Well-known marks in Nepal received their most significant judicial treatment when a division bench of the Supreme Court of Nepal, consisting of Hon. Justice Sapana Pradhan Malla and Hon. Justice Sunil Kumar Pokharel, ruled that a foreign trademark never registered or used in Nepal could supersede a trademark already registered in Nepal when the foreign company applied for registration (ITC Judgment). The Court canceled the trademark registration of “CANDYMAN (and LOGO),” granted in 2003 and then owned by Sujal Foods Pvt. Ltd. (Sujal Foods), and restored the registration of “CANDYMAN COCOLAIR (word)” in favor of ITC Limited.  

The Dispute and the Decision

The 1965 Act contains no definition of a well-known mark, and the Trademark Directive, 2015 leaves designation as a well-known mark to the Government. The Court accordingly adopted, as guidance rather than as a binding rule, the six factors set out in Article 2(1)(b) of the 1999 Joint Recommendation Concerning Provisions on the Protection of Well-Known Marks:

a.       the degree of knowledge or recognition of the mark in the relevant sector of the public;

b.       the duration, extent and geographical area of any use of the mark;

c.       the duration, extent and geographical area of any promotion of the mark;

d.       the duration and geographical area of any registrations, and/or any applications for registration, of the mark, to the extent that they reflect use or recognition of the mark;

e.       the record of successful enforcement of rights in the mark, in particular, the extent to which the mark was recognized as well known by competent authorities;

f.       the value associated with the mark.

The Court finally found that each factor set out in Article 2(1)(b) was satisfied and it could hence be concluded that the disputed trademark was a well-known trademark.

Goodwill and territoriality

The Court characterized the traditional territorial rule (linked to Hanover Star Milling v. Metcalf and United Drug v. Rectanus) as anachronistic in a global advertising era, and embraced the spillover reputation doctrine. The Court noted that, although cases such as Starbucks (HK) Ltd v. British Sky Broadcasting Group plc and Toyota Jidosha Kabushiki Kaisha v. Prius Auto Industries support the requirements of section 21B of the 1965 Act, the Court distinguished the present case because:

a.       the product linked to the contested trademark was inexpensive and purchased impulsively,

b.       Nepal and India share an open border, and

c.       Nepali consumers can easily access Indian media.

Section 21B and the Paris Convention

Section 21B of the 1965 Act states that a foreign mark not registered in Nepal does not grant rights within Nepal. The Court read this provision as reflecting territoriality but clarified that it does not protect the bad-faith registration of a well-known foreign mark. Applying the doctrine of harmonious construction and the maxims “generalia specialibus non derogant” (the general does not derogate from the specific) and “ut res magis valeat quam pereat” (it is better for a thing to have effect than to be destroyed), the Court read section 21B alongside the proviso to section 18(1), section 21C, and Article 6bis. It cited section 9(1) of the Treaty Act, 1990 for the proposition that a treaty overrides conflicting domestic law. The Court concluded that reading section 21B in absolute terms, so that a well-known foreign mark could be copied in bad faith simply because it was not yet registered in Nepal, would defeat the purpose of section 18, section 21C, Article 6bis, and section 9(1) of the Treaty Act, 1990 alike.

Relativity of First to File

The Court concluded that a foreign trademark can supersede an earlier Nepali registration if certain conditions are met. These include the mark's recognition beyond borders, evidence of bad faith by the Nepali registrant, trademark squatting, and the foreign owner's brand recognition among Nepali consumers, whether built directly or through international media and imports.

The Court's Jurisprudence Before CANDYMAN

Analysis

From Exception to Framework

Kansai Nerolac Paints v. Rukmani Chemical Industries established that bad faith defeats the first-to-file provision of the law. ITC supplies the means of proving the underlying reputation (the WIPO factors), an account of what constitutes goodwill (advertising that reaches Nepali consumers), and a method of reconciling statute with treaty. The last point on reconciliation extends beyond trademarks: the two-stage approach to section 9(1) of the Treaty Act, 1990 is a template for any conflict between a domestic provision and a ratified treaty, and another bench has applied the same section to protect the Scotch Whisky geographical indication in the absence of domestic legislation.

Continuation Rather than Rupture

The Court did not abandon territoriality. The Court stated expressly that section 21B adopts it. The relief itself was orthodox: cancellation of the local mark and registration of the foreign one. The ITC judgment does not clearly hold that an unregistered foreign mark carries enforceable rights by virtue of use alone, which is the proposition Tejram Dharampal v. Ganapati Tobacco rejected.

Confirmation from a Second Bench

Barely a month after the ITC judgment, a separate division bench of the Supreme Court passed its judgment on the Perfetti Van Melle S.P.A. v. Perfect Foods Pvt. Ltd. (Case No. 077-CI-0301) case. Perfetti Van Melle, the Italian confectionery company, had registered CENTER FRUIT for chewing gum in Nepal in 2013 and used the mark since 2005. Perfect Foods, a Nepali company, sought to register PERFECT CENTER FILLZ for the same class of goods. The Department of Industry allowed the registration, and the High Court (Patan) upheld that decision, finding the marks visually and phonetically different. The Supreme Court reversed, holding that the suffix change from “Fruit” to “Fillz” maintained substantial similarity sufficient to deceive consumers. Applying the same section 18(1) proviso and section 18(3) invoked in ITC, the Court stressed that these provisions embody a passing-off principle: even where section 21B requires registration, the proviso prevents registration of a mark that would injure the reputation of an established brand, whether or not that brand was itself registered at the time. The Court also invoked the WIPO standard on distinctiveness and the Noor Pratap Rana v. Department of Industry precedent to hold that mere prefix or suffix alterations do not avoid infringement when the dominant element remains recognizable. The fact that a different bench reached the same statutory construction within weeks of the ITC judgment, and in a case involving the same product category, suggests that the framework articulated in ITC is not an outlier but an emerging consensus on how the 1965 Act protects well-known foreign marks in Nepal.

Open Questions

However, several questions remain open.

1. The first concerns the evidence of Nepali awareness. The Court noted the absence of any survey on public recognition in Nepal and inferred awareness from the open border, shared culture, and Indian satellite advertising. That inference is natural for a mass-market Indian brand, but it may be difficult to draw for a mark without comparable media presence, or for goods purchased with greater deliberation.

2.  The second is whether the four circumstances listed in paragraph 37 of the ITC judgment are cumulative or alternative.

3. The third is the identity of the party whose bad faith is in issue. The Nepali mark was registered in 2003 and reached Sujal Foods by assignment in 2012. The Court's finding concerns Sujal Foods' knowledge, but the judgment does not separately analyze the original registrant's intention or the chain of title.

4.  The fourth is the temporal reach of the advertising route. The Court relied on advertising broadcast before the Clean Feed Policy, 2076 took effect. Whether later cross-border advertising, including online advertising, carries equal weight has not been tested.

5.  Finally, the Court itself quoted Professor Wadlow on the risk that a bona fide local trader may be sued by an obscure foreign claimant. The balance struck here depended on facts that a future court may find absent.