Dr Reddys Laboratories Limited v. Smart Laboratories Pvt Ltd

Introduction         

Recently, Dr Reddys Laboratories Limited (“Plaintiff”) instituted acase of trademark infringement and passing off against Smart Laboratories Pvt Ltd (“Defendant”). The Plaintiff claimed that the Defendant’s use of the mark AZIWAKE (“Impugned Mark”) for azithromycin formulations, was deceptively similar to its registered mark AZIWOK for the same product, and sought an interlocutory injunction to restrain the Defendant from using the Impugned Mark. The Plaintiff was successful in obtaining the injunction order from the Delhi High Court.

Facts Of The Case

• The Plaintiff is a leading pharmaceutical company and has been using the mark since 1994. The Plaintiff has been selling azithromycin under the name AZIWOK in various strengths and has achieved substantial sales and popularity of its product.
• The Defendant is another pharmaceutical company that applied for registration of the mark AZIWAKE on proposed to be used basis for the same product, i.e., azithromycin. The Defendant claimed that it coined and adopted the mark AZIWAKE independently and honestly, where AZI stands for azithromycin and WAKE stands for the ability of the formulation to awaken the human body’s ability to fight the growth of bacteria. The Defendant started using the mark AZIWAKE in the market since July 2022.
• The Plaintiff alleged that the mark AZIWAKE was deceptively similar to its registered mark AZIWOK and that it was likely to cause confusion and association among the consumers, especially in the context of pharmaceutical products.

Issues

The main issues involved in the case are:

• Whether the suit is maintainable without exhausting the remedy of pre-institution mediation under Section 12A of the Commercial Courts Act, 2015?
• Whether the marks AZIWOK and AZIWAKE are deceptively similar to each other and likely to cause confusion and association among the consumers?
• Whether the Plaintiff has established prior use and goodwill of its mark AZIWOK and whether the Defendant has adopted the mark AZIWAKE dishonestly or in bad faith?

Decision Of The Court

The Court decided the case in favour of the Plaintiff and granted the interlocutory injunction to restrain the Defendant from using the mark AZIWAKE. The Court gave the following reasons for its decision:

On the first issue, the Court held that the suit was maintainable without exhausting the remedy of pre-institution mediation, as the plaint contemplated urgent interim relief. The Court relied on the averments in the plaint and the application for interlocutory injunction, where the Plaintiff had stated that the Defendant’s use of the Impugned Mark was causing irreparable loss and injury to the Plaintiff’s reputation and goodwill, which could not be compensated in monetary terms. The Court found that the Plaintiff had not practised any deception or falsehood or cleverly worded the plaint to make it appear that urgent interim relief was needed, and that the plea for interim relief was genuine and bona fide.

On the second issue, the Court held that the marks AZIWOK and AZIWAKE were deceptively similar to each other and likely to cause confusion and association among the consumers. The Court applied the test of phonetic and visual similarity, as laid down in Amritdhara Pharmacy v. Satya Deo Gupta[1], and compared the marks as wholes. The Court observed that the marks had the same prefix AZI, which was not common to the trade, and the same length and structure. The Court also noted that the suffixes WOK and WAKE were phonetically similar, as they rhymed with each other and had the same vowel sound. The Court rejected the Defendant’s contention that the suffix WAKE was arbitrary and fanciful, and held that it was suggestive of the effect or quality of the product, as admitted by the Defendant itself. The Court held that a consumer of average intelligence and imperfect recollection, who had once come across the Plaintiff’s AZIWOK, and, at a later point of time, chanced upon the Defendant’s AZIWAKE, was bound to be placed in a state of wonderment as to whether he had seen the mark earlier, and that would suffice to constitute likelihood of confusion and association within the meaning of Section 29(2) of the Trade Marks Act, 1999.

On the third issue, the Court held that the Plaintiff had established prior use and goodwill of its mark AZIWOK and that the Defendant had adopted the mark AZIWAKE dishonestly or in bad faith. The Court relied on the evidence of use of the mark AZIWOK by the Plaintiff and its predecessor-in-interest, Wockhardt, since 1994. The Court rejected the Defendant’s contention that the Plaintiff had abandoned the mark AZIWOK by not renewing three label marks, and held that the Plaintiff had continued to use the word mark AZIWOK, which was valid and subsisting. The Court also rejected the Defendant’s contention that it had coined and adopted the mark AZIWAKE independently and honestly, and held that it was an afterthought and a lame excuse. The Court observed that the Defendant had applied for registration of the mark AZIWAKE on proposed to be used basis, and had not disclosed any prior use or date of first use of the mark. The Court also observed that the Defendant had not issued any notice or communication to the Plaintiff before adopting the mark AZIWAKE, and had not explained why it had chosen a mark so similar to the Plaintiff’s mark. The Court held that the Defendant’s adoption of the mark AZIWAKE was motivated by a desire to usurp the vast reputation and goodwill enjoyed by the Plaintiff’s mark AZIWOK, and that it amounted to dishonesty and bad faith.

Analysis

This judgment of the Court is a significant one because it protects the rights of the trade mark owners in the pharmaceutical industry, where confusion can be dangerous for the consumers. This judgement compares the marks as whole and applied a more relaxed standard of deceptive similarity, considering the factors such as the nature of the product, the class of consumers, the mode of purchase, and the likelihood of confusion and association. It upheld the validity and subsistence of the Plaintiff’s trade mark AZIWOK, which was registered in 1994 and assigned to the Plaintiff in 2020, along with the goodwill and reputation earned by the mark and found that the Defendant’s adoption of the mark AZIWAKE was dishonest and in bad faith, as it was motivated by a desire to usurp the Plaintiff’s goodwill and to confuse the consumers. The Court granted the interlocutory injunction to the Plaintiff, after weighing the balance of convenience and irreparable loss factors, and holds that the Plaintiff would suffer irreparable injury to its reputation and goodwill, which could not be compensated in monetary terms, if the Defendant was allowed to continue using the Impugned Mark.

[1] AIR 1963 SC 449