In the case of Perefetti Van Melle S.P.A. vs. Perfect Foods Private Limited, decided on August 6, 2024 (2081/04/22 B.S.) but full judgment of which was released only a few days back, the division bench of the Supreme Court of Nepal decided on several questions regarding the protection of trademarks in Nepal. The case concerned the similarities in trademark between “Center Fruit”, manufactured by Perefetti Van Melle S.P.A. and “Perfect Center Fillz”, manufactured by Perfect Foods, Private Limited. Perfetti Van Melle S.P.A. claimed that because “Center Fruit” was registered before “Perfect Center Fillz”, and “Perfect Center Fillz” was deceptively similar to “Center Fruit”, the application of Section 18(1) of the Patent, Design, and Trademark Act, 1965 (“PDTA”) must result in the cancellation of the registration of “Perfect Center Fillz” in accordance with Section 18(3) of the PDTA. The Department of Industries (“DOI”), whose decision was upheld by the Biratnagar High Court, contrarily ruled that Perfect Center Fillz did not violate Section 18(1) of the PDTA, thereby upholding the registration of Perfect Center Fillz.
Decision of the Supreme Court:
The bench, in favor of Perefetti Van Melle S.P.A., unanimously ruled to overturn the decisions of the DOI and the Biratnagar High Court, ordering the cancellation of Perfect Center Fillz’s registration pursuant to Section 18(3) of the PDTA. Significantly, the bench acknowledged Nepal’s international obligations under Trade-Related Aspects of International Property Rights (“TRIPS”). Further, the bench also employed definitions used by World Intellectual Property Organization (“WIPO”) and the Indian Supreme Court in clarifying key concepts relevant to the judgment. For instance, the bench referred to the standards set by WIPO with regards to the criteria that determined the protection of Intellectual Property rights. Similarly, the bench also turned to the Haldiram Bhujiwala case decided by the Indian Supreme Court to introduce and incorporate the concept of “passing off legislation” in the present case. The relevance of passing off legislation in this case is evident through its definition which states that one must not sell their product in the guise of another’s.
Takeaway from the Decision:
In determining whether or not Perfect Center Fillz can be registered in accordance with the PDTA, the bench addressed several questions. Firstly, the bench identified the need to interpret Section 18(1) of the PDTA, which, in relevant parts, stated that a trademark already registered in the name of another person cannot be registered. The bench characterized the significance of determining deceptive similarity in deciding whether a trademark is similar to a previously registered trademark. The bench enlisted numerous criteria in determining what constitutes deceptive similarity. The first criterion, i.e., visual similarity is, as per the bench, satisfied if the appearance of two products is similar and therefore likely to cause confusion amongst the buyers. For instance, factors such as style of packaging, use of font in specifying the name of the product, color of the wrapper/package, etc. The second prominent criterion concerned phonetic similarity, which refers to the similarity in sound when pronouncing the name of the product. The third criterion- commercial impression- encompassed several factors such as similarity in the type of product (for instance, both are dark chocolates, and square shaped), the kind of marketplace that sells the product (supermarket, general store), the target customers (similar in age group, profession, etc), etc.
Secondly, after analyzing the aforesaid criteria, the court consequently ruled that Perfect Center Fillz qualified as being deceptively similar to Center Fruit, and as such, ordered the cancellation of Perfect Center Fillz’s registration pursuant to Section 18(3) of the PDTA. Notably, the bench referred to several foreign cases in concluding what the phrase “deceptively similar” meant in the context of the present case. The bench concluded that such similarity which creates confusion between the buyers in differentiating between two products be it visual, phonetic or conceptual similarity, can be classified as “deceptively similar”. In this instance, the bench observed that Perfect Center Fillz and Center Fruit were similar both visually- similar red colored packaging, and phonetically- naming and pronunciation of the word Fillz and Fruit. Also, the bench factored in that targeted customers and primary sale locations are similar as both are chewing gums majorly consumed by people of similar age group and sold mostly in general stores.
Further, the argument that the word “Center” qualified as a common word, therefore, entitled to a lesser degree of protection was shut down as the bench determined that words in trademark must be viewed in conjunction, and not in isolation. As a result, although both the words “Center” and “Fruit” were common words, the combined word “Center Fruit” was deemed to be an arbitrary word, subject to high degree of protection under WIPO.
Way Forward:
The Supreme Court’s landmark ruling in the Center Fruit case represents a transformative shift in Nepal’s intellectual property landscape. This precedent clarifies that administrative approval from the Department of Industries (DOI) no longer serves as an absolute shield against cancellation.
To align with this evolving judicial standard, enterprises must adopt a more rigorous approach to trademark strategy:
- Holistic Commercial Impression: Compliance now extends far beyond literal name availability. The Court’s emphasis on “deceptive similarity” mandates an evaluation of the holistic brand identity, including typography, trade dress, color palettes, and phonetic resonance. Any branding that mirrors an established competitor’s “look and feel” creates a heightened risk of litigation and subsequent registration cancellation.
- Common No Longer Common: A critical takeaway is the Court’s refusal to dilute protection for trademarks composed of common words. While terms like “Center” or “Fruit” may be generic in isolation, their combination is now legally recognized as an “arbitrary” mark entitled to the highest degree of protection. Brand owners should focus on developing multi-word conjunctions to secure a more robust and defensible market position.
- Integration of International Jurisprudence: By explicitly invoking TRIPS obligations and WIPO standards as well as foreign notable precedents, the Supreme Court has harmonized local enforcement with global IP benchmarks. This integration means that local registrations are now weaved into international standards of originality.
- Proactive Enforcement and Defensive Auditing: This judgment empowers market leaders to take decisive action against “passing off” and “look-alike” products that dilute brand equity. Conversely, for emerging businesses, the ruling means that a DOI certificate is not a guarantee of permanence.
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