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Decoding Deception In Pharmacy: Cadila Healthcare v/s. Cadila Pharmaceuticals

The Indian pharmaceutical industry, while a lifeline for many, navigates a complex landscape of trademark laws. The article explores the famous Supreme Court case of Cadila Healthcare Ltd. vs. Cadila Pharmaceuticals Ltd. from 2001, which sparked a legal dispute over very similar medicine name. The major issue? possibility of consumer deception and health risks in a world where not everyone is literate in English.

The court considers the potential consequences of phonetic similarity in healthcare trademarks, which go beyond simple economic considerations. Even slight name overlaps can offer major hazards of patient confusion and possibly even put lives in peril in a nation where English literacy can be restricted. The case provides insightful guidance for managing the intricate relationship between intellectual property and patient welfare in India's developing pharmaceutical industry by striking a balance between brand interests and public health concerns.

Citation: 2001 (2) PTC 541 SC
Bench: Justice B.N. Kripal, Justice Doraswamy Raju, Justice British Kumar

A dispute regarding trademark infringement based on goodwill and reputation is not a new scenario in the sphere of IPR litigation. However, an infringement dispute in an industry like the pharmaceutical industry could have a grave consequence on the consumers than any other. This could directly cost their life side by side eradicating reputation of a well-established company.

The present case is yet another suit that was filed by one manufacturing company namely, Cadila Healthcare Ltd. against its sibling company, the Cadila Pharmaceuticals Ltd. regarding the drugs they have produced which contains similar prefix. The former has raised concerns regarding the confusion and deception between the two drugs which are Schedule "L" drugs and sold in hospitals and clinics.

The honourable Supreme Court, navigating through the complexities of societal literacy and precedents of foreign as well as Indian laws, has laid down crucial principles that would protect trademarks and the people looking for cure to their disease in a market where slight similarity could have a huge impact. The present case of Cadila Healthcare Ltd. Vs. Cadila Pharmeuticals Ltd. has set a stricter principle for protection in medical industry.

The appellant and the respondent are two companies that were formed after the restructuring of the Cadila Group and were allowed to use the term "CADILA" in their corporate name as per the conditions of the restructuring. Both the companies indulge in the manufacturing of pharmeuticals products and has created a drug respectively for the treatment of cerebral malaria that have similar spellings and has led to this dispute.

The appellant, CADILA HEALTHCARE LTD, has formulated a drug named "FALCIGO" for and on October 7th, 1996 received the permission by the Drugs Controller General of India to market the same under the trademark of "FALCIGO". On the other hand, the respondent, CADILA PHARMEUTICALS LTD, has received permission from the authority on April 10th, 1997 for the trademark of its product "FALCITAB" and has been selling it since then.

The appellant filed a suit in the district court at Vadodra as well as the High Court who did not give the order in favour of the appellant and stated that the two products are different from each other as the price, appearance, and composition of the two are different from each other and were not sold directly to the individuals. Both the drugs were schedule "L" drugs which are distributed to hospitals and clinics. Thus, there was no possibility for confusion between the two. Aggrieved from the decision of the High Court, the appellant filed a special leave in the Supreme Court.

Appellant's Contention
The appellant in their arguments have stated that they received the information regarding the use of the trademark "Falcitab" to treat the ailment of Falcipharum Malaria by the respondent in the month of April. The drug was sold by the respondent since 1998. The similar trademark to treat the same ailment could create confusion and lead to deception between the consumers.

The respondent in their defence claimed that the drug sold by both the parties were Schedule "L" category of drugs which could only be sold in the clinics and hospitals. Therefore, the chances for confusion were said to be minimal. Appellant in their counterpart mentioned that even though the drugs were not sold directly to the consumers and only to the hospitals, it could still lead to deception and the risk of confusion here could cost a person their health and life.

Respondent's Contention
The respondent in this dispute has contended that the prefix in the name of the drug i.e. "Falcitab" has been taken from the name of the disease itself which is "Falciparum." Further, they added that it is a general practice adopted by the pharmaceutical companies to name their drug after the disease that needs to be cured which they have also done here.

Moreover, the drugs are not Schedule "H" category which is available for the consumers at the retail shop and could only be purchased from hospitals and clinics over prescription by the doctor. This reduces the risk of confusion between the two drugs is unlikely to happen.

Decision And Reasoning
The court while considering this case has only set out principles that needs to be looked into while dealing with a case of passing off in Indian society with lower level of literacy rate. It did not involve itself into the merits of the case. The principles were set as per two important provisions of the Trade and Merchandise Marks Act of 1938. As per Section 28 of the act, the owner of the trademark in Part A or B of the registrar is given exclusive right to use their trademark without any infringement on it. In the case of any infringement, the person has the right to file a suit for recovery of their rights.

Section 27(2) of the same act deals with the action of passing off which is based on the concept that no other person can represent their goods or sell them as similar to another person or pretend to be someone they are not. Therefore, any action against any un-registered trademark is also allowed in the eyes of the law.

The court has examined various case laws for laying down principles in this case and tackle the issue of trademark in the medical industry. The court examined one of the recent cases of the Dyechem's Case where it was observed that when a question of deception is considered between two similar marks, the difference between the marks must be considered rather than the similarity.

Here the court pointed out three differences which eventually led to the decision that there was no scope of confusion and deception between the marks in suit and the action of passing off is not maintainable. The court in the present case held this case to be contrary to the already binding principles in other cases of National Sewing Thread Co. Ltd.'s case, Corn Products Refining Company's case, Amritdhara Pharmacy's case, Durga Dutta's case others.

The court in all the above-mentioned cases has considered the similarity between the marks and have considered the facts of the case as per the Indian society where the terms of English language is foreign to many people. As per the court, the phonetic similarity is equally important as the spelling of these term. No common man would look at the meaning of the terms or break the spelling of the drugs while purchasing it. People living in small towns rely on purchasing the medicines more than visiting a doctor to treat an ailment.

Therefore, in the case of pharmaceutical products, phonetic similarity could also lead to deception and there is high risk of confusion between the similar drugs. The court in the case of Amritdhara Pharmacy has put up two main questions that should be looked upon for deception. These are as follow:
  • Who are the people that could be deceived by the similar use of terms?
  • What rules of comparison needs to be considered while judging these cases?
In considering the facts and the terms of the drugs, the people of average intelligence in relation to the society they live in needs to be considered rather than the possible differences that the two marks might have. The court in Durga Dutta's case has observed that when the marks in question are identical to each other, then no other issue needs to be considered for infringement of trademark of the petitioner.

Moreover, if the court is not able to make out any similarity between the two marks, then the burden to prove the deception and confusion that could arise between the marks is on the petitioner itself.

Henceforth, the court in the present upheld the importance of phonetic similarity which could lead to deception between the people in Indian society due to their average intelligence and not being familiar to English language. Even if the drugs are sold under doctor's prescription or at clinics, the same could not reduce the risk of confusion as there could be accidental negligence on part of the pharmacy.

Further, an industry which is supposed to cure the disease and aid in good health of the people could not bear the deception at all. Thus, an Indian purchaser could not be compared to an English purchaser where there is language and intelligence disparity.

The supreme court laid out principles to be followed while considering the case of passing off and to decide the extent of similarity and deceptiveness between two marks. These principles are as follow:
  • Nature of Mark - Word marks, label marks, and composite marks.
  • Degree of Similarity - Ideological and phonetic similarity.
  • Similarity of Both Traders - Nature, Performance, Characters of Goods.
  • Identifying the Consumers - Intelligence, Education, Degree of Care taken.
  • Nature of Goods - Goods used as Trademarks.
  • Mode of Purchase - Used while buying the goods.
  • Other Circumstances - Important for dissimilarity.

Therefore, the court allowed the appeal of the appellant and held the mark used by the respondent in selling their drug named "FALCITAB" to be deceptive which could create confusion with the "FALCIGO" drug sold by the appellant.

The Supreme Court has carefully examined both Indian as well as foreign cases before laying down principles for the action of passing off. The judges have rightly stated that no matter whether the drugs is Schedule "L" category or not, it could still lead to confusion between the consumers due to which a suit of passing off could arise between the marks. Here the court dealt with more than the question of goodwill and reputation. Deception in the medical industry is of more serious nature than those of non-medical industry as it could directly affect the health of a person.

Even a slight phonetic similarity or spelling could have a large consequence on the consumer especially in a society with limited knowledge of English language. It was necessary to lay down the principle for passing off as certain precedents has considered the difference between the marks instead of similarity. There would definitely some kind of difference between the marks which allowed them to register their trademark with the registrar, however, these differences should be considered keeping in mind the end consumers of those goods. Thus, it is necessary to focus on the similar features in the marks that could create the possibility of confusion.

  • Cadila Health Care Ltd v. Cadila Pharmaceuticals Ltd., (2001) 5 SCC 73.
  • National Sewing Thread Co. Ltd., Chidambaram v. James Chadwick and Bros. Ltd., AIR 1953 SC 357.
  • Amritdhara Pharmacy v. Satya Deo Gupta, AIR 1963 SC 449.
  • Corn Products Refining Company v. Shangrila Food Products Limited, AIR 1960 SC 142.
  • S.M. Dyechem Ltd. v. Cadbury (India) Ltd., (2000) 5 SCC 573.
  • Kaviraj Pandit Durga Dutt Sharma v. Navaratna Pharmaceutical Laboratories, AIR 1965 SC 980.

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