ITC, Punchgini and Bukhara: ITC prevails as Second Circuit Court applies Unfair Competition [United States]

In ITC Limited and ITC Hotels Limited v. Punchgini Inc. USCOA 2 No. 165 (N.Y. December 13, 2007), the Second Circuit court refused to apply the doctrine of famous marks to stop the infringement of an Indian trademark ‘Bukhara’. Nevertheless, the New York Court of Appeals applied the law of Unfair Competition to protect the trademark not specifically being used in the US at that point of time. The plaintiff was running a five star restaurant in New Delhi by the name ‘Bukhara’. It had acquired “some measure of reknown among those with an avid interest in fine cuisine.” Later, they decided to open nine restaurants in different parts of the world including US. However, the two Bukhara restaurants opened in US were closed down within a short span. Few former employees of Bukhara of New Delhi opened a Bukhara Grill and Bukhara II restaurants in Manhattan. They used the same logos, style, design, recipes and even the dresses of the waiters of the original Bukhara.

The Second Circuit refused to acknowledge trademark infringement because the plaintiff had abandoned the use of the trademark in the US, though they continued to operate in India.
The New York Court of Appeals later concluded that New York law "recognizes common law unfair competition claims, but not the ‘famous’ or ‘well-known’ marks doctrine."

Unfair Competition law prohibits use of another’s trademark or indication which is identical or similar to other persons goods that are widely recognized among users and thereby causing one's goods or business to be confounded with another person's business. Accordingly, “when a business, through reknown in New York, possesses goodwill constituting property or commercial advantage in this state, that goodwill is protected from misappropriation under New York unfair competition law. This is so whether the business is domestic or foreign.” Further, it was stated that the consumers of services provided by the defendants “must primarily associate the mark with the foreign plaintiff.” The court refused to exhaustively state the factors to determine this, stating that they would “vary with the facts of each case”. However, there has to be “evidence that the defendant intentionally associated its goods with those of the foreign plaintiff in the minds of the public, such as public statements or advertising stating or implying a connection with the foreign plaintiff; direct evidence, such as consumer surveys, indicating that consumers of defendant's goods or services believe them to be associated with the plaintiff; and evidence of actual overlap between customers of the New York defendant and the foreign plaintiff.”

The case is foundational in that it represents a paradigm shift in protection of foreign trademarks in the US. They now qualify for protection even though they may not be registered in the US, the underlying principle being that commercial unfairness should be restrained whenever there is misappropriation, for the benefit of the person who holds a legitimate property right.

Trademark cannot be claimed on common English words [India]

The Bombay High Court has ruled that a trademark cannot be claimed on common, descriptive English words.

Division bench of Justices S Radhakrishnan and Anoop Mohta were hearing a petition filed by cigarette giant ITC challenging an order allowing rival GTC Industries to register a trademark in the name of 'Magnum' for a brand of cigarettes and cigars.

"We are of the view that the word 'magnum' is of common usage and purely descriptive," observed the judges in the order. "It can serve as an indication of character or quality or value of the goods since one of its laudatory and descriptive meaning is 'great'. Such words/marks should not be registered (as a trademark)," they held.

ITC has the major share of 65 percent in the market, owns several brands including Insignia, India Kings, Classic, Gold Flake, Silk Cut, Navy Cut, Scissors, Capstan, Berkeley, Bristol and Flake.

GTC Industries Limited (formerly known as the Golden Tobacco Company), a flagship of Dalmia Group, owns brands including Chancellor, Panama, Style, Esquire, Flair and Ms Special Filter cigarette for women. In December 1987, GTC had, for the first time, filed an application for registering a trademark in the name of 'Magnum' for a proposed brand of cigarettes.

In 1992, ITC opposed the grant of trademark, but the assistant registrar of trademarks, who passed an order in favour of GTC, dismissed its challenge.

ITC then approached the high court, where the matter went on for over eight years and in 2002, the court allowed GTC to register 'Magnum' as a trademark, saying it was not a common Indian word.

An appeal against the order was filed by ITC before a division bench.
The ITC advocate referred to English Law, which contained similar provisions as India's Trademarks Act as well as judgements of the European Courts of Justice to argue that laudatory words like 'magnum' could not be registered, which the court accepted.

The court held that purchasers of cigarettes are common men of all ages and include persons with knowledge of the English language.

The word 'magnum', the judges held, could serve as an indication of the characteristics of goods. Also Section 9(1) (b) of the TM Act "contains an absolute bar for registration of any descriptive and laudatory term," the judges stated in the order.