Nobody has any right to represent his goods as the goods of somebody else
The two decades of globalization and liberalization has resulted in mammoth number of commercial transactions, goods and services in today’s market. The quality offered and the competition has increased manifolds with the growth in the Economic trade. More and more goods and services are introduced in the market, each of which aims at capturing, retaining and increasing a market share exclusive to them.
In order to realize this goal it is utmost essential for these products to create an identity and recognition for themselves. Thus to distinguish them from their competition, products and services associate with a Trademark i.e., a graphical representation by which such a product or service is identified.
The Trademark Act 1999 provides protection and grants several rights to the holder of a registered trademark. However, an unregistered trademark is given limited safeguard under the said Act and thus Doctrine of Passing off is availed to provide such trademarks with the necessary protection. The Doctrine of passing off, a common law doctrine is a legal remedy controlling unfair competitive practices. It evolved in the 19th century and is based on the principle that a person is not to sell his goods or his services under the pretence that they are those of another.
This project deals with the critical analysis of passing off action beginning with its evolution in other countries and then its usage and application in India. In addition to this, passing off action has been analyzed in context with its constituent elements, defenses and reliefs granted in passing off, its distinction with infringement, evidence of passing off through different cases and also the role of the judiciary in giving legal recognition to the tort of passing off action.
CHAPTER I: ESSENTIALS OF PASSING OFF ACTION
The law of passing off arises when there is misrepresentation, goodwill is harmed in the course of trade, which causes damage to the trade or goodwill of the trader by whom the action is brought. The characteristics of passing – off are discussed and explained in number of cases. Lord Diplock in Erven Warnik B.V. v. Townend case stated:
- Made by person in course of trade
- To prospective consumers of his or ultimate consumers of goods or services supplied by him
- Which was calculated to injure business or goodwill of another trade (in the sense that this is reasonably foreseeable consequence), and
- Which caused actual damage to a business or goodwill of a trader by whom the action was brought, or in a quia tmet action would probably do so.
In addition to this, there are three main elements of the tort of passing off which were also referred as “classical trinity” in Harrods v. Harrodian School which are reputation, deception and damage. Once a misrepresentation is established it is reasonable to infer that the customers of the goods bought them on that misrepresentation unless there is evidence to the contrary.
In the case of Reckitt & Colman , it was stated that according to the law of passing off no man could pass off his goods as those of another. It may be expressed in terms of the elements which the plaintiff in such an action has to prove in order to succeed. Firstly, goodwill has to be established or the reputation attached to goods or services which he supplies in the mind of purchasing public by association with the identifying “get up” under which his particular goods or services are offered to the public as distinctive specifically of the plaintiff goods and services.
Secondly, he must demonstrate a misrepresentation by the defendant to the public leading or likely to lead the public into believing that goods or services offered by him are goods and services of the plaintiff. Thirdly, he must demonstrate that he suffers or likely to suffer damage by reason of erroneous belief engendered by the defendant’s misrepresentation that the source of defendant’s goods or services is the same as the source of those offered by the plaintiff. There are two necessary elements, first a misrepresentation expressed or implied but not necessary fraudulent and second a consequent likelihood of damage to the plaintiff’s goodwill.
In the case of Baker Huges Ltd. v. Hiroo Khushalani , the Delhi High Court held that the plaintiff in an action of passing off must establish the following elements:
- the plaintiff has acquired a reputation or goodwill in his goods, name or mark
- a misrepresentation, whether intentional or unintentional, which proceeds from the defendant by the use of the name of mark of the plaintiff or by any other method or means and which leads or is likely to lead the purchaser into believing that the goods or services offered by the defendant are the goods and services of the plaintiff;
- or that the goods and services offered by the defendant are the result of the association of the plaintiff’s
- the plaintiff has suffered or likely to suffer damage due to the belief endangered by the defendant’s representation.
These three elements of passing off namely the reputation of goods, possibility of deception and likelihood of damage have been approved by the Supreme Court in the case of Laxmikant V. Patel v. Chetanbhat Shah
CHAPTER II: EVOLUTION OF LAW OF PASSING OFF ACTION
2.1 Concept of passing off action in United Kingdom
The concept of passing off was prevalent from the 17th century where in the cases the House of Lords categorized it under tort of deceit and defamation. In 19th century the concept got recognized and started developing. In the case of Singer Manufacturing Co. v. Loog the House of Lords held that:
“no man is entitled to represent his goods as being the goods of another man; and no man is permitted to use any mark, sign or symbol, device or other means, whereby, without making a direct false representation himself to a purchaser who purchases from him, he enables such purchaser to tell a lie or to make a false representation to somebody else who is the ultimate customer. He must not make directly, or through the medium of another person, a false representation that his goods are the goods of another person.”
So the earlier definition of passing off was limited only to trade mark or trade name, where unauthorized owner deceits the consumers by inducing them that the goods or services offered is that of the authorized owner. Then after wards the scope of passing off was widened and the characteristics of the passing off were laid down in Advocat Case and the classical trinity test held in Reckitt Colman case was upheld in majority of the cases. So, to institute a suit for passing off three elements should exist, i.e. the goodwill, deception caused due to misrepresentation and damage caused to the owner due to misrepresentation . These became the major principles in the UK for the law of passing off.
Distinction between General and Commercial goodwill
In the leading case of Manitoba Fisheries Ltd. v. The Queen the Court adopted the definition of goodwill as follows:
Goodwill is a word sometimes used to indicate a ready formed connection of customers whose custom is of value because it is likely to continue. But in its commercial sense the word may connote much more than this.
Goodwill is also defined as “the attractive force which brings in custom,” which is not only restricted to the trade connections or one sphere but is spreads in other spheres also where the mark or other is recognized. It is the one which is generated through lots of hard work and efforts which adds value to the business . In order to ensure goodwill following test has been laid down in Parke, Davis & Co. v. Empire Laboratories Ltd. , the novel design recognized in the market which distinguishes the goods and services from others, and the owner has acquired reputation in the market through the use of that mark. The second criteria for instituting a suit are that there should be misrepresentation.
The Supreme Court of Canada has defined misrepresentation as a deceitful activity undertaken by the defendant, or any unfair trade activity done or unethical motives to be in the market . This doctrine also covers negligence or the carelessness of misrepresentation on the part of trader.
If the plaintiff establishes the case that the harm to the goodwill is done through misrepresentation in the course of trade which can easily deceit or confuse people, it is presumed that damage has been caused to the plaintiff and he is authorized for the cost of damage caused.
In English law passing off action is not described exclusively, on the other hand the Trade Mark Act provides for registration of trade mark. Section 19 subject to section 21, 32 and 67 provides exclusive right to use the trade mark in Canada except proved invalid. Section 7 although do not exclusively associated with protection of trade mark, outlines unfair trade practices. Clause (a) offers protection mechanism to the trade mark owners to ensure fair competition in market and clause (b) tells about protection of goodwill generated through use of trade mark.
2.2 Concept of passing off action in India
In India Passing off action was prevalent even before the enactment of the Trade Marks Act, 1940. It was the way to assert the trade marks right. To institute a suit one should establish the title on the trade mark. Secondly, the one must show that the mark has obtained a reputation and goodwill.
Thirdly, it was to be shown that the defendant has used a mark similar to the mark of complaining plaintiff and has thereby actually passed off his goods or has been seeking to pass off his goods as those of the complainant.
The modern law of passing off and its development as part of Common law may be understood as follows. It originated as an action in tort, to redress the wrongful conduct of the defendant in passing – off his goods as the goods of the plaintiff, by using the trade name or trade mark of the plaintiff so as to induce in potential purchasers the belief that his goods or business were those of the plaintiff.
The tort was in the misrepresentation by the defendant to the potential buyers of his goods that the goods were of the plaintiff. Defendant achieved this result by deception and deceitful use of the trade names, marks or other indications of the plaintiff.
The Trade Marks Act, 1958 and Trade Marks Act of 1999 provides for passing off. Section 2733 states about “No action for infringement of unregistered trade mark”.-
- No person shall be entitled to institute any proceeding to prevent, or to recover damages for, the infringement of an unregistered trade mark.
- Nothing in this Act shall be deemed to affect rights of action against any person for passing off goods or services as the goods of another person or as services provided by another person, or the remedies in respect thereof
Clause (2) of Section 27 preserves the rights and remedies of the prior user. It states as even if the application for the registration of trade mark has been filed by the subsequent user and the same got the registration, even then the prior user can file for passing off action under Section 27(2).
In Koninkhijke Phillips Electronics v. Kanta Arora , the Judge laid down that :“Section 27(2) makes it abundantly clear that registration of a mark in the trade mark Registry is irrelevant in an action of passing off and the mere presence of the mark in the Register does not prove its user by the person in whose name the same has been registered.”
In another important case of N.R. Dongre v. Whirlpool the question was whether an action for passing off could be maintained against the registered proprietor of a Trade Mark. Reliance was placed on Sec. 28(1) of the 1958 Act to argue that the registration of the trade mark gave to the registered proprietor an absolute right to use the trade mark in relation to goods in respect of which the trade mark was registered and to prevent infringement in the manner provided in the Act.
The court repelled the contention and held that “The rights of action under Section 27 (2) are not affected by Section 28 (3) and Section 30 (1)(d) of the 1958 Act. Therefore, registration of a trademark would be irrelevant in an action of passing off. Registration of a trademark in fact does not confer any new right on the proprietor thereof than what already existed at common law without registration of the mark. The right of goodwill and reputation in a trade mark was recognized at common law even before it was subject to statutory law. Prior to codification of trade mark law, there was no provision in India for registration of a trade mark. The right in a trade mark was acquired only by the use thereof. The right remained unaffected under the 1999 Act also and is recognized by Section 27 (2) and Section 33.”
The above concept of passing off was also explained in the case of Honda Motors Co. Ltd V Charanjit Singh & Others, wherein Plaintiff was using trademark “HONDA” in respect of automobiles and power equipments. Defendants started using the mark “HONDA” for its pressure cookers. Plaintiff bought an action against the defendants for passing of the business of the plaintiff.
It was thus held that the use of the mark “Honda” by the defendants couldn\’t be said to be an honest adoption. Its usage by the defendant is likely to cause confusion in the minds of the public and the injunction was granted for the same.
In the case of Rupa & Co. Ltd v. Dawn Mills Co. Ltd., the defendant manufactures an underwear which named dawn as similar to the plaintiff’s manufactured underwear don, which is creating confusion in the minds of people because the layout, get up and colour combination is same to the plaintiff’s product. The injunction was granted.
CHAPTER III. DISTINCTION BETWEEN PASSING OFF AND INFRINGEMENT
The registered trade mark holders have a remedy to get injunction and damages caused by the defendant by using deceptive similar or identical trade mark to deceit or cause confusion amongst consumers. But the remedy of infringement is not provided to the unregistered trade mark holders.The difference between infringement and passing has been identified by the Supreme Court of India in the case of Durga Dutt v. Navratna Pharmaceuticals Laboratories , as while an action for passing off is a common law remedy being in substance an action for deceit, i.e. a passing off by a person of his own goods as the goods of another, it is not the gist of an action for infringement.
The action for infringement is a statutory remedy conferred on the registered proprietor of a registered trade mark for the vindication of his exclusive rights to the use of the trade mark in relation to those goods. The use by the defendant of the trade mark of the plaintiff is not an essential in an action for passing off, but is the sine que non (absolute necessary) in the case of infringement. In the case of infringement the use by the plaintiff is not necessary but in the case of passing off the plaintiff has to show usage which lead to grow its reputation and goodwill.
In an action for infringement, likelihood of actual sale by the use of offending mark is not necessary. If there is an imitation of broad, or essential or peculiar features of a registered trade mark, it is sufficient to cause infringement .
For example, if the trade mark consisting of a get-up, label and word has come to be known and identified by a particular word, the use of such word would constitute infringement . While in passing off it is necessary to prove that an ordinary person is likely to buy goods in a belief that the goods are that of plaintiff, though it is not necessary to show that actual sale took place.
The burden of proof in case of infringement always lies on the plaintiff. In the case of S.M. Dychem Ltd. v. Cadbury (India) Ltd. , an infringement action is fail where plaintiff cannot prove registration or that its registration extends to the goods or to all the goods in question or because the registration is invalid and yet the plaintiff may show that by imitating the mark otherwise, the defendant has done what is calculated to pass off his goods as those plaintiff.
CHAPTER IV : DEFENCES AVAILABLE IN PASSING OFF ACTION
4.1 Use of a Registered Trade mark
If the defendant holds a registration for the trade mark that renders his good or service deceptively similar to that of the plaintiff, then the plaintiff’s claim will not stand as the defendant by law has an exclusive statutory right to use the mark in association with the concerned goods or service.
4.2 Individual’s Own Name
An individual (defendant) has the right to use their own name and even if such usage causes confusion it will not fall under passing off as such. However, in case of such confusion the individual has the obligation to take reasonable care to avoid the confusion by qualifying the representation implied in their conduct.
4.3 Plaintiff’s Own Goods
Trading in plaintiff’s own goods with plaintiff’s name or mark in connection does not qualify as passing off, as long as such goods are not of inferior quality or is not materially altered from the original product of the plaintiff. Example- various soft drinks sold in Tuk shops.
A claim of passing off on the basis of any combination of elements which primarily perform a function will not be successful.
CHAPTER V: REMEDIES AVAILABLE IN PASSING OFF ACTION
Section 135(1) lists the reliefs, which may be granted to the plaintiff who established his case by the court in case of infringement and passing off, are:
* An injunction restraining further use of trade mark
* Damages or an account of profits.
However, in the case of innocent infringement or passing off, if the conditions laid down in Section 135(3) are satisfied, the court will not grant relief by way of damages other than the nominal damages, or an account of profits; but An order for delivery-up of the infringing labels and the marks for destruction or erasure.
The grant of injunction is a right expressly provided by the TMA, 1999. The rules governing the grant of injunctions in trade mark cases are based on the provisions contained in Section 36 to 42 of the Specific Relief Act, 1963 and Order 39 Rule 1 and 2 read with section 151 of the Code of Civil Procedure.
In Aristo Pharmaceuticals v. Wockhardt , the plaintiff- respondent had filed suit and was granted injunction against SPASMOFLEXON when it was manufacturing under the registered trade mark SPASO PROXYVON. In SLP filed in Supreme Court, it said that it was necessary for the court to allow the parties to lead evidence before grant of injunction by the division bench.
In Wander Ltd. v. Antox India , the Supreme Court said that an interlocutory remedy is intended to preserve status quo and if such an order is not granted the plaintiff could not be adequately compensated in terms of damages recoverable in the action, if the uncertainty were resolved in his favour at the trial.
The need for such protection must be weighed against the corresponding need of the defendant to be protected against the injury resulting from his having been prevented from exercising his own legal rights for which he could not be adequately compensated.
The grant of damages is an award for compensatory damages to the plaintiff with an aim to compensate him for the loss suffered by him whereas punitive damages are aimed at deterring a wrong doer and the like minded for indulging in such unlawful activities. Whenever an action has criminal propensity also the punitive damages are clearly called for so that the tendency to violate the laws and infringe the rights of other with a view to make money is curbed.
The punitive damages are founded on the philosophy of corrective justice and as such, in appropriate cases these must be awarded to give a signal to the wrong doers that the law does not take a breach merely as a matter between rival parties but feel concerned about those also who are not party to the dispute but suffers breach.
In the case it is not the plaintiff alone who has suffered the infringement but also the readers of the magazine under the impression that it is being published from the same publishing house.
CHAPTER VI : JUDICIAL ANALYSIS OF PASSING OFF ACTION
Other than Legislature, the Judiciary has also played a vital role in enhancing the concept of passing off. In the case of Colgate Palmolive Company v. Anchor Health and Beauty Care , Both the plaintiffs and the defendants manufacture well known toothpaste brands. The plaintiffs sued the defendants for passing off.
The contention of the plaintiffs was that the defendants’ use of colour and pattern of colours in their dental products was dangerously similar to the plaintiffs’. According to the plaintiffs the proportion of colours (red and white) used by the defendants was almost identical to that of the plaintiffs (1/3:2/3). The reason for bringing in such an action was that the plaintiffs were established in the Indian market since 1951, and had a tremendous goodwill in the country, while the defendants had entered the market only in 1996.
It was held by the court that though there cannot be any monopoly over colour, in a country with a huge number of illiterate and semi-literate people, by marketing a new product with a design closely resembling that of the older product, it is easy to create confusion in the minds of the public, especially when a similar product has been prevailing in the market for close to half a century.
It was adjudged that the defendants were using the trade dress of the plaintiffs. The court ordered an injunction, restraining the defendants from using the red/white combination in the disputed order.
Another case of SVS Oil Mills v. SVS Rajkumar , wherein the Madras High Court injuncted the use of ‘SVS with R in small print’ trade mark finding it similar to reputed SVS trade mark in yellow polythene plastic cover placed in transparent carrybag in relation to vegetable oil. The petitioner had not obtained registration of the trade mark even though its sales were to the tune of Rs. 31 Crores.
In case of Honda Motors Co. Ltd. v. Charanjit Singh and Ors., the defendants manufactured pressure cookers under the name “Honda”, in India. It was held that with an established business and sale of quality products, the name “Honda” had become associated with the plaintiffs’ reputation and its goods. It is very easy for the public to associate the plaintiffs with any product that carries the name of “Honda”. Further, the honourable judges also held that by using the name “Honda” the defendants were creating confusion in the consumers’ minds, which was indirectly affecting the business of the plaintiffs in an adverse way. An injunction was ordered to stop the defendants from using the name “Honda.
CHAPTER VII : CRITICAL ANALYSIS OF PASSING OFF ACTION
Trade Mark Act, 1999 along with Trade Mark Rules, 2002 makes journey of Trade Mark in India very easy and comfortable. Among these laws and rules there is another concept of passing off, a valuable instrument to the rights of the unregistered trade mark holder. This concept has been used on numerous instances and provides relief to those who don’t register their marks and it looks down upon those who try to pass off goods as those of another.
In Tata Sons v. Manu Kosari , it was held that the rendering of Internet services is also entitled to protection the same way as goods, services are, and trademark law applies to activities on the Internet. With technological advances changing the way we provide goods and services, particularly in cyber space, domain names are also now entitled to equal protection as trademarks as they are no longer considered as mere addresses.
As India is a large country and World’s second largest market in terms of population, copying Well-Known marks is a very big phenomena here. The precedent of awarding Damages as evolved by the Delhi High Court is an effective remedy to this problem but not sufficient. Certain other measure need to be taken by the Registry Offices.
The Registries should keep a regular check on the Trademark Register for similar marks. No infringement matter should be taken leniently even thought the infringer had established a long use of the trademark.
The absence of any decisive definition of “goodwill” and “reputation” in the Statute forms is one of the challenges posed in understanding the concept. Courts in India fail to distinguish between these two terminologies and use the terms interchangeably.
It should be kept in mind that ‘goodwill’ is a species of property that is restricted to the local jurisdiction, while an action of Passing Off is based on ‘reputation’ which transgresses boundaries. The Indian courts completely ignore the concept of ‘residuary reputation’. The situation was so even in the Whirlpool Case, which is the first precedent for trans-border reputation.
CHAPTER VIII : CONCLUSION
Registration of the trademark has become vital with the growth in the competition, growth in the economy. In order to protect one to get harm in the sense of reputation and goodwill one needs to register its name by which he sold his good, i.e. trademark.
But those who even do not register their trademark, it does not mean they cannot protect their rights, their interest, they can very well protect the right by the concept called Passing off.
Passing Off is a common law tort which protects the goodwill and reputation of trade mark holder against damage caused by misrepresentation by defendant. The action of passing off can be done by using the trade name, trade mark or other get up of the plaintiff as to induce in potential purchasers the belief that his goods or business were those of plaintiff.
The tort lies in misrepresentation by the defendant. The misrepresentation is aimed at the potential buyers of the goods or services, who are invited to buy the goods believing that the goods are of the plaintiff.
If the authorized person finds that the defendant is using his mark, he can file the suit in the court and the jurisdiction of the court is where the person resides or where the person carries his business and got loss thereof.
If he is able to prove harm to reputation or goodwill or misrepresentation, then the person can get damages of the loss occurred. Even he can stop the person to use the mark further by taking injunction against him.
In order to protect the right one has to prove reputation and goodwill in the market. As no precise definition or criteria is specified in law to prove goodwill and reputation, many people fails to prove the same and thereby is not subject to such remedies. This creates huge loss to the honest person. Even now with the growth of economy and large area one cannot find out that the same mark in respect of same goods is being used by some other person. When the person gets to know about the same it becomes too late. So it is better to get registered your trade mark as soon as you start using the same. It ensures your rights and interest in better way.
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