the Board of Directors, applied on 6.2.2017 to withdraw the registration in respect of the above products. Against this application, the plaintiff has filed an objection, which is pending consideration of the Registrar of Trademarks. It is submitted by the learned Senior Counsel that in addition to the above, four more products are sought to be registered, namely PRANEC-MF, CALDEO, REDIFIX and ESORA -14 and the applications are pending. It is submitted by the learned counsel for the appellants that they have raised objection to the registration of the above medicines. 10. In support of the order, learned Senior Counsel raised two points mainly. Firstly, the respondent is entitled to get an order of injunction as they are the prior users of the trade mark VALESCO and the trade names for the medicines enlisted in the plaint. Second contention is that de hors registration of the trade marks by both the parties, an action for passing off can be sustained on establishment of prior use of the trade mark. 11. Learned counsel for the appellants, relying on Ext.R3, contended that the 2[nd] defendant, who was indisputably a part of the plaintiff company, entered into an agreement with the 3[rd] **7** ## **FAO 130/2018** defendant, accepting his expertise to design products, sales and marketing strategy, promotion and plans, market data, recruitment of sale representatives etc. This agreement was executed on 3.8.2015. It is the contention of the appellants that the product design and marketing were done as per Ext.R3 and the plaintiff has no right to challenge the rights of the 2[nd] appellant (3[rd] defendant). It is also contended that despite raising a specific contention in the counter affidavit by the appellants regarding the plaintiff's incompetency to claim any right over the products, no fresh affidavit was filed by the plaintiff rebutting the contentions raised in the counter affidavit. It is true that injunction petitions should be decided on affidavits and materials placed before the Court. 12. In answer to this contention, learned Senior Counsel contended that Ext.R3 is a document executed between defendants 2 and 3 without getting any authority from the Director Board of the company. No material is produced before the court below to show that the 2[nd] defendant was authorised to execute such a document. This document has to be viewed in the light of the fact that the plaintiff has a definite case that the **8** ## **FAO 130/2018** 2[nd] defendant was running the show, as other Directors of the company were working abroad. It is also interesting to note that Ext.P7 would show that the 2[nd] defendant himself applied for registration of trade mark of medicines on 20.5.2016 for and on behalf of the plaintiff company. It can be seen that the medicines named in Ext.P7 were in use from 2015 and 2016 onwards. Admittedly, the appellant company entered the fray only in 2017. It is therefore contended by the learned Senior Counsel, relying on **Neon Laboratories Ltd. v. Medical Technologies Ltd [2016 (2) SCC 672]** and **S.Syed Mohideen v. P.Sulochana Bai [2016 (2) SCC 683]** that even if the registration of trade mark was not in existence at a given point of time, prior user will have primacy over a registered mark holder. It is the contention of the plaintiff that without any authority and unlawfully the 2[nd] defendant has sought withdrawal from registration in respect of certain products marketed by the plaintiff. That matter is under challenge as well. 13. Chapter 4 of the Act deals with effect of registration. Section 27 says that no person shall be entitled to institute any **9** ## **FAO 130/2018** proceedings to prevent or to recover damages for the infringement of an unregistered trade mark. That Section has no application in this case because both the parties have registered their respective marks under the Act. Section 28 speaks about the rights conferred by registration. Section 29 is in respect of rights and remedies available in case of infringement of registered trade marks. Section 34 is an important provision, which is quoted hereunder, which saves the vested rights under the Act: Nothing in this Act shall entitle the proprietor or a registered user of registered trade mark to interfere with or restrain the use by any person of a trade mark identical with or nearly resembling it in relation to goods or services in relation to which that person or a predecessor in title of his has continuously used that trade mark from a date prior - (a) to the use of the first-mentioned trade mark in relation to those goods or services be the proprietor or a predecessor in title of his; or (b) to the date of registration of the firstmentioned trade mark in respect of those goods or services in the name of the proprietor of a predecessor in title of his, whichever is the earlier, and the Registrar shall not **10** ## **FAO 130/2018** refuse (on such use being proved) to register the second mentioned trade mark by reason only of the registration of the first-mentioned trade mark. ## 14. Interpreting Section 34, the Supreme Court in **Syed Mohideen's case (supra)** held as follows: Section 34 of the Trade Marks Act, 1999 provides that nothing in this Act shall entitle the registered proprietor or registered user to interfere with the rights of prior user. Conjoint reading of Sections 34, 27 and 28 would show that the rights of registration are subject to Section 34 which can be seen from the opening words of Section 28 of the Act which states “Subject to the other provisions of this Act, the registration of a trade mark shall, if valid, give to the registered proprietor....” and also the opening words of Section 34 which states “Nothing in this Act shall entitle the proprietor or a registered user of registered trade mark to interfere....:” Thus, the scheme of the Act is such where rights of prior user are recognised superior than that of the registration and even the registered proprietor cannot disturb/interfere with the rights of prior user. The overall effect of collective reading of the provisions of the Act is that the action for passing off which is premised on the rights of prior user **11** ## **FAO 130/2018** generating a goodwill shall be unaffected by any registration provided under the Act. Thus, plain reading of the 1999 Act gives clear indication that the rights of prior user are superior than that of registration and are unaffected by the registration rights under the Act. 15. In **Neon Laboratories's case (supra),** the same view has been adopted by the Supreme Court. It is therefore clear that a person having prior use has a right to take an action for passing off even against a trade mark, registered under the provisions of the Act. 16. After hearing the learned counsel on both sides, I am of the view that though the order passed by the court below may not be containing the various legal aspects involved in this case, the ultimate conclusion arrived at by the court below cannot be faulted. However, the contention raised by the appellants that they are suffering everyday untold miseries and huge loss should be tried to be remedied by expediting trial of the case. I find no reason to interfere with the order passed by the court below granting a temporary injunction in favour of the **12** ## **FAO 130/2018** plaintiff/respondent. Therefore, the temporary injunction order passed by the court below is confirmed. However, it is made clear that the contention raised by the plaintiff that 'VALICE' is an imitation, which is deceptively similar to 'VALESCO', is a matter to be considered by the court below at the time of trial. Since that is not an issue to be decided in this proceedings, no opinion is passed by this Court on that aspect. The court below is directed to try and dispose of the suit on merits within a period of six weeks from the date of receipt of a copy of this judgment. All pending interlocutory applications will stand dismissed. Sd/- **A. HARIPRASAD JUDGE** JV