In the matter of Neon Laboratories Ltd. vs. Medical Technologies Ltd. & Ors., 2015(64)PTC225(SC)1,the Supreme Court while interpreting Section 342 of the Trade Marks Act, 1999 (“Act”), has affirmed that the Proprietor of a trade mark does not have the right to prevent use by another party of an identical or similar mark where that use commenced prior to the use or trademark registration by proprietor.

That in the present case, the predecessor-in-title of the Plaintiff, has adopted and coined the trademark “PROFOL” in the year 1998, for manufacturing and marketing of pharmaceutical products and medicinal preparation. That after amalgamating with its predecessor-in-title on 17.2.2000, Plaintiff, Respondent No. 1 herein, became the owner of the trademark PROFOL, and has been using trademark “PROFOL” since 2000, and also applied for its registration in the aforesaid year. The Plaintiff No. 2, Respondent No. 2 herein, is a licensee of the Plaintiff No. 1.

The Defendant, Appellant herein, i.e., Neon Laboratories Ltd., had filed the application for registration of the trademark “ROFOL” in class 5 on 19.10.2012 which got registered on 14.09.2001. The Appellant has conceded that it commenced user of the trademark ROFOL only from 16.10.2004 onwards.

On becoming aware that the Defendant had introduced the same generic drug under the trademark ROFOL into market, the Plaintiffs filed a suit against the Defendant for injunction, damages and account of profits, alleging that the mark ROFOL is identical and deceptively similar to the trademark PROFOL. The Trial Court granted an ad-interim injunction in favour of the Plaintiffs. Aggrieved by the said order, the Appellant preferred an appeal which was rejected by the High Court of Gujarat. Thereafter, the Appellant has filed the present appeal in the Supreme Court of India against the Judgment of the Learned Single Judge of the High Court of Gujarat at Ahmedabad.

While deciding the present appeal, the Hon’ble Supreme Court interpreted Section 343 of the Act and stated that the present Section palpably holds that a proprietor of a trade mark does not have the right to prevent the use by another party of an identical or similar mark where that user commenced prior to the user or date of registration of the registered proprietor. The Supreme Court observed that the "first user" rule is a seminal part of the Act and it has always enjoyed pre-eminence. It was held that the use of the trademark “PROFOL” by the predecessor-in-title of the Respondent is prior to the user of the Appellant and is even prior to the date of registration of the trademark “ROFOL” of the Appellant. 

The Supreme Court further referred to Section 47of the Act and observed that the legislative intent of the Act is not to permit the hoarding of or appropriation of a trade mark without its utilization and the intention of the aforesaid section is to ordain that an applicant of a trademark does not have a permanent right by virtue of its application alone and such a right is lost if it is not exercised within a reasonable time. It was held that the Appellant had not used the mark ROFOL for over five years and three month after the application for registration of the said trademark was made and Appellant in a way has allowed or acquiesced in the user of the Respondents for several years.

Furthermore, Supreme Court also took into account that the litigation was initiated by the Respondents as opposed to the Appellant, who at any time could have raised the issue of Respondents using a mark similar to its registered trademark and that the Respondents have prima facie supported with proof, that they had already been using their trade mark well before the attempted user of an identical or closely similar trade mark by the Appellant.

Considering all these factors, the Supreme Court held that the Respondents had made out a prima facie case and the two other factors in an interim injunction, namely the balance of convenience and an irreparable loss, were also both in favour of the Respondents, given the potential loss of goodwill and business they could suffer should an injunction be denied, and thereafter, affirmed the decision of the Trial Court and the First Appellate Court.

At this preliminary stage of the matter, i.e. confirmation of the temporary injunction, the Supreme Court abjured itself from going into minute details of the case and adroitly left the issue that whether the situation on the date of application for registration alone would be relevant, or whether the developments in the period between this date and the date of grant of registration would have any bearing on the rights of the parties, to be appreciated by the Court before which the suit is being contested.