Case summary: Indo French Laboratories Ltd. and Ors v. Kausikh Therapeutics (P) Ltd. and Ors

Indo French Laboratories Ltd. and Ors v. Kausikh Therapeutics (P) Ltd. and Ors

In the High Court of Madras

decided on: 20.11.2020

Click here for Judgement
Facts:

The Indo French Laboratories Ltd. (Plaintiff/ Respondent) filed a suit against Kausikh Therapeutics (P) Ltd. (Respondent/Appellant) seeking a permanent injunction for infringing the plaintiff’s registered trademark REJUCALCIUM by using an identical trademark or mark deceptively similar to the registered trademark; and for passing off their products.

Plaintiff, being engaged in the manufacture of pharmaceutical products, has adopted and registered the trademark REJUCALCIUM in 1941 which is still valid and subsisting. In 2004, owing to certain differences between the directors, a demerger scheme was sanctioned by this very Court. That scheme led to the transfer of the business undertakings between M/s. Indo French Laboratories Ltd. (Plaintiff) and M/s. Indo French Network Ltd. (predecessor of the fifth defendant).

The business undertaking was segregated between division one and division two hence subdividing the mark REJUCALCIUM into four categories. Division one that vest with the plaintiff granted them the right to manufacture, produce, and selling of REJUCALCIUM liquid and REJUCALCIUM FH, whereas Division two vested with the fifth defendant have been granted the right to manufacture, production and selling of REJUCALCIUM tablets and REJUCALCIUM Fort.

The further clauses related to income and profits states that irrespective of the fact that the sole right regarding the use of REJUCALCIUM tablets vest with the predecessor of the fifth defendant, the plaintiff was granted the right to manufacture and export REJUCALCIUM tablets to Sri Lanka alone. But it cast an obligation on the plaintiffs to share 50% of the profits earned from such export with the predecessor of the fifth defendant. Furthermore, if in case the predecessor of the fifth defendant exports the REJUCALCIUM tablets to any other country they don’t carry the obligation to share the profit from such export to the plaintiffs. Plaintiff claims that the first to fourth defendants have, firstly, no right to manufacture REJUCALCIUM tablets and secondly, no right to export REJUCALCIUM tablets to Sri Lanka as the right of such exportation lies exclusively with the plaintiffs under the demerger scheme.

The plaintiff had not impleaded the fifth defendant who themselves filed an application seeking to implead themselves as a party and joined the as a party as per the direction of the Court. The defendants have stated that firstly, they are marketing and exporting REJUCALCIUM tablets on the behalf of the fifth defendant, and secondly, they are not claiming any Trademark right over the said brand name REJUCALCIUM. The defendant then filed an appeal before this Hon’ble Court to reject the plaint under Order VII Rule 11 (a) of the Code of Civil Procedure.

Issues:

The main issue before this Court was to decide whether there exists no cause of action to maintain the plant as claimed by the defendants and hence the plaint is suitable to be rejected on that ground.

Contentions:

The plaintiffs stating that they are the owner of the mark REJUCALCIUM since 1941 and have obtained substantial goodwill and reputation. Additionally, the mark has gained secondary meaning and has become associated only with the plaintiff. They were granted the exclusive rights to export both tablets and liquid formulations of REJUCALCIUM to Sri Lanka where they have established their reputation and Goodwill as well. In May 2020, they came to know that M/s. Kausikh Therapeutics (P) Ltd.( first defendant) has been manufacturing and exporting calcium supplements with the mark REJUCALCIUM on a commercial scale to Sri Lanka. They allege the following:

  1. The first defendant had fraudulently obtained a license from the National Medicines Authority in Sri Lanka claiming to be manufacturers of REJUCALCIUM tablets.
  2. The usage of the mark REJUCALCIUM by the first defendant is dishonest and they have copied the mark in its entirety.
  • The defendants have adopted the identical mark only to cause confusion and to encroach on the goodwill and reputation of the plaintiff.
  1. The defendant’s intention behind adopting the mark REJUCALCIUM was to pass off their goods as and for the plaintiff.

The defendants contented the following:

  1. They have been manufacturing REJUCALCIUM tablets for and on behalf of the fifth defendant and they do not possess any right or claim over the trademark REJUCALCIUM since they are only contract manufacturers.
  2. The demerger agreement has granted the fifth defendant absolute ownership of the REJUCALCIUM tablets and their connected rights including intellectual property rights.
  • The plaintiffs have given up their right to manufacture and export REJUCALCIUM tablets to Sri Lanka.
  1. The fifth defendant was the proprietor of the trademark REJUCALCIUM and the plaintiff was only permitted to non-exclusively manufacture and export REJUCALCIUM tablets to Sri Lanka.
  2. The plaint does not disclose any cause of action against the first to the fourth defendant and hence stands bad in law and was liable to be rejected.
Holding and Reasoning:

The Court discussed the criteria of rejection of the plaint under Order VII rule 11(a) of CPC and whether such criterion is applicable in the present case. Through the reference of various judicial pronouncements, it held that plaint has to be read in conjunction with the documents to determine whether the plaintiff has a cause of action and the suit against the defendants can be maintained. It referred to the clauses of the demerger agreement to infer the following:

  1. Brand name REJUCALCIUM was common for the divisions and eventually, both plaintiff and the fifth defendants were the common proprietors of the mark.
  2. The plaintiff was granted the rights to manufacture REJUCALCIUM liquid and REJUCALCIUM suspension preparation whereas the predecessor of the fifth defendant was granted the rights to manufacture REJUCALCIUM tablets and REJUCALCIUM capsules.
  • The right granted to the predecessor of the fifth defendant had subsequently flowed to the fifth defendant.
  1. The arrangement has given the exclusive rights to the plaintiffs to manufacture REJUCALCIUM tablets and export them to Sri Lanka.
  2. The Plaintiff will have a cause of action if the fifth defendant were to itself or through any of its agents export REJUCALCIUM tablets to Sri Lanka.
  3. Such cause of action will not arise owing to the registration of the Trademark REJUCALCIUM but owing to the violation of a clause of the demerger agreement that granted exclusive rights to the Plaintiff to export REJUCALCIUM tablets in Sri Lanka.
  • In such a case of violation, they are supposed to approach the Company Court to complain about such violation and prima facie an action cannot be based on the registration of the Trademark REJUCALCIUM.

Henceforth, the Court declared that since the first to fourth defendant have clarified that they are not claiming any trademark and are manufacturing and exporting REJUCALCIUM tablets on behalf of the fifth defendant, so they have not joined in issue against the plaintiff assertion regarding trademark REJUCALCIUM. Therefore there exists no cause of action for instituting a suit based on trademark REJUCALCIUM. The only issue that exists is concerning the export of REJUCALCIUM tablets to Sri Lanka by the fifth defendant through its agent, i.e. first to fourth defendants. For that, the plaintiff has approached the Company seeking redressal of their grievance regarding violation of the terms of the demerger agreement. The application seeking rejection of the plaint is allowed.

Rule of Law:

Multiplicity of proceedings in two different courts cannot be encouraged. Further proceedings would only be superfluous since plaintiffs have approached the company Court seeking appropriate reliefs.

Conclusion:

The actual cause of action in the present suit is not the infringement of the trademark REJUCALCIUM but an alleged violation of the order set forth as a demerger agreement whereby the plaintiff was granted a right to export REJUCALCIUM tablets to Sri Lanka. They now complain that the defendants herein are exporting tablets to Sri Lanka. The plaintiff has filed the necessary application seeking necessary relief before the Company Court. The plaintiff cannot be permitted to reagitate or raise the same issue before two separate forums. There is no issue with the registration of the Trademark. In a way, the plaintiff themselves have abandoned this suit by filing Company Applications subsequent to the institution of this suit.

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