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Prior use turns the scales in favour of Cremo

Two entities dealing in milk and dairy products vie for rights in the mark/name CREMO before the Punjab & Haryana High Court. The Plaintiff, Cremo S.A., (Cremo S.A), filed the suit before the District Court, Faridabad (Haryana), against the Defendants, Cremo Netureal Milk LLP & another (CNML), alleging passing off. Cremo S.A., a swiss company, sought to restrain CNML from selling products under the name 'Cremo' or dealing in any manner under the trademark 'Cremo' and/or 'Cremo Netureal Milk LLP'. 

Facts in brief

Cremo S.A., based in Switzerland, and operating since 1927, claims to be in the business of processing, manufacturing, and marketing consumer dairy products. In India, their application for the mark CREMO in class 29 faced objection based on an identical prior mark in the said class in the name of CNML. Inquiries revealed that CNML had set up a limited liability partnership firm under the name Cremo Netureal Milk LLP and applied for registration of the mark CREMO. Cremo S.A.'s warning letter asking to cease use of the name CREMO and withdrawing the trademark application was not complied with by CNML, which led to the filing of the suit at the District Court, Faridabad.

In defence, CNML contended that they honestly adopted the name Cremo which was allowed by the Registrar of Companies. They have spent a considerable amount of money to promote the mark/name Cremo and filed an application for registration which is pending. Cremo S.A. has neither business activities nor commercial existence in India.

After considering the arguments, the District Court granted an injunction in favour of Cremo S.A. CNML challenged the order by filing an Appeal before the Division Bench (two judges) of the Punjab & Haryana High Court.

Appeal

CNML, in the appeal, reiterated their contentions that they raised before the District Court a) bonafide adoption of the mark/name CREMO b) prior trademark application filed by them c) Cremo S.A. is based in Switzerland and have no activities in India. CNML has acquired goodwill for their products though there has been a delay in manufacturing on account of Covid pandemic. Thus, the injunction granted by the District Court ought to be set aside.

Cremo S.A. countered the arguments based on a) their prior global adoption and goodwill b) Cremo branded products are sold/supplied in India since the year 2016, prior to registration of CNML in March, 2019 as a limited liability partnership. There is no infirmity in the order, and the appeal ought to be dismissed.

The High Court, after considering the arguments, case laws and documents on record made the following observations:

  • The contention that Cremo S.A. does not have commercial existence in India will not succeed. Cremo S.A. has filed invoices evidencing the sale and supply of goods/products to the Indian customers/importers since the year 2016. The quantity of these products ranges from 2500 Kgs up to 50,000 Kgs with requisite certificates of the concerned authorities. This, shows that Cremo S.A. was well known to the customers/importers in India at least since the year 2016 and even much before the incorporation of CNML in March 2019.

  • The contention that CNML's trademark application is prior does not have much relevance. In this regard, CNML, in their written statement, has stated that they are facing operational problems due to the pandemic, and the temporary injunction would delay the production. This statement, coupled with the fact that CNML has not been able to place any material on record to show that they have been manufacturing and marketing any milk/dairy products with the said trade name or mark prior to their applying for the registration, lead to the only inference that they are yet to manufacture and launch their products in the market. On the other hand, Cremo S.A. has been catering to the orders/demands of the Indian importers since the year 2016. In the circumstances, Cremo S.A’s trademark application being subsequent to CNML does not adversely affect its preferential right to use the said trademark for its products.

  • CNML's argument that they have spent a considerable amount of money will not suffice to disentitle Cremo S.A. from seeking ad-interim relief. The latter has already been exporting its products to the customers/ importers in India.

  • In the instant case, the balance of convenience favors Cremo S.A., considering they are supplying/exporting its products to the Indian importers/customers since the year 2016.

    • In light of the above, the High Court held that there is no infirmity or irregularity in the order passed by the District Court and thus, dismissed the appeal filed by CNML.

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