Passing Off action for Protection of the Trademark

By Harish Khan 17 Minutes Read

Introduction

The doctrine of “Passing Off” under the Indian Trademarks Act, 1999, serves as a crucial legal mechanism for protecting the goodwill associated with unregistered trademarks. Rooted in common law, passing off occurs when one party misrepresents their goods or services as those of another, infringing upon the rightful owner’s brand identity.

The concept originated in the landmark English case of Perry v. Truefitt[1], which established that “a man is not to sell his own goods under the pretense that they are the goods of another man.” This principle remains central to passing off claims, reinforcing the importance of preventing consumer deception through the exploitation of another party’s reputation.

Over time, this doctrine has evolved to encompass a wide range of commercial activities, addressing both business and non-business operations.

In the absence of formal trademark registration, passing off provides essential protection for intellectual property rights. However, the process of proving a passing off claim is complex, as the claimant must establish a likelihood of public confusion regarding the origin of the goods or services in question. The central issue is whether the defendant’s actions lead to confusion and potentially harm the claimant’s goodwill.

What is Passing Off?

• Passing off is a common law tort recognized under Section 27 of the Indian Trademarks Act, 1999,[2] providing legal protection for unregistered trademarks. Although the Act does not define passing off explicitly, it empowers trademark owners to take legal action against parties that misrepresent their goods or services.
• The primary goal of passing off is to prevent deceptive practices that mislead consumers and harm the goodwill and reputation of rightful trademark owners. Misrepresentation occurs when a trademark or trade name is used without authorization, leading to confusion about the source of products or services. This legal remedy is crucial in protecting both businesses and consumers from unfair competition.
• Passing off has evolved to encompass a wide range of commercial activities, reflecting changes in the marketplace. It is not limited to goods and services but also includes any commercial actions that could mislead consumers. The doctrine is vital for maintaining consumer trust, as it prevents businesses from exploiting the established reputations of others.
• In practical terms, passing off may arise when a business uses a name or logo that is deceptively similar to that of a well-known brand, causing consumer confusion. Such actions can undermine the goodwill that the original brand has built over time.
• Under Indian law, passing off provides a mechanism for owners of unregistered trademarks to file lawsuits against infringing activities and seek damages. This protection enables businesses to safeguard their market identity and maintain consumer trust, regardless of trademark registration status.

Types of Passing Off

Passing off in trademark law are categorized based on the nature of misrepresentation, each presenting unique challenges and implications for trademark owners. These variations reflect how unauthorized use of a trademark can lead to confusion and damage the goodwill associated with a legitimate brand.

1. Direct Passing Off

Direct passing off occurs when someone intentionally uses a mark that is either identical or deceptively similar to that of another party. The goal is to mislead consumers into believing that the infringer’s goods or services are those of the original trademark owner. This blatant form of misrepresentation often leads to significant harm, as it can damage the distinctiveness and reputation of the original trademark. For example, selling counterfeit products with a well-known brand’s logo constitutes direct passing off.

2. Indirect Passing Off

Indirect passing off involves a more subtle form of misrepresentation. Here, the infringing trademark may not be an exact replica but creates enough similarity to confuse consumers. This can occur through overall branding, marketing style, or a closely related name that leads consumers to associate the products or services with the legitimate brand. Proving indirect passing off can be more complex, as it requires demonstrating that the resemblance is strong enough to cause public confusion and dilute the original trademark’s goodwill.

3. Reverse Passing Off

In reverse passing off, the infringer does not attempt to pass off their goods as those of another. Instead, they take products produced by the rightful trademark owner and sell them under their own brand. This rebranding leads the public to believe that the original products are their own. Over time, this can erode the goodwill associated with the trademark, as consumers begin to attribute the qualities of the original product to the infringer’s brand. Reverse passing off, though less common, can be highly damaging to the rightful owner’s market presence and brand integrity.

Characteristics of Passing Off

In the landmark case Erven Warnink B.V. v. J. Townend & Sons (Hull) Ltd.[3], Lord Diplock identified five essential characteristics that define an action for passing off. These characteristics remain central to protecting the goodwill and reputation of a business or trademark from deceptive practices. The key characteristics of passing off are:

1. Misrepresentation: The core element of passing off is a misrepresentation made by the defendant, whether intentional or not, leading consumers to believe that the goods or services offered by the defendant are connected with the plaintiff’s business. This misrepresentation can occur through the use of a similar name, mark, or other identifying elements.
2. Course of Trade: The misrepresentation must occur in the context of commercial activity, meaning the defendant is offering goods or services in a business environment. This characteristic ensures that passing off applies to situations where there is competition and consumer transactions, thereby safeguarding the commercial value of the trademark or brand.
3. Targeting Customers: The misrepresentation must be directed towards the same customers as the plaintiff’s goods or services. The defendant’s actions should affect the plaintiff’s customer base, causing confusion among consumers who rely on the reputation and goodwill of the plaintiff’s brand. This is crucial in maintaining the integrity of the consumer base.
4. Intent and Likelihood of Damage: While intent to deceive is not always required, the misrepresentation must be calculated to cause harm to the plaintiff’s goodwill or business. The harm can be in the form of loss of sales, damage to reputation, or dilution of the brand’s distinctiveness. Even unintended misrepresentation can lead to liability if it results in economic damage or loss of goodwill.
5. Actual Damage: To succeed in a passing-off action, the plaintiff must demonstrate that actual damage has been caused to their business or goodwill. This could manifest as a loss of customers, diminished reputation, or confusion in the market that affects the plaintiff’s competitive standing.

Establishing Criteria for Passing Off in Trademark Act

To establish a successful passing off claim under the Trademark Act, 1999, several critical criteria must be met, demonstrating misrepresentation, and resulting injury to the goodwill of the trademark owner. The foundations of these criteria were laid out in significant case laws, particularly the Classical Trinity Test established in Perry v. Truefitt[4] and later affirmed in Reckitt & Colman Products Ltd. v. Borden Inc[5]. This test outlines three essential elements necessary for proving passing off, each of these components plays a vital role in establishing the legitimacy of a passing off claim in court:

1. Goodwill and Reputation: The claimant must demonstrate that their trademark has acquired substantial goodwill and reputation in the market. This involves proving that consumers associate the trademark with the claimant’s goods or services, establishing a distinct identity. Evidence of advertising efforts, market presence, and positive consumer experiences can reinforce the existence of goodwill. The case of CIT v. B.C. Srinivas Seti[6] highlighted that goodwill encompasses various factors, including the business’s character, location, and the owner’s personality, all contributing to consumer perception.

2. Misrepresentation: A key element of passing off claims is misrepresentation, which occurs when the defendant uses a trademark or branding that leads consumers to believe their goods or services are affiliated with those of the claimant. The plaintiff must prove that the defendant’s actions have created, or are likely to create, confusion among consumers regarding the source of the products or services. The case of Khemraj v. Garg[7] illustrates this, where the defendants imitated the plaintiff’s product appearance, leading the court to issue an interim injunction based on the likelihood of consumer confusion.

3. Damage to Goodwill: The plaintiff must establish that the defendant’s misrepresentation has caused, or is likely to cause, actual damage to their goodwill. This damage can manifest as financial loss, harm to reputation, or dilution of the brand’s distinctiveness. The court will assess whether consumers have been misled into purchasing inferior products under the false impression that they are associated with the plaintiff’s brand.

What is the difference between Passing Off and Infringement of a trademark?

Reliefs in Passing Off Actions

1. Injunction: Courts may grant an injunction to prevent the defendant from further unauthorized use of the trademark, with specific terms as necessary.

2. Damages or Account of Profits: Plaintiffs can choose between seeking damages for losses incurred or an account of profits gained by the defendant from the passing off.

3. Delivery Up: An order for the defendant to return or destroy any offending labels or marks to eliminate confusion.

In cases of innocent passing off, if the defendant stops using the mark upon becoming aware of the plaintiff’s rights, only nominal damages may be awarded, but other reliefs remain available.

Remedies

1. Civil Remedies

• Interlocutory Injunction: A temporary court order to prevent further infringement during the legal process.
• Anton Piller Orders: Court orders allowing the plaintiff to search the defendant’s premises and seize infringing materials.
• Damages and Account of Profits: Compensation for losses or profits gained by the defendant from unauthorized use.

2. Criminal Proceedings

• A complaint can be filed against the infringer, allowing for simultaneous civil and criminal actions. Civil proceedings focus on obtaining relief for the plaintiff, while criminal proceedings aim to impose penalties on the infringer.

3. Administrative Remedies

• Opposition to the registration of a similar trademark during the review process by the Trade Marks Registry.
• Application for the removal of an already registered deceptively similar trademark.

[1] 6 Beav. 66,49 E.R. 749.

[2] The Indian Trademarks Act, 1999, s. 27.

[3] [1979] A.C. 731

[4] Supra at 1.

[5] [1990] 1 All E.R. 873

[6] 1981 AIR 972.

[7] AIR 1975 DELHI 130.

[8] The Civil Procedure Code, 1908, s. 20. 

[9] The Trademarks Act, 1999, s. 134.

Harish Khan

This is Harish Khan, Enrolled as an Advocate with the Bar Council of Delhi. Currently, working as Legal Manager at Blackbull Law House. Pursued B.B.A. LL.B (Hons) Specialised in Business Laws from Himachal Pradesh National Law University, Shimla [H.P]. completed LL.M Specialised in Business Laws from Amity University, Lucknow [U.P].