Passing Off Chapter
Passing Off Chapter
85
distinction between passing off, trademark dilution and infringement of
trademarks. It is also necessary to see how far this statutory protection has
been expanded.
The action for passing off is the oldest of the modern legal regimes
for the protection of trade symbols. Lord Langdale MR summed up the
rationale for the passing off action in following words:
A man is not to sell his own goods under the pretence
that they are the goods of another man; he cannot be
permitted to practice such a deception, or to use the
means which contribute to that end. He cannot,
therefore be allowed to use names, marks, letters or
1
P.S. Narayanan, Law of Trademarks and Passing off, 685 (Eastern Law House,
Kolkata, 6th edn., 2004, Rept. 2007).
2
D.P. Mittal, Trademarks, Passing off and Geographical Indication of Goods, 1.142
(Eastern Law House, Calcutta, 2nd edn., 2008).
86
other indicia, by which he is selling are the
manufacture of another person.3
By around 1870 there existed a common law action for passing off in
UK but only damages could be awarded as a remedy and that too on the
proof of fraud. The Trademarks Registration Act, 1875 in UK did not
affect the passing off action directly. For encouraging registration, the 1875
Act provided that no one was entitled to initiate infringement action until
and unless the mark was duly registered. This Act was amended by Act of
1876 permitting infringement action to be brought also on mark in use
before the 1875 Act, which was not granted registration. An action for
infringement was given clear statutory basis in the Trademarks Act, 1905
of UK and also stating that nothing in it affected the passing off action. The
following observations of House of Lords deserve to be noticed in this
connection:
Jurisdiction over passing off which are formerly vested from a very
early date in the court of chancery in this country and has survived to the
High Court, is a jurisdiction which has rested on fraud. It is the commonest
principle of honesty that no man shall be allowed to sell as the goods of
another either his own goods or the goods of some third manufacturer. For
any trader to attempt to sell either his own goods or the goods of a third
person as the goods of the complainant is, of course, a fraud. It is quite true
that it is not necessary in cases of this kind to prove that the defendant
whose conduct is complained of was consciously, or intentionally, doing
the acts complained of before the issue of the writ, but when the facts are
brought to his attention, and when the facts are established in a court of
justice. For him to do that which perhaps he was previously doing
3
Lionel Bently and Brad Sherman, Intellectual Property Law, 671 (Oxford
University Press, New Delhi, Indian edn., 2003).
87
unintentionally or unconsciously before the matters was brought to his
attention constitutes and is a fraud.4
The passing off action arose in the nineteenth century and dependent
upon the simple principle that nobody had any right to represent his goods
as the goods of somebody else.6 In other words, a man is not sell his goods
or services under the pretence that they are those of another man.
The wrong of passing off consists in the fact that no man is entitled
to represent his goods as of another. The law does not, permit anyone to
carry on his business in such a way as would persuade the customers in
believing that the goods or services belonging to someone else are his or
associated herewith. It does not matter whether the latter person does so
fraudulently or not. The gist of conception of passing off is that the goods
4
Quoted from V.A. Mohta, Trademarks, Passing off and Franchising, 676 (All India
Reporter Pvt. Ltd., Nagpur, 1st edn., 2004).
5
AIR 1965 SC 980 at 990.
6
See B.K. Engineering Co. v. U.B.H.I. Enterprises AIR 1985 Del. 210 at 220.
7
Supra note 1 at 690.
88
are in effect telling a falsehood about themselves, are saying something
about themselves which is calculated to mislead.8
8
Salmond & Heuston, The Law of Torts, 395 (Universal Law Publishing Co. Pvt.
Ltd., Delhi, 20th edn., 1992, 6th Indian Rept. 2002).
9
AIR 2001 SC 1952.
10
Id. at 1964.
11
Ibid.
89
It was further observed that in the interests of fair trading and in the
interests of all who may wish to buy and sell goods the law recognizes that
certain limitations upon freedom of action are necessary and desirable. In
some situations the law has had to resolve what might at first appear to be
conflicts between competing rights.13 A trader is not permitted to use
trademark whereby although he does not make a false representation to a
direct purchaser of his goods, he enables such a purchaser to make a false
representation to ultimate purchasers of those goods.
12
Parker-Knoll International (1962) RPC 275 at 278, quoted and applied in B.K.
Engineering v. UBHI Enterprises AIR 1985 Del. 210 at 212 (DB).
13
Ibid.
14
Supra note 8.
90
The legal and economic basis of this tort is to provide protection for
the right of property which exists not in a particular name, mark or style
but in an established business, commercial or professional reputation or
goodwill.
91
merely the nature of goods and not that they are the merchandise of
any particular person.15
92
passing off goods is the remedy for false representation. This false
representation tends to deceive purchasers into believing that the goods
which the defendant is selling are really the plaintiffs. The representation
may be by a direct statement to that effect, or as is more usually the case,
by conduct or by way of using the distinctive mark, name, number, design,
get up or appearance of another’s goods. 18 In case of unregistered
trademarks, action against passing off is the proper channel to obtain
remedies. Similarly, a registered trademark enjoys all the rights of an
unregistered trademark. Thus, in addition to infringement, a passing off
action is also brought in case the goods or services are passed off in respect
of a mark which is registered.
Passing off action has its origin in tort to redress the wrongful
conduct of the defendant in passing off his goods as the goods of the
plaintiff. This might be done by using the trade name, trademark or other
get up of the plaintiff. It might be done by deceiving public or purchasers
to believe that the goods or business were those of the plaintiff. The courts
have wavered between two conceptions of a passing off action namely as a
remedy for invasion of a property right in trade name or trademark and as a
remedy for invasion of personal right not to be injured by fraudulent
competition. The true basis of the action is now held to be that the passing
off injures the right of property in the plaintiff, that right of property being
his right to the goodwill of his business.19
93
regard to trading is that trading must not only be honest but must even
unintentionally be dishonest.20 Passing off action does not merely relate to
goods but may relate to name also. It was observed by Justice D.P.
Wadhwa in K.G. Khosla Compressors Ltd. v. Khosla Extraktion Ltd.21
It was a case pertaining to wrongful use of word ‘Khosla’ which was a well
known name applicable to the Khosla group of companies and was
unauthorisedly and perhaps deceptively misappropriated and misused by
the respondents. In brief, it was held that a person is not entitled as of right
to have a company registered in a name which happened to be his own
name. The defendants were restrained from entering the capital market, and
making the public issue under the name of that of plaintiff’s.
20
Ashwani Kumar Bansal, Law of Trademarks in India, 526 (CLIPTRADE, Delhi,
2nd edn. 2006, updated 2009).
21
AIR 1986 Del. 181.
94
Originally, the law of passing off originated as an action in tort. It
was available to redress the wrongful conduct of the defendant in passing
off his goods as the goods of the plaintiff. This was done by using the trade
name or trademark or business were those of the plaintiff. This tort was in
the misrepresentation by the defendant. He achieved this result by
deception and deceitful use of the trade names, marks or other indications
of the plaintiff. In the course of time passing-off action was extended to
other cases. The focus subsequently shifted to the effect of the
misrepresentation which was injurious to the goodwill or business
reputation of the plaintiff. The passing off action became a remedy for the
defendant’s invasion of the plaintiff right of property in his goodwill, or
business reputation, by his wrongful conduct.
1. Non-trading activities: The principle of the law of passing off has been
extended and applied to many kinds of businesses, other than trading
business in the ordinary sense. For example professional associations, the
business of looking after children, of organizing exhibitions and beauty
contests.
95
2. Charitable Societies: The tort of passing off is sufficiently wide to give
relief to charities engaged in trading type activities. The broad principle of
law governing all such cases has been expressed in following words:
In the interests of fair trading and in the interests of
all who may wish to buy or to sell goods the law
recognizes that certain limitations upon the freedom
of action are necessary and desirable. In some
situations the law has had to resolve what might at
first appear to be conflicts between competing
rights.22
c) Principles governing passing off action
In its classic form, the basis of passing off action was the existence
of a ‘misrepresentation’. Typically, a misrepresentation occurs where a
person says o does something, incorrectly, that the goods or services they
are selling are the goods or service of the claimant. 23 The three elements of
the tort of passing off are the following:
1. Reputation or goodwill
22
[Link] Co. [Link] Ludhiana AIR 1985 Del.210at212.
23
Supra note 3.
96
2. Misrepresentation or deception
3. Damage
97
therefore, in a position to maintain a claim for passing off. Goodwill does
not come to an end with the business to which it relates. Even a defunct
business can bring up an action for passing off. The goodwill can be earned
in a business with the passage of time. The brand name or the get up of the
goods or services must be sufficiently distinctive so that consumer public
can associate the goods or services with the business and with none
another. In the context of goodwill Lord Machaghen said:
Goodwill is the benefit and advantage of the good
name, reputation and connection of a business. It is
the attractive force that brings in custom. It is the one
thing which distinguishes an old established business
from a new business at its first start. The goodwill of
a business must emanate from a particular centre or
source. However, widely or extended or diffused its
influence may be, goodwill is worth nothing unless it
has power of attraction sufficient to bring customers
home to the source from which it emanates. Goodwill
is composed of a variety of elements. It differs in its
composition in different trades and in different
businesses in the same trade. One element may
preponderate here and another element there.27
Goodwill is adversely affected mainly as the result of confusion in
the mind of the public arising out of misrepresentation.28
The purpose for this tort is to protect commercial goodwill to ensure that
people’s business reputations are not exploited. Since business ‘goodwill’
is an asset, and therefore species of property the law protects it against
26
V.A. Mohta, Trademarks, Passing off and Franchising, 684 (All India Reporter
Pvt. Ltd., Nagpur, 1st edn., 2004).
27
Supra note 24.
28
Supra note 25.
29
AIR 1980 Delhi 254.
98
encroachment as such. The tort is based on economic policy, the need to
encourage enterprise and to ensure commercial stability.
2. Misrepresentation
99
colourable intention and by using labels resembling
those of others as to be calculated to cause the goods
to be taken by ordinary purchasers for the goods of
the plaintiff. The gist of the conception of passing off
is that the good, are in effect telling a falsehood about
themselves, are saying something about themselves
which is calculated in misled. In its extended
meaning the action of passing off will be
maintainable where the plaintiff could prove injury to
its business or goodwill which could take a variety of
forms even though the defendant is not passing its
goods and the goods of the plaintiff. It is possible that
the defendant partly states the truth in its label or in
the description and partly mixes it up with
description and devices which are misleading to
confuse an unwary purchaser. In such a case, the
defendant cannot escape the liability for its
misrepresentation or actionable wrong of passing
off.32
It was a case of passing off action which was instituted by the
plaintiff, against the defendants for passing off its whisky as the plaintiff’s
whisky. The plaintiff is the well known company, “The Scotch Whisky
Association” a company incorporated in U.K. for protecting and promoting
interests of Scotch whisky trade. It was held that plaintiffs had sufficient
interest and locus standi to prevent passing off Indian Whisky
manufactured by the defendants as Scotch Whisky and to prevent damage
to reputation and goodwill of Scotch Whisky Trade.
(I)Forms of Misrepresentation
32
Id. at 303-304.
100
In some cases the relevant misrepresentation may be implied from
the action of the defendant. The clearest example of this where the
defendant manufactures his goods or look like the claimant’s. The
consequences of this sort of misrepresentation may lead to the following
consequences namely:
- Misrepresentation as to source.
- Misrepresentation as to quality.
One factor that may influence the court when considering whether a
misrepresentation deceives the public is the similarity of the signs. In this
101
regard, Hon’ble Judges P.V. Rajamannar and Ganapatia Pillai J.J. observed
in S.M.A. Rahiman & Co. v. Kizar Mohd. & Co.33 observed as follows:
It is of course not necessary that there should be
actual evidence that the similarity had deceived the
buyers. Sometimes when a plaintiff comes to court
expeditiously before any perceptible loss has been
sustained it will not be possible to adduce evidence
of actual deception. Then, it would be for the court to
find out if an ordinary buyer would not be taken in by
the close similarly between the trademarks adopted
by the two contesting parties.34
This case was pertaining to passing off action instituted as appeal in
the Madras High Court for dismissing the decree of lower court. The
appellants were traders of lungi business in Madras which was a registered
firm. The plaintiff alleged that their business established and in existence
for over 80 years and their goods have become well known in many places
and territories. The plaintiff alleged that the defendant’s mark resembling
the trademark used by the plaintiff’s has the effect of passing off the
defendants goods as goods manufactured by the plaintiff. The plaintiff,
therefore sought the protection of the court to prevent such passing off. It
was held that S.M. Syed Hazi Abdul Rahiman and Co. the defendants
therein their servants and agents were restrained by perpetual injunction
from using the label or trademark used by plaintiff’s. Except for this
modification of the decree, the appeal was dismissed.
33
AIR 1959 Mad. 357.
34
Id. at 358.
35
AIR 2001 SC 1952.
102
1. The nature of the marks i.e. whether the marks are word marks or
label marks or composite marks i.e. both words and label works.
5. 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.
6. The mode of purchasing the goods or placing orders for the goods;
and
103
according to appellant was a brand name similar to the drug sold by it
under its brand name “Falcigo”.36
The appeal filed by the appellant before the High Court met with no
success. The High Court came to the conclusion that it could not be said
that there was a likelihood of confusion being caused to an unwary
consumer in respect of the disputed marks. It observed that there was little
chance of any passing off one product or the over product. When the
special leave came up for hearing in Supreme Court, the court did not
interfere with the orders passed by the courts below but gave directions
regarding expeditious disposal of the suit. In this judgement, the court gave
reasons for not interfering and also set out the principles which are to be
kept in mind while dealing with an action for infringement or passing off
specially in the cases relating to medicinal products.
3. Damage
The third and final element that a claimant must prove to sustain a
passing off action is that they have suffered, or are likely to suffer, damage
as a result of the defendant’s misrepresentation. Basically, there are four
types of damage that have been recognized by the courts.
These are
36
Id. at 1965.
104
loss of existing trade and profits,
dilution.
In each case, there must be more than trivial or minimal damage. The
various types of damage arising from misrepresentation are:
(3) The inability of the plaintiff to supervise, the quality of the goods or
services offered by the defendants.
(4) The customer’s believe that the inferior goods or services of the
defendants are connected with the plaintiff.
(6) Erosion of the exclusive association with the plaintiff by the use by
third parties, of the plaintiff’s mark.
105
The essential characteristics which must be present in order to create
a valid cause of action for passing off as stated by Lord Diplock 37 are set
out as follows:
(i) a misrepresentation.
(ii) made by a trader in the course of trade.
(iii) to prospective customers of his or ultimate
consumers of goods or services supplied by
him.
(iv) which is calculated in injure the business or
goodwill of another trader, in the sense that
this is reasonably for seeable consequence,
and
(v) which causes actual damage to a business or
goodwill of the trader by whim the action is
brought or in a quia timet action, will probably
do so.38
It was observed that the plaintiff was required to prove each of the
above mentioned five ingredients in an action for passing off.39
The term ‘passing off’ is not defined in The Trade Marks Act, 1999.
But it is referred to in section 27(2), 134(1)(c) and 135 of the said Act. The
right preserves all the rights and remedies with respect to passing off of
37
Even Warnink B.V. v. J. Townend & Sons [1980] RPC 31 at 93 (HL) quoted from
Scotch Whisky Association v. Pravara Sahakar Shakar Karkhana Ltd. AIR
1992 Bom. 294.
38
Id. at 305.
39
Supra note 37 at 305.
40
P.S. Atchuthen Pillai, Law of Tort, 301 (Eastern Book Company, Lucknow, 8th
Edn., 1987, Rept. 2002).
106
goods and specifically declare that nothing in this Act shall affect the rights
or remedies.41
41
Section 27(2) of Trademarks Act, 1999 reads as under:
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.
42
Section 134(1)(c) states as follows:
No suit for passing off arising out of the use by the defendant of any
trademark which is identical with or deceptively similar to the plaintiff’s
trademark whether registered or unregistered.
43
Section 135 of the Trademarks Act, 1999 (See Appendix-I).
107
defendant by imitating the marks, claimed by the plaintiff as a trademark,
had been guilty of “passing off.”44
44
Supra note 40.
45
AIR 1970 SC 1649.
46
Id. at 1651.
108
infringement of his trademark and brought an action on the ground of
passing off action.
1. Difference between the action for passing off and action for
infringement of a trademark;
2. Burden of proof.
47
AIR 1965 SC 980.
48
Id. at 990.
49
Ibid.
109
Thus, the proof of resemblance or similarity in the case of
infringement and passing off is different. The onus to prove deception is on
the plaintiff who alleges infringement. The registered trademark is said to
be infringed by another trademark even without using the whole of it. If the
latter uses one or more of essential features of the trademark. The
identification of an essential feature depends partly on the court’s own
judgement and partly on the evidence that is placed before it.
(i) Infringement need not lead to passing off and vice versa
50
Supra note 44 at 1650.
51
Ashwani Kumar Bansal, Law of Trademarks in India, 533 (CLIPTRADE, Delhi,
2nd edn., 2006, updated edn. 2009).
110
A plaintiff may combine, as is often done, infringement and passing
off in one suit. Where the mark is registered, in passing off action the plaint
may be amended by incorporating a plea of infringement. It can be done if
the application for registration of the trademark was referred to in the
plaint. But in an action for infringement alone the plaintiff may not be
allowed to amend the pleading to include a fresh cause of passing off in
order to save the action. In a suit for infringement, the plaintiff adduces
evidence on the basis of which passing off could be pleaded the court may
grant leave to amend the pleadings to include passing off. In some cases
the plaintiff may succeed in infringement but not in passing off and vice
versa.
52
AIR 1980 Mad. 56.
111
pending on the date of the plaint. It was held in the case that overall
similarity between the labels of the plaintiff with the label of the defendant
and the identical name used by both are likely to cause confusion or
deception. As regards the competence of the suit for infringement while an
application for registration is pending, the court held that the suit is
competent because under section 23 of the Act the date of registration
should be taken to be the date of application which the certificate of
registration has to bear.
The law casts an obligation on the defendant not to pass off his
goods as if they have been produced by the plaintiff. Element of deceit may
exist in both kinds of action, but it is of the essence of the passing off
action. Actual deception is not required to be proved but reasonable ground
for apprehending deception must exist.54
53
AIR 1975 Del. 130.
54
Id. at 134.
112
J.C. Shah and V. Ramaswani K.J. in Ruston & Hornby Ltd. v. Z.
Engineering co.55 pointed out the difference in regards to issues besides
other points of distinction as following:56
Apart from the question as to the nature of the trademark the issue is
an infringement action is quite different from the issue in a passing off
action. In a passing off action the issue is as follows: Is the defendant
selling goods so marked as to lead purchasers to believe that they are the
plaintiff’s goods? But in an infringement action the issue is as follows: Is
the defendant using a mark which is the same as or which is a colourable
imitation of the plaintiff’s registered trademark?
B. Trademark Dilution
55
AIR 1970 SC 1649.
56
Supra note 45.
57
Recognising trademark dilution, available at:
[Link] accessed
on 25.06.2010.
58
Ibid.
113
a) Concept of Trademark dilution
59
Trademark dilution, available at: [Link]
last accessed on 25.06.2011.
60
Ibid.
61
Intellectual Property – India, available at [Link] last
accessed on 25.06.2011.
114
sales directly, but the reputation of the trademark damaged or unfairly
appropriated.62
When the famous trademark is used by the person, other than the
owner in a way that lessens the mark’s uniqueness, the famous trademark is
said to be diluted. Dilution occurs when the image of the famous mark is
muddied. In other words, the singular association of famous trademark
with the products in the minds of public losses. For example, the mark
‘PEPSI’ is singularly associated with a cold drink, when any other product
displaying the word ‘PEPSI’ will lead to an association with the soft drinks
company in the minds of consumers.
62
Ibid.
63
Michael A. Epstein, Epstein on Intellectual roperty, 7.7 (Wolters Kluwer India,
New Delhi, 5th edn., 2008).
64
T.G. Agitha, “Trademark Dilution: Indian Approach,” 50 JILI 340 (2008).
115
Dilution may be divided into two related concepts namely (i)
blurring (ii) tarnishment.
(i) blurring or basic dilution, which blurs a mark from association with
only one product to signify other products in other markets. 65 In
other words the link between the mark and the goods is blurred. It
amounts to devaluation of the strength and commercial value of the
marks.
The Trade and Merchandise Marks Act, 1958 did not contain any
provisions related to trademark dilution. Statutory provisions relating to
trademark dilution were introduced for the first time into Indian Law with
The Trademarks Act of 1999, which came into effect in 2003. There has
been little discussion about this concept and therefore many
misconceptions have accumulated around it. The provision is found within
section 29(4),67 having regard to internationally recognized standards about
65
Supra note 61.
66
D. Waver and L. Bently, Intellectual Property in the New Millennium, 161
(Cambridge University Press, Rept. 2005).
67
Section 29(4) of the Trademarks Act, 1999 provides as under:
116
the need to protect generally well known marks. A similar provision is
found within section 11(2) of The Trade Marks Act, 1999. 68 Indian law has
long been inspired by UK Legislation and the equivalent infringement
provision is section 10(3) of the UK Trademarks Act, 1994. 69 Unlike the
other provisions dealing with infringement, there is no requirement of
confusion in this section.70
117
Thus dilution under passing off is a new type of injury within a familiar
tort. Prevention of consumer confusion is an essential objective of this tort
of passing off. However, under the Trademarks Act, 1999 dilution, in its
aspect of blurring or ‘detriment to distinctive character’ is the basis for an
independent character. It is an expanded form of infringement without the
requirement of consumer confusion. Trademark dilution prevents the
tarnishing of the image of the famous mark and in Indian context well
known marks are provided with more protection. Unlike the other
provisions dealing with infringement, there is no requirement of confusion
in section 29(4) of The Trade Marks Act, 1999.72
The Trade Marks Act, 1999 is not explicit about ‘dilution’. It does
not refer to the term. Yet the entire structure of section 29(4) is different
from earlier part. The likelihood of confusion test, which is the essential
basis of trademark law, is not incorporated in relation to infringement of
the kind section 29(4)73 envisions. It requires identity or similarity of the
mark alone but in relation to dissimilar goods. The object of the ‘dilution’
form of infringement is a wider trademark protection to well known
trademarks. There is no presumption about trademark infringement, even if
the identity of the two marks is established. Trademark dilution is an
extended form of protection given by trademark infringement. As in case
of infringement, the goods or services must be same or similar but in this
type of extended infringement, the goods or services are to be dissimilar.
There is need of proof of consumer deception or confusion in infringement
action but no such consumer confusion is needed to be established in
trademark dilution.
Summing Up
72
Supra note 64 at 350.
73
Supra note 67.
118
The statutory law as to the infringement of the registered trademarks
does not exclude the principle of common law i.e. passing off. According
to the principle of passing off nobody has any right to represent his goods
or services as the goods or services of somebody else. The law of passing
off primarily protects the goodwill or reputation of the plaintiff. In a
landmark judgement in Kaviraj Pandit v. N.P. Laboratories, the Supreme
Court said that “an action for passing off is a common law remedy being in
substance an action for deceit, that is, passing off by a person of his own
goods as those of another.”
The term ‘passing off’ is not defined in The Trade Marks Act, 1999,
but it is referred to in Section 27(2), 134(1)(c) and 135 of the said Act. The
Act preserves all the rights and remedies with respect to passing off of
goods and specifically declare that nothing in this Act shall affect the rights
or remedies in respect thereof.
119
for passing off is a common law remedy and its gist is deceit and not
infringement of a right to exclusive user. There is an extended form of
infringement when the famous trademark is used by the person other than
the owner in a way that lessens the mark’s uniqueness, called dilution of
trademark. The Trade Marks Act, 1999 is not explicit about ‘dilution’ and
does not refer to the term. The likelihood of confusion test which is the
essential basis of trademark law is not incorporated in relation to
infringement of the kind section 29(4) of The Trade Marks Act, 1999
envisions. The object of the ‘dilution’ form of infringement is a wider
trademark protection to well known trademarks even the use is on
dissimilar goods and without the requirement of proving confusion or
deception of public.
120