• PAGE ONE
• INDEX
• HOME

Unfair trade practice: SC lays down guidelines

Our Legal Correspondent

NEW DELHI, May 6

IN an appeal in the case of Cadila Healthcare Ltd vs. Cadila Pharmaceuticals Ltd, the Supreme Court has laid down various guidelines for the courts dealing with the cases of goods being passed on deceptively by a new entrant in the market, encashing on t he goodwill of another company.

The guidelines, as issued by Mr Justice B.N. Kirpal, Mr Justice Doraiswamy Raju, and Mr Justice Brijesh Kumar are:

*That the action of passing off of one's goods as the goods of others is a kind of unfair trade practice.

*That action can be taken under the common law for causing deception by attempting to gain economic benefit out of the reputation established by the other party by adopting similar name and overall similarity in features with a view to misrepresenting th e product.

*The nature of marks on the goods is to be considered -- whether the marks are words or label marks or composite marks, i.e., both words and label works are similar or not.

*The degree of resemblance between the marks, phonetic similarity and similarity of idea.

*The nature of the goods in respect of which they are used as trade marks.

*The similarity in the nature, character and performance of the goods of the rival traders.

*The class of purchasers who are likely to buy the goods bearing the trade mark depending on their education and intelligence and a degree of care they are likely to exercise in purchasing and using the goods.

*The mode of purchasing the goods or placing orders for the goods.

*And, any other surrounding circumstances which may be relevant.

The court has said that weightage should be given to each of the aforesaid factors depending on the facts of each case.

Coming close on the heels of the Supreme Court judgment, the Monopolies and Restrictive Trade Practices Commission (MRTPC) in the case of Vicco Laboratories vs. Ekcco Herbs (India), examined the matter of passing off to determine whether such practices w ould fall within the ambit of unfair trade practices or not.

The facts of the case were that an application for interim relief under Section 12-A of the MRTPC Act, 1969 had been filed in addition to the main petition for injuncting the respondent from manufacturing and selling its product -- Primo Vajradanti and a lso using the same colour, size shape and printing of bottles and also the trade name `Primo Vajradanti', the trade name `Vajradanti' being that of the appellant.

The argument of the advocate, Mr S.K. Sharma, appearing for the appellant-complainant, was that the respondent had adopted an ``unfair method'' and a ``deceptive trade practice'' within the meaning of Section 36A (1) (i) and (iv) of the Act and had used similar characteristics, style and model in packaging and marketing its goods, Primo Vajradanti as that of the appellant and was causing irreparable damage to the goodwill and reputation of the appellant in addition to eroding its market share.

Mr Sharma also submitted that the applicant-complainant had received complaints from its stockists that due to the similarity in the packaging, colour and size of the respondent's product, retailers and consumers were being deceived.

The MRTP Commission passed an injunction order in favour of Vicco Laboratories on the basis of the ruling of the apex court in the case of Lakhanpal National Ltd vs. MRTPC (1989).

It was held by the MRTP Commission that the real test of an unfair or deceptive trade practice was whether the trade practice had the effect of misleading and deceiving innocent and gullible consumers.

It said that the trade practice, in the present case, misled the consumer into making a wrong choice while buying the product, resulting in damage to the goodwill of the complainant company.

The MRTP Commission injuncted the respondent from using the same size, shape, colour and printing on the container of its product.