Search
  • Legis Scriptor

ITC Limited Vs. Nestle India Limited


Authored by - Thejuswini

Keywords - Trademark, passing off, Brand name, Common expression, ITC Limited, Nestle India Limited.


Abstract


The question which pops up is under what circumstances could we say, that a trader is liable for passing off? Does it amount to passing off when a company or industry has used an expression that is not a part of the brand name? Will industry be liable for the usage of such terms or will they be left under the impression that their act was not malafide? In order to answer these sorts of questions, this article deals with case law ITC Limited v. Nestle India Limited.[1] This particular writing lays emphasis on the facts, issues and the main pointers from the judgment passed by the Madras High court.


Introduction


The case between ITC Limited v. Nestle India Limited has laid downlight on how an expression can be made available to every industry in common, even if it is not considered as a part of the brand or sub-brand of the plaintiff itself. This article tries to make the readers understand the outline of the case law and its significance in Trade law.


Background


This case was filed by ITC Limited against Nestle India for the use of the word Magic/Magical Masala in the sale of instant noodles. ITC Limited was of the opinion that the term ‘Magic Masala’ was used by the first so as to advertise their product i.e. Yippee Magic Masala. It was in this case, the Madras High Court held that neither ITC Limited nor Nestle Limited has a monopoly over the term Magic Masala as it was one of the common words that were used by different Indian good industries to advertise their food items.[2]


Facts


1. In 2010, Sunfeast Yippee Noodles added the expression ‘Magic Masala’ in their product so as to differentiate between the flavors which they produced. The two flavors were Classic Masala and Magic Masala.


2. In 2013, Nestle India added the same expression, which was earlier used by ITC Limited in 2010.


3. Hence, ITC Limited filed a suit against Nestle India on the ground of passing off.


4. In the suit, the plaintiff asked for the following reliefs:

i. Firstly, to restrain the use of Magic/Magical Masala by the defendants in their products, by the way of the court passing a permanent injunction in favor of the plaintiffs.

ii. Secondly, to demolish or destroy all the goods, including all the materials which bearded the expression Magic/Magical Masala and surrender to the plaintiff.

iii. Thirdly, the plaintiff wanted the court to pass the preliminary decree favoring them by making the defendants pay the profit made by them using the expression ‘Magic/Magical Masala’. In addition to that, they also wanted the court to pass the final decree in favor of them on the same matter.

iv. Fourthly, they wanted the court to give the verdict directing the defendants to pay a compensation of ₹ 10,05,000/-.

v. Fifthly, the plaintiff also wanted the defendants to pay the costs of the suit.


Issues


A total of 11 issues were formed before the High Court of Madras on 28 April 2020. Out of these 11 issues, 2 issues were considered to be of utmost importance.[3] The 11 issues are stated herein below-


1. Does the plaintiff have the right to protect the expression ‘Magic/Magical Masala’ so as to sell instant noodles?


2. Is the expression Bonafide when the adoption of the expression Magic/Magical Masala is considered from the side of the defendant?


3. Was the defendant successful in proving that the expression Magic/Magical Masala is descriptive in nature?


4. Was it proved by the defendant that the expression Magic Magical Masala was of descriptive nature?


5. Does the plaintiff own the rights to use the expression (Magic/Magical Masala) as per the Trademark Act?


6. Did the usage of the expression (Magic/Magical Masala) by the defendant result in passing off?


7. Does the expressions Magic/Magical Masala, Chinese Masala and Classic Masala actually nonproprietary in nature, or are they flavors?


8. Did the defendant use the expression Magic earlier in the category of food materials?


9. Does the term Magic/Magical Masala act as a common factor when it comes to the trading of food materials?


10. Is the plaintiff guilty of material concealment and representation?


11. Was the plaintiff successful in expressing that the terms used by them were a part of their brand?


Even though all the 11 issues were dealt with by the court in detail. The two primary issues were formed by first, clubbing issues 1 and 5 and for the second one, issues 2 and 6.

Thus, the actual issues which were primarily considered were;


i. Is the expression Magic/Magical Masala apt to be considered as a trademark or is there any need to monopolize the same?


ii. Did the usage of the expression Magic in the defendant's product namely Maggi xtra delicious magic masala noodles result in passing off when traded?

Judgement


Issue 1


It was observed by the court that both the parties i.e. the plaintiff and the defendant did not have the authority to claim the expression Magic/Magical Masala as their own. It was stated by the court that the expression Magic/Magical Masala was used in India on a common basis for the sale of items in the food industry. In addition to this, the court was also of the opinion that the plaintiff did not have the authority to have a claim over the expression as it was used by themselves to distinguish the flavors of the food item (i.e. instant noodles) that they were trading. This had nothing to do with their brand or sub-brand.[4]


Issue 2


The court held that there was no passing off by the defendant in this case. As the defendants have only adopted the expression, which is used quite commonly, there was no malice from the side of the defendants. [5]


Concepts Highlighted


This case law aims to capture a significant part about passing off and trade law. Trademark law indefinitely prevents the act of passing off while passing off is considered as the act of misrepresentation of other traders’ products by adopting another's the brand name.

[1] ITC Ltd v. Nestle India Limited C.S.No.231 of 2013 [2]Banana IP Trademark Attorneys, ITC vs. NESTLE, the Curious Case of The Magic Masala, Crypto Exchange Loses Domain Dispute to Australian Florist, and more, https://www.bananaip.com/ip-news-center/itc-vs-nestle-the-curious-case-of-the-magic-masala-crypto-exchange-loses-domain-dispute-to-australian-florist-and-more/ (Last visited: 9 September 2020) [3] Judgment, ITC Ltd v. Nestle India Limited C.S.No.231 of 2013, https://www.livelaw.in/pdf_upload/pdf_upload-376802.pdf, (Last visited: 9 September 2020) [4] Live law, live law news network, https://www.livelaw.in/news-updates/magic-masala-common-words-in-indian-food-industry-no-one-can-monopolise-them-madras-hc-in-sunfeast-maggie-dispute-158698?from-login=234105 (Last visited: 9 September 2020) [5] Tax Guru, ITC Vs Nestle India Limited (Madras High Court), https://taxguru.in/corporate-law/sunfeast-maggi-dispute-monopoly-word-magic-masala.html, (Last visited: 9 September 2020)