Safiya Malik

The Division Bench of the Delhi High Court comprising of Justice Navin Chawla and Justice Shalinder Kaur dismissed the appeal filed by the appellant Arpita Agro Products Pvt. Ltd., thereby upholding  injunction granted by the Single Judge restraining Arpita Agro Products Pvt. Ltd.  from using the trademark ‘POWRNYM’ for its floor cleaner products, holding that the mark is deceptively similar to the trademarks ‘NIMYLE’ and ‘JOR-POWR’ assigned to ITC Ltd. The Division bench held that the defendants had previously owned and assigned these trademarks to ITC under a Brand Assignment Agreement and Asset Purchase Agreement, and their adoption of the impugned mark was likely to cause consumer confusion. The Court held that the appellants’ use of the mark ‘POWRNYM’ was an attempt to benefit from the goodwill of ITC’s registered trademarks. The Court directed the defendants to cease all manufacturing, selling, and advertising activities related to ‘POWRNYM’ and ordered the removal of all online listings under the impugned mark.

The dispute arose from an appeal filed by Arpita Agro Products Pvt. Ltd. and other appellants against the interim injunction granted by the learned Single Judge in favor of ITC Ltd. The suit was initiated by ITC, claiming that the defendants had violated contractual obligations by using a mark deceptively similar to its registered trademarks. The respondent (ITC) submitted that it had acquired exclusive ownership of the ‘NIMYLE’ and ‘JOR-POWR’ trademarks through agreements executed in 2018 and had since invested substantially in their promotion and market presence. The dispute primarily concerned the defendants’ adoption of the mark ‘POWRNYM’ for floor cleaners, which ITC contended was a deliberate attempt to misappropriate its brand identity.

The respondent submitted that it had acquired all rights to the trademarks through the Asset Purchase Agreement dated April 5, 2018, and the Brand Assignment Agreement dated April 19, 2018. Under these agreements, the defendants had assigned their trademarks, product formulations, manufacturing know-how, and all associated goodwill to ITC for a total consideration of ₹100 crores. The agreements also included clauses prohibiting the defendants from using any mark that was confusingly similar to the assigned trademarks. ITC further argued that it had extensively marketed the ‘NIMYLE’ brand, which had acquired distinctiveness, and that the adoption of ‘POWRNYM’ by the defendants was in violation of both contractual obligations and trademark laws.

The appellants, on the other hand, argued that the mark ‘POWRNYM’ was distinct and was neither identical nor deceptively similar to ‘NIMYLE’ or ‘JOR-POWR.’ They submitted that the expiry of the non-compete clause in the Asset Purchase Agreement permitted them to engage in the manufacture and sale of competing products. It was further contended that the elements ‘POWR’ and ‘NYM’ in the impugned mark had independent meanings and were not derived from ITC’s registered trademarks. The appellants asserted that there was no risk of consumer confusion, particularly since the products were not being sold in Delhi, where the suit was filed. They also argued that the respondent had not actively used the ‘JOR-POWR’ trademark, and therefore, no claim for passing off could be sustained.

The Court examined the agreements executed between the parties and found that the defendants had explicitly assigned all rights, including goodwill, to ITC. It was recorded that “the appellants have transferred their rights in the trademark ‘NIMYLE’ and other ‘NIM’ marks, for a consideration of ₹100 crores, the copyright associated therewith, and also their trademark ‘JOR-POWR’ to the respondent.” The Court held that the appellants were not mere competitors but had previously owned the trademarks and had knowledge of their market value. It was observed that “the test for determining the case of infringement or passing off has to be stricter against the appellants, who must stay absolutely clear of the marks they assigned to the respondent.”

The Court noted that “the appellants have taken the two prominent parts from the assigned trademarks, namely ‘POWR’ from ‘JOR-POWR’ and ‘NYM’ from ‘NIMYLE,’ and combined them to form the impugned mark ‘POWRNYM.’” The Court rejected the appellants’ explanation that the mark ‘POWRNYM’ was meant to indicate the power of the product, stating that “such an explanation is not credible, and the appellants’ choice of the mark appears to be a deliberate attempt to create confusion.”

The Court relied on the principle that “copying a prominent part of another trademark is prohibited, particularly when the original mark is a registered trademark.” It was recorded that “even a remote resemblance to the assigned marks would be sufficient to injunct the appellants from using such marks.” The Court also referred to the doctrine of initial interest confusion, noting that “a consumer encountering the mark ‘POWRNYM’ is likely to associate it with ‘NIMYLE’ or ‘JOR-POWR’ due to the similarity in structure, phonetics, and trade dress.”

The Court addressed the appellants’ contention that the respondent had not actively used the ‘JOR-POWR’ mark and held that “non-use of a registered trademark does not affect the right of its proprietor to seek protection against infringement.” It was further recorded that “the Trade Marks Act permits enforcement of trademark rights even if the proprietor is not actively using the mark, provided that the mark is registered and has not been abandoned.”

The Court also examined whether the appellants had a valid defense based on the expiry of the non-compete clause in the Asset Purchase Agreement. It was recorded that “the non-compete clause merely restricted the appellants from engaging in the manufacture of competing products for a specified period. However, the clause did not authorize the appellants to infringe upon or pass off the respondent’s trademarks.” The Court held that “the expiration of the non-compete clause does not provide a defense to trademark infringement or passing off.”

The Divison Bench relying on the judgment of the Suprem  Court in M/s Kirorimal Kashiram Marketing and Agencies
Pvt. Ltd v. M/s Shree Sita Chawal Udyog Mill, 2010 SC OnLine 2933,and Cadila Health Care Ltd. v. Cadila Pharmaceuticals Ltd., (2001) 5 SCC 73,  held that: 

"Applying the above test to the facts of the present case and keeping in view the nature of goods, the past relationship between the parties, the resemblance of the marks, the intent of the appellants to adopt the prominent parts of the marks of the respondent, and other surrounding circumstances, in our view, no fault can be found in the findings of the learned Single Judge that a case of passing off was made out against the appellants and in favour of the respondent."

Based on these findings, the Division Bench upheld the injunction granted by the learned Single Judge and dismissed the appeal.

The Division Bench held that observations made herein are prima facie and shall not be regarded as a final determination on the merits of the contentions raised by the parties in the Suit. The issues shall be decided during the trial, uninfluenced by these observations.

Case Title: Arpita Agro Products Pvt. Ltd. & Ors. v. ITC Ltd.
Case Number: FAO (OS) (COMM) 289/2024
Bench: Justice Navin Chawla and Justice Shalinder Kaur

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