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HC hold adoption of mark ZEN by ASUS TECHNOLOGY was in bad faith, holds Section 17(2) of TM Act cannot be used as a license to commit an act of passing off

Telecare Network India Private Limited vs. Asus Technology Private Limited

In this present case, Telecare Network India Private Limited (Plaintiff) has filed for infringement, permanent and mandatory injunction, passing off, delivery up and damages.

Plaintiff has stated that he is registered proprietor of the marks ZEN and ZENMOBILE under class 9, 21 and 36 of the Trade Marks Act, 1999. Furthermore, he is using these marks continuously and extensively for feature phones, smart phones tablets and accessories since 2008. He further contends that Asus Technology Private Limited (Defendant) has adopted an identical trade mark ZENFONE to that of the plaintiff’s mark ZEN and ZENMOBILE for selling mobile phones.

It is also contended by the Plaintiff that the price range of his products is approximately from INR 900 to INR 12,000 whereas Defendants’ products began from INR 2,000. Hence, Defendants had launched their products within a similar price range and to target the same customer base and hence likelihood of confusion in the mind of public shall remain.

Defendant argued that Mr. Jonney Shih was a staunch believer of “Zen Philosophy” and hence using the Zen Design on its gadgets outer surfaces since a long time. Furthermore, he has also launched Ultra thin laptops named as ZENBOOK to reflect its belief in Zen Philosophy. Success of ZENBOOK led to the launch of ASUS Zenpad tablets, ASUS ZenUI, Asis ZenAiO, Asus Zenear, Asus ZenPower and Asus ZenFlash.

Defendant further contends that it has already filed an application for cancellation of the Plaintiff’s registered trademark under Application no. 733503 in class 9 under the Trade Marks Act, 1999 before the IPAB, New Delhi and the same is pending adjudication.

It is also argued that Plaintiff had deliberately and mala fidely made an incorrect statement that it had applied for registration of the mark ZEN under application number 2943137 and 3052532 as records of Trade Marks Registry reflects that these are not word marks but device/label marks. Hence, as per Section 17(2) of the Trade Marks Act, 1999 Plaintiff was disentitled from claiming exclusivity/monopoly over a part of the label/device.

Further it was argued by Defendant that ZEN was common to trade and generic in nature and there were various third-party manufacturers who had got the mark ZEN registered. Moreover, Plaintiff in its response to the examination report for Application No. 1733503 had admitted that ZEN was generic in nature and no one party could claim exclusivity over the same. It is also argued that Plaintiff had not acquired any secondary significance.

In the Rejoinder filed by the Plaintiff stated that the Application No. 2943137 was for Device mark but contained only word ZEN. Further, it was argued that none of the third party companies named by the Defendants are actually using the mark ZEN with respect to mobile phones.

HC is of the view that it is necessary to first appreciate that the rationale behind grant of recognition and protection of trademarks and trade names is to ensure that people don’t get confused about the source of goods and services. To put it tersely, a trademarkis a source identifier. Thereafter, HC referred to Mattel, Inc. & Ors. vs. Mr. Jayant Agarwala & Ors., 2008 SCC OnLine Del 105 wherein it was held that,

“ The objective to trademark law is to prevent an injury to the goodwill and reputation of the enterprise which owns the trademark as well as ensuring as well as ensuring that consumers are not misled as to the product, services or their sources. Mark helps the buyers to identify their sources, and assure them of the constancy of quality from a particular producer. The essence of a trademark has always been that it is “A BADGE OF ORIGIN”. It indicates trade source: a connection in the course of trade between the goods and the proprietor of the mark. Trademark are thus, a valuable medium of advertisement, vital for marketing of products. If the consumers understands the trademark in the contest of its source, the manufacturer is inseparably associated with it. The drawback here could be that trademark are misused if they serve to limit competition in the manufacture and sale of a product.

Accordingly, in reference to the present case, HC holds that there are various types of trademark ‘generic marks’ are those which refer to the genus to which particular product or service is a species. Though ZEN is a generic word qua a school of Buddhism, yet it is not a generic mark with regard to mobile phones.

Thereafter, HC highlighted about the various types of trademark and mention four categories of trademarks i.e. (1) generic, (2) descriptive, (3) suggestive, and (4) arbitrary or fanciful which were set out in Abercrombie & Fitch Co. vs. Hunting World, Inc., 537F.2d4, 9 (2nd Cir. 1976). Further, HC defines the term  “generic”’ refers to the “genus” to which a particular product or service is a species of and “descriptive” refers to a word/mark which describes an article/service, its qualities, ingredients or characteristics. However, often the lines differentiating different categories of marks are blurred. Often, distinctions between suggestive, fanciful and arbitrary marks may seem artificial.

HC further highlights that,

“In common law, neither the generic nor merely descriptive terms are valid trademarks and the exclusive use of such terms is not entitled to legal protection. However, protection is awarded to descriptive marks which have acquired secondary significance.

The category of suggestive marks refers to those marks which are neither exactly descriptive on the one hand, nor truly fanciful on the other. A term is suggestive if it requires imagination, thought and perception to reach a conclusion as to the nature of the goods. If a term is suggestive, it is entitled to registration without proof of secondary meaning.”

In addition, HC defines term “fanciful” refers to a mark which is an invented word solely for use as trademarks. When a common word is applied in an unfamiliar way, it is called an “arbitrary‟ mark. Fanciful and arbitrary terms enjoy all rights accorded to suggestive marks and are also entitled to registration without proof of secondary meanings. Hence, HC hold that word may be generic qua a specific business or trade or industry but not across the board for all business or trades or industries.

Further in reference to the present case, HC referred to the Evergreen Sweet House vs. Ever Green 2008 (38) PTC 325 (Del) (paragraph  14) wherein it was held that “Evergreen” in its application to sweets and confections is an arbitrary one and accordingly is entitled to protection.

Accordingly,  HC hold that though ZEN is a generic word qua a school of Buddhism, yet it is not a generic mark with regard to mobile phones and tablets as the said word has no connection or correlation with mobile phones or tablets. Hence, HC holds that the adoption of the mark ZEN by the plaintiff with respect to mobile phones and tablets, with which it has no correlation, is arbitrary and is entitled to protection without proof of it having acquired secondary significance.  

HC further holds that mere filing of a search report from the Trade mark office does not prove that the mark mentioned in the search report is actually being used by third parties.

Thereafter, HC holds that, “ just because defendant’s’ application for cancellation of plaintiff’s registered trademark is pending consideration, does not mean that this Court is denuded of the power either to decide this applicant or grants an injunction”.  

Further, HC holds that though the present suit is a commercial suit, yet the defendants have not placed on record any instance of use of the mark ZEN by third parties.

HC is of the opinion that Section 17 (2) of  the Trade Marks Act, 1999 relates to a composite registered trademark and the circumstances under which exclusive rights can be claimed in part of a registered mark. The Supreme Court in Registrar of Trademarks Vs. Ashok Chandra Rakhit Ltd., AIR 1955 SC 558 and Bhole Baba Milk Food Industries Ltd. vs. Parul Food Specialties Pvt. Ltd. has held that registration of a label mark does not entitle a proprietor to protection of a specific part of the label. However, this Court is of the view that, “a party can overcome the bar under Section 17(2) of the Trade Marks Act, 1999, by filing an action for passing off to claim exclusivity of a part or whole of the registered trademark. Section 17(2) of the Trade Marks Act, 1999 cannot be used as a license to commit an act of passing off. A subsequent dishonest user cannot take shelter under Section 17(2) and argue that the statute permits it to commit passing off”. Consequently, the present suit for the purpose of the present application is treated as a suit for passing off and not for infringement.

Hence, Court is of the view that the defendants’ adoption of the mark ZEN is in bad faith as it applied for the plaintiff’s mark subsequently in 2014. Further, in the opinion of this Court, the triple identity test is satisfied as the defendants have made use of a deceptively similar/identical trademark (ZENFONE) in relation to identical goods (mobile phones) having identical trade channels.

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