M: 147

Abstract: This paper addresses the tort of passing off and infringement action under the Trademarks act, 1999. Whereas the tort law is not applicable to the plaintiff as a statutory remedy, it is a remedy in common law. The paper discusses the tort of passing off and its importance which provide protection against misrepresentation, using ones reputation and goodwill in the market as well as protecting the uncertainty that occurs because of the trademark similarities. It  deals with actions involve the passing off and misuse of trademarks, what are the possible remedies, who can sue, and the possible defences in the event of a trademark infringement. It also addresses the considerations to be considered in the event of a move to the Court and violation action along with various judicial pronouncements by Indian Courts.

Author – Ipsita Kate[1]

Introduction:

Trademark is a type of intellectual property that consists of a symbol, word or words that distinguishes the product from one particular sign from the others. In 1940, the first Trademark Law was enforced in India, but before that, protection of trademarks in the country was regulated by common law principles based on English cases.

Under common law, the integrity of an undertaking symbolized by a label can be secured only by a Passing off action. The registration of a trademark pursuant to the Trade Marks Act of 1999 gives statutory rights and a minor infringement of it can invite an Infringement action.

The trademark means a symbol capable of being graphically depicted and capable of separating one person’s products or services from another, including the form of items, their labelling and the combination of colours. Copying a trademark is regarded as the highest flattering type. Since the trademark is the sign and mark of the particular business which distinguishes a particular service from other services, so imitating the mark causes the prestige of the goodwill of the trade in goods and services to pass away. Trademarks are commonly used for advertising purposes and often allows consumers to equate something positive with any company’s price, prestige and goodwill. And it’s really important for every corporation to take care before allowing others to use their trademark as the company’s name and reputation is directly linked to the brand.

Passing off means selling one’s own products under the pretence that they are other man’s products.

How it can cause damage?

If a company, duplicates a trademark of another company without permission, just to increase the market reputation of their company and to enhance their business without much efforts.Such an act is causes damage to the brand name of the company and it is a crime in the eyes of law.

In some cases, the company doesn’t use the same trademark but rather a similar trademark is used therefore causing confusion amongst the buyers. Such activities fall under infringement and passing off.

Infringement of trademark

According section 29 of Trademark Act, a registered trademark is infringed by a person who, not being a registered proprietor or an individual using the trademark by way of a licensed usage, uses a trademark that is identical or deceptively similar to the trademark in respect of products or services for which the trade mark is registered and makes the use of the trademark likely to be taken as infringement.

Other subsections specify that in the context of the use of the trademark, the use of similar or equivalent trademarks to sell similar goods and services or to use equivalent or deceptively similar trademarks for some other form of goods and services is said to be violating the rights of other companies. In sub-section (9), it is further stated that the violation can also be done through the spoken usage of these words as well as through their visual representation.  

As specified in the Trademark Act,’ An enrolled exchange stamp is infringed by a man on the off chance that he uses some enrolled exchange check, such as his exchange name or a portion of his exchange name, or the name of his business concern or a portion of his name, managing his company in products or administrations for which the exchange check is enlisted.’ Trademark encroachment requires the use of such a search by a man other than the stamp’s enlisted proprietor.

According to the Trademark Act, a check will be known as an intruded stamp if: a copy of the entire enlisted stamp is found with a few increments and adjustments the intruded stamp is used as part of the exchange course. The use of the intruded stamp is printed or a specific representation of the test in advertising. The oral usage of the symbol shall not be an encroachment. The stamp used by the other person takes almost the sign of the enlisted owner as it is likely to deceive or cause disarray and merchandise in regard of which it is enrolled.

In an infringement case, where the two imprints are indistinguishable, the infringement that occurred usually allows the Court to examine the two denotes, the degree of similarity by phonetic, visual or in the fundamental ides the enlisted proprietor spoke to, irrespective of whether the essential elements of the enrolled proprietor’s sign are to be discovered through other individuals.

Under Section 29 of the Trade Check Act, 1999, the use of a trademark by a person who is not a registered owner of the trademark or a registered consumer of the trademark that is indistinguishable or misleading as a registered trademark leads to the infringement of the trademark and the registered owner may make a move or be relieved of the infringement of the trademark.

In an inspection for trademark encroachment. The offending party shall be the

  1. Registered trademark proprietor
  2. The respondent must misleadingly use such a test as stamp of the offended party.
  3. The usage shall be in connection with the products in respect of which the stamp of the offended party has mentioned
  4. The respondent’s use must not be inadvertent, but rather over the exchange cycle.

Any individual claiming rights in a check can use TM (trademark) or SM (benefit stamp) with the stamp to notify people of the claim in general. To use these assignments, it is not necessary to have an enlistment, or even a pending application. Conceivably the assertion may be valid. The enrolment picture, can only be used when enlisting the stamp.

India’s commitments under the TRIPS Mark Insurance Agreement include, but are not limited to, protection of identification of marks, identification of administrative imprints, non-conclusive periodic restitution of registration, annulment of the required trademark authorisation, and so on. India, being a custom-based law country, takes into account both the systematized law and customary law standards and, in that capacity, accommodates infringement as well as action against trademark infringement.  

Trademark infringement remedies

“Trade mark”[2] means a mark capable of being represented graphically and which is capable of distinguishing the goods or services of one person from those of others and may include shape of goods, their packaging and combination of colours. Encroachment may occur when the infringer (i.e. the person carrying out the infringing demonstration) uses a trademark that is indistinguishable or confusing as an enlisted trademark held by someone else, in relation with items or administrations that are indistinguishable or like the items or administrations protected by the enlistment. The proprietor of such registered trademark may begin legal proceedings against the infringer.

Therefore a trademark that is not appointed cannot be infringed, and the proprietor of the trademark cannot pursue infringement proceedings. Instead, the proprietor may initiate procedures for leaving or distortion under civil law, or under legislation which precludes uncalled for business. Equally notable may be the encroachment of trademark in a few purviews. In order to determine an infringement of an enrolled trademark, it is crucial to determine that the infringement imprint is indistinguishable or deceptive as the enrolled test and that no further testing is needed. The Courts will require order and guide the custom specialists to withhold the encroaching material or its shipment or to keep its transfer in some other way, to protect the interest of the proprietors of approved innovation rights. This legitimate suggestion can be applied with / without having the concerned experts as a gathering in the suit.

Jurisdiction

A complaint for infringing or for passing off shall be brought in a court not inferior to a District Court which has jurisdiction to prosecute a lawsuit. The District Court which has jurisdiction shall include a District Court within the boundaries of its jurisdiction, the person who initiated the case or other proceedings at the time the lawsuit was instituted or where there is more than one person, the one who undertakes business can file a suit against the infringer.

Common remedies in Trademark:

  1. Injunction / remain against the usage of a trademark
  2. Damages may be sought.
  3. Accounts and awarding of benefits.
  4. Appointment of a local magistrate by the court for authority / filing of FIR / fixing of infringing material / accounts.
  5. Application for approval of an impermanent / substitute ex-parte regulation under request 39 governs 1 and 2 of the Civil Procedure Code

Case Study:

Ranbaxy Laboratories Ltd. Vs. Dua Pharmaceuticals Ltd [3]

The Plaintiff company, developed products under the trade name Calmpose. The defendant company then floated the identical drug under the “Calmprose” trademark.

The Hon’ble Delhi High Court held that the two trademarks being phonetically and visually alike and the size of the two strips being virtually the same, including the form of packaging, the colour scheme and the manner of writing, is a clear case of trademark infringement and the ad interim injunction given to the plaintiff.

Passing off

The precise definition of the passing off is not specified in the trademark act but the courts have taken its definition from common law that if the infringement of the trademark is done in such a way that the trademark is not only deceptively similar to the other company’s trademark but also causes confusion among the consumers, which eventually leads to harm to the company’s profits.

Safeguarding corporate trust is the purpose of passing off. It means that there is no misuse of the image of the people in business. “No one should possibly have the right to show his goods as someone else’s goods” is the fundamental principle of passing off.

In countries such as the United Kingdom, Australia and New Zealand where common law is followed, passing off is a common law tort that is used to enforce unregistered trade mark rights. Goodwill of a trader is protected from misrepresentation and by the abuse of passing off. The passing off rule prohibits one person from misrepresenting his or her products or services as to that of another’s. The passing off definition has undergone improvements over the course of time, initially it was limited to the products of one individual as to those of another. This was later expanded to industry, business and services. This was expanded further to occupations and non-trading practices.

Pursuant to common law, the passing off rule in India is specifically intended to protect the goodwill attached to unregistered marks. One does not profit from another person’s labour which is based on the basic principle of law.

Passing off is specified in clauses 27(2), 134(1) (c) and 135 of the Trademarks Act. Section 134(1) (c) provides for the jurisdiction or control of the district courts in the matter of passing off cases, trying the suit or imposing an injunction. The complainant is responsible for defining the case and the irreparable cause of damage or loss. The absence of intention to deceive is not a defence in passing off while the proof of fraudulent intention may significantly assist a claimant in evaluating the probability of deception.”[4]  

In Reckitt & Colman vs. Borden [5] their Lordships used the term “classical trinity” for goodwill, misrepresentation and damage, which are the three elements of the tort of passing off.

The three elements of tort of passing off:

  1. Goodwill: offers a good name, a reputation and a business partnership. A business goodwill must come from a specific source as it has the power of attraction to bring customers home to the position it emanates from.
  • Misrepresentation: In its classic form, an implied assertion by the defendant that his goods are the goods of the plaintiff is the misrepresentation that gives rise to a passing off suit.
  • Damage: the plaintiff will argue that he / she has sustained injury or is likely to suffer harm because of the defendant misrepresents the source of the goods or services and claims it to be the same as the source of the plaintiffs products or services. Damage is believed to be caused in an action for passing off even though there is a possibility of deception.

In Deepam Silk International vs. Deepam Silks[6], the Karnataka High Court observed that while granting an injunction to bar the defendant from using the plaintiff’s trademark “if the plaintiff has shown that he has been doing business with the trademark for more than a decade and that he has not only applied for the registration of a trademark for almost a decade, but also has a longer duration. This is the prestige of the trade name of the plaintiff that is going to be jeopardised. When the defendant sells defective products, this will certainly affect the plaintiff’s company and will give the defendant’s purchasers of the products and idea that the goods sold under the trade name will not retain their quality. Therefore, the plaintiff is likely to lose his clients and defame his trade name.

Rupa & Co. v. Dawn Mills Co. Ltd.[7], in this case, the defendant produces an underwear that named “dawn” as identical to the manufactured underwear “don” of the plaintiff, which causes confusion in people’s minds because the combination of shape, stand up and colour is the same as the product of the plaintiff.

Scope of passing off

In the course of time the concept of passing off which is a form of tort has undergone several changes. This was at first limited to presenting one’s product as that of another. This was later applied to corporations and governments. In this way, callings and non-exercises were additionally linked. Today it is connected to several forms of uncalled trade and out of line rivalry where one individual’s exercises hurt or destroy the goodwill related to someone else’s exercises or people’s gathering.

Factors to be considered for a passing-off action:-

In Cadila Health Care[8], the Hon’ble Supreme Court suggested that the following factors should be considered in the case of an action involving an unregistered trademark to assess the question of deceptive similarity:

1. The character of the marks, i.e. whether the marks are word, marks or labels or combination marks, i.e. all words or labels together.

2. The degree of similarity between the signs, similar in phonetic terms and therefore similar in concept.

3. The nature of the products and their trademarks.

4. The nature, character and performance of the rival trader’s products are identical.

5. The group of consumers who are likely to purchase the products bearing the markings that they are likely to follow when purchasing and/or using the products.

6. The way the products are bought or demands are made for the product.

7. Any other circumstances surrounding it which may be important to the degree of the dissimilarity between competing marks.

In Laxmikant V. Patel vs. Chetanbhai Shah, the Hon’ble Supreme Court held the three characteristic elements of the passing off action:-

a. Reputation of the goods;

b. Possibility of deception; and

c. Likelihood of damages to the Plaintiff.

Characteristics of Passing off Action

 a. Proof of fraudulent intent not necessary:

It is not important that the plaintiff establish fraud on the defendant’s part in a passing off action. Although granting an injunction against the accused using the trademark “Horlioks,” the Delhi High Court held that “the use of the infringing mark by the defendant to imitate the trademark of the plaintiff appears to be a flagrant and clear attempt by the defendant to imitate the trademark of the plaintiff with a view to deceiving the unwary buyers and manipulating and encroaching on their goodwill. The law does not authorize any person to carry on his business in such a way as to induce consumers to believe that the products belonging to another person are his or her own. Where there is potential for an ambiguity in the business, an injunction will be issued even though the defendant innocently adopted the name.

b. Passing off not limited to goods:

The proper passing off so called is not limited to the selling of goods. Passing off also forbids the defendant from trading under a specific name and therefore preventing the defendant from selling the goods.[9] Therefore, if a name has been established by adoption and user of a particular trade or product or business, the person who used it or adopted it may receive assistance from the Court to limit the use of the goods by others in such a manner as to lead the customer or the company.

c. Proof of misrepresentation-

Not necessary deception: In any case, false statement made by the defendant, whether specifically or otherwise, must be proven as true. It’s not determinative to neglect real deceit. The overall question of whether the fraud is likely to cause uncertainty and confusion among the buyers remains a matter of fact for the courts to determine in the light of the evidence available.

Defences against the action of passing off:

  1. Usage of a licensed trade mark

In the event that the suspected transfer indicates the use of the licensed exchange mark by the litigant in relation to the goods or administrations of the registry, the existence of the registry may constitute an obstacle to the claim the leave. That is because the litigant has to choose legislative appropriateness to use the label in relation to the goods or administrations for which it is licensed. In the event the offended party has an argument that the registrant’s thinking should be valid for the check in need to bring proceedings to revoke the enlistment.  The defendant may argue that the plaintiff has abandoned his trademark and that either the defendant has already moved to rectify the register for removal of the trademark or has proposed to do so. Where a mark is discontinued, trade may become common.[10]

  • Utilization of an Individual’s Own Name

An individual litigant has the right of using his or her own name, and the manner in which perplexity may occur does not constitute a passing off. In any case, if disarray arises, which is communicated to the respondent’s consideration, the litigant is under an undertaking to take good care in evaluating the representation implied by them. Usage of the label by the defendant is a bona fide representation of the existence or quality of the products or services. Nevertheless, the defence of the name being’ surname’ or’ real name’ is not applicable to a corporate body, although it is available to individuals.[11]

  • The defendant asserts the right to use his name concurrently. Once created, an honest and concurrent user of a trademark may constitute a defence.[12]

Reliefs in suit for Passing-Off and Infringement:

Under Section 135 of the Trademark Act 1999, the reliefs for passing off and infringement are as follows:-

  1. Injunction is one of the reliefs that an aggrieved person may seek in any case for infringement of a registered mark or for passing off the registered mark or unregistered mark. Injunction remedy is an appropriate remedy to prevent violation of licensed trademark or unregistered trademark. Section 135 of the Trademarks Act, 1999 allows for injunction relief. When granting an injunction, the Court will also depend on whether the balance of convenience rests with the plaintiff and whether the plaintiff will sustain irreparable damage or harm if injunction against the defendant is not granted within a particular period.
  2. Damages shall be the compensation given by the defendant to the plaintiff for the legal harm caused to the plaintiff. Damages are the notional compensation paid to the plaintiff irrespective of the real value of the plaintiff’s loss.
  3. Account of profit is the real income that the defendant has made by violating the plaintiff’s legal rights. Sub-section (1) of Section 135 provides for the grant of relief which, at the plaintiff’s choice, requires either damages or an account of profit. The loss the plaintiff has sustained is completely immaterial when taking into account the profits. The object of the benefit account is to give the plaintiff the actual profits which the defendant has made and of which it has made the revenue inappropriately. Section 135(3) expressly specifies that if the court is satisfied that the infringement is innocent, it shall award only nominal damages. Still, the Court shall not grant a profit account in such a case.

Case Study

In, Wockhardt Limited vs. Torrent Pharmaceuticals Ltd., the Supreme Court consisting of a dual bench Judge, clarified the principles of passing off and delays and acquiescence. 

Facts: The Pharmaceutical firm Torrent (“Plaintiff”) owns proprietary goods called “CHYMORAL” and “CHYMORAL FORTE.” These medications are used to reduce swellings and fractures that can occur during surgery. The rival firm, Wockhardt, (“Defendant “) began selling goods under the name of “CHYMTRAL FORTE,” thus merely replacing the letter ‘ T’ with the letter’ O’ in the Plaintiff’s trademark, using a trademark which is deceptively identical.Upon being approached by the Plaintiffs, the Bombay High Court’s single judge Bench refused to issue a temporary injunction in their favour, on the basis that no argument had been presented for passing off. Nevertheless, a Division Bench of the Court reversed this decision and granted the Plaintiff the requisite injunction claiming that the facts of the case formed a simple case of passing off. The matter eventually appealed to the Supreme Court. Under common law, the right to protect goodwill under company from misrepresentation by another person and to avoid the possibility of damage resulting from such misrepresentation is the right to pass off. Apart from the deceptive similarity of goods, many other variables, some of which are listed here, need to be investigated to constitute a passing off argument. The Classical Trinity test postulates that the following should be proved:

(1) Goodwill possessed by the complainant

(2) Defendant misrepresentation; and

(3) Likelihood of damage to that goodwill.

Besides the above, a variety of other considerations do need to be considered. Proof of the misrepresentation (which could be deliberate or unintentional) that led the public to assume that the trademark belonged to the defendant. The Bombay High Court, Single Judge Bench also held that “no need to prove deception or dishonest intent and the state of mind of the defendant is irrelevant.” Acquiescence is an estoppel species which consists of direct or implied agreement to the violation of one’s rights, by means of such “positive acts,” i.e. by sitting by or refusing to act. These actions cannot be simply a matter of silence or inaction.

The Bombay High Court, single judge Bench, drew a sharp line of distinction between delay and acquiescence. For its acquiescence, it held that, “knowledge of the defendant’s mark and productcoupled with “a long period of inaction against the alleged invasion of a claim of exclusivity”, it is not a statement to say’ there is no positive act,’ as acquiescence is not an explicit permission, but a silent consent. Simple inaction is not acquiescence either, but it may well be prolonged inaction coupled with the knowledge of a violation of that right. It held that the actions of the plaintiff were acquiescence as they were lying by for a long period of time and they had taken constructive action to make the defendant think he might start his company. Nevertheless, the Division Bench held that this was not an acquiescence because the plaintiffs had never generated such false expectations through their “positive acts.”

The Supreme Court adopted a similar approach to that of the single judge bench in Bombay High Court and said there was no need for fraud to prove passing off. On the basis of a 2001 Supreme Court decision, it held that “while passing off is, in essence, a deceit-based practice, deception is not a required component of the right of action, and that the state of mind of the defendant is entirely irrelevant to the nature of an action for passing off if the defendant has otherwise imitated or adopted the mark of the defendant.”

Reverse passing off: Another form of passing off is called ‘ reverse passing off’ which is much rarer. It occurs when the defendant markets the product of the plaintiff as the product of the defendant.[13] It is to be recalled that the orthodox passing off requires the defendant arguing that his product is the property of the complainant. For certain cases, reverse passing off may be clarified under the ordinary rules: for example, where a defendant can argue that he or she made products that were actually made by the plaintiff to pass off his or her own company as a branch of the plaintiff’s.

Difference between trademark infringement and passing off

  1. The Hon’ble Supreme Court, in the case Durga Dutt Sharma V. N.P. Laboratories[14], laid the difference between the two – infringement and passing off. It was held that an action of dismissal is a common law remedy. Nevertheless, that is not the nature of an action for infringement. The action for infringement is a statutory remedy imposed on the licensed proprietor of a licensed trade mark for the vindication of the exclusive right of dismissal of a trademark. An infringement action is to protect the trademark itself, but it is to protect the goodwill and prestige for action against the trademark. In the violation, the plaintiff must determine that the defendant has similar trademark by dealing with similar trademark implies that the defendant has the trademark that is either phonetically identical to the trademark of the plaintiff. Essential of the trade mark shall be copied with little alteration to which the defendant is responsible for the trademark infringement. Nonetheless, it is necessary for the prosecution to prove that the inclusion of minute details is sufficient to differentiate between the two trademarks.[15]
  2. In India plaintiff will sue for trademark infringement and passing off. Though these two are separate terms, complainant in India may bring action against these two. The next distinction point extends to judicial jurisdiction in this matter. As far as the infringement issues with the assistance of section 134[16], the infringement suite can be heard by the Mumbai, Delhi, Kolkata and Madras High Court within their local jurisdiction limit. The person bringing cause for action should be resident and conduct business there.
  3. The jurisdiction where the cause of action occurs or where the defendant lives can be difficult to move the claim when in the court. The next difference emerges in the remedy available to the plaintiff with the benefit of section 135[17] which gives the plaintiff the right to claim the criminal prosecution while it is little difficult to claim the criminal prosecution in the passing off.

Conclusion

Thus, it can be seen from the above research that the protection of trademarks is important not only from a business point of view, but also for the protection of consumers from fraud and imposition. It is advantageous, however, if combined action for infringement and passing off is brought in one suit as including a plea of infringement, if the trademark is registered it can also amend the claim. Yet the plaintiff will not be able to add a fresh cause of passing off in an infringement case alone, in order to save the suit. Since the spectrum of passing off action is wider than an infringement action, if one action fails, there is a possibility of success for another. The passing off action shall be extended in the case of unregistered goods and services, and the remedy shall be the same in the case of the violation of the claim and the passing off in both cases. So the transfer happens first in three cases where the plaintiffs harm the good will, second in misrepresentation and third in damages where the situation is the same as in the infringement action. As stated in the preamble to the Trademarks Act, 1999, it provides for better protection of trademarks, it has turned out to be a fact that trademark law provides protection to trademarks. The present Act expressly acknowledges the remedy of common law and thereby prohibits the violation of both registered and unregistered symbols.

References:-

  1. www.manupatra.com
  2. https://indiankanoon.org/
  3. V K Ahuja : Intellectual Property Rights in India
  4. Kailasam and Vendaraman’s : the Law of Trademarks and Geographical Indications
  5. Indian Trade Mark Act, 1999.

[1] Fourth year BLS LLB, Pravin Gandhi College of Law Mumbai, ipsikate@gmail.com

[2] Section 2 (zb) Trademark Act, 1999

[3] AIR 1989 Delhi 44

[4] Laxmikant Patel vs. Chetanbhai Shah, 2002 (24) PTC 1 (S.C)

[5] (1990) RPC 341 (HL),

[6] 1998 (18) PTC 18 Kar.

[7]  AIR 1998 Guj 247, (1999) 1 GLR 744

[8] Cadila Health Care Ltd. Vs. Cadila Pharmaceuticals Ltd.

[9] Sales Affilates lts. Vs. Le Jean Ltd., (1947) 64 RPC 103 

[10] National Starch Manufacturing Co. vs. Munn’s Patent Maizena and Starch Co.

[11] Manoj Plastics vs. Bhola Plastic, (1983) PTC 368

[12] Kirloskar Diseal Recon Ltd. Vs. Kirloskar Proprietors Ltd, AIR 1996 Bom. 149

[13] John Roberts Powers School v Tessensohn [1995] FSR 947

[14] AIR 1965 SC 980

[15] Fast Food v.Thalappa Naidu Anandu Vilas Biryani Hotel. 2011, 4 LW 193

[16] Trademarks act 1999

[17] Trademarks act 1999