Hamdard National Foundation (India) and Another v. Sadar Laboratories Pvt Ltd.

CASE DETAILS

• Case Title: Hamdard National Foundation (India) and Another v. Sadar Laboratories Pvt Ltd.
• Court: High Court of Delhi at New Delhi
• Date of Judgment: 21st December 2022
• Citation: 2022 SCC OnLine Del 4523

INTRODUCTION

Hamdard National Foundation (India) v. Sadar Laboratories Pvt. Ltd. (2022) [1]is a significant decision by the Delhi High Court that highlights the fine line between commercial free speech and trademark protection. The dispute involved Hamdard, the maker of the iconic herbal drink “ROOH AFZA,” and Sadar Laboratories, which launched a similar product named “DIL AFZA.” The controversy arose from a YouTube advertisement where a shopkeeper offers “DIL AFZA” to a customer who asked for “ROOH AFZA,” stating, “Rooh Afza nahi mila, isiliye le lo Dil Afza.”

Hamdard argued that this reference misused its trademark in a misleading and disparaging way, implying that “ROOH AFZA” was either unavailable or inferior. The company claimed that this damaged its brand reputation and amounted to trademark infringement .

In defense, Sadar Laboratories invoked the principles of comparative advertising and commercial free speech under Article 19(1)(a) of the Constitution. They contended that the ad merely offered a substitute product and did not harm the image of “ROOH AFZA.”

The Court, however, sided with Hamdard. It held that the ad unfairly exploited and disparaged the established trademark and goodwill of “ROOH AFZA,” going beyond acceptable comparative advertising. The Court restrained further broadcasting of the advertisement.

This ruling sets a precedent by reinforcing the boundaries of comparative advertising, protecting well-known trademarks, and balancing commercial expression with intellectual property rights.

FACTUAL BACKGROUND

Hamdard National Foundation (India), the maker of the iconic herbal drink “ROOH AFZA,” [2]holds a registered trademark for the brand, which has been a household name in India for over a century. Widely consumed during summers and Ramadan, “ROOH AFZA” is recognized as a well-known mark with strong cultural significance. The defendant, Sadar Laboratories Pvt. Ltd., sells a similar herbal beverage called “DIL AFZA” and registered this trademark in 2018. Both products have coexisted in the market.

The dispute arose when Sadar Laboratories released a YouTube advertisement featuring a girl asking a shopkeeper for “ROOH AFZA.” The shopkeeper responds that it’s unavailable and offers “DIL AFZA” instead, with the tagline, “Rooh Afza nahi mila? Toh Dil Afza le lo.” Hamdard objected to this, claiming the ad was misleading, unauthorized, and disparaging. It alleged that the commercial suggested the unavailability or inferiority of its product, amounting to trademark infringement and unfair competition.

Sadar defended the advertisement as comparative and legitimate commercial speech, protected under Article 19(1)(a) of the Constitution. The matter reached the Delhi High Court, where Hamdard sought an injunction. The case centered on defining the limits of comparative advertising and the protection of trademark rights.

LEGAL ISSUES

1. Whether the use of “ROOH AFZA” in the defendant’s advertisement amounted to trademark infringement under the Trade Marks Act, 1999?
   Answer- Yes. Court held that the defendant’s unauthorized use of the mark “ROOH AFZA” in its advertisement amounted to infringement under Section 29 of the Trade Marks Act, 1999[3]. The Court observed that “ROOH AFZA” is a widely recognized trademark with significant goodwill, and using it to advertise a competing product might mislead consumers or suggest a connection between the two.
2. Whether the advertisement amounted to passing off and dilution of the plaintiff’s brand?
   Answer- Yes. The Court found that suggesting “DIL AFZA” as a substitute diluted the distinctive identity of “ROOH AFZA.” This amounted to passing off, as the defendant leveraged the established reputation of the plaintiff’s product to promote its own, thereby risking brand dilution and consumer deception.
3. Is comparative advertising considered a form of commercial speech protected under Article 19(1)(a) of the Constitution?
   Answer- No. While commercial speech is protected, the Court clarified that such protection is subject to reasonable restrictions. Misleading use of a competitor’s trademark is not protected, especially when it causes confusion or unfairly exploits brand goodwill.

ARGUMENTS BY THE PARTIES

PLAINTIFF’S CONTENTIONS (HAMDARD)

Trademark Infringement-

Hamdard maintained that “ROOH AFZA” is a legally registered and widely recognized trademark protected under the Trade Marks Act, 1999. The defendant’s advertisement employed the “ROOH AFZA” trademark without consent, amounting to a clear breach of Section 29 of the Act. The plaintiff emphasized that using a trademark for identification in advertising requires prior approval, particularly when it creates an impression of connection or causes consumer confusion.

Passing Off-

The plaintiff alleged that the ad indirectly suggested association or interchangeability between “ROOH AFZA” and “DIL AFZA.” This amounted to passing off, as it misrepresented the defendant’s product as having some connection with or endorsement from Hamdard.

Violation of Goodwill and Brand Reputation-

The plaintiff contended that “ROOH AFZA” has been a household name since 1907, enjoying massive goodwill, brand recognition, and customer loyalty. The impugned advertisement sought to benefit from the reputation built by Hamdard over decades, thereby free-riding on its goodwill.

Disparagement and Unfair Trade Practices-

Hamdard asserted that the statement in the ad “Rooh Afza nahi mila? Toh Dil Afza le lo” implied unavailability and inferiority of its product. It argued that the ad was not merely comparative, but disparaging, thereby violating advertising ethics and consumer protection norms.

DEFENDANT’S CONTENTIONS (SADAR LABORATORIES)

Comparative Advertising and Freedom of Commercial Speech-

The defendant claimed that comparative advertising is legally permissible under Indian law, so long as it is truthful and not disparaging. It argued that the right to advertise and promote one’s goods is protected under Article 19(1)(a) of the Constitution.[4]

Nominative Fair Use of Trademark-

The defendant stated that the use of “ROOH AFZA” was nominative and is used only to identify a competing product that the customer initially requested. According to well-established guidelines, using a trademark for identification purposes is not considered infringement as long as it is essential to refer to the product and does not cause confusion or suggest sponsorship.

No Disparagement or Defamation-

The advertisement [5] made no derogatory statements about “ROOH AFZA.” It merely suggested that if a consumer cannot find “ROOH AFZA,” they may try “DIL AFZA” instead. This, according to the defendant, was a harmless and lawful comparative statement.

Honest Practices and No Intent to Mislead-

The defendant claimed to have acted in good faith, within the boundaries of honest trade practices and without intending to mislead or confuse the public. It argued that consumer choice and healthy competition are protected under the law, and their advertisement facilitated this.

COURT’S ANALYSIS AND REASONING

On 21st December 2022, [6]the Delhi High Court delivered this significant judgment concerning comparative advertising and trademark infringement. The Court sided with the plaintiff, Hamdard National Foundation, the manufacturer of the well-known herbal syrup “ROOH AFZA,” and issued an injunction against Sadar Laboratories, which had launched a television advertisement for its competing product “DIL AFZA.”

FINDINGS AND REASONING

The Court made several important observations:

Trademark Status of “ROOH AFZA”-

The Court recognized that “ROOH AFZA” is a well-known and registered trademark, enjoying a strong reputation and consumer goodwill since 1907. Such trademarks are entitled to a higher degree of protection under Indian trademark law.

Improper Use of Trademark Without Permission

The Court determined that the advertisement clearly featured the plaintiff’s trademark in a commercial setting without permission. Although comparative advertising is allowed, the use of a competitor’s registered trademark in its entirety, without a valid reason, was considered unacceptable.

Disparagement and Confusion-

The wording in the advertisement conveyed an indirect implication that the plaintiff’s product was either lacking in quality or out of stock, and that the defendant’s product might serve as a comparable alternative. This amounted to disparagement and had the potential to mislead consumers, which is not permitted even in comparative advertising.

Limits of Commercial Speech-

The Court acknowledged that commercial speech, including advertising is protected by the constituion. However, it clarified that this right does not extend to misleading or infringing content, especially where a competitor’s intellectual property rights are violated.

Doctrine of Nominative Fair Use-

The defendant’s claim of “nominative fair use” was dismissed. The Court concluded that using the plaintiff’s trademark in the advertisement was unnecessary. It was not crucial for comparing products and instead exploited the reputation of the plaintiff.

FINAL DECISION AND RELIEF

Following a detailed examination, the Delhi High Court ruled that:
• The defendant violated the plaintiff’s trademark rights as per Section 29 of the Trade Marks Act, 1999.
• The advertisement constituted passing off and constituted an unfair trade practice.
• A permanent injunction was issued, preventing Sadar Laboratories from using the “ROOH AFZA” trademark in any upcoming advertisements.

SIGNIFICANCE

Impact on Law:
This case significantly clarified the boundaries of comparative advertising under Indian trademark law. The Delhi High Court emphasized that while businesses are allowed to compare products, such comparisons must not mislead consumers or unfairly use a competitor’s trademark. The ruling reinforced that commercial free speech under Article 19(1)(a) is not absolute and cannot be used to justify trademark infringement or brand dilution.

Precedent:
The judgment set a vital precedent by holding that using a competitor’s well-known trademark in an advertisement—especially in a manner suggesting substitution—can amount to trademark infringement and passing off. It also established that nominative use of a trademark in advertising must not imply endorsement, unavailability, or inferiority of the original brand. This case is now cited to define the limits of permissible comparative advertising and the protection of well-known trademarks.

Subsequent Developments:
Following this decision, brands and advertisers have become more cautious in crafting comparative ads, particularly when referring to established trademarks. The case has influenced IP litigation strategies and is frequently referred to in legal arguments involving brand disparagement, trademark misuse, and advertising ethics.

CONCLUSION

The Delhi High Court’s decision in this case [7]clarified the limits of comparative advertising under Indian trademark law. The case involved an ad by the defendant promoting “DIL AFZA” by referencing the plaintiff’s well-known product “ROOH AFZA.” The Court acknowledged that comparative advertising is protected under the Constitution but emphasized this protection does not cover ads causing trademark infringement or disparagement. The advertisement used “ROOH AFZA” without permission and implied its unavailability, positioning “DIL AFZA” as a better alternative. This, the Court held, tarnished and diluted the plaintiff’s trademark. Consequently, the Court granted a permanent injunction preventing the defendant from airing the ad or using the plaintiff’s mark in a misleading or disparaging way. This judgment underscores the protection of trademark owners against unfair competition and sets a precedent for regulating comparative ads that misuse well-known marks, reinforcing honest and non-misleading commercial speech.

REFERENCE(S):

• Hamdard National Foundation (India) and Ors. v. Sadar Laboratories Pvt. Ltd., 2022, SCC Online Del, 4523.
• Trade Marks Act, No. 47 of 1999 section 29 (India).
• https://lawjournals.celnet.in/index.php/jiprl/article/view/1421
• https://www.sc-ip.in/post/hamdard-national-foundation-india-anr-v-sadar-laboratories-pvt-ltd
• https://www.sc-ip.in/post/hamdard-national-foundation-india-anr-v-sadar-laboratories-pvt-ltd

[1] Rooh Afza v. Dil Afza: Delhi High Court restrains Sadar Laboratories from manufacturing or selling products containing trademark ‘DIL AFZA’ till final disposal, SCC Times (Dec. 23, 2022, 11:00 AM), https://www.scconline.com/blog/post/2022/12/23/rooh-afza-v-dil-afza-delhi-high-court-restrains-sadar-laboratories-from-manufacturing-or-selling-products-containing-trademark-dil-afza-till-final-disposal/.

[2] Pooja Sharma, Comparative Advertising and Trademark Law: A Study, JIPRL (May 1, 2024), https://lawjournals.celnet.in/index.php/jiprl/article/view/1421.

[3] Trade Marks Act, No. 47 of 1999, Sec 29 (India).

[4] Constitution of India art. 191(a).

[5] Poonam Gandhi, Trademark Dispute: Ex-parte Order of Ad-interim Injunction Unjustified, TaxGuru (Sept. 22, 2022), https://taxguru.in/corporate-law/trademark-dispute-ex-parte-order-ad-interim-injunction-unjustified.html.

[6] Hamdard Nat’l Found. (India) v. Sadar Labs. Pvt. Ltd., FAO(OS) (COMM) 67/2022, 2022/DHC/005711 (Del. H.C. Dec. 21, 2022), https://indiankanoon.org/doc/26490168/.

[7] Legal Fund, Trademark Conflict of Rooh Afza vs. Dil Afza, Legal Fund (Jan. 6, 2022), https://legalfund.in/trademark-conflict-of-rooh-afza-vs-dil-afza/.