Delhi High Court Grants Injunction Against ‘CAB-RIO’: “Phonetic Similarity with ‘REO’ Likely to Mislead Consumers”; Directs Defendants to Change Trade Name Within One Month

Court’s Decision

The Delhi High Court granted an interim injunction against the use of the ‘CAB-RIO’ trademark, holding that it was deceptively similar to ‘REO’, a registered and well-known trademark of the plaintiff. The court ruled that:

1. The plaintiff had established a prima facie case of passing off, demonstrating that its mark had prior use and strong goodwill.
2. The phonetic and visual similarities between ‘REO’ and ‘CAB-RIO’ were likely to mislead consumers, particularly electricians, builders, and contractors.
3. The balance of convenience was in favor of the plaintiff, given its significant market presence and sales.
4. The defendants’ adoption of ‘CAB-RIO’ appeared to be dishonest and an attempt to ride on the goodwill of the plaintiff.
5. The court directed the defendants to change their corporate name/trade name within one month.

Facts of the Case

• The Plaintiff:
  • A leading electrical equipment manufacturer that adopted the mark ‘REO’ in 2012 for electrical cables and wires.
  • Registered the trademark ‘REO’ under classes 7, 9, and 11 and also obtained copyright protection for its packaging.
  • The Delhi High Court declared ‘REO’ a well-known trademark in an earlier case.
  • Annual sales under ‘REO’ for 2023-24 exceeded ₹946.86 crores, with extensive advertising efforts and global exports.
• The Defendants:
  • A company that started using the mark ‘CAB-RIO’ for electrical wires in 2017.
  • Claimed to have legally registered the ‘CAB-RIO’ mark in 2017 and obtained certifications.
  • The plaintiff discovered in October 2024 that the defendants were actively selling products under ‘CAB-RIO’, leading to this lawsuit.
• Legal Action:
  • The plaintiff filed a suit for permanent injunction against the use of ‘CAB-RIO’.
  • The court appointed a Local Commissioner, who visited the defendants’ premises and documented products under the impugned mark.

Issues Before the Court

1. Did the plaintiff have prior rights over the mark ‘REO’?
2. Was the defendants’ mark ‘CAB-RIO’ deceptively similar to ‘REO’?
3. Was the adoption of ‘CAB-RIO’ dishonest and meant to mislead consumers?
4. Would the use of ‘CAB-RIO’ create confusion among ordinary buyers?
5. Did the defendants have legal protection under Section 28(3) of the Trade Marks Act, 1999?

Petitioner’s (Plaintiff’s) Arguments

1. Prior Adoption and Use:
   • The plaintiff adopted ‘REO’ in 2012 and had been selling electrical cables under this mark since then.
   • Their trademark registration was valid, and their annual sales in 2023-24 alone amounted to ₹946.86 crores.
2. Goodwill and Market Presence:
   • The plaintiff’s brand ‘REO’ had substantial goodwill with extensive advertisements, dealership networks, and export markets.
   • The plaintiff had invested heavily in marketing, spending ₹7.85 crores on advertisements in 2023-24.
3. Likelihood of Confusion:
   • The phonetic and structural similarity between ‘REO’ and ‘CAB-RIO’ was likely to mislead customers.
   • The target buyers (electricians, builders, contractors) may not notice subtle differences, increasing the likelihood of deception.
4. Defendants’ Dishonest Adoption:
   • The defendants provided no reasonable explanation for choosing the name ‘CAB-RIO’.
   • The plaintiff alleged that the defendants copied other elements, such as the packaging and logo, in an attempt to pass off their goods as those of the plaintiff.
5. False Claims by the Defendants:
   • The defendants falsely claimed usage since 2017, whereas their earliest invoice dates back to 2019.
   • This indicated an attempt to mislead the court about their actual use of the mark.

Respondent’s (Defendants’) Arguments

1. Trademark Registration and Use:
   • The defendants registered ‘CAB-RIO’ as a trademark in 2017 and had been using it since then.
   • They claimed that their use was legitimate and had received quality certifications for their products.
2. Plaintiff’s Concealment of Facts:
   • The defendants argued that the plaintiff failed to disclose third-party rectification petitions filed against the ‘REO’ trademark.
   • They claimed that the plaintiff uses ‘REO’ alongside ‘HAVELLS’, which distinguishes it from ‘CAB-RIO’.
3. Dissimilarity Between the Marks:
   • The defendants asserted that ‘CAB-RIO’ should be considered as a whole, rather than dissecting ‘RIO’ separately.
   • They claimed that the visual differences in packaging, logo, and font should prevent confusion.
4. Added Elements to Avoid Confusion:
   • The defendants’ products had unique design elements that distinguished them from ‘REO’.
   • The packaging, fonts, and added logos were different, making confusion unlikely.

Analysis of the Law

• Passing Off vs. Infringement:
  • Under Section 27(2) of the Trade Marks Act, 1999, passing off can be established even without trademark registration.
  • The Supreme Court in S. Syed Mohideen v. P. Sulochana Bai (2016) held that prior use rights prevail over trademark registration.
• Deceptive Similarity Test:
  • The Supreme Court in Cadila Health Care Ltd. v. Cadila Pharmaceuticals Ltd. (2001) laid down several factors, including:
    • Phonetic similarity: ‘REO’ and ‘CAB-RIO’ sound similar.
    • Nature of goods: Both brands sell electrical wires and cables.
    • Customer perception: Target consumers may not distinguish between similar-sounding brands.
• Honest Adoption and Bonafide Use:
  • The court found that the defendants had no valid reason for choosing ‘RIO’.
  • The use of ‘CAB’ as a short form for ‘cables’ meant ‘RIO’ was the dominant part, which closely resembled ‘REO’.

Precedent Analysis

1. Cadila Health Care Ltd. v. Cadila Pharmaceuticals Ltd. (2001):
   • Established that phonetic and visual similarity can cause confusion.
2. S. Syed Mohideen v. P. Sulochana Bai (2016):
   • Confirmed that prior user rights are superior to registered trademarks.
3. Havells India Ltd. v. G.P. Industries (2024):
   • Declared ‘REO’ a well-known trademark in India.

Court’s Reasoning

• The plaintiff demonstrated prior use of ‘REO’ since 2012.
• The phonetic similarity between ‘REO’ and ‘CAB-RIO’ was evident.
• The defendants had no legitimate reason for adopting ‘RIO’, suggesting dishonest intent.
• Target consumers were likely to be confused, especially in rural markets where brand recognition plays a crucial role.

Conclusion

• The Delhi High Court granted an injunction, preventing the defendants from using ‘CAB-RIO’ in relation to electrical cables.
• The defendants were directed to change their corporate name within one month.
• The court held that the use of ‘CAB-RIO’ was an attempt to mislead customers and ride on the goodwill of ‘REO’.

Implications

• Stronger protection for well-known trademarks: This decision reinforces the importance of prior use over later registrations.
• Deceptive similarity will not be tolerated: Companies must justify their choice of similar-sounding marks.
• Affects businesses with phonetic resemblance: The case sets a precedent against brands adopting similar names.

This ruling ensures that brand reputation and consumer trust are protected, particularly in markets where consumers rely on recognition rather than close scrutiny of trademarks.

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