Well-Known Trademark Protection in Nepal 2026: ITC v. Sujal Foods

Key Takeaways

1. An earlier Nepalese registration cannot be treated as conclusive where it was obtained in bad faith by taking advantage of another trader’s established reputation.
2. A trademark may acquire reputation among Nepali consumers through cross-border advertising and media exposure, even without a substantial physical presence in Nepal.
3. The first-registration principle under Sections 16 and 21B of the Patent, Design and Trade Mark Act, 2022 (1965) (PDTA) is not absolute.
4. A foreign brand may build protectable reputation in Nepal through sustained advertising and consumer recognition before its goods achieve a substantial market presence.

A. Context

The dispute concerns competing claims over the CANDYMAN trademark in Nepal. ITC Limited (ITC) relied on its earlier creation, registration, use and reputation of the mark in India. Sujal Foods Pvt. Ltd. (Sujal Foods) relied on an earlier registration of CANDYMAN in Nepal.

The main issue before the Supreme Court of Nepal was whether an earlier Nepalese registration should prevail where the mark was allegedly adopted from a foreign trademark that already had a reputation among Nepali consumers.

B. Material Facts

• ITC registered CANDYMAN in India on 15 November 2001 and sold confectionery under the brand. From around 2002, it was advertised on Indian television channels accessible to viewers in Nepal.
• CANDYMAN and its logo were registered in Nepal on 3 April 2003 in the name of Lord Shiva Food & Confectionery. The registration passed to Jaya Confectionery (3 January 2008) and then to Sujal Foods (5 October 2012).
• ITC applied to register CANDYMAN COCOLAIR in Nepal on 3 May 2012. Sujal Foods opposed on the basis of its earlier registration. The Department of Industries (DOI) ruled for ITC and issued a certificate on 11 January 2013.
• On 27 June 2013, the DOI cancelled ITC’s registration after Sujal Foods petitioned for revocation. The Patan Appellate Court (now High Court Patan) upheld the cancellation on 29 February 2016.
• The Supreme Court granted leave on 10 September 2017 and delivered its final judgment on 7 July 2024.

Key Case Milestones

The full chronology appears in Note 1 below.

C. Principal Questions Before the Court

1. Had CANDYMAN acquired well-known trademark status among Nepali consumers?
2. When can a trademark already registered abroad be registered in Nepal, and can a foreign mark be protected without Nepalese registration?
3. Can Sujal Foods’ CANDYMAN registration be cancelled while ITC’s CANDYMAN COCOLAIR registration is maintained?
4. Was the High Court Patan judgment of 29 February 2016 correct, and can ITC’s grounds of appeal be sustained?

D. The Decision

The Supreme Court reversed the DOI decision of 27 June 2013 and the Patan judgment of 29 February 2016. It held that an earlier Nepalese registration is not conclusive where it was obtained in bad faith by taking advantage of another trader’s established reputation.

The Court cancelled the CANDYMAN name, logo and related label registered in the name of Sujal Foods. ITC’s CANDYMAN COCOLAIR registration, certified by the DOI on 11 January 2013, remains valid.

E. Basis of the Ruling

1. Reputation can cross borders. Trademark protection cannot be determined solely by the date of registration in Nepal. The Court considered ITC’s prior use and promotion in India, the availability of Indian television channels in Nepal, and the resulting consumer recognition.

2. First registration is not absolute. Sections 16 and 21B of the PDTA must be read with Section 18, Section 21C, the Paris Convention and Section 9(1) of the Nepal Treaty Act, 2047 (1990). An earlier local registration cannot defeat a well-known foreign mark where prior reputation and bad-faith adoption are shown.

3. Similarity and confusion. The Court found substantial similarity in the word CANDYMAN, lettering, font, colour combination, logo and overall presentation, for similar confectionery products.

Court’s Reasoning at a Glance

F. Analysis

1. Registration-Based Protection under Nepalese Law

Section 16 of the PDTA provides that title to a trademark is acquired on registration under Section 18. Section 21B states that registration in a foreign country does not, by itself, create valid title in Nepal unless the mark is registered in Nepal. Sujal Foods relied on these provisions.

The Court did not reject this registration-based structure. It held the provisions cannot be read in isolation. The proviso to Section 18(1) bars registration where a mark may harm the reputation of another person’s trademark, and Section 18(3) permits cancellation on that ground. Registration is therefore an important source of rights, but it does not protect a registration obtained contrary to the Act or in bad faith.

2. Recognition of Trans-Border Reputation

In assessing whether CANDYMAN was well known, the Court referred to the WIPO Joint Recommendation Concerning Provisions on the Protection of Well-Known Marks, 1999. The relevant factors include:

• knowledge or recognition among the relevant public;
• duration, extent and geographical area of use;
• duration, extent and geographical area of promotion;
• duration and geographical area of registrations or applications;
• record of successful enforcement; and
• value associated with the mark.

The Court noted that Indian satellite channels such as Sony Max, Star Plus, Sahara One, Sun TV and Cartoon Network were accessible in Nepal and carried CANDYMAN advertisements from the early 2000s. Nepali consumers could therefore become familiar with the mark before ITC built a substantial physical market in Nepal.

Actual physical sale of ITC’s goods in Nepal was not treated as an essential condition for protection. The reasoning focused on consumer awareness created through advertising and communication media.

3. Bad-Faith Registration and Trademark Squatting

The Court examined the circumstances of adoption and registration. It treated the following as indicators of bad faith:

• ITC’s earlier creation and registration of CANDYMAN;
• the short interval before the Nepalese registration;
• close copying of the name and visual presentation;
• use of the mark for the same or similar goods; and
• the absence of a convincing independent basis for adopting the same presentation.

Deliberately adopting another trader’s established mark to gain unfair commercial advantage, or to obstruct the genuine owner, is bad faith. Such a registration does not gain legitimacy merely by being earlier in time and may be treated as invalid from the outset.

4. Domestic Law and International Obligations

Applying harmonious construction, the Court read Section 21B (registration in Nepal required for a foreign mark to have title) together with Section 21C, which provides for registration of foreign trademarks and requires the DOI to provide facilities under the Paris Convention.

It also relied on Section 9(1) of the Nepal Treaty Act, considering Nepal’s obligations under the Paris Convention, including Article 6bis (well-known marks) and Article 10bis (effective protection against unfair competition). The Court rejected an interpretation under which the domestic registration rule could validate bad-faith appropriation of a well-known foreign mark.

5. Likelihood of Consumer Confusion

The Court found close similarities in name, font, style, logo, colour combination and overall presentation. It also weighed the nature of the goods: chocolates and candies are low-value consumer goods, often bought quickly and without detailed comparison, including by children and ordinary consumers. The overall similarity was likely to confuse consumers about the true source of the goods.

G. Conclusion and Practical Implications

The judgment qualifies Nepal’s traditional first-registration approach. Registration remains central to trademark protection, but an earlier registration will not be protected where it was obtained in bad faith, harms another mark’s reputation, or conflicts with Nepal’s international obligations.

What this means in practice:

• For Nepalese businesses: conduct broader trademark due diligence, including foreign marks, before adopting or registering a brand.
• For foreign trademark owners: prior international use and reputation may be relevant in Nepal where the evidence establishes a well-known mark, trans-border reputation or bad-faith local registration.
• For future disputes: the courts and the DOI may look beyond registration date to who genuinely adopted the mark, whether it had acquired reputation, whether the later adopter acted in good faith, whether consumers are likely to be confused, and whether the registration is consistent with treaty obligations.

Notes

Note 1 – Key Timeline of the CANDYMAN Trademark Dispute

Note 2 – Official Sources

• Patent, Design and Trade Mark Act, 2022 (1965), WIPO Lex
• Nepal Treaty Act, 2047, Nepal Law Commission
• Paris Convention for the Protection of Industrial Property, WIPO Lex
• WIPO Joint Recommendation Concerning Provisions on the Protection of Well-Known Marks