Starbucks Corporation v. Sardarbuksh Coffee & Co. & Ors

Estimated Reading Time: 10 minutes

Court – High Court of Delhi

Case No. – CS (COMM) 1007/2018

Order dated- 27th September 2018

Introduction

Intellectual property rights are the product of human beings’ creative activity, which enables them to exercise their rights as owners of property rights. Trademark is one of the areas of intellectual property whose purpose is to protect the trademark of a product or service. Trademarks give the owners of creative works the legal right to prevent others from using a confusingly similar mark. Trademarks are essential in popularising a brand name and increasing the goodwill of any business. It not only contributes to the creation of brand value, but it also contributes to the growth of income. Because the trademark is so valuable, it is vulnerable to infringement or misappropriation. Because of its importance, the trademark may be infringed upon or misappropriated. Having “deceptively identical” trademarks is one of these techniques.

One of the major obstacles to trademark registration is the trademark’s similarity to an existing mark. According to section 11(1) of the Trademark Act, 1999, a trademark cannot be registered if it is deceptively similar, or identical, to the existing trademark and goods and services, which is likely to create confusion in the mind of the public at large.

Penalties are imposed when domestic businesses use the names of well-known brands in a humorous way to advertise their products. This[1] time it’s a coffee company called SardarBuksh, which sounds suspiciously like the well-known Starbucks. Starting with a cart, SardarBuksh has had to pull back and change its name to Sardarji-Buksh to distinguish itself from Starbucks, as per an interim order of the Delhi High Court.

To be registered as a trademark in India, the trademark must meet the following criteria: distinctive character, non-similarity, not prohibited by statute, and so on. Deceptively similar mark has been discussed under Section 2 (h) of the Trademark Act 1999, “A mark is deemed to be deceptively similar to another mark if it so merely resembles that other mark as to be likely to or cause confusion.” PUMA, COMA; NIKE, NUKE are some of the misleading similar marks. Throughout this case study, we will learn what a deceptively similar trademark is.

Facts

U.S global coffee giant, Starbucks has sued the Indian coffee chain Sardarbuksh for reportedly copying his name and logo. Starbucks is a coffee company and cafe chain founded in 1972 having Headquartered in Seattle, Washington. It has 28,218 sales outlets worldwide as of 2018. In 2012, Tata Group entered the Indian market and currently holds 125 outlets In 2001, Starbucks registered its trademark consisting of a word mark i.e. STARBUCKS, and a logo representing a “crowned long-haired maiden,” in India. In 2015, the defendants began work by calling their company ‘Sardarbuksh Café & Co’ in which ‘Sardar’ is a Hindi word meaning ‘commander’ and ‘Buksh’ means ‘Pardon.’ In May 2018, the defendant set up and operated under that name a private limited company called “Sardar Buksh Private Limited.” Both the plaintiff and the defendant provide similar kinds of goods and services. In Delhi, coffee stores were established by Sardarbuksh offering a wide selection of coffee, shakes, and snacks. The defendants used a logo consisting of a circular black band with the words ‘Sardarbuksh Coffee & Co.’

In 2017, Starbucks asked the defendants to make a letter of demand to change their logo. It is also amended into a black and yellow color scheme and the newly modified logo has started operations. Starbucks submitted to the Hon’ble Delhi High Court (“the Court”) an application against Sardarbuksh, subsequently. The deceptively similar analogy is derived from Section 2(1)(h) read with Section 11 of The Trademarks Act, 1999, which states that when two marks are placed next to each other and create confusion or mislead the viewers, they are deceptively similar and cannot be registered. Apart from the legal side of the present case, it would also have certain economic complications on the plaintiff that were disappointingly similar. Starbucks is a well-known global company with a long history of positive reputation. In this case, the defendant was aware of Starbucks’ global reputation and desired to exploit it to gain market attention quickly. When the trademark of both firms is contrasted as a whole, it reveals a near phonetic and structural similarity intended to deceive and confuse the plaintiff’s public and customers. Further the respondent using such marks with the goods and services which are the goods and services of the plaintiff thereby any customer of average intelligence and imperfect recollection is likely to be deceived and confused. 

Issues

  • Whether the trademark of SardarBuksh is deceptively similar to that of Starbucks and is this leading to dilution of the senior mark, i.e. of Starbucks.

Contentions of the Parties

  • Plaintiff asserted that Sardarbuksh copied their company’s name as well as their logo, which is too close to their famous 2-tailed mermaid, and for unlawful use in the promotion of their product. The goods and services provided by the defendants are identical to that of the plaintiff company, knowing well about the goodwill and reputation in the market. They even said they always prefer to resolve disputes with trademarks informally and friendly where possible and to prevent customer confusion.
  • The defendants, on the other hand, claimed they had never visited Starbucks. Their name was an amalgamation of Sardar and Buksh and their logo was developed by the internal team. They denied every statement made by plaintiffs vehemently and explicitly. 

Judicial Decision

Court held that:

1. Both parties must deal with the same type of business and offer the same services to their customers.

2. The distinctions are deceptively similar, and the plaintiff also has certain economic complications. Starbucks is a global brand that has long-lasting goodwill collected.

3. It is possible to say that the defendant knew the global reputation Starbucks has and would like to use this image to properly attract market attention.

On 1 August 2018, the Court ordered the defendant to change the store name from “Sardarbuksh Coffee & Co” to “Sardarji-Bakhsh Coffee & Co.”. The 20 stores that have yet to open were granted the modification order. The court also granted permission to use the name “Sardarbuksh Coffee & Co.” for the two stores that were previously open.

The defendants were also ordered not to use, record, or even attempt to register any mark containing the terms “Sardar” and “Buksh” or “Bakhsh” or “Baksh” or “Star” or “Buck” or “Bucks” other than “Sardar-Ji-Bakhsh” or “Sardar-Ji-Bakhsh Coffee & Co.” Furthermore, it was clarified and determined that if a third party uses the word “Bakhsh,” the defendant has the right to file a lawsuit against that individual on 27th September 2018. The lawsuit was settled on these terms. 

Several principles are to be considered for determining the extent of deceptive similarity, according to judgments, such as the theory of phonetic and visual similarity, the law of entirety, the test of probability and uncertainty, and goodwill, to name a few. It was determined that the deceptively identical dispute could only be resolved by putting oneself in the shoes of the seller, who is assumed to be a man of average intelligence. If the purchaser is confused by the identity of two brands, it is fair to assume that they are deceptively similar. 

The following cases were used by courts to weigh the deceptively similar comparison, such as the test of probability and uncertainty, goodwill, etc 

When these measures are applied to both the pictures of the trademark, Sardarbaksh appears to be deceptively close to Starbucks. Starbucks is an internationally recognized trademark that is registered across borders, so allowing trademarks like Sardarbuksh that deal with similar goods would be unfair to Starbucks.

Analysis

The Courts in trademark infringement cases commonly used the ‘Doctrine of deceptive similarity.’ A deceptive mark is likely to confuse the minds of potential buyers. The test has two parts. To begin with, such a mark should confuse the general public with average intelligence as to its source of origin. Second, the overall similarity is taken into account rather than the individual components of the mark. As a trademark of reputed business and goodwill, it is highly important to protect it from misuse and violation. In the case cited above, it is clear that the courts can go beyond the letter of the law to provide justice, preserve trader rights, and protect consumer interests. 

Intellectual Property Rights and their values have attracted the attention of the judiciary. Following the controversy over the deceptive similarity, the judiciary took a look into the matter. The cases mentioned below demonstrate that the courts are moving beyond the literal interpretations of the laws to provide justice and protect the rights of traders and customers. 

In simple terms, deceptive similarity can be described as a similarity between trademarks that could lead the general public of average intelligence to believe that the mark in question is related to a registered or well-known trademark in some way. Several criteria needs to be considered for Deceptive similar marks, according to the various judgments provided by the supreme court and high court:

  • Phonetic and visual similarity principle.
  • Rule of Entirety
  • Test of likelihood and confusion
  • Goodwill

Some of the landmark cases which were referred by the Delhi High Court were the cases of Polaroid Corporation vs. Polarad Electronics Corporation 287 F.2d 492 (1961)[4] and National Sewing Thread Co. Ltd. vs. James Chadwick and Bros AIR 1953 SC 357 where it was held that the deceptively identical dispute can only be resolved by putting oneself in the shoes of the purchaser, who is assumed to be a man of ordinary intelligence. If a buyer’s identification of two brands causes them to be confused, it’s fair to say they’re deceptively identical.

Again, in the case of Cadila Health Care Ltd. vs. Cadila Pharmaceuticals Limited (2001) 5 SCC 73[5] the Apex Court held It makes no difference if the plaintiff and defendant work in the same profession or sell the same commodity. The nature of the signs, such as words, labels, and the degree to which they are identical, as well as the nature of the products, are all taken into consideration.

In the case of Apex Laboratories Ltd. vs. Zuventus Health Care Ltd. 2006 (33) PTC 492 (Mad)[6], according to the Madras High Court, the mark ‘Zinconia’ is phonetically and visually distinguished from ‘Zincovit,’ and hence there is no misunderstanding.

In 2013, a Pakistani businessman opened a cafe called “Sattarbucks Cafe” with a logo that was entirely different from Starbucks’, with a bearded gentleman replacing the mermaid in the Starbucks logo.

Furthermore, in India, a Ludhiana-based street vendor named Ravinder Pal Singh Babbar began his business under the name “Mr. Singh Burger King” but was later forced to change the name to “Mr. Singh Food King” after being sued by Burger King, a US-based global chain of hamburger fast-food restaurants.

Addtionally, in the case of M/s Nandhini Delux vs. M/s Karnataka Co-operative Milk Producers Federation Ltd. CIVIL APPEAL NO. 2943-2944 OF 2018 where the Court ruled that the trademarks ‘NANDINI and NANDHINI’ were non-infringing due to the range of goods traded and the graphics of both firms.

After further analysis, this case essentially depicts a newly founded company ‘cheating’ or ‘misleading’ a brand name or other items such as goods from a well-known business. This case demonstrates how new start-ups are unable to use their own experience and instead deceive the market by misrepresenting someone else’s name and credibility. Many such new firms have come up in recent times where the problems of cheating have been depicted. A humorous yet interesting case in which the well-known Starbucks was victimized by the clever minds of Indian infringers, who used Sardar instead of Star in such a misleading manner and on such a large scale that people were led to believe they were owned by the same individual. The Court did, however, grant Defendant the right to use the changed version of the Trademark Sardar Baksh to Sardarji Baksh, as well as the right to sue someone who uses Baksh in the future.

Both plaintiff and defendant logos have a remarkable similarity in that Starbuck’s logo have concentric circles with the name written in a similar fashion in the outer circles; both logos have a wavy font with a character in the center, which is highly misleading despite the fact that they are in different color schemes. Observing online sites such as Swiggy, Food Panda, Zomato, UberEats, and others where both items are sold, Starbucks might face a wrongful loss which would accrue, with such a tricky branding by domestic firms, as many people internationally would take this as a business tactic to sell their products initially and when sued they will change it to something else. A trademark’s essence is that it can be uniquely recognized by a buyer in the industry. A trademark also has a number of characteristics, the most significant of which is the reputation it has built over time.

Conclusion

In conclusion, it can be said that with the growing difficulty and competition, unscrupulous use of trade names is often found in local businesspeople having a flexible notion of trademarks, not considering the use of known marks as a crime. 

Traditionally, the only reason the trademark was violated was the likelihood of confusion about the origin of a good or service. However, as businesses gradually evolved, other reasons or factors also led to the violation of the mark, and a wider approach was therefore necessary with regards to trademark protection. When two marks are the same, it is a clear case of the breach as it can confuse people’s minds. However, there may be instances where two marks are not identical but share a sufficient degree of similarity. In such cases, even if the marks are not identical, infringement can be said to occur if they are similar enough or have a high enough degree of resemblance to confuse the minds of people.

In the present case, it can be seen that similarities are highly visible and the flawed intention is obvious, which consists in using the brand name and the stronger brand’s goodwill to promote one’s own business. The Court ordered the name to be changed to remove phonetic and visual similarities. The need for time is therefore to raise awareness among local entrepreneurs of the importance of intellectual property rights, which will make a significant difference to avoid disputes over these matters and will encourage fair and honest business practices in the future. 


[1] CS (COMM) 1007/2018.

[2] AIR 1953 SC 357.

[3] Civil Appeal No. 2943-2944 of 2018.

[4] 287 F.2d 492 (1961).

[5] (2001) 5 SCC 73.

[6] 2006 (33) PTC 492 (Mad).

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