Folzest Vs Forzest: Delhi HC stays order involving Rs10 lakh penalty on Sun Pharma
Delhi: In a major relief to Sun Pharmaceuticals Ltd., the Delhi High Court has issued an order staying its earlier order in November that had imposed a fine of Rs 10 lakh on the drug giant for allegedly concealing facts in a trademark dispute with DWD Pharmaceuticals Ltd. over the mark 'Folzest', which is deceptively similar to Sun's mark 'Forzest'.
The stay has been granted until March 27 of next year, when the matter will be taken up for hearing by the High Court.
Last month, the Delhi High Court levied a penalty of Rs 10 lakh on Sun Pharma for concealing facts in order to obtain an ex-parte injunction order in the matter with DWD Pharmaceuticals Ltd. over the mark 'Folzest', which is deceptively similar to Sun's mark 'Forzest'.
While FORZEST is a medicine used to target erectile dysfunction in men, FOLZEST is a multivitamin for pregnant women for lowering the risk of pre-term birth.
In May, 2022, an interim injunction was passed by the high court restraining DWD from using the mark "Folzest" or any other mark similar to Sun Pharma's mark "Forzest" after Sun Pharma filed a plea against DWD Pharma, seeking the grant of an ad-interim injunction restraining the DWD from manufacturing, selling, offering for sale, advertising, directly or indirectly dealing in medicinal preparations under the mark 'FOLZEST' or any other trademark which is deceptively similar to the plaintiff's trademark 'FORZEST'.
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In its plea, Sun Pharma had submitted that its predecessor-in-interest, namely, 'Ranbaxy Laboratories Ltd.', coined and adopted the trademark' in the year 2003 and has been using it since then. The drug maker mentioned the figures of sales for the medicinal product sold under the said registered mark for the financial years 2004-05 to 2020- 21, asserting that such sales have grown from Rs.95.31 Lakh in the financial year 2004- 05 to Rs.187.53 Lakh in the financial year 2020-21.
Sun Pharma alleged that it only learnt about DWD's trademark in May and hence moved the high court, claiming that the adoption of a similar trademark amounts to infringement as also "passing off and unfair competition".
Deliberating the case, the Court issued an ad-interim ex-parte order on 19 May, 2022, restraining DWD Pharma from using the mark Folzest or any other trademark deceptively similar to Sun Pharma's trademark.
However, DWD Pharma approached the Court with another application praying for setting aside the order. It alleged that Sun Pharma has obtained the order by concealing various material facts including that DWD Pharma is a registered proprietor of the trade mark Zest since the year 1983 and has a family of registered trade marks with Zest forming a part of them (Zest family of marks).
DWD further argued that Sun Pharma was aware of not only the registration of the mark 'ZEST' in DWD Pharma's favour but also of the other marks registered and used by the drug maker. DWD pointed out that Sun Pharma had earlier applied for the registration of the mark 'EXEZEST', which was opposed by DWD in 2009, and this matter is still pending adjudication before the Trade Marks Registry.
Subsequently, in its plea DWD said that;
"As Sun Pharma has approached this Court with unclean hands by concealing and suppressing material facts and documents, it is not entitled to be heard on the merits of its claim and the application filed by it under Order XXXIX Rules 1 and 2 of the CPC, being I.A. No. 7825 of 2022, is liable to be dismissed in limine."
On the other hand, Sun argued that the uses of the two medicines are different. It said, "Any confusion between the two marks can lead to wrongful consumption of the pharmaceutical goods by an unwary consumer, which in turn will lead to disastrous consequences."
Further, in context of the concealment of information, Sun Pharma explained that the reply submitted by the predecessor-in-interest of the plaintiff to the Examination Report is also not relevant as once the registration of a trade mark is granted, no reliance can be placed on such correspondence.
After hearing both the parties, Justice Navin Chawla observed that there were facts important and material to be disclosed upfront in the plaint by Sun Pharma, which has a bearing on the Court while considering the relief of an ad-interim ex-parte injunction in favour of the company.
It held;
"Sun Pharma, with a mala fide intent, sought to mislead this Court by concealing material facts from this Court."
It further noted;
"The plaintiff (Sun Pharma) cannot be allowed to escape the consequences of having concealed material facts from this Court to obtain an ex-parte order of injunction. Whether with the disclosure of the above-mentioned material facts, the Court would have still granted the ad-interim ex-parte order of injunction or not, is not relevant and cannot absolve the plaintiff from the consequences of not making such disclosure of material facts".
The court further added that,
"Such a practice not only has to be deprecated but must also be penalised. The plaintiff, therefore, is saddled with costs of Rs.10 Lakh (Rupees Ten Lakh only) to be deposited with the Delhi High Court Legal Services Committee within a period of two weeks from the date of the judgment."
However, despite the "concealment and misstatement" by Sun Pharma, the high court ruled in their favour as it "prima facie" found that the two medicines were "deceptively similar to each other".
Resultantly, the court opined that in the case of medicines, the right of not only the private litigants but also public interest has to be kept in mind, and, in fact, be given prominence. It noted;
"Even a remote chance of deception or confusion arising because of similarity in the marks is to be avoided and prevented, as it may led (lead) to disastrous consequences for unwary consumers."
The case was then listed for further proceedings on 19 January 2023. However, the ruling was immediately challenged by Sun Pharma for seeking a stay. As per a recent media report in Live Mint, the court, in its latest order has granted stay until March 27 of next year, when the matter will be taken up for hearing by the High Court.
To read the November order, click below:
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