In common law, passing off is a tort used to enforce rights in unregistered trademarks. It’s a fair action. It is founded on the premise that no one can use deceptive means to destroy the company of a competitor. The rule of passing off was created to discourage unscrupulous individuals from profiting from an honest business’s credibility and goodwill.
This was time and again cleared in the recent case of Cutis Biotech vs Serum Institute of India Private Limited.
With brief introduction of the companies, Cutis Biotech is the sole proprietorship of Archana Kabra. The company deals in selling pharmaceutical products since the year 2013 in Nanded, Maharashtra. Serum Institute is a company incorporated under the Companies Act, 1956. It has started its business in the year 1966. This company deals with the manufacturing of vaccines & immune-biologicals. It has been supplying vaccines to various international organisations for the immunization programme worldwide.
The facts of the case are that Cutis Biotech had sought for an interim injunction in Commercial Court Pune, restraining Serum Institute using the Trademark “COVISHIELD” and maintain the accounts regarding the sale. This case was sought under passing off. At the Commercial Court, the application was rejected. The aggrieved party, Cutis Biotech further appealed to the Hight Court of Bombay.
The appeal was initially rejected on the grounds that, primarily both the companies do not have registration for the trademark “COVISHIELD”. Thus, Cutis Biotech has based suit through the Trademark provision under Section 27, under the act of passing off.
Going into the details, Cutis Biotech had filed an application for trademark registration on 29th Apr 2020 for the “COVISHIELD” under Class 5 for veterinary, Ayurvedic, allopathic, medicinal and pharmaceutical preparations and vitamins and dietary food supplements for humans and animals. And Serum Institute had filed an application on 6th Jun 2020 for vaccine under Class 5 for “COVISHIELD”. Serum Institute submitted that they coined the mark ‘Covishield’ in March 2020, itself. They produced an inter-office communication of 26 March 2020 to their purchase. Later on, 10th Dec 2020, the Ministry of Health & Family, Government of India COVID-19 vaccine procedure.
The Cutis Biotech then filed a trademark suit against Serum Institute at District Court to restrain the use of trademark “COVISHIELD” invoking the law of passing off. Cutis Biotech further made another application under the same trademark and same Class for vaccine for human use & others under the class right after Serum Institute filed for the vaccine. This move by Cutis Biotech questioned their bonafide intentions.
Upon the findings of the case at the District Court, it was held that, the grievance of Cutis Biotech would be termed as an allegation of passing off by Serum Institute.
The Court noted that the products of Cutis Biotech and Serum Institute were different. The trade channels of both companies were different and there was no evidence of confusion submitted by the plaintiff. It was noticed that the products produced by both companies were used for different purposes and their visual appearance also differed.
Custis Biotech failed to establish the case and qualify the Classical trinity test of passing off. The two main ingredients while granting an injunction in case of passing off includes establishing prima facie of the case and the balance of convenience should be in favour of the applicant/ plaintiff. The foundation of passing off action is the existence of goodwill. All of these criteria were not complied with by Cutis Biotech.
The court, in this case, did not find adequate details to establish a prima facie case. While the defendant company had the whole process and procedure document submitted as evidence to show the prior adoption, usage and had been in continuous use without a break of the trademark “COVISHIELD”. Serum Institute has coined the word and took substantial legal measures and medical licenses towards the development and manufacture of the vaccine.
While Cutis Biotech pleaded its case based on goodwill and prior use in the plaint and interim application. But eventually failed in itself to provide substantial evidence or material facts to support the same. The High Court of Bombay held that District Court was right in its observations. The District Court held that Cutis Biotech had earned no goodwill in a short time.
The possibilities of the likelihood of deception between the two marks were not considerable as the Cutis Biotech had not established prior use/goodwill being acquired by Serum Institute.
Key notes to be looked at here while placing the arguments contenting of the likelihood of deception is that vaccine “COVISHIELD” produced by Serum Institute is not available across the counter. The products are purchased by government agencies and made available only through selective medical authorities. The administration of the vaccine is made through an injection. Now the products manufactured by Cutis Biotech are rightly available at the stores outside through their products are related to medical usage. Also, not to forget, Serum Institute has been in the media for a long time since their production has begun. Therefore, this will certainly not confuse any common person with average intelligence and imperfect recollection.
Now touching on the point of Balance of convenience, Cutis Biotech claimed that within a span of 6 months its turnover was Rs. 16 lakhs and spent 1.2 lakh towards advertisement under the trademark “COVISHIELD”. Serum Institute has made a sale amounting to Rs. 37507 lakhs through the sale of “COVISHIELD” vaccine. It has spent over Rs 28 crore on the development, research and is expected to spend a huge amount further also. The balance of convenience was not in favour of Cutis Biotech. Granting an injunction against Serum Institute at this point in time would cause severe on its business.
The court also held that “A temporary injunction directing Serum Institute to discontinue the use of mark ‘COVISHIELD’ for its vaccine will cause confusion and disruption in the Vaccine administration programme of the State. In this case, thus, the grant of an injunction would have large scale ramifications traversing beyond the parties to the suit.”
Based on the evidence and the facts of the case, the High Court of Bombay rejected the plea to restrain Serum Institute of India from using “COVISHIELD” Trademark on the grounds that Serum Institute was the first to use the trademark, had built-up sufficient goodwill, and that dropping the name would cause confusion and chaos in the vaccination programme.
Beyond the facts and evidence of the case, the courts were also right in holding up the implication the grant of an injunction would cause. The situation brought about by the pandemic and the importance of the vaccine for the general public of this country and the countries relying on the vaccine produced by Serum Institute.
Author: Sneha V Kopparad