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[This guest post has been authored by Devangini Rai. Devangini is an intellectual property lawyer working as an Associate with ANM Global Inc.]
In a spicy twist of events, an order passed by HMJ Navin Chawla in the case of Capital Food Private Limited v. Radiant Indus Chem Pvt. Ltd. at the Delhi High Court regarding the usage of ‘Schezwan Chutney’ as a trademark was stayed by the Division Bench of HMJ Manmohan and HMJ Saurabh Banerjee. While the decision passed by HMJ Navin Chawla of the Delhi High Court found the usage of the trademark ‘Schezwan Chutney’ as prima facie descriptive of the quality and intended purpose of the goods. However, in an appeal preferred by the plaintiff against the order passed by Justice Chawla, the Division Bench passed a stay on the finding of ‘Schezwan Chutney’ to be descriptive. It was held that owing to the enormous sales and advertisement of products bearing the trademark ‘Schezwan Chutney’, the trademark had acquired secondary significance. While a previous post on the cases by Ishant Jain describes briefly the divided views of the Single Judge and Division Bench on this issue, I delve deep into the rulings and analyse as to why the ‘Schezwan Chutney’ could not possibly have any acquired meaning!
Facts and Arguments by the Parties
Capital Food Private Limited (Capital Food) filed an application seeking a temporary injunction restraining Radiant Indus Chem Pvt. Ltd. (Radiant Indus) to use their registered trademarks ‘Schezwan Chutney’ and ‘Szechuan Chutney’. Capital Food pleaded that it was a leading food company in India engaged in the production of a wide variety of condiments, spreads, dips etc and was the first in the market to coin ‘Schezwan Chutney’. Describing more about their trademark ‘Schezwan Chutney’, it was submitted that the trademark symbolised a combination of Indian and Chinese flavours which is now synonymous with the plaintiff across the world. Capital Food brought an action of trademark infringement and passing off against Radiant Indus’s trademark ‘Mrs. Foodrite Schezwan Chutney’. It was argued the trademark of the plaintiff ‘Schezwan Chutney’, had been adopted for an identical product and bore a similar artistic impression, trade dress and get-up as of the plaintiff’s trademark. On the contrary, the defendant primarily argued that the plaintiff cannot claim and exclusive right to the mark ‘Schezwan Chutney’ as it is devoid of any distinctive character and is descriptive of the kind, quality and geographic origin of the product sold. The defendant further contested the validity of the registration of the plaintiff’s trademark.
Relying on the principles laid down by McCarthy namely the Imaginative Test and Competitor’s need test, it was observed by the Single Judge that the plaintiff’s trademark is a descriptive term used in a bonafide manner by the defendant to describe the quality and kind of goods being sold by them. HMJ Chawla particularly noted that the plaintiff’s trademark is being used across the market by multiple manufacturers to market the food product in a generic sense. It was further observed that the plaintiff’s product can in fact be differentiated from the defendant’s product through the usage of the plaintiff’s trademark ‘Ching’s’ being used along with ‘Schezwan Chutney’ to sell the product.
Elaborating further on the validity of the trademark ‘Schezwan Chutney’, it was held that usage of two generic terms ‘Schezwan’ and ‘Chutney’ (the Hindi word for ‘dip/sauce’) and further emboldened by the fact that ‘Schezwan’ finds its origin from the Szechuan territory in China, make the plaintiff’s trademark completely descriptive. Therefore, usage of a descriptive term by the defendant does not disentitle it from selling its product under the said trademark. It was further observed that the quantum of sales figures is not enough to declare that the plaintiff’s trademark as a descriptive term has acquired secondary significance. While refusing the interim application for injunction, HMJ Chawla however allowed the relief (that had been previously granted on an ad-interim basis in the first hearing) to restrain the defendant from using a similar trade dress as that of the plaintiff in absolute terms till the time the suit is disposed off.
In a complete reversal of judicial findings, the order as passed when appealed by Capital Food was stayed by the Division Bench of the Delhi High Court to the extent that ‘Schezwan Chutney’ had been found to be descriptive. It was further observed that owing to the volume of sale figures and promotional costs of the appellant, the mark ‘Schezwan Chutney’ owned by the appellant has acquired secondary significance.
Generic words cannot be used as trademarks
One look at the word ‘Schezwan Chutney’ leaves little to the imagination of a prospective buyer as to what is the kind of product being sold. The plaintiff’s product is a spicy dip that has been shown to trace its name from the Sichuan/Szechuan territory in China. The Sichuan territory is known to be home to a spicy chilly-based condiment that has been widely adopted as a base ingredient in Chinese foods cooked in India. The word Schezwan or Szechuan, therefore, becomes a direct reference to the Chinese territory. Further, the word ‘Chutney’ is a common Hindi word to refer to dips, sauces, or condiments. As elucidated in the order, a number of manufacturers sell similar food products as the plaintiff by the name of ‘Schezwan Chutney’. An action of infringement of a descriptive trademark is most likely to succeed only in circumstances where the descriptive trademark is far from suggestive of the product in question. The validity of a trademark granted to a descriptive term such as the plaintiff’s trademark as a term describing the food product being sold is therefore questionable here. In the present case, the usage of ‘Schezwan Chutney’ by the defendant is protected by Section 30(2) of the Indian Trade Marks Act, 1999 under which a registered trademark cannot be said to be infringed when the same is being used to indicate the kind, quality, intended purpose, value, geographical origin or other characteristics of the good. Therefore, it is not valid to allow the plaintiff to assert rights on the words ‘Schezwan Chutney’ unless the words may have acquired secondary significance.
Question of acquired distinctiveness
There is a stark contrast between the acquired distinctiveness of ‘Schezwan Chutney’ by the Single Bench and Division Bench. It is particularly pronounced where the HMJ Chawla specifically held that sales figures cannot alone act as a yardstick to establish acquired distinctiveness of the plaintiff’s trademark whereas the Division bench held the opposite. While it may be likely that owing to substantial similarities between the artistic impressions, style, and getup of the plaintiff and defendant trademarks, a certain level of dishonesty is attributable to the defendant’s in the manner of usage of the words ‘Schezwan Chutney’, it cannot be said that the plaintiff can also enforce proprietary rights over the words as a whole. In holding that injunction is normally granted in infringement matters, ‘especially involving the facts of the aforesaid nature’, the Division Bench seems to have generalised the factual context leading to a dangerous precedent. It has pertinently found a prima facie finding on acquired distinctiveness, that too merely on the quantum of sale figures. The approach of the Division Bench while passing a stay on the Single Bench order appears to have accorded sales figures of the good significant decisiveness. However, the Division Bench order completely lacks the primary assessment of assessing the validity of a generic trademark, which in the present case is highly descriptive of the inherent nature of the good. The fact that a range of manufacturers sell a spicy dip by the name of Schezwan Chutney which indicates the very nature of the dip precludes any further assessment of delving into whether the Plaintiff’s product has substantial sales. Merely considering sales figures of the product without assessing whether a mark such as ‘Schezwan Chutney’ is capable of acting as a trademark brings the threshold of generic trademarks having acquired secondary significance substantially down.
In the Indian Supreme Court’s decision of JR Kapoor v. Micronix India, it was held that a descriptive trademark that is descriptive of the particular industry cannot be held to be inventive. The present case is comparable to a similar landmark Delhi High Court case of Cadila Healthcare ltd. v. Gujarat Co-operative Milk Marketing Federation Ltd. and Ors. wherein the Division Bench dealt with the question of the acquired distinctiveness of the trademark ‘Sugar Free’ for an artificial sweetener. It was held in Cadila Healthcare that ‘Sugar Free’ is so descriptive of the food product in question that it is inherently capable of being distinctive as a trademark. It was further held that a business enterprise always runs a risk while adopting a descriptive trademark that directly describes the product as other competitors in the market are entitled to use such a descriptive trademark to describe the kind and quality of their goods.
Another aspect where the Single Judge and the Division Bench differ is the question of whether sales figures can substantiate for a descriptive trademark to be distinctive. Despite the law being extremely clear that a descriptive term as a trademark should not be suggestive with respect to the product being sold to gain secondary significance, the Division Bench has held the sales figure and promotional costs as indicators for prima facie adjudicating the secondary meaning of the plaintiff’s trademark. Such a finding completely ignores the overarching legal principle with regards to descriptive words acting as a trademark only in cases where the words do not describe the inherent nature of type of good. The terms ‘Schezwan Chutney’ being words common to the trade of spicy condiments cannot be termed has having gained secondary meaning. The case of Marico Limited v. Agro Tech Foods Limited, a landmark case delivered by the Delhi High Court dealing with descriptive trademarks had held that only such descriptive marks which have been arbitrarily adopted with respect to the goods can be accorded the highest degree of protection.
Therefore, before stepping into the question of sales figures and promotional costs, the Division Bench ought to have assessed whether the descriptive mark as used by the plaintiff in the present case is such that it can be allowed to be monopolised by the Plaintiff or not. An assessment of a descriptive mark acting as a trademark having acquired secondary significance should be on a case-by-case basis with a major focus on whether the mark can be considered a trademark or not. Such a finding of the Division Bench in the present case can only be seen as jumping the gun in the principal controversy of deciding on the acquired distinctiveness of a descriptive trademark.