In a couple of matters filed before the Delhi High Court regarding a dispute between Dr. Reddy’s Laboratories (DRL) and Reddy Pharmaceuticals Ltd. (RPL) involving competing claims over the use of the term ‘REDDY’ for pharmaceutical products, a Division Bench of Justice C. Hari Shankar and Justice Om Prakash Shukla, concurred that a case for permanent injunction against RPL had been made out and refused to set aside Intellectual Property Appellate Board’s (IPAB) order.
A civil suit was instituted by DRL for passing off and copyright infringement, which was decreed in its favour by a Single Judge on 13-09-2013, and on 29-10-2013, the removal of RPL’s registered mark from the Trade Marks Register was ordered in a trademark rectification proceeding before IPAB. RPL appealed against the civil decree and challenged IPAB’s rectification order.
The facts of the present matter are that the parties originally had a cooperative commercial relationship beginning in 1997, in which RPL acted as a distributor, purchasing bulk drugs and Active Pharmaceutical Ingredients (APIs) from DRL. As RPL was merely acting as a distributor of DRL’s bulk ingredients to other manufacturers, DRL initially had no commercial reason to object to RPL’s corporate name, “Reddy Pharmaceuticals Ltd.” However, their relationship changed significantly on 01-04-2003, when DRL appointed RPL as its commercial del credere agent for Northern India. The dispute escalated in September 2003 when DRL discovered that RPL had expanded its operations into the finished generic formulation segment.
DRL found that RPL was marketing finished medicinal preparations while prominently displaying the mark “REDDY” on its packaging, often in visual formats larger than the actual brand name of the drug, and falsely representing to traders that it belonged to the “Reddy Group”. To further exploit DRL’s goodwill, RPL printed ‘Ameerpet, Hyderabad’, i.e., the precise locality of DRL’s globally registered head office, on its packaging, despite conducting its actual business out of Delhi.
Furthermore, DRL claimed that RPL began marketing Omeprazole under the brand “OMRE” in a strip packaging that visually mirrored DRL’s famous leading brand “OMEZ” and also marketed a drug named “RECOLITE” to mimic DRL’s “MUCOLITE”. After out-of-court discussions in late 2003 collapsed due to RPL’s refusal to modify its corporate name or cease using the “REDDY” mark, DRL terminated the agency and filed the civil suit.
The Court referred to the Supreme Court’s decision in Patel Field Marshal Agencies v. P.M. Diesels Ltd. (2018) 2 SCC 112, and stated that questions regarding the statutory validity of a trademark registration occupy a foundational position and must be settled before determining common law passing off claims. Evaluating the petition against IPAB’s rectification order, the Court emphasized that its supervisory jurisdiction under Articles 226 and 227 did not permit it to act as an appellate court or re-examine evidence, restricting interference only to instances of manifest illegality or perversity.
The Court found that trademark rectification under Section 57(2) of the Trade Marks Act, 1999 (Act) is a broad remedy allowing any “aggrieved person” to challenge a mark that is “wrongly remaining” on the register. It was stated that even though IPAB did not explicitly refer to Sections 9 and 11 of the Act, its factual findings that RPL’s adoption of the mark caused public confusion and was inherently deceptive, were clearly aligned with the principles of said provisions. Hence, the Court upheld IPAB’s order, dismissed the said petition, and stated that the dispute would thereafter be examined purely based on the principles governing passing off, prior use, and protection of goodwill.
Considering the appeal against the judgment of the Single Judge, the Court clarified that the legal clock for acquiescence does not run from the initial adoption of a name in a non-competing trade, but from the point at which the conduct crosses the threshold into misrepresentation and becomes legally objectionable. It was found that prior to 2003, there was no clash of commercial interests because RPL was simply a distributor promoting DRL’s bulk drugs, and that the genuine threat to DRL’s market identity materialized only when RPL invaded the finished-formulation space. The Court reiterated the Supreme Court’s finding that the cause of action in a passing off action arises not merely from the adoption or use of a mark, but from the misrepresentation that causes deception or confusion in the public’s minds.
The Court found it evident that DRL was not guilty of any delay or acquiescence, as the cause of action only arose when the defendant’s conduct became legally objectionable, and stated that since DRL filed suit immediately after the expansion into formulations and subsequent talk failures, it acted with reasonable promptitude, entirely defeating the plea of acquiescence.
Regarding whether the use of “REDDY” amounted to passing off, the Court said that the mere fact that RPL was using a trade mark deceptively similar to that of DRL was not sufficient to establish a claim for passing off. The Court applied the “Classical Trinity Test” for common law passing off, requiring proof of goodwill, misrepresentation, and a likelihood of damage and highlighted a critical evidentiary admission during the trial. RPL’s own witness (DW-1) categorically admitted under cross-examination that DRL enjoys an immense, established reputation in the market.
The Court stated that judicial admissions made under oath are the best evidence against the admitting party and legally dispense with the need for further proof. Furthermore, DRL had submitted extensive historical sales invoices, advertisements, and newspaper features dating back to 1997 to establish its prior user status. Since RPL failed to cross-examine DRL’s witnesses regarding the authenticity of these specific exhibits, the Court referred to a Supreme Court decision holding that uncross-examined portions of the evidence must be presumed unchallenged and accepted as true. Thus, prior proprietary goodwill and RPL’s misrepresentation were conclusively established, and the Court stated that the Single Judge’s reasoning did not suffer from perversity.
It was stated that RPL was not an innocent adopter, but had direct exposure to the plaintiff’s goodwill and trade mark. The Court said that the adoption of “REDDY” in the same field of activity, coupled with the misrepresented address on the packaging, pointed towards a lack of bona fides. The Court noted that RPL’s conduct did not reveal an honest use of a personal name, but an attempt to create market association, and held that RPL’s use of the mark “REDDY” was tainted, holding that it could not be given protection under Section 35.
Regarding the internet domain name dispute, RPL argued that DRL could not claim passing off because it had not proven exclusive ownership over an identical domain name. The Court rejected this and said that domain names do not merely serve as addresses, but function exactly like trademarks by distinguishing the source of an enterprise. In a passing off action, a plaintiff does not need to own an identical domain; rather, because online consumers operate with an “imperfect recollection,” RPL’s prominent integration of the dominant word “REDDY” into www.reddylimited.com was bound to deceptively divert internet traffic away from DRL.
Regarding copyright infringement in product packaging, RPL claimed that DRL failed to prove its legal title to or originality of the artwork for its drug “OMEZ”. The Court stated that DRL successfully established a clear chain of title by an Assignment Deed executed in 2002. It was clarified that originality in packaging artwork does not require novelty in a patent sense, but resides in the unique arrangement, layout, overall visual presentation, etc., designed by the author. A side-by-side visual comparison between DRL’s “OMEZ” strip and RPL’s “OMRE” strip proved an undeniable reproduction of protected artistic work.
In relation to the damages and rendition of accounts, RPL argued that the absence of mathematically quantified proof of actual monetary loss during the trial should defeat DRL’s claims. The Court clarified that while a lack of quantified financial evidence might disentitle a plaintiff to compensatory damages, it cannot block equitable remedies. It was said that once copyright violation and passing off are legally established, an order for the rendition of accounts and the physical delivery up of infringing labels is fully justified to prevent the tortfeasor from unjustly enriching themselves through another’s goodwill.
Finding no perversity, legal error, or factual misalignment, the Court dismissed the appeal and finalized the permanent injunction that restrained Reddy Pharmaceuticals Limited from using the name “REDDY” or its current corporate style in relation to medicinal products, domain names, and deceptive product packaging.
Appearances:
For Appellant – Mr. Chander M. Lall (Sr. Adv), Ms. Arushi Singh, Ms. Annanya Mehan, Ms. Manviya Arun, Mr. Prabhjyot Singh, Ms. Amrisha Kumar
For Respondent – Ms. Swathi Sukumar (Sr. Adv), Mr. Ranjan Narula, Mr. Shakti Priyan Nair, Mr. Parth Bajaj, Ms. Rishika Aggarwal, Mr. Ritik Raghuwanshi
