Delhi High Court Rules Indian Stag Liquor Deceptively Similar To Royal Stag, But No Passing Off Since Former Only Exported

Delhi High Court Rules Indian Stag Liquor Deceptively Similar To Royal Stag, But No Passing Off Since Former Only Exported

The Delhi High Court has upheld a 2019 interim order restraining two manufacturers/sellers from selling liquor and alcoholic beverages under the mark “Indian Stag” in a trademark infringement lawsuit filed by Indian whiskey brand “Royal Stag.”

Justice C. Hari Shankar confirmed the interim order passed by a coordinate bench on July 25, 2019, pending the disposal of the trademark infringement suit.

The Court also ruled that the defendant manufacturers (AB Sugars Limited and Ian Macleod India Private Limited) had not committed passing off, as they only export their products abroad and do not sell any bottles in India.

The Court ruled that there is a prima facie case of trademark infringement, as the defendants’ use of the INDIAN STAG mark for IMFL products is likely to confuse with the plaintiff’s ROYAL STAG mark. However, the Court found that there is no prima facie case of passing off, as the defendants do not sell their products in India.

The Court noted that the standard of proof for passing off is higher than the standard of proof for trademark infringement. The Court held that, given the visual differences between the product labels and the fact that the defendants’ product is exported only, any finding of passing off would require evidence that consumers in foreign markets are likely to mistake the defendants’ goods for the plaintiffs’ goods.

“Though mens rea need not be shown to exist for a plea of passing off to succeed, nonetheless, passing off is, classically, a tort of deceit. The character and complexion of passing off is not far removed from its normal etymological connotation. A defendant can be found guilty of passing off if the facts indicate that the defendant is passing off its goods, or services, as those of the plaintiff,” Justice Shankar said.

Justice Shankar also found that the mark “Indian Stag” is deceptively similar to the mark “Royal Stag” and that the defendant’s use of the stag device would make the confusion worse.

A stag is an animal, and while alcoholic beverages consumed in excess may evoke animalistic tendencies in the imbiber, the word STAG cannot be considered descriptive of alcoholic beverages in any way. Therefore, applying the reasoning of the aforementioned decisions, the marks INDIAN ROYAL STAG and INDIAN STAG must be considered deceptively similar, as they are both used for IMFL products, the Court observed.

Analysing judicial precedents on phonetic and visual similarity, the Court found that the defendant manufacturers’ use of the word “STAG” rendered their “INDIAN STAG” mark phonetically and structurally similar to the plaintiff’s “ROYAL STAG” mark.

Additionally, the Court held that the market is not crowded, with only two brands: ROYAL STAG and INDIAN STAG, both depicting a stag. Therefore, the possibility could not be ruled out that a typical consumer with average intelligence and imperfect memory would associate the two marks.

The defendant manufacturers argued that the plaintiff had acquiesced in their use of the INDIAN STAG mark by allowing them to sell their products in the same outlets as ROYAL STAG (both overseas and in the UAE) for several years without objection.

The Court found that the defendant manufacturers had not satisfied the conditions of Section 33 of the Trade Marks Act (which deals with the effect of acquiescence), and therefore their plea of acquiescence failed.

If a statute specifically provides for a particular exigency and its consequences, that provision will prevail. Therefore, only if the conditions of Section 33 are strictly satisfied can a defendant plead acquiescence as a defence to an injunction, even if infringement is found to exist. The burden of proving that the conditions of Section 33 are met rests with the defendant, the Court stated.

Justice Shankar ruled that a mark that is publici juris, meaning it belongs to the public and can be freely used by anyone, cannot be monopolised by a private individual. He held that the mark “STAG” was eligible for registration as a trademark and was not publici juris.

The concept of publici juris is circular. Only registration gives a trademark owner the right to monopolize the mark and sue those who use it, or something deceptively similar to it, without permission. Therefore, any mark that is not registered and not deceptively similar to a registered mark is publici juris, the Court said.

“The publici juris character is being attributed only to the latter “STAG” part of the plaintiff’s mark. In view of the fact that the defendants’ INDIAN STAG mark, as used for IMFL, is deceptively similar to the plaintiff’s ROYAL STAG mark, the issue of whether the latter STAG part of the plaintiff’s mark is, or is not, publici juris, ceases to be of relevance,” Justice Shankar said.

Citing the precedents set in Baker Hughes Ltd. v. Hiroo Khushalani and Ramdev Food Products (P) Ltd v. Arvindbhai Rambhai Patel, the Court similarly dismissed the defendants’ argument that the consumers of both the plaintiffs and their products were highly discerning, and thus, there was no probability of confusion.

Recognising that a stag is unrelated to alcoholic beverages, the Court concurred with the plaintiff’s claim of “idea infringement.”

Interpreting Sections 29(6)(c) and 56 of the Trade Marks Act together, the Court dismissed the defendants’ argument that their products were not sold in India. It held that one must examine the likelihood of confusion on the assumption that a consumer with average intelligence and imperfect memory could encounter the plaintiff’s and defendants’ marks in India, even if they did not do so.

The Court found that the stag devices of the two parties were not visually similar. However, the deceptively similar word marks (ROYAL STAG and INDIAN STAG) made the likelihood of confusion worse.

The defendants argued that the plaintiff had disclaimed part of its mark, namely “ROYAL.” The Court held that a disclaimed portion of a mark cannot be the basis for a claim of infringement. However, when examining for infringement, the marks should be considered as a whole.

The Court noted that the plaintiff was claiming deceptive similarity based on the word “STAG,” which was common to the competing marks and had not been disclaimed by the plaintiff. Therefore, the defendants’ argument about the plaintiff’s disclaimer was irrelevant.

The Court also agreed with the plaintiff that “STAG” was the dominant part of its mark. It cited the decision of the Delhi High Court in South India Beverages Pvt Ltd v. General Mills Marketing Inc., which held that it is permissible to give more or less weight to a particular part or element of a composite mark.

Notably, in South India Beverages, the Court was concerned with an infringement challenge brought by General Mills Marketing in respect of its registered trademark ‘HAAGEN DAZS’. South India Beverages was manufacturing like products under the name ‘D’DAAZ’. Reiterating the importance of analysing marks as wholes, the Court had held that the “anti-dissection rule” did not impose an absolute embargo upon the consideration of the constituent elements of a composite mark.

In the South India Beverages case, General Mills Marketing challenged South India Beverages’ use of the trademark “D’DAAZ” for similar products to its registered trademark “HAAGEN DAZS.” The Court reiterated that trademarks must be analysed as wholes and that the “anti-dissection rule” does not completely prohibit consideration of the individual elements of a composite mark.

Advocates Hemant Singh, Mamta Rani Jha, Waseem Shuaib Ahmed, Abhijeet Rastogi and Isha Arora represented the Plaintiff in the court while Defendants: Rajeshwari H. and Swapnil Gaur, appeared on behalf of Defendant No 2.