Introduction

Trade marks are not merely labels or logos. They represent the goodwill, reputation, and consumer trust that a business builds over years of hard work. When a trade mark is registered, the law gives its owner exclusive rights to use it, but only if that owner genuinely intends to use it in relation to the goods for which it is registered. A person who registers a trade mark without any genuine intention to use it, perhaps with the idea of selling the registration to someone else for profit, is said to be engaged in what trade mark law calls ‘trafficking’. The underlying policy of trade mark law across the world is to prevent such trafficking.

Against this backdrop, the Supreme Court of India in American Home Products Corporation v. Mac Laboratories Pvt. Ltd. and Another [(1986) 1 SCC 465], decided on September 30, 1985, was called upon to address a fascinating and commercially important question: can a foreign multinational company, which does not itself use a trade mark in India but intends to use it through an Indian partner company as a registered user, be said to have had a genuine and bona fide intention to use that trade mark? And if such a foreign company applies for registration of the mark on the basis of that intention, can the mark subsequently be removed from the Register on the ground that there was no bona fide intention to use it at the time of the application?

The Supreme Court’s answer to these questions, delivered through a detailed and wide-ranging judgement, has become one of the most important precedents in Indian trademark law, especially in the context of multinational corporations, registered user arrangements, the legal fiction created by Section 48(2) of the Trade and Merchandise Marks Act, 1958, and the interpretation of Section 46(1)(a) dealing with the removal of trademarks from the register on the ground of non-use.

Factual and Procedural Background

American Home Products Corporation, the appellant, is a multinational corporation incorporated under the laws of the State of Delaware in the United States of America. Its pharmaceutical division, called ‘Whitehall Laboratories’, was engaged in the manufacture and marketing of pharmaceutical products and drugs. In 1956, the appellant introduced an antihistamine drug in the American market under the trademark ‘Dristan’, a decongestant tablet intended for symptomatic relief of colds, congestion, and other respiratory ailments. The trade mark ‘Dristan’ was registered in the United States and subsequently, between 1957 and 1961, in approximately 39 other foreign countries.

The appellant held a 40% shareholding in an Indian company called Geoffrey Manners and Co. Ltd. (the Indian Company). As early as December 1957, it was decided that the Indian company should introduce in the Indian market nine new products of the appellant, including ‘Dristan’ tablets. On August 18, 1958, the appellant filed an application under Section 14(1) of the Trade Marks Act, 1940, in Form No. TM-I for registration of the trade mark ‘Dristan’ in Class 5 as a medicinal preparation for treatment of respiratory ailments. No notice of opposition was filed by anyone, and the trade mark ‘Dristan’ was registered as Trade Mark No. 186511 in Class 5 on June 8, 1959. The Trade Marks Act, 1940, was replaced by the Trade and Merchandise Marks Act, 1958, with effect from November 25, 1959.

Steps Taken After Registration

After registration, the Indian company took several concrete steps. It obtained a licence for the purchase of a Stokes Triple Layer Machine, installed it at its Ghatkopar factory on October 5, 1960, obtained samples and the manufacturing manual from the appellant, applied to the Central Government for a manufacturing licence under Section 11 of the Industries (Development and Regulation) Act, 1951 (granted on January 19, 1961), and obtained Drugs Control Administration approval on February 10, 1961.

• A licence was obtained for the purchase of a Stokes Triple Layer Machine.
• Machine installed at the Ghatkopar factory on October 5, 1960.
• Samples and manufacturing manuals received from the appellant.
• Manufacturing licence obtained under the Industries (Development and Regulation) Act, 1951.
• Drugs Control Administration approval was secured on February 10, 1961.

Competing Trademark and Opposition

Meanwhile, on May 31, 1960, Mac Laboratories Private Limited, the first respondent, applied for registration of the trade mark ‘Tristine’ in Class 5. On January 18, 1961, the appellant filed a notice of opposition. As a counterblast, the first respondent, on April 10, 1961, filed Application No. CAL-17 with the Registrar of Trade Marks, Calcutta, for rectifying the Register by removing the appellant’s trade mark ‘Dristan’.

Registered User Arrangement

On October 18, 1961, the appellant and the Indian Company entered into a registered user agreement. The ‘Dristan’ tablets were first marketed in India on October 22, 1961. On March 6, 1962, both parties jointly applied for registering the Indian company as a registered user of the mark.

Litigation History

On December 7, 1964, the Registrar of Trade Marks, Calcutta, dismissed the rectification application. The first respondent appealed; a learned Single Judge of the Calcutta High Court allowed that appeal on May 10, 13, and 14, 1968. The appellant’s further appeal, Appeal 165 of 1968, was dismissed by the Division Bench of the Calcutta High Court on December 16, 1969. It was against this judgement that the present appeal by certificate was filed before the Supreme Court under Article 133(1)(a) and (c) of the Constitution of India.

Timeline of Key Events

Year/Date	Event
1956	‘Dristan’ was introduced in the United States market.
December 1957	Decision taken to introduce ‘Dristan’ in India through Geoffrey Manners & Co. Ltd.
August 18, 1958	Application filed for registration of ‘Dristan’.
June 8, 1959	The trademark ‘Dristan’ is registered in Class 5.
October 5, 1960	Manufacturing machinery installed.
January 19, 1961	Manufacturing licence granted.
February 10, 1961	Drugs Control Administration approval obtained.
April 10, 1961	Rectification application filed by Mac Laboratories.
October 18, 1961	Registered user agreement executed.
October 22, 1961	‘Dristan’ tablets launched in India.
March 6, 1962	An application was filed for the registration of the Indian company as a registered user.
December 7, 1964	Registrar dismissed rectification application.
December 16, 1969	The Division Bench dismissed the appeal.
September 30, 1985	The Supreme Court delivered its judgement.

The Dispute

The central question was whether the trademark ‘Dristan’ was liable to be removed from the Register under clause (a) of Section 46(1) of the Trade and Merchandise Marks Act, 1958, on the ground that it was registered without any bona fide intention on the part of the applicant that it should be used in relation to those goods by him, and that there had in fact been no bona fide use of the trademark by any proprietor up to one month before the date of the rectification application.

The dispute turned on two connected questions.

1. Whether the appellant at the time of its application on August 18, 1958, had a bona fide intention to use the trademark and whether an intention to use it through a registered user (the Indian company) satisfied the requirement of ‘intention to use by him’.
2. Whether the legal fiction in Section 48(2) of the 1958 Act, deeming use by a registered user to be use by the proprietor, applied only to cases of actual use, or also extended to the intention limb under Section 18(1) and the first condition of clause (a) of Section 46(1).

Key Legal Issues

• Meaning and scope of bona fide intention to use a trade mark.
• Whether use through a registered user amounts to use by the proprietor.
• Interpretation of Section 46(1)(a) of the Trade and Merchandise Marks Act, 1958.
• Application of the legal fiction created by Section 48(2).
• Rights of multinational corporations seeking trade mark protection in India.
• Whether non-use before commercial launch justified rectification of the Register.
• Prevention of trade mark trafficking while protecting legitimate commercial arrangements.

The Object of Trade Mark Law and the Meaning of Trafficking

The Supreme Court explained that a trade mark cannot exist in isolation; it exists only in connection with the goods in relation to which it is used or intended to be used. Since registration confers very valuable rights, the law cannot permit a person to register a trade mark when he has not used it in relation to the goods or does not genuinely intend to use it.

The fundamental object of all trade mark laws is to prevent trafficking in trade marks. The Court accepted the meaning of trafficking from Re American Greetings Corp’s Application [(1983) 2 All ER 609] and the House of Lords decision [(1984) 1 All ER 426], per Lord Brightman, that trafficking in a trademark context conveys dealing in a trademark primarily as a commodity in its own right, not for identifying or promoting merchandise.

There must be a real trade connection between the proprietor and the licensee or his goods.

Key Principles on Trafficking

• A trade mark cannot exist independently of goods or services.
• Registration requires genuine use or a bona fide intention to use.
• Trade mark law seeks to prevent trafficking in trade marks.
• A trade mark should not be treated merely as a tradable commodity.
• A genuine trade connection must exist between the proprietor and the user.

The Two Conditions Under Section 46(1)(a) Are Cumulative

The Court held that both conditions of clause (a)—absence of bona fide intention at the time of registration and no bona fide use up to one month before the rectification application—are cumulative and not disjunctive.

Both must be satisfied. The reason is to prevent harassment of a legitimate trade mark registrant, since setting up manufacturing and marketing for a new product necessarily takes time.

The burden of proving both conditions rests on the person seeking removal from the Register.

Requirements Under Section 46(1)(a)

Condition	Requirement
First Condition	Absence of bona fide intention to use the trade mark at the time of registration.
Second Condition	No bona fide use of the trade mark up to one month before the rectification application.
Legal Position	Both conditions must be proved together.
Burden of Proof	On the person seeking removal of the trade mark.

Can Proposed Use Through a Registered User Satisfy the Intention Requirement?

This was the central legal question.

The Court held that the legal fiction in Section 48(2) is not limited to cases of actual use; it applies wherever the word “use” occurs in any of its permutations and combinations in the Act, including “proposed to be used by him” in Section 18(1).

Carrying the fiction to its logical conclusion—as required by the principle in East End Dwellings Co. Ltd v. Finsbury Borough Council [1952 AC 109], approved by this Court in State of Bombay v. Pandurang Vinayak Chaphalkar [1953 SCR 773; AIR 1953 SC 244]—Section 18(1) must be read as

“Any person claiming to be the proprietor of a trade mark used or proposed to be used by him or by a registered user.”

Any other construction would render the provisions relating to registered users almost meaningless.

The court further held that to avail this fiction, the proprietor must have had in mind at the date of his application some specific person whom he intended to allow to use the trademark as a registered user; otherwise, the protection of the fiction is unavailable.

Court Findings on Section 48(2)

• The legal fiction applies to both actual and proposed use.
• Section 18(1) must be read in conjunction with Section 48(2).
• Use by a registered user can satisfy the statutory intention requirement.
• A specific prospective registered user must have been contemplated at the time of registration.
• Without such a contemplated user, the legal fiction cannot be invoked.

Application to the Facts

The Court found that the continuous chain of events—the 40% shareholding in the Indian company, the collaboration agreement from November 1, 1957, the machinery procurement, manufacturing licence, drug controller approval, samples and manufacturing manual, the registered user agreement dated October 18, 1961, and the first marketing of “Dristan” tablets on October 22, 1961—established beyond doubt that the appellant had a bona fide intention at the date of its application to use the trademark “Dristan” through the Indian company.

There was no trafficking.

The first condition of clause (a) was not satisfied.

Evidence Relied Upon by the Court

• 40% shareholding in the Indian company.
• Collaboration agreement dated November 1, 1957.
• Procurement of machinery.
• Obtaining a manufacturing licence.
• Drug controller approval.
• Supply of samples and manufacturing manuals.
• Registered user agreement dated October 18, 1961.
• Launch of “Dristan” tablets on October 22, 1961.

The ‘Pussy Galore’ Case and English Decisions Distinguished

The Court held that the Calcutta High Court was unduly impressed by the “Pussy Galore” trademark case [1967 RPC 265], which was merely a decision of the Board of Trade under the English Trade Marks Act, 1938.

The relevant provisions of the English Act are materially different—the English Act creates two legal fictions (in Sections 28(2) and 29(2)), while the 1958 Act contains only one (in Section 48(2)).

English decisions have persuasive value, but applicability must be judged in the context of Indian laws—as held in Forasol v. Oil and Natural Gas Commission [(1984) 1 SCR 526; 1984 Supp SCC 263].

A construction leading to manifest absurdity or palpable injustice must also be rejected, as settled in M. Pentiah v. Muddala Veeramallappa [(1961) 2 SCR 295; AIR 1961 SC 1107].

Distinction Between Indian and English Law

Aspect	English Trade Marks Act, 1938	Indian Trade and Merchandise Marks Act, 1958
Legal Fictions	Two legal fictions under Sections 28(2) and 29(2)	One legal fiction under Section 48(2)
Applicability of Decisions	Persuasive only	Must be interpreted according to Indian statutory provisions
Judicial Approach	Based on English legislation	Must avoid absurdity and injustice in Indian law

Final Decision of the Court

The Supreme Court allowed the appeal with costs.

• The judgement of the Division Bench of the Calcutta High Court dated December 16, 1969, was reversed and set aside.
• Appeal 165 of 1968 filed by the appellant before the Division Bench was allowed with costs.
• The judgement of the learned Single Judge and the order passed by him were also reversed and set aside.
• Appeal 61 of 1965 filed by the first respondent before the Single Judge was dismissed with costs.
• The order of the Registrar of Trade Marks, Calcutta, dismissing the first respondent’s rectification application No. CAL-17 with costs was confirmed.
• The first respondent was directed to pay the costs of the Supreme Court appeal to the appellant.

Points of Law Settled in This Case

• The two conditions in clause (a) of Section 46(1) of the Trade and Merchandise Marks Act, 1958, are cumulative; both must be proved to remove a trademark from the register on that ground.
• The legal fiction in Section 48(2) applies not only to actual use but also to proposed use under Section 18(1) and the intention limb of clause (a) of Section 46(1).
• To claim the benefit of this legal fiction, the proprietor must have had a specific person in view as a prospective registered user at the time of the application for registration.
• Intention to use is a state of mind ascertained from all circumstances, including subsequent events.
• English decisions under the Trade Marks Act, 1938, are not directly applicable to the 1958 Indian Act owing to material differences in the provisions.
• A statutory construction leading to absurdity or palpable injustice must be rejected.

Case Summary

Particulars	Details
Case Title	American Home Products Corporation Vs Mac Laboratories Pvt. Ltd and Another
Date of Order	September 30, 1985
Case Number	Civil Appeal No. 2159 of 1970
Neutral Citation	(1986) 1 SCC 465
Name of Court	Supreme Court of India
Honourable Judges	Amarendra Nath Sen and D.P. Madon, JJ.