The Blocks Of Legacy
Block by block, Lego, the Danish toy company, has managed to build itself a name and reputation worldwide since the 1930s. Not only that, in 2003, Lego successfully managed to become a trans-border brand and achieved the status of a well-known mark during a case in the Secundrabad Court. Recently, in a contentious dispute between Lego (Petitioner), the company and a Hyderabad based confectionery company called Leo Foods (Respondent 1) the Madras High Court, presided over by Justice PB Balaji, ordered the Registry of Trademarks (Respondent 2) to strike down two trademarks of the Leo Foods i.e. Respondent 1, namely the ‘Lego Cuteheart’ and ‘Lego Coffybond’.
The Background
Lego filed a Rectification Petition under Section 57 of the Trade Marks Act, 1999 (“Act”), which provides for grounds for rectification of the trademark register, seeking cancellation of the registered trademarks of the Respondent 1. This action of Lego came after the company discovered that Leo Foods, a confectionary company, had been using the ‘LEGO’ trademark on its candy brands. Since its inception in 1934, Lego has gained immense popularity, with a sale of approximately INR 61.7 crores in India alone.
Lego alleged that Leo Food using their registered trademark, has infringed on their rights and leveraged its reputation in an unfair manner. On the other hand, Leo Foods asserted that the use of the mark was specific to the confectionery world, registered under Class 30 and was independent from Lego’s toy products that fell under Class 28.
Issues Raised
Four major issues were raised in the Court of law, namely:
a) Whether the impugned marks needed to be struck down from the Trademark Register?
b) Whether Lego was entitled to claim to be a well-known mark in India?
c) Whether the impugned marks were capable of causing consumer confusion and deception?
d) Whether the adoption of the impugned marks by Respondent 1 was honest and bonafide?
The Petitioner’s primary contention was that the identical use of their well-known mark by Respondent 1. i.e. Leo Foods, targeted the same audience i.e. children, which would lead to grave deception and confusion in their minds. To strengthen their argument, reliance was placed on the case of Bata India Limited v. Pyare Lal and Company and Daimler Benz Aktiegesselschaft and another v. Hydo Hindustan , to state that Petitioner was entitled to protection across all goods and services by the virtue of Section 11(2) of the Act.
The Petitioner has also stated that fraud or deceit on part of the Respondent 1 was huge.
The Respondent 1 submitted that on the day of filing the rectification petition, the Petitioner’s mark had not acquired a well-known mark status. The Respondent 1 also argued that its adoption of the mark was honest and bonafide with no intention of deceit. They also emphasized that distinct trade channels and differing product costs would nowhere cause any confusion among the consumer base. To fortify this, the case Vishnudas Trading as Vishnudas Kishendas v. Vazir Sultan Tobacco Company Limited , was cited to prove that even in the same class of goods, both marks could possibly co-exist.
The Court’s Analysis
The Madras High Court first examined the merit of the well-known mark status of the Petitioner. It held that although, the Rectification Petition was filed at a later date, the mark has already achieved such status in other jurisdictions throughout the world. The court cited the explanation to Section 11 of the Act, stating that an earlier trademark that is well-known in nature could seek protection even if the goods are not similar.
To analyse the issue of trade channels, the Madras High Court examined the rival marks side by side and held that Respondent 1 had identically adopted the Petitioner’s mark including the style and colours. The Madras High Court also stated that though the trade channels were different, the Leo Foods catered to an audience was children with young minds. The Court also held that the adoption of the mark on grounds that the Respondent 1 only conducted a search in the class including confectionery items was dishonest and in bad faith.
To refute the Respondent 1’s different classes argument, the Madras High Court also stated that the bifurcation was only for convenience purposes and could be used as defence for acts of infringement and passing off.
While discussing the intent and scope of Section 29 of the Act, the Court held that only likeliness of confusion and not actual instances of confusion needed to be proved. The Madras High Court further refuted the territorial limitations alleged by the Respondent 1 against the Petitioner, ruling that dishonest adoptions negate such claims. The Court also emphasized on the amendments made to Section 11 of the Act which now extend protection by now including the law of passing off, thus, rejecting the plea that both the marks could co-exist without any confusion.
Conclusion
The Madras High Court ruled in favour of Lego and ordered the Registry of Trademarks to remove the impugned marks in Class 30 from the register. An analysis of the judgement highlights the importance of trademark protection for giant brands and protection to be granted to them against mala-fide practices of third-party brands to reap commercial benefits. Companies must be not only vigilant in securing their statutory rights but must be mindful in ensuring that their business strategies do not violate the rights of other brands, leading to consumer deception. This case serves as a reminder that despite goods being of different classes, the potential confusion still remains a critical point of contention in the trademark landscape.
Authors: Khushboo Pareek, Vishal Menon & Simran Jayarao