Courts may permit time-bound exhaustion of modified inventory to balance equities in trade dress injunctions.

The Appellant, trading as M/S Grand Chemical Works under the trademark ‘GAINDA’, challenged an interim injunction order dated March 28, 2026, passed by a learned Single Judge.

The injunction restrained the Appellant from using specific trade dresses for its toilet cleaner, glass cleaner, and disinfectant products, which were alleged to be deceptively similar to the Respondent's ‘HARPIC’ and ‘COLIN’ products.

In the present appeal, the Appellant sought limited relief to exhaust its existing packaged stock and utilize unpackaged inventory (empty bottles and labels) for its Toilet Cleaner and Glass Cleaner products.

The Appellant disclosed substantial inventory, including approximately 9,30,000 packaged bottles already in the market and 3,60,000 empty plastic bottles lying in its factory.

1. Whether the Appellant should be permitted to exhaust its existing finished and unfinished inventory of products bearing the impugned trade dress during the pendency of the appeal to balance equities.

2. Whether the potential economic hardship and environmental waste resulting from the immediate destruction of inventory outweigh the potential prejudice to the Respondent's proprietary rights.

The Court applied the principles of equity and the doctrine of proportionality in granting interim relief within trademark and trade dress litigation.

It emphasized that an appellate court, under its inherent jurisdiction and powers to modify interim orders, must balance the competing interests of parties to prevent "dead waste" and "grave economic hardship".

The court relied on the principle that where a defendant has been in the market for a significant period (since 2019) and maintains audited accounts, any alleged loss of profit to the plaintiff can be adequately compensated by a final decree, whereas the immediate destruction of stock may cause irreparable environmental and financial harm.

The Court observed that the Appellant had been selling the products since 2019, yet the injunction was only granted in 2026, necessitating a reasonable transition period to liquidate stock.

To mitigate the risk of consumer confusion during this transition, the Court proposed and the Appellant accepted specific modifications to the trade dress of the unfinished stock: for the Toilet Cleaner, the use of yellow caps and revised yellow labels [para. 10]; and for the Glass Cleaner, the replacement of blue spray nozzles with white ones [para. 12].

The Court reasoned that these modifications, combined with the distinctiveness of the ‘GAINDA’ trademark, "substantially reduced" the alleged similarity between the products.

Furthermore, the Court determined that the Respondent’s interests could be protected by allowing verification of the stock by their representatives and requiring the Appellant to file audited statements and affidavits of sale.

The Appellant was permitted to package 2,40,000 empty Toilet Cleaner bottles using yellow caps/labels and 1,20,000 Glass Cleaner bottles using white nozzles.

The Court ordered that packaging must be completed by May 31, 2026, and all sales to retailers must conclude by July 31, 2026.

Retailers were granted until December 31, 2026, to liquidate their stock, after which any remaining inventory must be recalled by the Appellant.

The Court clarified that these directions were intended to balance equities and prevent environmental waste without expressing an opinion on the final merits of the trade dress dispute.

The Appellant was directed to file an undertaking to abide by these conditions within one week.