Passing Off under the Indian Trade Marks Act
19 November 2012
The action for passing off lies when a merchandiser applies an established trademark in such a manner as to cause confusion or deception in the mind of the consumers regarding the source or origin of the goods leading them to form a linkage between the established trademark and the mark so applied. The ingredients of a passing off action applicable in India are the same as developed in common law, which are as follows:
(1) Plaintiff’s goods must have acquired a goodwill or reputation in the market attributable to some distinguishing feature;
(2) Defendant must have misrepresented (whether or not intentionally), leading the public to believe that the goods or services offered by the defendants are goods or services of the plaintiff; and
(3) Plaintiff must have suffered or is likely to suffer damage as a result of the erroneous belief engendered by the defendant’s misrepresentation.
The Indian Trade Marks Act 1999 recognises the rights in unregistered trademarks and allows for an action for passing off for enforcement of unregistered trademarks under Section 27(2). Alternatively, the proprietor may institute criminal proceedings under Section 103 of the Trade Marks Act for applying false trademarks or trade descriptions.
Unlike infringement, passing off is not a proprietary right in the name or the get-up that is misappropriated by the defendant. It is the wrongful invasion of a property right vested in the plaintiff and is established by evidence of reputation and goodwill of the business. To enforce the rights in an unregistered trademark, it is also essential that there is priority in adoption and use of the impugned mark. As held in Kishore Zarda Factory v. J.P. Tobacco House, “a prior user of trademark has rights even over a later registered user….. [n]o injunction may be issued against a prior user of the trademark in a passing off action.”
This applies to foreign marks, too, which have acquired trans-border reputation so as to enable them to enforce their trademarks in India. In Sony Kabushiki Kaisha v. Mahaluxmi Textile Mills, the plaintiff was allowed to enforce its well-known trademark in India against the defendants, who were using it on hosiery goods. Again in N R Dongre v. Whirlpool Corporation, dealing with well known trademark WHIRLPOOL, the court ruled that “a man may not sell his own goods under the pretence that they are the goods of another man.” The trans-border reputation of a trader could enable him to obtain injunction in the courts of a country in which he is not trading.
In a passing off action, it is essential to determine whether the defendant is selling goods so marked as to be designed or calculated to lead purchasers to believe that they are the plaintiff's goods. To determine this, the following have to be evaluated:
(1) Similarity in the trade names;
(2) Deception on the part of defendant when passing off goods;
(3) Confusion in the minds of the consumers.
It was also held in the Kishore Zarda Factory case that the test to be applied in such matters is as to whether a man of average intelligence and of imperfect recollection would be confused. The principles of passing off which ought to be considered by the courts has been further clarified by the Supreme Court in Cadila Health Care v. Cadila Pharmaceuticals as:
In an action for passing off on the basis of an unregistered trademark, for deciding the question of deceptive similarity, the following factors are to be considered:
(a) The nature of the marks
(b) The degree of resemblance between the marks
(c) The nature of the goods in respect of which they are used as trademarks
(d) The similarity in the nature, character and performance of the goods of the rival traders
(e) The class of purchasers who are likely to buy the goods bearing the marks they require, on their education and intelligence and a degree of care they are likely to exercise in purchasing and/or using the goods
(f) The mode of purchasing the goods or placing orders for the goods
(g) Any other surrounding circumstances which may be relevant in the extent of dissimilarity between the competing marks
However, with time and depending on the facts and circumstances of the case, the ‘similarity in goods’ is not taken to be a very important ground to restrain the remedy of passing off. Accordingly, in many cases of dissimilar goods, relief has been granted. In Mahendra & Mahendra Paper Mills, the defence of dissimilarity in the field of operation was taken. This argument was not accepted and it was held that “a passing off action lies on the allegations of misuse of both business name and trademark (applied on goods). The basic principle would not vary in its application if the acts complained against relate to application of a mark on goods, as against application of an expression as a business name. In the event a passing off action is instituted to defend the exclusivity of a corporate name, it would not be open to another trader to justify the use on the ground that he is using the same corporate name as his business identity in respect of a business entirely different from that of the plaintiffs.”
Further, to seek a remedy for passing off, the motive of the defendant is not important. Once reputation is established by the plaintiffs, no further proof of fraudulent intention on the part of the defendants is required to be proved or established. An action of passing off is based on common law of tort and is founded on the doctrine of equity.
The relief available in suits for passing off includes an injunction restraining further use of the mark, damages, an account of profits or an order for delivery of the infringing labels and marks for destruction or erasure.
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