[This post is authored by our former blogger Rahul Bajaj. Rahul is an attorney at Ira Law.]
On 24th February, Justice Navin Chawla of the Delhi High Court passed an interesting judgment that discusses the parameters for a trademark to be considered descriptive/laudatory and the evidence needed to establish the same. At issue in LT OVERSEAS NORTH AMERICA INC & ANR. V. KRBL LIMITED was alleged infringement and passing off of the plaintiff’s trademark registrations for marks that include the word ‘Royal’, by the defendant’s mark ‘Zabreen Royal’ (‘Impugned Mark’). In what follows, I will set out the key arguments of the parties and the holding of the court, along with my analysis of the judgment.
Key arguments of the plaintiff:
The plaintiffs, LT Overseas North America Inc and Anr., are in the business of processing, marketing and exporting rice and were aggrieved by the adoption of the Impugned Mark “Zabreen Royal” by the defendants for the manufacture, sale and distribution of its Basmati rice. They asserted that the first plaintiff owns a number of registrations for the trademark ‘Royal’ and associated marks and by dint of prior adoption, long and continuous use, marketing network, enormous global sales and painstaking quality control maintained by the plaintiffs, their marks have acquired formidable goodwill and reputation.
In April 2022, the first plaintiff learned of the use of the Impugned Mark through its sales team. Efforts at amicable settlement failed. The plaintiffs asserted that use of the Impugned Mark would cause them irreparable harm and injury.
Key arguments of the defendant:
First, the defendant argued that, in their reply to the examination reports at the time of registration of their marks, the plaintiffs had indicated that they were seeking protection for the word ‘Royal’ in a label/logo/device format. Therefore, the plaintiffs were estopped from seeking to restrain the use of the word Royal per se. Further, as per Section 17 of the Trademarks Act, the protection granted is to the mark as a whole and not to its individual parts. The defendant also argued that the plaintiff does not enjoy any registration over the word mark “Royal”.
The second, and perhaps the central argument of the defendant was that it is using the word ‘Royal’ in a laudatory/descriptive sense along with the mark “ZABREEN’ in order to describe the royal quality of the rice having extra-long grain and royal taste. Thus, the Impugned Mark was unlikely to cause confusion.
The Court commenced its analysis by dealing with the issue as to whether the word ‘Royal’ is a descriptive mark. It set out the 2 key tests formulated by McCarthy to determine if a trademark is descriptive or suggestive: [a] whether connecting the mark with the product or service in question requires imagination; and [b] whether the mark is one that competitors need to use to describe their offering [paras 36 and 37].
Applying these tests to the case at hand, the Court held that the word ‘Royal’ is not a descriptive term with reference to its use for Rice. This is because connecting the term ‘Royal’ with rice requires a high degree of imagination and reasoning process, thereby not meeting the first test [para 39]. Further, Royal is not a natural attribute or synonym for rice, and so competitors do not have to use the word ‘Royal’ to refer to rice [para 40].
The Court analysed all the cases cited by the defendant on descriptive terms and held that neither of them was applicable to the case at hand. This is because, in those cases: or [a] the term in question was not an essential or prominent component of the mark; or [b] the term was not registered as a trademark. Neither of these conditions were found to exist in the instant case [paras 43-47].
The defendant’s argument as to the term ‘Royal’ being common to the trade was rejected on the basis that this factual determination would have to be made at trial [para 52].
Eliding the distinction between descriptive and laudatory marks:
While the court found that the term ‘Royal’ was not descriptive, it was found to be laudatory in its use by the defendant [para 47]. The Court further noted: “Though it has been held hereinabove that the word „ROYAL‟ is not descriptive of the product-rice, at the same time it cannot be disputed that it is a laudatory word” [para 64].
Prima facie, it is difficult to understand how a term may not be descriptive but laudatory. That is especially so, as the Court does not provide a principled basis for the distinction between descriptive and laudatory marks. To explicate, the word royal was used here to indicate the positive attributes of the rice sold by the defendant [its kind and quality]. Those very attributes describe the rice in question also. So the Court could have either found that the word Royal was both descriptive and laudatory or that it was neither. If it was the former, the plaintiff would not have been entitled to claim any rights over the word Royal. If it was the latter, the defendant would not have been able to seek advantage from its laudatory use and should have been found liable for using the word Royal.
What is further interesting is the Court’s consideration of the defence that the use of the word ‘Royal’ would be covered by S. 30(2)(a) and 35 of the Trademarks Act. These provisions shield from liability the use of a mark to indicate the kind or quality of the goods in a bona fide manner. Conceptually, my understanding of a descriptive mark is a mark that is used to indicate the kind or quality of the goods. I am not sure how, after finding that the term ‘Royal’ was not descriptive, the Court could have held this defence to be applicable, given that the enquiry to be conducted apropos a finding of descriptiveness and the application of S. 30(2)(a) and S. 35, prima facie, seem very similar. At any rate, the Court did not return a finding on this defence but only noted the defendant’s arguments at paras 62 and 63.
The judgment, therefore, would have benefited from greater conceptual clarity on 2 aspects:
The difference between descriptive and laudatory use; and
The difference between the enquiry as to descriptive use and the enquiry as to the applicability of the defences set out in S. 30(2)(a) and S. 35, TMA.
Reverting to the judgment, the defendant offered a proposed packaging to assuage the concerns of the court and the plaintiff. The Court held that the proposed packaging used the word ‘Zabreen’ prominently which would be sufficient to shield the defendant from liability. However, the packaging currently adopted by the defendant foregrounds the term ‘Royal’ and was therefore found prima facie to cause dilution and liable to be injuncted during the pendency of the suit [paras 74-75]. That said, the Court held that, were the defendant to change its packaging, its use of ‘Royal Zabreen’ would be permissible [para 76].
In sum, the judgment offers a helpful analytical framework to evaluate descriptive use. However, the lack of clarity in distinguishing between descriptive and laudatory use and between descriptive use and the defences at issue is a cause of concern.