On September 12, the Indian Supreme Court issued judgment explaining its decision not to interfere with a November 2017 Bombay High Court ruling in Wockhardt v. Torrent Pharmaceuticals. The Supreme Court opinion stokes a question of appreciable interest on injunctive relief in trademark claims.
In essence, it asks: when can it be said that the conduct of a trademark Claimant has crossed the line between permissible delay and impermissible acquiescence that separates a tenable interim injunction claim from an untenable one? Though the Supreme Court opts against ruling on the question, the decision not to decide it may, in itself, be of great significance in future cases.
The Background and Claim
The background informing the dispute is uncomplicated.
Wockhardt invited the Supreme Court to set aside a November 2017 ruling by an appellate bench of the Bombay High Court in a medicinal trademark dispute. The appeals ruling was constructed around two talking points.
First, it diverged from Mr Justice Patel’s March 2017 first instance opinion dismissing Torrent’s motion to injunct Wockhardt, on merits. Second, it opted, on balance, to stay the operation of Torrent’s injunction at Wockhardt’s request, over Torrent’s objections.
The Supreme Court extended this stay in May 2018, setting the table for a fuller consideration of Wockhardt’s challenge to the Bombay appeals decision. This challenge is rejected by the Supreme Court here.
Torrent’s claim itself rests on its trademarks ‘CHYMORAL’ / ‘CHYMORAL FORTE’ for a medicine administered to repair surgical injuries. The prefix ‘chymo’ draws from the generic name of the medicine (chymotripsin). This, in Torrent’s claim, sets up an arguable passing off claim either side of Wockhardt’s ‘CHYMTRAL’ / ‘CHYMTRAL FORTE’ for the same medicine.
Three Issues for the Supreme Court
After running through the parties’ cases on the passing off trifecta of Claimant’s reputation, Defendant’s misrepresentation and likelihood of damage to the Claimant, the Supreme Court sharpens the differences between the two Bombay opinions to three issues.
First, it finds that Mr Justice Patel hesitated to presume misrepresentation by Wockhardt by the simple fact of two confusing names for the same product in the market, but the appeals court was more willing to do so. On this issue, the Supreme Court sides with the appeals court. It does so by recanting the established position that a passing off claim does not necessarily require fraud or other nefarious intent to make misrepresentation: it only matters that there is confusion, not how the confusion results.
Second, it finds that Mr Justice Patel had been unimpressed by Torrent’s showing of “reputation as to source [of the product]” whereas the appeals court had, in Torrent’s sales figures and claim of prior use, found sufficient material to tie its reputation to the trademark. This is a disagreement that invites no comment from the Supreme Court.
Finally, the Supreme Court notes that the two Bombay opinions had been divided on the question of whether Torrent’s failure to oppose Wockhardt’s claim over ‘CHYMTRAL’ since 2009 — including its trademark applications in prosecution — constituted acquiescence sufficient to bar a trademark suit now. Mr Justice Patel had ruled that it was sufficient but had been overruled for effectively conflating delay with acquiescence.
The Supreme Court quotes at length from the appeals court ruling on this question, which, in turn, leans on February 1994’s Supreme Court opinion in Power Control Appliances v. Sumeet Machines. Power Control Appliances had ruled specifically on the sufficiency of acquiescence by Claimants in disentitling them from interim injunctions, dividing the permissibility of such conduct either side of a bright line of “positive acts, not merely silence or inaction”. Failing to find a clear-cut positive act by Torrent here, the appeals court had found against Wockhardt. This, rules the Supreme Court, is within the bounds of acceptable appellate interference “on a matter of principle”.
Measuring the Standard for Appellate Interference Against Wander v Antox
Blanketing all three issues is the standard for appellate interference prescribed by the Supreme Court in August 1990’s Wander v. Antox. The Wander decision — an excellent ruling that now functions as a sobriety check on appellate interference in trademark interim injunction cases — invites appellate courts to meet a two-sided requirement.
Following Wander, an appeals court may reverse an interim trademark injunction ruling only if the discretion informing it is arbitrary, perverse or in ignorance of settled principles governing such injunctions and not if the exercise of the discretion fed an outcome that was reasonably possible on the material before the first court.
Here, the Supreme Court finds that “this is not a case where Wander has not been heeded”. This is likely a fair ruling, but certainly one that permits of reasoned disagreement on each point.
On misrepresentation, the only place Mr Justice Patel’s opinion stops short of the appeals court’s view is in not presuming misrepresentation where it may have, on another view, been otherwise made out. The fact that passing off concerns itself only with the effect of deceit and not the intention behind it does not automatically mean that not presuming its fulfillment as a condition is an unreasonable position.
On Torrent’s reputation, the conclusion by the appeals court that it was sufficiently attached to the trademark is, in truth, not a disagreement on law at all. It is a reinterpretation of the sales figures and of Torrent’s prior use claim, both of which are decidedly factual considerations. Wander, it is worth recalling, specifically warns against reassessing material where a reasonable view to the contrary is possible.
If Mr Justice Patel’s view was not a reasonably possible one, the correct course of action ought to have been to explain why this was not so. The closest the appeals court opinion comes to doing so is stating that the previous court’s view is in ignorance of admitted facts. That is a contestable position in itself, and once again, a stance that affords room for divergence.
Lastly, on Torrent’s acquiescence, there is undoubtedly good reason to support the Supreme Court’s non-interference with the Bombay appeals court’s ‘delay is separable from positive acquiescence’ position. However, again, this is not the inquiry that the Wander Supreme Court demands. It simply asks if the view taken by the court of first instance was reasonably possible on the material before it.
It is surely not coincidental that this inquiry is, once again, factual in nature. In appeal of Mr Justice Patel’s opinion, the questions to ask are: (a) whether a largely unrefuted and unactioned position in the market by a prominent competitor dating back to 2009 could be seen as proof of unreasonable delay and, coupled with knowledge of invasion of rights, a type of “silent” acquiescence; and (b) whether these factors weigh sufficiently heavily to disentitle Torrent’s claim for interim relief here.
The appeals court, however, simply reiterates that acquiescence is different from delay for the reason that acquiescence requires a purely positive act. This can either be read as a disagreement with Mr Justice Patel for applying an incorrect metric to judge Torrent’s interim injunction claim or as an incorrect framing of the Wander Supreme Court’s requirement for how Mr Justice Patel’s opinion ought to have been examined on appeal.
The layers of inquiry involved in a Wander review can be confusing, so it merits repetition: my position is not that one view is preferable over the other but is merely to demonstrate that two reasoned views are possible. If two reasoned views are possible, it follows that the Supreme Court’s conclusion in this case that the Wander standard for interference had not been breached is not necessarily the only route that could have been taken.
“Positive” Acquiescence or “Silent” Acquiescence?
However, leaving aside the merits of the other routes open to the Supreme Court here, what do we make of its decision to give the substance of the acquiescence question a wide berth?
What we can be sure of is that the Supreme Court’s support, “on a matter of principle”, of the Bombay appeals court’s interference means that acquiescence findings can be opened up substantively in appeal. However, does it have the effect of approving a bullish, pro-Claimant, Power Control Appliances-style “positive” acquiescence? Is it a complete rejection of Mr Justice Patel’s eminently reasonable view that “silent” acquiescence over an inordinate period of time could be sufficient to block interim injunctions?
The Supreme Court’s decision not to wade into the substance of the acquiescence controversy looks compellingly like a tactical one. Equally, though, it is difficult to read the Supreme Court’s language in confirming that the appeals court ruling has corrected “errors of law” by the first court as anything other than an implied endorsement of the “positive” acquiescence position.
However, the difficulty with reading such an endorsement is in the diluted manner of its presentation. If, for instance, the positions taken by the two Bombay courts were swapped, would the Supreme Court have defended appellate interference with “positive” acquiescence equally enthusiastically?
Unfortunately, nothing in this Supreme Court decision brings us any closer to answering this question.
Decoding what legal position the Supreme Court stands behind has, through force of familiarity, become an interpretive challenge familiar to Indian trademark law. However, given that this is an area that carries the potential to so easily influence whether numerous entities in the medical supplies market stick or twist, it is regrettable that Wockhardt v Torrent Pharmaceuticals compounds, rather than resolves, another such challenge.
Comments