The case involves a trademark dispute where the plaintiff, Chanel Ltd., alleged infringement of its registered trademark "CHANEL" by the defendant, Sunder Chemicals Agarbati Works (P) Ltd., which was using the mark "SHANELLE" for perfumes. The plaintiff sought an interim injunction to restrain the defendant from using a mark that was allegedly deceptively similar to its well-known trademark. The Delhi High Court considered whether phonetic similarity and the possibility of consumer confusion justified granting interim relief.

Detailed Factual Background:
Chanel Ltd., a globally recognized manufacturer of perfumes and cosmetics, has held the "CHANEL" trademark since 1925. The trademark, derived from the surname of its French founder, has been extensively used and promoted worldwide. The plaintiff reported sales exceeding Rs. 5000 million in the three years preceding the suit and an annual advertising expenditure of approximately Rs. 500 million.

The defendant, Sunder Chemicals Agarbati Works (P) Ltd., launched a perfume brand under the name "SHANELLE." Chanel Ltd. claimed that "SHANELLE" was deceptively similar to "CHANEL," especially in phonetic terms, and was likely to mislead consumers. The defendant contended that its trademark was visually distinct and that there was a significant delay in the plaintiff's legal action.

Detailed Procedural Background:
Chanel Ltd. filed a suit before the Delhi High Court for trademark infringement and passing off, seeking a permanent injunction, damages, and other reliefs. The plaintiff also filed an interim application under Order 39 Rules 1 and 2 of the Code of Civil Procedure (CPC) for an immediate injunction restraining the defendant from using "SHANELLE."

The defendant opposed the interim relief, arguing that "SHANELLE" was not deceptively similar to "CHANEL" and that the plaintiff had delayed filing the suit, weakening its claim for injunction. The court analyzed the phonetic and visual similarities between the two marks and examined whether the plaintiff had established a strong prima facie case.

Issues Involved in the Case
Whether the trademark "SHANELLE" was deceptively similar to "CHANEL" and likely to cause confusion among consumers? Whether phonetic similarity alone was sufficient to establish trademark infringement and passing off?

Detailed Submission of Parties:
The plaintiff argued that "CHANEL" was a globally reputed trademark with extensive recognition in India. It contended that the defendant's mark "SHANELLE" was phonetically identical and created consumer confusion. The plaintiff relied on previous Supreme Court decisions affirming that phonetic similarity is a crucial factor in determining trademark infringement. The plaintiff also contended that even if there were minor visual differences in packaging, consumers primarily relied on brand names when purchasing perfumes.

The defendant asserted that "SHANELLE" had been in use for over 17 years and that there was no actual evidence of consumer confusion. It contended that Indian consumers would not confuse "CH" (as pronounced in "CHANEL") with "SH" (as in "SHANELLE") and that phonetic resemblance alone was insufficient to establish infringement. The defendant further argued that the plaintiff had delayed legal action, weakening its case for interim relief.

Detailed Discussion on Judgments Along with Their Complete Citation Cited by Parties and Their Respective Context Referred in This Case:  Parle Products (P) Ltd. v. J.P. & Co., Mysore, (1972) 1 SCC 618, was cited by the plaintiff to argue that trademark similarity can be visual, phonetic, or both. The Supreme Court held that when there is a strong likelihood of consumer confusion, minor differences in spelling or packaging do not negate infringement.

Amritdhara Pharmacy v. Satya Deo Gupta, (1963) AIR SC 449, was referenced to emphasize that the test for deceptive similarity must consider the imperfect recollection of an average consumer. The Supreme Court held that a person with average intelligence and imperfect memory may confuse similar-sounding trademarks, making phonetic similarity a decisive factor.

K.R. Chinna Krishna Chettiar v. Sri Ambal & Co., (1970) AIR SC 146, was relied upon to highlight that phonetic resemblance alone can lead to deception, even if the marks are visually different. The Supreme Court refused registration of "Sri Andal" because of its phonetic similarity to "Sri Ambal," despite the absence of visual resemblance.

Laxmikant V. Patel v. Chetanbhai Shah & Anr., (2002) 3 SCC 65, was cited in support of the passing off claim. The Supreme Court held that passing off protects traders from unfair competition, which includes misleading consumers into associating one brand with another. The judgment affirmed that a reputation built over decades must be safeguarded against dishonest adoption by competitors.


Detailed Reasoning and Analysis of the Judge:
The Delhi High Court found that the plaintiff had established a strong prima facie case for trademark infringement and passing off. The court emphasized that phonetic similarity is a key determinant in cases of trademark confusion. It noted that "CH" in "CHANEL" is commonly pronounced as "SH," making "SHANELLE" nearly identical in sound. The court dismissed the defendant's argument that Indian consumers distinguish between "CH" and "SH" sounds, citing judicial recognition of phonetic similarity in previous cases.

The court rejected the defendant's delay argument, noting that the plaintiff had been engaged in opposition proceedings before the Trademark Registry and had promptly challenged the defendant's trademark once administrative remedies were exhausted. The court reiterated that delay is not a valid defense in trademark infringement cases where deceptive similarity is apparent.

On the balance of convenience, the court found that allowing the defendant to continue using "SHANELLE" would cause irreparable harm to Chanel Ltd. by diluting its brand reputation. The court concluded that an interim injunction was necessary to prevent confusion and protect the plaintiff's rights.

Final Decision:
The Delhi High Court granted an interim injunction in favor of Chanel Ltd., restraining the defendant from manufacturing, selling, or advertising perfumes under the mark "SHANELLE" or any other mark deceptively similar to "CHANEL." The injunction was limited to the interim stage, with the final decision pending trial. The court directed the parties to proceed with evidence submission and scheduled further hearings for final adjudication.

Law Settled in This Case:
Phonetic similarity alone can be sufficient to establish trademark infringement and passing off, even if visual differences exist. The test for deceptive similarity must consider the imperfect recollection of an average consumer, who may confuse similar-sounding marks. Delay in legal action does not bar injunctive relief when deceptive similarity is evident. Balance of convenience and irreparable harm favor the protection of well-established trademarks against potentially misleading variations.

Case Title: Chanel Ltd. Vs Sunder Chemicals Agarbati Works (P) Ltd.
Date of Order: 1 October 2002
Case No.: IA No. 11043/2001
Neutral Citation: 2003(26)PTC52(DEL)
Name of Court: Delhi High Court
Name of Judge: Hon'ble Justice Shri Justice S. Mukerjee

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Written By: Advocate Ajay Amitabh Suman, IP Adjutor - Patent and Trademark Attorney
Email: ajayamitabhsuman@gmail.com, Ph no: 9990389539