REVERSE PASSING OFF: EMBOSSED BEER BOTTLES

January 13, 2025
Beer Bottles

By Rima Majumdar and Aishwarya Hariharan

FACTUAL BACKGROUND

In the present case, Appellant was a manufacturer and seller of beer under the trademark ‘STOK’. The glass bottles used by the Appellant for selling its beer had label affixed with stickers bearing statutory details along with Appellant’s trademark ‘STOK’. The bottles were embossed with ‘panda device’. It is the case of the Appellant that the Respondents who are also manufactures and sellers of beer, were reusing the beer bottles of the Appellant for bottling their beer. However, the beer bottles that were reused contained the embossed trademark ‘STOK’ and the ‘Panda device’ which belongs to the Appellant thereby infringing its trademark and passing off Respondents’ beer as that of the Appellant’s.

TIMELINE OF EVENTS

To gain a deeper understanding of this case and its outcome, it is necessary to first examine the sequence of events which is outlined below:

TIMELINE OF EVENTS
Dates Events
December 12, 2019 and March 05, 2020 Appellant approached the Commissioner of Excise, Madhya Pradesh complaining about the reusing of their beer bottles by the Respondent which were manufactured by the Appellants, bearing their trademark/copyright/design.
Since, no action was taken by the Commissioner of Excise, Appellant approached the Hon’ble High Court of Madhya Pradesh in Writ Petition No. 7051 of 2020.
July 10, 2020 Writ Petition was disposed of directing the Commissioner of Excise to take appropriate decision on the representation of the Appellants.
November 07, 2020 Commissioner of Excise prohibited all liquor/beer bottling units, including the private Respondents from re-using old glass beer bottles carrying embossment on them and also prohibited the reuse of the old bottles even after removing or scratching the embossed logo.
2021 Respondents filed Writ Petitions challenging the order dated November 07, 2020 of the Commissioner of Excise on the ground that the aforesaid order is non-reasoned.
March 13, 2024 Ld. Single Judge held that the Commissioner of Excise had not adverted to any of the objections raised by the Respondent and the order was indeed cryptic in nature and remitted the matter to the Commissioner of Excise to decide the dispute afresh.
Present appeal Aggrieved by the order of Ld. Single Judge dated March 13, 2024, Appellant filed the present appeal challenging the aforesaid order.

ISSUE BEFORE THE COURT

The main question before the Hon’ble Court was as under:

  • Whether reusing embossed bottles with another manufacturer’s trademark constitutes infringement of Intellectual Property Rights;
  • Whether the Commissioner of Excise has the power under Excise Act to decide the issue of infringement of Intellectual Property Rights?

CONTENSIONS RAISED BY THE PARTIES

SUBMISSIONS OF THE APPELLANT

  • Appellant contented that the Commissioner of Excise was within its right to ensure proper conduct of business by various beer manufacturers. Further, the re-use of embossed beer bottles violated the Excise Act, 1915 and also violated the Madhya Pradesh Beer and Wine Rules, 2000. (“MP Rules”).
  • Appellant submitted that the acts of Respondents of re-using beer bottles which has Petitioner’s trademark embossed on it amounts to infringement of their trademark and copyright even though Respondents are putting their own label on the said beer bottles. This is because even if the label of the Appellants was removed by the Respondents, the embossed trademark of the Appellant still remained on the bottle. This can create confusion in the minds of consumers. Not only that, Respondents even attempted to scratch out the logo of the appellant thereby weakening the strength of the bottles and causing risk to the customers.

SUBMISSIONS BY THE RESPONDENTS

  • On the other hand, the Respondents contended that they are the manufacture and seller of beers under its own brands and labels which are duly approved by the Commissioner of Excise.
  • Further, the Respondent submitted that the empty beer bottles are procured from the scrap dealers and then used for bottling Respondent’s manufactured beer. Thereafter, existing labels are removed and only the approved big sized labels are affixed onto them before releasing them in the market.
  • It was further argued that Commissioner of Excise has no jurisdiction to enforce trademark protections, and nowhere in the Excise Act or the Rules framed thereunder, there is any prohibition that the beer bottle of any other manufacture cannot be used by any company.
  • It was further contended that the impugned order caused logistical impossibility and imposed undue financial hardship, thereby, impacted environmental sustainability, and violated constitutional rights under Articles 19(1)(g) and 301 of the Constitution of India.

PICTORIAL REPRESENTATION

Comparison of Appellant’s bottle and Respondents’ bottle is being made below for better understanding of the present dispute.

PICTORIAL REPRESENTATION
Appellant’s Bottle Respondents’ Bottle
Overview of the bottles Stok beer Power Cool Beer wrapping
Embossed trademarks and logo Emboss Print Stok Emboss An Emboss Print Beer print
Scracted out bottles embossed with labels and logos before reusing Beer Bolt

 

ANAYSIS AND FINDINGS BY THE COURT

  • The Hon’ble Court relied on MP foreign Liquor Rules and noted that labelling and branding in foreign liquor and beer is pivotal and it should help to uniquely identify the manufacturer. As per the Rules, no foreign liquor/beer can be transported, imported, exported or sold unless, inter alia, the details required by Rule 9 of the MP Foreign Liquor Rules are printed on the label. These Rules mandate the mentioning of brand with contents on the label, thereby highlighting significance of branding.
  • In the instant case, although the Respondents are pasting their registered labels on the beer bottles, however, the brands of the Appellants ‘STOK’ and ‘panda device’ continue to remain prominently displayed on the bottles. Thus, presence of two different brands on the same bottle is in contravention of the MP Foreign Liquor Rules. The same cannot be permitted.
  • The Hon’ble Court further held that if an action of the manufacturer or retailer contravenes the conditions of an approved label under MP Foreign Liquor Rules, then the Commissioner of Excise has the power to pass an order prohibiting that manufacturer/retailer from acting in a manner that contravenes the approved label.
  • The Hon’ble Court rejected Respondents’ argument that there is violation of Article 19(1)(g) and Article 301 of the Constitution of India thereby holding there is no prohibition of Respondents from conducting their business. The Commissioner of Excise has only directed that bottles that have embossed logo or brand cannot be used, which very well falls within the ambit of ‘reasonable restrictions’.
  • With regards to Respondents’ contention that manufacturing new bottles is not financially viable for them and can raise environmental concerns was also held to be untenable. The Hon’ble Court held that private Respondents are free to reuse generic beer bottles manufactured by third parties which do not violate rights of any entity. There is no prohibition on reusing and recycling of generic glass bottles.
  • Appellant also raised a contention that Respondents are using the bottles for which there is a design registration in favour of the Appellants. With regard to IP rights, the Hon’ble Court held that the issue pertaining to Respondents using the bottles for which there is a design registration in favor of Appellants, is beyond the purview of the MP Foreign Rules and Excise Act. In view of the above, it is open to the Appellant to seek enforcement of its IP rights before appropriate forum.
  • In light of the above, the Hon’ble Court allowed the appeal and Impugned order dated March 12, 2024 passed by Ld. Single Judge which held that the matter to be remitted back the matter to the Commissioner of Excise for deciding then dispute afresh, was set aside. The Hon’ble Court further upheld the Order dated November 07, 2020 passed by Commissioner of Excise prohibiting all liquor/beer bottling units, including Respondents’, from using old glasses bottles which carry an embossment on them, for the purpose of refilling and sale of liquor. However, the Hon’ble Court set aside the direction prohibiting the reuse of the old bottles after removing or scratching the embossed logo and left the issue open for determination in appropriate proceedings.

AUTHOR’S NOTE

The instant case is a classic example of reverse passing off wherein the Respondents had clearly attempted to remove the original trademark of the Appellant without Appellant’s authorization from the beer bottles manufactured by the Appellant and reusing the same to sell beer under their own trademark. You can read more about reverse passing off here. In the present case, the Respondents’ conduct of reusing the beer bottles embossed with Appellant’s mark may mislead unsuspecting consumers by creating a false impression, thereby, allowing the Respondents to benefit from the manufacturer’s efforts without incurring legitimate costs. This is a classic example of riding on the goodwill and reputation of the well-established party. As a result, this results in causing damage to goodwill and losses to the Appellant. Therefore, the present ruling is a positive step towards recognizing the concept of reverse passing off in India.

Further, this ruling is a significant decision in context of trademark law and the protection of branded packaging, particularly in the beverage industry. It serves as a reminder that trademark rights extend not only to logos and names, but also to the overall design and appearance of a product’s packaging-known as trade dress. Therefore, this judgement ruling underscores the fact that embossed beer bottles, which are often key part of a brand’s identity, are not immune to infringement claims if re-used without proper authorization.

Sakshi Khandelwal, Junior Associate Advocate at S.S. Rana & Co. has assisted in the research of this article.

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