Neon Laboratories Ltd. v. Medical Technologies Ltd. & Ors.

Relevant Acts and provisions

Trade Marks Act, 1999

Section 34Section 47

Provisions considered: Sections 34 and 47 of the Trade Marks Act, 1999, on saving of prior-user rights and non-use.

Brief facts

The respondents' predecessor coined and used a mark for an anaesthetic drug from 1998, applying for registration that year, and the respondent succeeded to the mark on amalgamation in 2000. The appellant had applied to register a deceptively similar mark in 1992 for the same generic drug but did not commence actual use until 2004, after the respondents had built market goodwill. The respondents sued for passing off and obtained an injunction from the trial court, upheld by the Gujarat High Court. The appellant appealed, relying on its earlier registration application date.

Issues before the Court

1. Does an application for registration filed years before actual use confer priority over a mark actually used earlier by another trader?
2. Does Section 34 protect a prior continuous user even against a rival with an earlier application date?

Court's findings

The Court held that Section 34 of the Trade Marks Act, 1999 embodies the first user rule, entitling a person who has continuously used a mark from a date prior to its registration by another to continue that use notwithstanding the registration.

The Court observed that although the appellant had applied for registration six years before the respondents began using their mark, the appellant remained inactive in the market for twelve years and commenced actual use only in 2004, after the respondents had built substantial goodwill. It noted that a mere application for registration does not freeze rights indefinitely, and that prolonged non-use coupled with acquiescence in open market use could indicate abandonment.

Relying on earlier authority, the Court reaffirmed that the first-in-the-market test enjoys pre-eminence, and found a strong prima facie case, balance of convenience and irreparable harm in the respondents' favour.

Decision

Appeal dismissed; the interim injunction restraining the appellant from using its mark, granted below, was upheld.

Cases cited

• Milmet Oftho Industries v. Allergan Inc., (2004) 12 SCC 624

Authorities referred to in the decision. Please verify each citation in the judgment itself.

Keywords

Deceptive Similarity Non-use Passing Off Prior User Trademark Registration