• Procedures relating to the incorporation of a company under The Indian Companies Act, 1956 more>>
• Selection of a Name more>>
• What's in a company name more>>
• Guidelines for approving Names of New Proposed Companies more>>
• How company names are infringed more>>
• What does the law say more>>
• Remedies against infringement more>>
• Change of Company Name more>>

• Registrability details>>
• Class 05 Trademarks: Drug Affidavit not required any more details>>
• The Emblems and Names (Prevention of Improper Use ) Act, 1950 details>>
• The Drug and Cosmetics Act, 1940 details>>
• Remedies against contravention of the provisions of the laws governing Trademark use and registrability more>>
• INDIA :Trademarks Bill 1992* details>>

• The Pharmaceutical Industry details>>

• Pharmaceutical Trademarks details>>
• Trademarks Law and Pharmaceuticals details>>
• Trademarks Searches in India details>>
• Some Registered Indian Marks identical to INNs details>>
• Trademarks Case Laws details>>
• Pharmaceutical UNFAIR TRADE PRACTICE Cases details>>
• Some Pharmaceutical Joint Ventures details>>

1. Any 7 or more persons in case of a public limited company, or 2 or more persons in case of a private company, associated for any lawful purpose may, by subscribing their names to a Memorandum of Association and otherwise complying with the requirements of the Companies Act, 1956, in respect of registration, form an incorporated company.

2. Registration with the Registrar of Companies (ROC) of the state where the company is being incorporated is obtained on the presentation of (i) Memorandum of Association (ii) Articles of Association

3. A Certificate of Incorporation given by the ROC is conclusive evidence that the association is a company authorised to be registered and has been duly registered under the Companies Act, 1956.

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Though a company can have any name, there are two broad legal restrictions:

a. The company name must end with the word "limited" (if it is a public limited company with equity share capital) or the words "private limited" (if the shares are closely held.)

b. No company shall be registered by a name which in the opinion of the Central Government, is undesirable, or in a name which is identical with, or too nearly resembles, the name of any existing company.

Once the name has been selected, the following procedures have to be initiated:

i. An informal search has to be conducted at the office of the ROC for finding out whether the proposed name for the Indian company is available for the purpose of incorporation of a company in India.

ii. Once the name appears free, the next step would be to apply to the ROC of the State in which the company is proposed to be incorporated and obtain his official clearance.

iii. Once the name is made officially available by the ROC, then the said name is set aside for the applicant and the applicant is expected to incorporate the company within THREE MONTHS from the date of issue of the Official Letter.

iv. The office of the ROC takes about four to six weeks, from the date of application to reply to the applicant.

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A new generation of not too scrupulous entrepreneurs realising the brand equity in the names of centuries old mega business houses, are floating companies bearing those august names by the score all over India. As the Registrar of Companies does not have a fool-proof system for registering company names, the pretenders slip through easily.

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The provision under the Companies Act, 1956, provides that no company shall be registered by a name which in the opinion of the Central Government, is undesirable or closely resembles the name of an existing company. Certain guiding instructions have also been laid down for deciding whether a name is available for registration under the Companies Act, 1956, and the salient points which are considered for coming to any conclusion are :

i. The name should be in consonance with the principal objects of the company as stated in the Memorandum of Association of the Company.

ii. It should not include any word or words which are offensive to any section of the people of India.

iii. The proposed name should not be an exact Hindi translation of an existing company in English which has a reputation.

iv. The proposed name should not have a close phonetic resemblance to the name of an existing company.

v. The name should not attract the provision of The Emblems and Names (Prevention of Improper Use) Act, 1950, as applicable i.e. the name should not fall within the improper names prohibited under the Act. This statute prohibits commercial exploitation of names, emblems and symbols having special national significance.

vi. The name should not include a word(s) which is a registered trade mark unless the consent of the owner of the Trademarks has been obtained and produced by the promoters.

vii. A company (even unregistered companies/ firms also, which have built up reputation over a considerable period) should not be permitted to register a name which is identical with or too nearly resembles the name by which a company in existence has been previously registered. However, if a proposed company is to be under the same management, or in the same group and likely to have a closely resembling name to the existing companies under the same management or group, with a view to have advantage of the goodwill attached to the management or group name, such a name may be allowed.

viii. The name of a company should not contain words which are intended or likely to produce a misleading impression regarding the scope or scale of its activities which would be beyond the resources at its disposal. For instance, words like "International", "Hindustan", "India", "Bharat", "Continental", "Asiatic" may be allowed only if the scope and scale of business of the proposed company is large enough to justify the use of the words.

The words "Bharat", "India", etc. if stated in the brackets before the words limited or private limited need not stand the same test as the words India, etc., put at the beginning of the name. Further, the use of the word "India" or "Bharat" in brackets before the words "limited" or "private limited" does not necessarily mean that the company is an Indian branch of some foreign company.

ix. If the proposed name includes the word "State" along with the name of the state such as "Punjab" or "Tamilnadu", then such a name should not be allowed as it would give the impression of the Punjab or Tamilnadu State Government participating in the share capital of the proposed company. However, if only the name of the state is included without the addition of the word "State" in the proposed name, then such a name may be allowed as it is not likely to give the impression that the Company has the State Government's interest in it.

Further, as per Central Government directive issued in 1974, the word "Hindustan" should be kept reserved only for the public sector companies. It may be however allowed to be used for companies in the private sector which are carrying on large scale business activities. Similarly, the word "Corporation" may be allowed in the name of the company in case the authorised capital is more than Rs. 5. crores. (US$ 2 million approx.)

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5. How company names are infringed ?

While legal protection is available to Trademarks, logos and registered brand names, the law is less clear when it comes to guarding company names.

Transnationals, too, have not escaped such forms of imitation. Recent examples include Hindustan Lever vs. Unilever Venture Capital Investment, American chemicals giant Du Pont vs. Dupont Sportswear, Hitachi Limited vs. Hitachi Properties Pvt. Ltd. For transnational companies entering into joint ventures, the threat of having their name usurped is an even more potent one.The joint ventures which begin operations under their foreign names with the word India in brackets, often find that even if the partners choose to part later, there is little to prevent the Indian company from retaining its former foreign partner's name unless comprehensive agreements had been entered into at the time of such formations.

To avoid such pitfalls, companies are armouring their names as Trademarks and logos to prevent their unauthorised usage. Also, Indian companies are now utilising name-licensing arrangements. Under this the company name is first registered as a Trademarks, just like brands. Then, permission to use this name is given against specific arrangements between the licensor and the licencee involving the payment of fees. The company is thus safeguarded against a discontinuance of collaboration; a sell-out of the foreign company's equity stake or even, nationalisation.

A recent phenomenon has been the confusion created by the media announcement of public issue of equity shares by companies having (infringing?) names similar to the famous trade names of companies incorporated earlier. Some insatnces are:

Polson Limited vs. Polson Dairy Limited, Inter State Finance Limited vs. Inter State Financial Services Limited, Gulf Oil India Limited vs. Gulf Refinery Limited, Montari Industries Limited vs. Montari Overseas Limited, and Dolphin Laboratories vs. Dolphin Organics.

In each case the plaintiff company has sought injunction against the infringing company on the contention that the similarity of names will mislead the investors. In some cases, the infringing companies have even issued advertisements in the media disclaiming any relationship with the companies with the older registrations, (often under court directions), thereby covertly admitting the similarity in their names.

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6. What does the law say ?

• Trade and Merchandise Marks Act, 1958

Section 34 of the Trade and Merchandise Act, 1958 does not give a registered Trademarks holder the right to interfere with any bona fide use (ie. no attempt to exploit the reputation of another similarly-named company, or pass off its products as the other's) by a "person of his own name, or the name of a place of business, or any of his predessors in business".

• Provisions under the Companies Act, 1956

In the event a company in India is found to have as part of its Corporate name a Trademarks registered in the name of some other proprietor, there are at present only two ways in which such a trade mark could be excluded from the Corporate name of the Indian Company as detailed in the next section dealing with REMEDIES. A lot of difficulty is felt if the erring company shows long term operation in that name and contends goodwill and reputation attached to it over the years. The statutory provision does not provide any protection for the Trademarks owner whose mark may have been copied and made part of the corporate name of the offending company and the trade mark owner comes to know of it only after the 12 month period, as mentioned in Section 22 of The Companies Act, 1956 relating to "Rectification of name of Company", is over. In such an eventuality the only course open for the Registered Proprietor is to initiate action in the Civil Court.

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7. Remedies against infringement

The courts in India are showing a healthy trend of restraining infringing companies from including some one else's Trademarks in their corporate names. However, this is a menace that companies can now prevent by having a search conducted in respect of their Trademarks every six months on the computerised file of registered names of companies and of available names at the Offices of all the Registrars of Companies.

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8. Change of Company Name

There are two ways in which the name of a Company can be changed -

(i) when the company itself decides to change the name of the Company with the approval of the Central Government, and

(ii) where, in the opinion of the Central Government the Company is registered (on its first registration or on its registration by a new name) by a name which is identical with or too nearly resembles the name by which a company already in existence has been previously registered, then such a company

(a) may, with the approval of the Central Government, taken in writing, change its name or new name, and

(b) shall, if the Central Government directs within 12 months of its first registration or registration by its new name, change with the previous approval of the Central Government in writing, change the name of the Company within a period of 3 months from the date of direction or such longer period as the Central Government may direct. If a Company which has been directed under clause (ii) (b) above, does not comply with the directions, the Company and every officer who is in default shall be penalised and are punishable with fine.

To sum up, the Central Government can compell a Company to change its name only if the name is identical with or too nearly resembles that of an existing company. Further, this power has to be exercised by the Central Government within 12 months of registration. (This view is supported in Buckley's on the Companies Act, 14th edition 1981, p. 62). After twelve months, the aggrieved company may resort to Civil proceedings to compel the rectification of the error.

The change of name of a company does not bring into existence any new company. The company remains the same entity as it was before. Only the name changes. A new certificate of incorporation has no doubt to be issued but that does not incorporate a new company.

One of the salient features of the proposed Trademarks Bill (which has not been enacted, yet) is prohibiting the use of some one else's Trademarks as part of a corporate name, or name of a business concern.

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9. Registrability

The principal Acts that govern the registrability and/or use of words, names and emblems as Trademarks are:

• The Trade and Merchandise Marks Act, 1958
• The Emblems and Names (Prevention of Improper Use ) Act, 1950
• The Drug and Cosmetics Act, 1940

The following marks are generally not registrable as Trademarks in India:

• which are descriptive or laudatory of the goods concerned.
  
• the use of which are likely to deceive or cause confusion.
  
• involving the use of geographical names (of industrial importance). Some common geographical names may be registered on acquiring distinctiveness by use.
  
• comprising or containing scandalous or obscene matter.
  
• comprising or containing any matter likely to hurt  the religious susceptibilities of any class or section of citizens of India.
  
• involving the use of personal names that have not been made distinct by prior use.
  
• which is identical with or deceptively similar to a trade mark already registered in respect of the same goods or goods of the same description except under under certain circumstances.
  
• which is the accepted name of any single chemical or chemical chemical compound in respect of chemical substances.
  
• involving the use of abbreviated names of various bodies of  United  Nations and  Bureau of Indian   Standards, certain notified names.

Under Section 23(1) and Section 136(2) of the Trade and Merchandise Marks Act, 1958, certain words and letters and their colourable imitations, official seals, emblems and devices are not registrable as per directions of the Government of India.

• Words UNITED NATIONS, Letters UNO, Official seal and Emblem of UNO.
  
• The device of an arrow, as it is the property of the Government of India.
  
• Letters N.C.L, I.S.I., I.C.S., N.P.L., I.S.O., I.R., STC.
  
• Words ASOKA CHAKRA or DHARMA CHAKRA, the device or colourable imitation thereof.
  
• The British Royal Arms, the British Crown or the Union Jack or any clourable imitaion thereof.
  
• Words NATIONAL and PANCHSHEEL.
  
• Representation of the Election Symbol of any political party in India.

The following names for pesticides are non registrable:

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10. Class 05 Trademarks: Drug Affidavit not required any more
     
Till June 1994, applications in class 05 once accepted were registered only on submission of a Drug Affidavit which had to state that the products in respect of which the mark is sought to be used and registered did not consist of any of the following in single ingredient dosage form :

(i)   Analgin
(ii)  Aspirin
(iii) Chloropromazine
(iv) Ferrous Sulphate
(v)  Piperazine and its salts such as, adipate, citrate and phosphate, or
(vi) It is not a single new ingredient drug being introduced for the first time in India.
This requirement of an Affidavit has been withdrawn.

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This is an Act to prevent the improper use of certain emblems and names for professional and commercial purposes.

Section 3 of the Act says-

Notwithstanding anything contained in any law for the time being in force, no person shall, except in such cases and under  such conditions as may be prescribed by the Government of India, use, or continue to use, for the purpose of any trade, business,  calling or profession, or in the title of a Patents, or in any trade mark or design, any name or emblem specified in the SCHEDULE or any colourable imitation thereof without the previous permission of  the Government of India as may be authorised in this behalf by the Government of India.

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12. The Drug and Cosmetics Act, 1940

Rule 106 of the Drugs and Cosmetics Act, 1940 and Rules, 1945 specifies the diseases or ailments which a drug may not purport or claim to prevent, cure or mitigate.
Schedule J lists 52 such diseases or ailments.

Rule 104 states- the letters IP and recognised abbreviations of pharmacopoeias and official compendia of drug standards prescribed under these rules shall be entered on the label of the drug only for the purpose of indicating that the drug is in accordance with standards set out in the Indian Pharmacopoeia or in any such pharmacopoeia or official compendium of drug standards recognised under the Rule.

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13. Remedies against contravention of the provisions of the laws governing Trademarks use and registrability

While the Trade & Mechandise Marks Act, 1958, can prohibit the registration of certain words as Trademarks under the Act,  it cannot prevent their use without registration. Hence, many such unregistrered brands will be visible in the market. But, contravention of the provisions of section 3 of The Emblems and Names (Prevention of Improper Use) Act, 1950 is punishable with a fine that may extend upto five hundred rupees.

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14. INDIA :Trademark Bill 1992

Proposals

* The Trademark Bill has been enacted in January 2000

As the amendments to the Trade & Merchandise Marks, 1958, were extensive that a new Act, The Trademarks Act 1999 has come into force. However, the Rules for implementation of the new Act are not expected to take effect before April 2000.

The Trademarks Bill 1992 failed to draw the approval of the Upper House of Parliament after having been passed by the Lower House. A Select Committee appointed to debate the Bill also failed to obtain a consensus. As of present, changes in the Trademarks Law seem a remote possibility considering the ongoing political upheavals. In the absence of the new Trademarks Act, service mark protection continues to be unavailable in India.

    The objectives and salient features of the proposed Trademarks Bill 1992 were:

• Providing for registration of Marks for services in addition to goods.
  
• Registration of Trademarks which are imitations of well known Trademarks is not to be permitted besides enlarging the grounds for refusal of registration. Consequently, the provisions for defensive registration of Trademarks are proposed to be omitted.
  
• Doing away with the system of maintaining registration of Trademarks in Part A and with Part B with different legal rights, and to provide only a single register with simplified procedure for registration and with equal rights.
  
• Simplifying the procedure for registration of registered user and enlarging the scope of permitted use.
  
• Providing for registration of "Collective Marks" owned by associations, etc.
  
• Establishing an Appellate Board for speedy disposal of the appeals and rectification applications which at present lie before the High Court.
  
• Transferring the final authority relating to registration of certification Trademarks to the Registrar instead of Central Government.
  
• Providing enhanced punishment for the offences relating to Trademarks on par with the present Copyright Act, 1957, to prevent the sale of spurious goods.
  
• Prohibiting use of some one else's Trademarks as part of corporate name, or name of business concern. Incorporating other provisions, like amending the definition of Trademarks to include shape of goods, packaging, combination of colours. Packaging includes any case, box, container, folder, receptacle, vessel, casket, bottle, wrapper, label, band, ticket, reel, frame, capsule, cap, lid, stopper and cork.
  
• Providing for a Trademarks registered without limitation of colour to be deemed to be registered for all colours. A Trademarks shall not be registered if it is identical with or similar to an earlier Trademarks. Earlier Trademarks means a Trademarks which, at the date of application, or where appropriate, the priority date claimed in respect of the application, was entitled toprotection as a well-known Trademarks. In determining whether a Trademarks is well-known, account shall be taken of the knowledge of that Trademarks in the relevant section of the public, and elsewhere in India obtained as a result of promotion of the said mark.
  
• No word shall be registered as a Trademarks - which is notified as an International Non-Proprietary Name or which is deceptively similar to such name and any such registration shall be deemed as an entry wrongly remaining on the register.
  
• Provisions for filing a single application for registration in more than one class.
  
• Increasing the period of registration and renewal from 7 to 10 years.
  
• Making all Trademarks offences cognizable and enlarging the jurisdiction of courts to bring the law in this respect on par with copyright law, amplifying the powers of the court to grant ex parte injunction in certain cases (ANTON PILAR orders) and other related amendments to simplify and streamline the Trademarks law and procedure.

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A Study

The Indian Pharmaceutical Industry has the largest number of operating units in the world and is perhaps, the 4th largest in terms of volume, number of products, market size, etc. In India, the total number of Pharmaceutical units, small, medium and large, exceed 8000. Most of the small units produce pharmaceuticals for the larger units. many of he medium units produce and market themselves, as wellas do contract manufacturing for others. The total value of the Indian pharmaceutical market is estimated to be US $ 2000 million.

Some of the biggest Indian and Foreign companies in terms of sales are:

Approximately 300 Indian and foreign Pharmaceutical companies in India account for 80% of all branded product sales. The Indian Drug Industry is regulated in all respects leading to anomalies and problems of scale. But once the various controls on the Drug Industry are removed and the Patents Law amended, the big Indian Drug companies expect to grow ten-fold in the coming decade. All the top 50 Indian Drug companies have plans to upgrade their R&D facilities to accomodate new products and processes.  Most Indian companies are prospecting for Joint Ventures with British, Israeli, South African and American companies to manufacture and market, new  as well as generic products.

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16. Pharmaceutical Trademarks

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17. Trademark Law and Pharmaceuticals

1. Till June 1994, applications in class 05 once accepted were registered only on submission of a Drug Affidavit which had to state that the products in respect of which the mark is sought to be used and registered did not consist of any of the following in single ingredient dosage form:  (i)  Analgin  (ii) Aspirin  (iii) Chloropromazine  (iv) Ferrous sulphate  (v)  Piperazine and its salts such as adipate, citrate and phosphate, or  (vi) It is not a single new ingredient drug being introduced for the first time in India.  This requirement of an Affidavit has been withdrawn with immediate effect.

2. International Non-Proprietory Names and Trademarks similar to such INNs are not accepted for registration in India. There are however, a number of Trademarks which are accepted for registration which are very close to INNs. (MINICYCLINE : Minocycline). Trademarks Office does not conduct any search in this regard. There have also been cases where marks close to generic names have been accepted. (NORPHIN : Morphine)

3. 40% of all Trademarks oppositions filed in India relate to pharmaceutical Trademarks.

4. The number of similar marks accepted and advertised by the Registrar of Trademarks in India clearly shows a lack of sophisticated searching capability available with the Trademarks Office.

A sample list of similar Class 05 marks accepted:

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25,000 Trademarks applications are now being filed in India every year. Total number of applications filed till date (May 1996) are approximately 6,20,000. There are 2,50,000 accepted Trademarks in India of which 43,500 belong to class 05. Number of valid registrations presently in India are 1,00,000 of which 15,700 fall in class 05.

In view of the peculiar situation arising out of the large number of In-Use as well as pending and accepted Trademarks in India, searches prior to filing applications as well as marketing a product has become very important It has been the experience of Indian Drug Companies coining new brands that in a Trademarks search 9 out of 10 marks proposed are pre-empted.

We have the only proprietory Trademarks database in India which has records of registrations, acceptances and renewals, as well as brief details of 15,000 In-Use Brands as well as INNs.

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19. Some Registered Indian Marks identical to INNs

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The following cases decided in 1990-94 indicate the trend of litigation in the Indian Pharmaceutical Industry:

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• Wander Limited vs. Retail & Dispensing Chemists Association;
  Pharmaceutical Wholesalers Association,
  Chemist Association of Thane;
  New Bombay Retail Chemist & Wholesalers Association; and
  Maharashtra Drugs & Chemists Association
  Monopolies & Restrictive Trade Practices Commission
  
• Compelling manufacturers to obtain a letter  of  consent before introducing a new product in the market deemed restrictive trade practice under Section 33(1)(a) of the Monopolies & Restrictive Trade Practices Act.
• The issuing of a summary note alleging illegal  and unfair trade practices of a company and   thereby advising its members to boycott the products of the said company deemed unfair trade   practice under Section 36A of the MRTP Act.
• Commission orders enquiry and issues ad interim injunction.

The complainant, Wander Limited, a manufacturer of pharmaceutical and nutritional products, had in September 1994, changed the packaging of one of its products and communicated the new price and discountstructure to its stockists throughout the country. The associations, taking exception to this, demanded details of the product as per Form IV of the Drug Price Control Order. After they were told that the product did not come under the purview of the DPCO, the respondents raised demands with regard to sales tax, excise duty and octroi and threatened to boycott the company's products which they did by issuing a summary note in an association bulletin.

The complainant also alleged that the associations compelled pharmaceutical companies to obtain a letter of consent from them before introducing any new product in the market and before appointing a new distributor as well.

Based on these allegations by the complainant, the Monopolies & Restrictive Trade Practices Commission (MRTPC) ordered an enquiry against the above 5 Bombay-based chemist associations for indulging in the alleged unfair and restrictive practices.

The Commission has also issued an ad interim injunction against the 5 associations to restrain them from continuing or commencing afresh any boycott, direct or indirect, of the complainant's products till further orders.

• Drug Action Forum vs Eight Indian Pharmaceutical Firms
  The Supreme Court of India

Selling nine harmful drug combinations:

The Supreme Court had decided to set up an experts' committee to examine the complaint by the Drug Action Forum that certain Indian drug companies were selling harmful drug combinations. The Judges had asked the petitioner Drug Action Forum, the eight Pharmaceutical Companies objected against and the Central Government to give a list of experts to be empanelled. Such a committee has now been formed.

The Drug Action Forum (DAF) had petitioned the Supreme Court that eight Indian pharmaceutical companies were selling nine harmful drug combinations.

The DAF  had sought -

• the appointment of an experts' committee for recommending a ban on those nine categories   of medicines including combinations of analgin, clioquinol, antibiotics, cough syrups,   vitamin complexes, ayurvedic-allopathic combinations and injectible contraceptives like   Depo-Provera;
  
• a machinery to monitor drug reaction;
  
• drugs should be sold on generic names;
  
• names of banned drugs should be publicised; and
  
• Chemists should display the banned list.

The Judges of the Supreme Court were critical of the Central Government's attitude for not appearing in any of the three earlier hearings of the case and merely submitting that it had prepared a national drug policy. The Judges said that the court's power to examine the issue could not be foreclosed because the government has formulated a policy.

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• Singapore
  TIGER MEDICALS LTD: pharmaceutical products
  
• CIS
  BIOMED: Joint venture with Dr. Reddy's Labs to manufacture and market pharmaceutical formulations in the former Soviet republics.
  
• France
  LABORATORIES PIERR FABRE: Strategic alliance with Max Pharma to manufacture and market nature-based products
  
• Sweden
  ORIFLAME INTERNATIONAL: Tie-up with Rollscon India Private Ltd., to introduce perfumes and skin care products
  
• USA
  ENERGENE INC: Vaccines
  
  SEPRACOR INC: Manufacture of PACLITAXEL, a anti-cancer drug through its 50:50 joint venture company InNova Pharmaceuticals with Dabur India Ltd. , in Canada.
  
  TECH INDIA VENTURES INC: Joint venture with Recon Ltd., through the company
  
  "Criticare Laboratories Private Limited" to manufacture speciality products.
  
  ALLERGAN: Joint venture with Nicholas Piramal for eyecare products.
  
  SC JOHNSON & CO INC: Tie-up with Unilever Group in India to manufacture a whole range of consumer products including "OFF" insect repellants and "GLADE" air freshner.
  
  UPJOHN CO: Strategic alliance with Max Pharma for manufacturing and marketing injectable contraceptive Depo-Provera, Solu Medrol, Prostin VR, Depo-Medrol, Lincocin and Dalacin-C.

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