NEHA: A Common Name, An Uncommon Trademark Battle

Introduction

The High Court of Delhi, in a judgment of Inder Raj Sahni Proprietor M/S Sahni vs. Neha Herbals Pvt. Ltd.[1], meticulously adjudicated a complex trademark dispute centered on the mark "NEHA". This consolidated legal proceeding involved Inder Raj Sahni, proprietor of M/s Sahni Cosmetics (the Defendant), and Neha Herbals Pvt. Ltd. and Vikas Gupta (the Plaintiffs). The core of the controversy revolved around competing claims of prior commercial adoption and continuous use of the identical "NEHA" mark, applied to distinct yet overlapping product categories within the personal care sector: Mehandi and allied herbal preparations by the Plaintiffs, and face creams by the Defendant. The Court was tasked with resolving these rival assertions to determine issues of trademark infringement, passing off, and the validity of existing registrations, thereby underscoring the paramount importance of credible and sustained commercial use in establishing proprietary rights.

Factual Background

The protracted litigation originated in 1992 when Mr. Vikas Gupta (Plaintiff No. 1) adopted the trademark "NEHA" for his proprietorship concern, M/s Neha Enterprises, initially for Mehandi powder and Ubtan, with subsequent expansion into Mehandi cones, hair dyes, and hair colouring products. Neha Herbals Pvt. Ltd. (Plaintiff No. 2), incorporated in 2007, subsequently acquired the business in 2012. The Plaintiffs held several trademark registrations for "NEHA", including a word mark, claiming continuous use since April 1, 1992. The Plaintiffs initiated the present suit in June 2019, alleging trademark infringement and passing off, shortly after discovering the Defendant's sale of cold cream bearing the "NEHA" mark.

Conversely, the Defendant asserted prior adoption and use of the "NEHA" trademark for creams as early as 1990. The Defendant presented a manufacturing license from 1990 and sales invoices dating from 2003 onwards to substantiate its claim of honest and concurrent use, arguing that its adoption predated the Plaintiffs'. The Defendant further contended that the Plaintiffs' claims were barred by undue delay and acquiescence, alleging prior knowledge of the Defendant's use since 2003 through a common wholesaler. Additionally, the Defendant sought the cancellation of the Plaintiffs' trademark registrations, positing that the Plaintiffs' early use of "NEHA" for Mehandi products was in violation of the Drugs and Cosmetics Act, 1940 (D&C Act) due to the absence of a valid manufacturing license. It is pertinent to note that the Defendant's multiple applications for registration of "NEHA" for creams had previously been refused or abandoned by the Trade Marks Registry.

The dispute progressed through various judicial fora, including an initial interim injunction granted and subsequently vacated by the District Court, and parallel cancellation petitions filed by the Defendant before the Intellectual Property Appellate Board (IPAB). Following the abolition of the IPAB, these petitions were transferred to the Delhi High Court. The Supreme Court, having reviewed the interim injunction matter, directed the expeditious disposal of the suit. Ultimately, by mutual consent of the parties, the suit and the two cancellation petitions were consolidated and heard together by the High Court, with the evidence adduced in the suit being considered for all connected proceedings.

Issues Before the Court

Based on the comprehensive pleadings, the Court framed several pivotal issues for adjudication. The primary questions revolved around the ownership and prior use of the "NEHA" trademark. This included determining whether the Plaintiffs were the lawful proprietors of the mark and if they had maintained continuous use since 1992 as claimed. Critically, the Court also had to ascertain if the Defendant was, in fact, a prior user and adopter of the trademark "NEHA", and the legal implications of such a finding on the Plaintiffs' rights. Directly related to these priority claims was the question of whether the Plaintiffs' trademark registration for "NEHA" was invalid and warranted cancellation.

In addition to the core priority dispute, the Court considered equitable defenses raised by the Defendant. These included allegations that the Plaintiffs were guilty of concealment and suppression of material facts, and that the suit itself was barred by reason of undue delay, laches, and acquiescence on the part of the Plaintiffs.

Finally, the Court also addressed the questions concerning trademark infringement and passing off. This involved determining whether the Defendant's use of the impugned trademark "NEHA" was likely to cause confusion or deception, thereby leading to the passing off of the Defendant's products as those of the Plaintiffs', and whether it constituted an infringement of the Plaintiffs' registered trademark "NEHA". The Court also had to consider if the Plaintiffs were entitled to specific reliefs, such as delivery up of infringing goods and rendition of accounts. The Court strategically decided to address the issues pertaining to prior use and trademark validity in conjunction, given their direct bearing on the determination of who held superior rights. Similarly, the equitable defenses concerning concealment and delay were considered simultaneously.

Decision

On Proprietorship (Issue 1): The Court upheld the Plaintiffs as the registered proprietors of the trademarks "NEHA" and "NEHA HERBALS" under Section 28(1) of the Trade Marks Act. It rejected the Defendant's objections to the assignment deed between Plaintiff No. 1 and Plaintiff No. 2, noting that Plaintiff No. 1’s primary registration from 2003 (with a user claim from 1992) was independent of that assignment. Accordingly, Issue 1 was decided in favor of the Plaintiffs.

On Prior Use and Trademark Validity: This was the central issue. The Court emphasized that trademark rights stem from genuine and continuous use. Despite the absence of direct evidence from the earliest claimed dates, the Plaintiffs’ use of “NEHA” since at least 1994 was supported by testimonies, ITRs from FY 1994–95, a 1995 application, packaging samples, a 1999 registration, licensing agreements from 2005, 2002 advertisements, and a steady rise in turnover. The Defendant’s claim of use from 1990 was unsubstantiated, sales invoices began only in 2003, packaging invoices from 1999, and their claimed products did not match the licensed ones. Trademark applications filed between 2006–2012 cited conflicting user dates and unsupported product claims, weakening their case. The Court also rejected the argument that absence of a manufacturing license until 2005 rendered the Plaintiffs' earlier use illegal, citing legal precedent. The issue was decided in favor of the Plaintiffs.

On Concealment and Delay (Issues 4 and 5): The Defendant’s claim that the Plaintiffs concealed facts or delayed action was dismissed. The Plaintiffs became aware of the Defendant's product in May 2019 and promptly filed suit in June. The Defendant’s attempt to prove earlier knowledge relied on inconsistent and unsubstantiated evidence. The Court reiterated that mere delay, without prejudice or active encouragement, does not bar relief. These issues were also decided against the Defendant.

Conclusion

The Delhi High Court's judgment in this matter stands as a significant pronouncement in Indian trademark jurisprudence. Through a meticulous examination of the evidence and a rigorous application of settled legal principles, the Court has:

• Reaffirmed the Primacy of Continuous Use: The decision unequivocally establishes that while statutory trademark registration confers rights, these rights are fundamentally rooted in genuine, continuous, and credible commercial use in the market. It underscores that unsubstantiated assertions, inconsistent claims, or belated evidence cannot override a well-substantiated narrative of market presence.

• Clarified Evidentiary Burdens: The case highlights the substantial burden on a party asserting prior use, particularly when direct, contemporaneous evidence from the claimed earliest date is not available. Indirect evidence, though admissible, must collectively form a coherent and convincing narrative.

• Distinguished Regulatory Compliance from Trademark Rights: The ruling importantly clarifies that an alleged breach of a regulatory condition, especially where no such license is legally mandated (as was found for Mehandi), does not automatically vitiate a party's accrued trademark rights.

• Elucidated Defenses of Delay and Acquiescence: The Court reiterated that these equitable defenses demand more than mere inaction;  require clear proof of knowledge, active encouragement, and consequential prejudice, which the Defendant in this instance failed to substantiate.

  
  

This landmark decision provides invaluable guidance for trademark owners and legal practitioners, reinforcing the critical importance of diligent record-keeping, consistent representations before statutory bodies, and timely enforcement of intellectual property rights. It decisively resolves a long-standing dispute over the "NEHA" mark, affirming the established rights of the Plaintiffs based on their proven, long-term commercial utilization of the mark.

Reference:

 C.O. (COMM.IPD-TM) 355/2021