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Prior User over a Registered Trademark


By: Nidhi Tandon

Several Companies have the tendency to file for a trademark, wait for its registration and then start using the same. Some just register the trademark for future, without using the same thereby blocking others from filing or using same or similar mark. However, as per the recent decision of the Supreme Court in Neon Laboratories v/s Medical Technologies Ltd., a company cannot claim right to a trademark even after registration if it does not use it for a long time.

Neon Laboratories and Medical Technologies Ltd., both being in the business of manufacturing and marketing pharmaceuticals, were in a dispute over the trademark of similar sounding brand names, ROFOL and PROFOL. Medical Technologies Ltd. had coined and started using the name ‘PROFOL’ in 1998 having a prior user date. Neon Laboratories filed an application for registration of the trademark ‘ROFOL’ in 1992. While registration was granted to it in 2001, it commenced use of the same only in 2004. On becoming aware of the trademark ‘ROFOL’, Medical Technologies Ltd. filed a suit against Neon Laboratories for injunction, damages and account of profits claiming that the mark ‘ROFOL’ of Neon Laboratories was identical and deceptively similar to their mark “PROFOL”. Neon Laboratories argued that it is the prior adopter of the mark ROFOL since it applied for registration of the same in 1992 and obtained registration in 2001. The City Civil Court passed an injunction in favour of Medical Technologies Ltd. stating that being a prior user, Medical Technologies Ltd. had prior common law rights in the mark PROFOL, thereby restraining Neon Laboratories from using the mark ROFOL. Aggrieved by this order, Neon Laboratories appealed before the High Court of Gujarat, which was dismissed. Therefore, Neon Laboratories approached the Supreme Court.

The Supreme Court held in favour of Medical Technologies Ltd. thereby affirming the decision of the City Civil Court and the Gujarat High Court in restraining Neon Laboratories from using the mark ROFOL on the basis of its similarity to Medical Technologies Ltd’s mark PROFOL, on the basis of the following:

  1. Neon Laboratories did not use the mark for twelve years after making the application in 1992. In this regard, the Supreme Court relied on Section 47 (1) (b) of the Indian Trade Marks Act, 1999 and stated that Neon had not used the mark ROFOL for over five years after a registration application was made.

  2. Section 34 – Under this section, the proprietor of registered trademark or a registered user (in this case being Neon Laboratories) cannot interfere with the use of any identical or similar mark if the person (in this case being Medical Technologies) has been using the mark from an earlier date.

  3. Since Neon Laboratories had not used the mark for 12 years and only commenced its use in 2004, the balance of convenience was in favour of Medical Technologies since it had built up goodwill and reputation in the market for its trademark PROFOL.

The Supreme Court upheld the injunction ignoring the fact that Neon laboratories was the registered proprietor of the trademark and had applied for registration six years prior to use by Medical Technologies. The Supreme Court dismissed the appeal by giving credence to the ‘first in the market’ test stating that Neon Laboratories had registered the name in 1992 but started marketing the brand only in 2004, much after Medical Technologies Ltd. launched its product in the market. In effect, the Supreme Court held that a prior application for registration of a mark is of no assistance if the use of that mark is commenced after twelve years that too after the rival’s use of their mark (in this case, Medical Technologies).

With this decision, the Companies who wait for their mark to get registered will have to change their brand launch strategies. However, the Supreme Court has erroneously interpreted section 47(1) (b) of the Act. As per section 47(1) (b), a trademark that is not used within five years of its registration becomes liable for removal either completely or in respect of those goods or services for which the mark has not been used. The five year period will start from the date on which the trademark is actually entered on the Register of Trademarks, i.e., when the mark gets registered. In this case, Neon Laboratories’ trademark got registered in 2001 and they commenced use in 2004, the five year period had not elapsed to make the mark vulnerable for non-use proceedings under Section 47 (1) (b) of the Act. Therefore, the interpretation of the Section 47 (1) (b) appears to be erroneous.

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