Trademark's Value Can Be Estimated In Monetary Terms As Proprietor Invests In Publicity and Building Reputation: Delhi High Court

The Delhi High Court has ruled that apart from the primary function of identifying the source of goods, a trademark has an investment function as well, which is to preserve the investments made by a proprietor of a trademark in publicity and building up its reputation.

A division bench of Justice Vibhu Bakhru and Justice Amit Mahajan said the trademark, thus, acquires a value that can be estimated in monetary terms. Although intangible, the court added, trademark is a valuable asset.

"The use of a trademark by other persons, which is identical or similar to the senior mark, would inevitably result in dilution of the senior mark and adversely affect its value," the court said.

It added: "Thus, the Trade Marks Act also extends protection to reputed trademarks and does not permit use of similar or deceptive trademarks notwithstanding that they are not in respect of goods covered by the senior trademark, if their use is to take an unfair advantage or is detrimental to the distinctive character or repute of the registered senior trademark".

Facts of the Case

The court made the observations while dismissing an appeal filed by Sanjay Chadha, the sole proprietor of M/s Eveready Tools Emporium against an order passed by Single Judge on February 17, 2022 rejecting his plea against cancellation of his registration for the mark 'EVEREADY'.

The Intellectual Property Appellate Board (IPAB) had cancelled the registration pursuant to a petition filed by the Eveready Industries India Limited, the manufacturer of popular batteries, flashlights and small home appliances. The single judge had rejected the appellant's plea against the IPAB order.

The appellant is engaged in the business of manufacturing and marketing hand tools like screwdrivers and cutting pliers. Before court, he claimed that it was in 1978 when his mother commenced business under the name 'Everest Tools Industries'. She was granted registration for the trademark 'Everready' under class 8 in the 1980s, Chadha told the court. In the 1990s, she was also granted registration for the device mark.

What was the IPAB Order?

The IPAB had found that the trademark EVEREADY is a well-known and also a distinctive mark which was registered in the year 1942 and is recognised all over India and internationally.

The board had also taken note of the fact that the said mark was protected under various orders passed by the courts from time to time, clubbed with the fact that Eveready Industries India Limited had sales turnover of Rs. 229.70 crores in the year 1990-91 and had also spent Rs. three crores on promotional expenses in the said year.

It was thus concluded that the mark of Eveready Industries India Limited was a well-known mark and all conditions of the Trade Marks Act were satisfied.

Decision of Division Bench

Observing IPAB's decision that Eveready Industries India Limited's trademark "EVEREADY" is a well-known trademark with substantial goodwill cannot be faulted, the court noted the mark was coined by joining the words 'Ever' and 'Ready'.

"It is relevant to note that the lettering was distinctive as the letters in the center of the mark 'EVEREADY' were in a larger font than the letters 'E' and 'Y' at the two ends. The use of the varying font sizes in respect of different letters of the word "Eveready" lent it a pyramidal shape as is clear from the device mark "EVEREADY"," it added.

The court further said that 'Eveready' is not a generic word and it is difficult to believe that the appellant had discovered it as a matter of coincidence without being aware of its use in respect of dry cell batteries and flashlights.

"The appellants had also set out the said word in a pyramidical form with letters of the words being in different font sizes. The letters 'R' and 'E' at the center are in a large font, whilst the font size of the letters 'E' and 'Y' at the extreme ends, is relatively small," the court added.

The court also concluded that the predecessor, the appellant's mother from whom he claimed to derive his title, had adopted the trademark of Eveready Industries India Limited "to ride on the goodwill and to take an unfair advantage of its reputation."

"The learned IPAB had rightly found that respondent no.3's trademark was entitled to be extended such protection," the court said.

Title: MR SANJAY CHADHA TRADING AS M/S EVEREADY TOOLS EMPORIUM v. UNION OF INDIA & ORS.

Citation: 2022 LiveLaw (Del) 1022

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