CADILA HEALTH CARE Ltd. VS CADILA PHARMACEUTICALS Ltd. 2001 PTC 300 (SC) AIR 2001 SC 1952 = 2001 (5) SCC 73

INTRODUCTION:

The case of Cadila Healthcare Ltd. vs Cadila Pharmaceuticals Ltd. is a landmark decision  in the field of trademark law in India. It primarily deals with the issue of passing off and  trademark infringement. The dispute arose between two pharmaceutical companies, both of  which were allowed to use the name “Cadila” as part of their corporate identity due to a  corporate restructuring. The issue centred around the use of deceptively similar trademarks for  two different anti-malarial drugs, “Falcigo” and “Falcitab.” The case addressed the vital  question of whether similar-sounding names could lead to confusion among consumers,  especially in the sensitive pharmaceutical industry, and set new precedents for handling  trademark disputes involving medical products. 

The Supreme Court’s decision in this case established key principles for determining cases  of deceptive similarity, particularly in the context of pharmaceutical products, where any  confusion can have severe consequences.

1. CASE DETAILS 

2. FACTS OF THE CASE:

(2.1) Parties Involved: 

The appellant, Cadila Healthcare Ltd., and the respondent, Cadila Pharmaceuticals  Ltd., were two companies engaged in the pharmaceutical business. After a corporate  restructuring of the original Cadila Group, both entities were granted the right to use “Cadila” in their respective corporate names. This led to confusion between the two companies,  especially regarding their respective pharmaceutical products. 

(2.2) Dispute:  

In 1996, Cadila Healthcare Ltd. (the appellant) introduced a drug named “FALCIGO” for the treatment of falciparum malaria, a severe form of malaria. The company applied to register the name “Falcigo” under the Trade and Merchandise Marks Act, 1958. After receiving  permission from the Drug Controller General of India to market the drug, the appellant began  commercialising it. Shortly thereafter, it came to the attention of the appellant that the respondent, Cadila  Pharmaceuticals Ltd., was manufacturing and selling a drug named “FALCITAB,” which also  treated falciparum malaria and was trademarked in 1997. Both drugs had similar purposes, and  the appellant contended that the similarity in the names of the drugs could lead to confusion among consumers, resulting in misrepresentation and deceptive similarity. The appellant  sought legal remedy on the grounds of passing off, arguing that the respondent’s use of a similar  trademark was likely to confuse consumers. 

(2.3) Background proceedings in Lower Courts:  

In the year 1998, the appellant became aware of the fact that the respondent was manufacturing, distributing, and selling a medicine similar to that of the appellant in name and  use; thus, the appellant filed an injunction before the Vadodara district court to restrict the  respondent from doing any further trade. However, the Vadodara court gave the judgment in favour of the respondent, stating that the two medicines were different from each other based  on formulation, appearance, and price. The court also stated that, since both medicines are  “Schedule L” category drugs and are sold to hospitals directly, there will not be any likelihood  of the public being confused. Aggrieved by this decision, the appellant appealed to the High  Court. The appellants had no luck in the High Court, also, as the Hon’ble Court dismissed the  appeal on the basis that there was no possibility of any confusion between the two medicines  and thus, there was only a slight chance of passing off. Finally, appellant approached the  Supreme Court.  

3. ISSUES FRAMED BEFORE THE SUPREME COURT:

The issues framed before the Hon’ble Supreme Court are as follows: (1) whether the respondent’s use of the trademark “Falcitab” would likely cause confusion  among consumers, leading them to believe that the drug was associated with or endorsed  by the appellant? 

(2) Whether the respondent’s actions amounted to passing off the appellant’s trademark  “Falcigo” through the use of a deceptively similar name? 

(3) What standards should be used to determine the deceptive similarity between trademarks  in the pharmaceutical industry, particularly when such confusion could have serious  consequences for public health? 

4. ARGUMENTS ON THE SIDE OF THE APPELLANT:

(4.1) The appellant argued that the respondent’s use of the prefix “Falci”, taken from the  name of the disease “Falciparum malaria”, was deceptively similar to the appellant’s  registered trademark “Falcigo”. Since both the drugs targeted the same illness, the appellant contended that the names “Falcigo” and “Falcitab” were likely to confuse  consumers.  

(4.2) The appellant further argued that even though both drugs were sold to hospitals and  clinics and not directly to consumers, medical professionals such as doctors and  pharmacists could still be confused by the similarity in the names, leading to serious  health risks for patients. 

(4.3) The appellant also stated that confusion in the pharmaceutical industry could have more  severe consequences than in other industries, as mistakes related to medication could  result in life-threatening situations. The high degree of phonetic similarity between the  trademarks, according to the appellant, increased the likelihood of confusion, regardless  of the differences in price, appearance, and formulation.  

5. ARGUMENTS ON THE SIDE OF THE RESPONDENT:

(5.1) The respondent argued that the similarity in the names was due to the common practice  in the pharmaceutical industry of deriving drug names from the diseases they treat. The  prefix “Falci” was derived from “Falciparum Malaria”, which was the target ailment  for both drugs. As such, the respondent contended that the names were not deceptively  similar but merely descriptive of the disease the drugs were designed to cure. 

(5.2) The respondent further emphasised that the drugs were sold only to hospitals and  clinics, meaning that the likelihood of confusion among the consumers was negligible.  Since these drugs were prescribed and administered by medical professionals, the  respondent argued that there was no real risk of deception. 

(5.3) The respondent also highlighted that the differences in price, appearance, and  formulation of two drugs were significant enough to prevent any confusion or  misrepresentation.  

6. JUDGEMENT OF THE CASE:

The Hon’ble Supreme Court stated that by means of the judgment, it does not intend to  involve itself with the judgments passed by the lower courts; the said judgment is passed to  establish the principles to be followed while dealing with an action of passing off with special  regard to medical products.

The apex court further went into the detailed aspects of a catena of judgments, including  domestic and foreign judgments, after which it stated that no matter how intricate and precise  those judgments are, the same cannot be applied to the instant case, as there is no common  language in India. The Indian market consists of a huge number of people who don’t know  English or are illiterate; thus, such consumers are supposed to be considered before making  any decisions, as the confusion regarding the identity of the product might lead to grave effects  on public health.  

The Hon’ble Court also observed that even if the drugs in dispute belong to “Schedule L”, which are directly sold to the hospitals or clinics, the possibility of creation of confusion  between the two drugs cannot be dispensed with, even though it is prescribed by the medical  practitioner.  

Finally, the Hon’ble Supreme Court established certain principles to consider while dealing  with a case of passing off and to decide the existence of deceptive similarity. The principles  are as follows: 

(1) The nature of the marks, i.e., whether the marks are word marks or label marks or composite  marks, i.e., both words and label marks.  

(2) The degree of resemblance between the marks, phonetically similar and hence similar in  idea.  

(3) The nature of the goods in respect of which they are used as trademarks.

(4) The similarity in the nature, character, and performance of the goods of the rival traders.

(5) The class of purchasers who are likely to buy the goods bearing the marks they require, on  

their education and intelligence, and a degree of care they are likely to exercise in  purchasing and/or using the goods.  

(6) The mode of purchasing the goods or placing orders for the goods, and  (7) Any other surrounding circumstances which may be relevant to the extent of dissimilarity  between the competing marks.  

 Weightage to be given to each of the aforesaid factors depends upon the facts of each case, and the same weightage cannot be given to each factor in every case. 

7. CRITICAL ANALYSIS:

The Hon’ble Supreme Court established various principles to be followed in the cases of  passing off, mainly concerning medical products. The Hon’ble Court also confirmed that  before manufacturing a drug, the applicant must prove to the Drug Controller General that their  drug shall not cause any confusion or deception in the market by making use of a particular  brand name.  

The Apex court did not involve itself in the decision given by the lower courts, and it further  gave directions to the lower courts to dispose of the suit expeditiously. However, the present  case was reverted to the lower court, which was to follow the principles established by the  Apex court while deciding the case. 

8. CASES REFERRED TO IN THIS JUDGMENT:

(8.1) CORN PRODUCTS REFINING COMPANY VS SHANGRILA FOOD PRODUCTS  LTD, 1960  

(8.2) F. HOFFMANN-LA ROCHE AND CO. Ltd., VS GEOFFREY MANNER AND CO.  (P) Ltd., 1969 

9. CONCLUSION:

In the present case, the Hon’ble Supreme Court gave its judgment after carefully  interpreting various domestic and foreign judgments. More importantly, the court observed that  even though both the drugs belonged to the “Schedule L” category, there was a high probability  of confusion being created between them, leading to a case of passing off and deceptive  similarity.  

Generally, a case of passing off of non-medical products only leads to damage to goodwill  or economic loss. However, in the case of medicinal products, the damage might lead to grave  effects on the lives of people. The apex court ruled the present case as a case of deceptive  similarity, and thus, the decision was given in favour of the applicant, i.e., Cadila Health Care  Ltd.