passing off

Passing off

Introduction

The action against passing off is based on the principlethat “a man may not sell his goods under the pretence thatthey are the goods of another man”. (N.R.Dongre v. WhirlpoolCorporation,(1996) 5 SCC 714. Passing off actions involvesituations in which a representation is made in the course oftrade which deceives or causes confusion amongst customers.It is a species of unfair trade competition by which oneperson seeks to profit from the reputation of another in aparticular trade or business. It is a wrongful in common lawof tort and is founded on the principle that “no man isentitled to represent his goods as being the goods of anotherman; and no man is permitted to use any mark, sign or symbol,device or means, whereby without making a directrepresentation himself to a purchaser who purchases from him,he enables such purchaser to tell a lie or to make a falserepresentation to somebody else who is the ultimatepurchaser. The Trade and Merchandise Marks Act, 1958 does notdefine passing off, but only provides the rules of procedureand the remedies available. It is referred to in section27(2), 134(1) (c) and 135.Section 27(2) states that therights of action against any person for passing off goods asthe goods of another person or the remedies in respectthereof. Section 134(1) (c) refers to injunction of courts totry suits for passing off arising out of the use of any trademark. Section 135 specifies the remedies available in respectof passing off arising from the use of a trademark.

Some types of passing off include:

A misrepresentation that one person's goods are those ofanother. [[

A misrepresentation that one person's goods are of aparticular class or quality.

A misrepresentation that a connection exists between aperson's goods and those of another where there is noactual connection.

EVOLUTION AND DEVELOPMENT OF THE CONCEPT

Liability in the tort of passing off ultimately boilsdown to misrepresentation. It all started in the 17thcentury, in the cases Southern v. How and Dean v. Steel .Usually, the judges categorised such torts under deceit ordefamation .

Later in the eighteenth century, all cases of passing offwere classified as cases of deceit, where the action wasusually brought not by the deceived, but by the one whosemark was used to deceive. (Blanchard v. Hill ), limiting thetort to cases where there was a proof of bad faith .

Later, in the nineteenth century, in the case Millingtonv. Fox , it was decided that proof of fraud was not necessaryin such a wrong and it was from here that the actual tort ofpassing off began building its own definition .

The concept of equity was largely used to realise thescope of passing off. The predominant view was that equity

intervened to restrain what would be a fraud if allowed to goahead and that it protected proprietary rights. Thisparticular viewpoint led to the equity courts to awardingcompensations instead of injunctions. This idea was based onthe theory that, in such a tort, constructively, thedefendant was an agent of the plaintiff .

Later, in the case Cartier v. Carlile , it was decidedthat a “man must be taken to intend” the natural consequencesof his act and mere proof of likelihood of deception wassufficient to prove the wrong.

In Edelsten v. Edelsten , it was put forth that merenotice of plaintiff’s rights satisfied the requirement offraud and a man could be held liable in such a case whetheror not his actions were honest.

Whatever the case be, fraud continued to remain an essentialelement in the tort. Where fraud was not proved, usually aninquiry into the damages caused was ordered.

Finally it was concluded gradually, that fraud need notbe shown while judging such a case.

The final question would be, if the defendant was unawareof the existence of the plaintiff or his brand, would hestill be liable for such a tort. The question remained openended for a long time and at one point, the authorities wereopposed to the imposition of liability in such a case. But asof now, the motive of the defendant is not very important insuch an action. The only thing that needs to be proved is thereputation established by the plaintiffs.

Passing off & Trademark

The Trademark is providing protection to registered goodsand services, but the passing off action is providing a

protection to unregistered goods and services. The mostimportant point is that the remedy is same in both the casesbut the Trademark is available to only the registered goodsand services and passing off is available to unregisteredgoods and services. (Durga Dutt vs. Navaratna Pharmaceutical)In this case the Supreme Court set out the distinctionbetween infringement and passing off. The action forinfringement is a statutory remedy conferred on theregistered owner of a registered Trade mark and has anexclusive right to the use of the trade mark in relation tothose goods. A passing off action is, therefore, independentof a statutory right and is established by evidence ofreputation and goodwill of the business. (Harrods V. Harrodian School,(1996)RPC697 as cited in P.Narayanan, Law of Trade Marks(Trade Mark Act,1999) andpassing off(5th ed.500)In a passing off action, the registration of the trade nameor a similar mark is irrelevant. Here, the priority inadoption and use of trade mark is superior to priority inregistration.(Kishore Zarda Factory(P) Ltd. v. J.P. Tobaccohouse, AIR 1999 Delhi172) “By catena of decisions it is nowsettled that a prior user of trade mark has rights even overa later registered user……no injunction can be issued againsta prior user of the trade mark in a passing off action.”(M/sSenor Laboratories Ltd .v. M/s. Jagsonpal PharmaceuticalsLtd., AIR 1999 Delhi102)

The protection afforded to unregistered marks is alsoextended to foreign marks, which have a reputation in Indiaon the basis of extensive advertisements and publicity. Thetransborder reputation of a trader could enable him to obtaininjunction in the courts of a country in which he is nottrading. Indian courts, too, recognize the existence oftransborder reputation and grant injunction in cases whereone tries to derive economic benefit from the reputation

established in a particular trade by another.(MarsIncorporated v. Chanda softy Ice Cream and Others, AIR 2001Madras237).

Elements Of Passing Off

The three fundamental elements of passing off areReputation, Misrepresentation and Damage to goodwill. Thesethree elements are also known as the CLASSICAL TRINITY, asrestated by the House of Lords in the case of RECKITT &COLMAN LTD V BORDEN INC . It was stated in this case that ina suit for passing off the plaintiff must establish firstly,goodwill or reputation attached to his goods or services.Secondly he must prove a misrepresentation by the defendantto the public i.e. leading or likely to lead the public tobelieve that the goods and services offered by him are thatof the plaintiff's. Lastly he must demonstrate that he hassuffered a loss due to the belief that the defendant's goodsand services are those of the plaintiff's.

MODERN ELEMENTS OF PASSING OFF - In the case Erven WarninkVs. Townend 3 , Lord Diplock gave the essential moderncharacteristics of a passing off action. They are as follows:-

i. Misrepresentation ii. Made by a person 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 to injure the business or goodwill of

another trader. v. Which causes actual damage to a business or goodwill of

the trader by whom the action is brought.

The above concept of passing off can be explained with thehelp of few case laws: Honda Motors Co. Ltd V Charanjit Singh & Others 4

Facts: Plaintiff was using trademark "HONDA" in respect ofautomobiles and power equipments. Defendants started usingthe mark "HONDA" for its pressure cookers. Plaintiff boughtan action against the defendants for passing of the businessof the plaintiff.

Held: It was held that the use of the mark "Honda" by thedefendants couldn't be said to be an honest adoption. Itsusage by the defendant is likely to cause confusion in theminds of the public. The application of the plaintiff wasallowed.

Requirements for a claim

To succeed in a claim for passing off, the claimant mustfirst prove that they have established a reputation in a markby using it in business and that the use is associated withtheir name personally or their goods/services.

The claimant must also show that the mark distinguishes themand/or their goods/services from others. Marks can have manydifferent forms, for example:

Style of packaging (e.g. the Smarties tube); Colour (the gold foil in Ferrero Rocher chocolate).

The length of time required to establish goodwill is a matterof fact in all the circumstances and there is no hard andfast rule on this.

In order to succeed, the claimant must also prove that theinfringing act has taken place within the geographical limitsof their goodwill. It is not necessary for the owner to setup a business in the UK in order to show that they haveestablished goodwill there.

Cases involving the geographical limits of goodwill aredifficult to reconcile and the outcome depends on the factsof each case. Two cases can best explain this.

In 1967, the Crazy Horse Saloon of Paris (which had no UKbase but was known here) was unable to stop the opening of asimilarly named but otherwise unconnected club in the UK. Incontrast, in 1964, the Sheraton Hotel Group (which at thattime had no UK base but was known and took bookings for itsoverseas hotels from here) was able to stop the opening of asimilarly named hotel in the UK. Clearly, it is a judgmentthat a court will make based on the facts of an individualcase.

i. Misrepresentation

The claimant must prove that in the course of trade, thedefendant made a representation that was misleading. It doesnot matter if the representation is true as long the overalleffect is to mislead. Moreover, there is no need for therepresentation to be made by the defendant with the intentionthat confusion will result.

The real issue is the effect on the customer. Will thecustomer believe that there is an association between thedefendant's goods/services and the reputation of theclaimant?

Confusion alone is not enough for an action for passing off.There must be also be loss to the claimant.

ii. Damage to the claimant

To succeed in a passing off claim, the claimant has to showactual or likely business loss associated with thedefendant's act. The loss need not be financial and the term'business' is widely interpreted to include many things.

There can be loss to goodwill even before the claimant'sbusiness has begun if advance publicity and marketing hasestablished goodwill. Similarly, there can also be damage togoodwill after the claimant's business has stopped.

Remedies

The claimant in a passing off action may claim any of thefollowing remedies:

An inquiry to establish loss Damages or an account of the defendant's profits An order for the delivery up or destruction of the

infringing articles Injunctive relief

Defences

A number of defences relate to the nature of the defendant’sactivities

1. Use of a Registered Trade mark

If the alleged passing off relates to the defendant's use ofa registered trade mark in association with the wares orservices of the registration, the existence of theregistration will be a defence to a claim for passing off.This is because the defendant has the exclusive statutoryright to use the mark in association with the wares orservices for which it is registered. If the plaintiff has aclaim that it is entitled to the mark in priority to theregistrant consideration should be given to bringingproceedings to expunge the registration

2. Use of an Individual's Own Name

An individual defendant has a right to use his or her ownname and the fact that confusion may occur does notconstitute passing off by itself. However, if confusionoccurs, which is brought to the attention of that defendant,the defendant is under an obligation to take reasonable careto qualify the representation implied in his or her conductin order to avoid confusion.

3. Plaintiff's Own Goods

It is not passing off to use the plaintiff's name or mark inconnection with wares that are the plaintiff's originalwares. But a trader cannot represent that wares, which arethe plaintiff's wares, are of a particular class or qualityif they are not. For example, it is actionable to offer waresof inferior or deteriorated quality as the plaintiff'soriginal goods or the plaintiff's wares in an materiallyaltered form as the original. The fact that notice of thedifference is given to consumers at the time of sale mayavoid a finding of passing off.

4. Functionality

Like trade marks any combination of elements which areprimarily designed to perform a function cannot be protectedthrough a claim for passing off. The fact that the partyseeking protection obtained a patent relating to the articlein question is evidence of functionality. For example, themanufacturer of LEGO brand toy building blocks, after thepatents relating to its product expired, was not able toprotect the elements that make up its product through anaction for passing off.

.A defendant can start by denying that the necessary elementsto establish a passing off action exist. Further, thefollowing defences can be used:

The claimant's mark is not distinctive The claimant's mark is merely descriptive The mark has ceased to be distinctive and has become

generic The claimant and the defendant have concurrent rights The defendant is merely innocently using his own name The claimant has given his or her consent The claimant has delayed in issuing proceedings The claimant has abandoned the mark The claimant has exhausted his or her rights

Often where someone believes that they have the benefit of anunregistered mark, they will seek to warn off others. Theycan do so by using the ™ sign in order to preserve the mark.

ANALYSIS OF JUDICIAL DECISIONS

1. Southern v. How

The earliest documented case where there was anindication of passing off, this one dates back to 1618. Inthis case mark of an eminent clothing brand was used to dupea customer, who bought the defendant’s low grade clothingthinking it was the plaintiff’s brand.

The defendant was held liable. This though was more a case ofdeceit, but the principle of passing off clearly started itsjourney from this case.

2. A.G. Spalding & Brothers v. A.W. Gamage, Ltd.

The defendants had organised a sale where they announcedthey would sell the plaintiffs’ footballs at a nominal price.

But in reality, the intention of the defendants was to sell adifferent ball, belonging to the plaintiffs’ company ofcourse, than the one advertised.

An action was brought by the plaintiffs seeking to recoverdamages, which they contended, they had incurred from the dipin sale of their genuine footballs.

It was held that in this type of a wrong, actual passing offwas unnecessary. What was important was a description of thiswrong in terms of representation. Referring to thedefendants’ contention that the writ was issued before therewas any kind of sale, there lay no basis in the action andhence, it could not succeed, it was declared that offering tosell was an actionable act. It was also declared that therecould be no sort of a limit for awarding damages for such awrong.

3. Hendricks v. Montagu

The plaintiffs, the “Universal Life Assurance Society”brought an action against the defendants to stop them fromcarrying on business with the trade name “Universal LifeAssurance Association”. The injunction sought was granted andit was mentioned that since the names were too similar fordifferentiation, the tort of passing off was indeedcommitted.

4. J Bollinger v Costa Brava Wine Co. Ltd.

Popularly known as the Spanish Champagne case, thisparticular case saw an action being brought by twelve biggestchampagne manufacturers of France, on behalf of everychampagne manufacturer in their country, seeking injunctions

on use of the word “champagne” while describing Spanish wine,and passing it off as champagne. An injunction was granted.

5. The Dutch Advocaat Case

Erven Warnink B. V. v. J. Townend & Sons is popularlyknown as the Dutch Advocaat case. This was the first casewhere basic elements of passing off were first put forth.Lord Fraser, while delivering the judgment had listed fiveprinciples of such a tort, which have already been discussed.

In the present case, the first plaintiff was a company fromthe Netherlands which manufactured a beverage made from eggsand brandewijn spirit. The drink was called Advocaat. Thedefendants were an English company manufacturing a drink of asimilar name (Old English Advocaat), but altogether differentin nature, being prepared from eggs and fortified wine. Beinga wine based drink, the excise duty on the defendants’product was much lesser than that on the plaintiff’s product,which had a huge share of the English “Advocaat” market. Thisresulted in the defendants taking over much of theplaintiff’s market share. An injunction was sought to stopthe defendants from using the name “Advocaat”.

Initially it was held that the term “Advocaat” had earned agood reputation and goodwill, being recognised as a drink ofgood quality and taste, something which the defendants’product did not comply with, with it having a differentrecipe. It was held that the defendants were guilty of thetort of passing off. The Court of Appeal reversed thisdecision by Goulding J., only to see the House of Lordsrestoring it.

6. The Jif Lemon case

Reckitt & Colman Products Ltd. v. Borden Inc. ispopularly known as the Jif Lemon case. The judgment in thiscase finally formulated three basic principles of the tort ofpassing off.

The facts of this case go as such;

The plaintiff was a manufacturer of lemon juice and, since1956, had been selling such juice under the name “Jif” inplastic containers resembling real lemons. The defendant’sproduct, manufactured in 1985-86 marketed three differentkinds of lemon juice in containers precariously similar tothose of the plaintiffs’, the only difference being adifferently coloured cover and a different brand name,“ReaLemon”.

The plaintiffs’ brought an action for passing off and weresuccessful, with both the Court of Appeal and the House ofLords upholding the decision.

Walton J., observed that a careful shopper might be able todistinguish between the different brands, but, to quote him;

“the slightest peradventure that the effect of theintroduction of any of the defendant’s lemons on to themarket would be bound to result in many housewives purchasingthem in the belief that they were purchasing the well knownand liked Jif brand.”

The fact that the brand “Jif” was identified by the shape ofits container and not by its label provided the ultimateevidence.

7. Calvin Klein Inc. USA v. International Apparel Syndicate

In this case, the plaintiff, an internationally reputedUS company with a tremendous goodwill for designer clothing

brought an action for passing off and trademark infringementagainst International Apparel Syndicate, an Indian company tostop them from using the trade name Calvin Klein and the markCK.

Calvin Klein did not have a market in India, but theirgoodwill was based on their reputation earned throughadvertisements. They also had worldwide trademarkregistrations in 136 countries including India. In India,their registration covered only textile goods, while theirapplication for trademark registration for clothing, footwearand headgear was still pending. False representation by theIndian company that they were official CK licensees andmarketing their products under the trade name of Calvin Kleinled to the Calcutta High Court passing an interim order forinjunction, stopping International Apparel Syndicate fromusing the name Calvin Klein and the mark CK, whichsubsequently became permanent.

The defendants’ contention that the plaintiffs could notbring an action because they did not sell their goods inIndia was disallowed. The court said that the marks were usedwith an intention to deceive the customers and to traderiding on the international reputation of Calvin Klein.

8. Honda Motors Co. Ltd. v. Mr. Charanjit Singh and Ors

The defendants manufactured pressure cookers under thename “Honda”, in India. Their application for registrationhad already been rejected once before and they had appliedfor registration again, while continuing to sell theirproducts.

The plaintiffs, popular all over the world for their motorgoods and electrical appliances brought an action against the

defendants. In India, they ran a joint venture with theSiddharth Shriram Group.

In the judgment, it was held that with an establishedbusiness and sale of quality products, the name “Honda” hadbecome associated with the plaintiffs’ reputation and itsgoods. It was said that it is very easy for the public toassociate the plaintiffs with any product that carries thename of “Honda”. Further, the honourable judges also heldthat by using the name “Honda” the defendants were creatingconfusion in the consumers’ minds, which was indirectlyaffecting the business of the plaintiffs in an adverse way.An injunction was ordered to stop the defendants from usingthe name “Honda”.

9. Colgate Palmolive Company and Anr. v. Anchor Health andBeauty Care Pvt. Ltd.

Both the plaintiffs and the defendants manufacture wellknown toothpaste brands. The plaintiffs sued the defendantsfor passing off. The contention of the plaintiffs was thatthe defendants’ use of colour and pattern of colours in theirdental products was dangerously similar to the plaintiffs’.According to the plaintiffs the proportion of colours (redand white) used by the defendants was almost identical tothat of the plaintiffs (1/3:2/3). The reason for bringing insuch an action was that the plaintiffs were established inthe Indian market since 1951, and had a tremendous goodwillin the country, while the defendants had entered the marketonly in 1996.

It was held by the court that though there cannot be anymonopoly over colour, in a country with a huge number ofilliterate and semi-literate people, by marketing a newproduct with a design closely resembling that of the olderproduct, it is easy to create confusion in the minds of the

public, especially when a similar product has been prevailingin the market for close to half a century. It was adjudgedthat the defendants were using the trade dress of theplaintiffs. The court ordered an injunction, restraining thedefendants from using the red/white combination in thedisputed order.

10. Smithkline Beecham v. V.R. Bumtaria

The defendants used the name “ACIFLO” for one of theirpharmaceutical preparations. The plaintiffs’ sued thedefendants for passing off since they had been using the nameof “ARIFLO” for the same product, a name which wasregistered. They did not have a market in India. Theplaintiffs contended that advertisements in medical journalsamounted to building of a goodwill in India, which was beingmisused by the defendants. The court held that the reach ofmedical journals was restricted to a specific class of peopleand so was the reputation, hence, there was no passing off.

The practical consequences of the law of passing off

Essentially, the law of passing off means that in choosing atrade mark, you should consider whether there are any earlierrelevant registered trade marks (by searching trade markregisters) and also whether there are any relevantunregistered trade marks (by undertaking common law searchessuch as general internet searches). Just because a mark isn'tregistered, doesn't mean that you won't infringe by using asimilar mark.

A second practical consequence is that if you have notregistered your trade mark and find a competitor using a

suspiciously similar mark, you may have rights on which youcan take action.

CONCLUSION

In a nutshell, in an action for passing off the

plaintiff has to establish that his business or goods has

acquired the reputation he is claiming, by showing that his

trade name has become distinctive of his goods and the

purchasing public at large associates the plaintiff’ name

with them.

In the cases of infringement the burden is always lies to theplaintiff. (S.M. Dyechem Ltd. v. Cadbury (India) Ltd) In thiscase an infringement action is fail where plaintiff cannotprove registration or that its registration extends to thegoods or to all the goods in question or because theregistration is invalid and yet the plaintiff may show thatbymitating the mark otherwise, the defendant has done what iscalculated to pass off his goods as those plaintiff.What the plaintiff must establish in a passing off action?It is essential for success in a passing off action based onthe use of a mark or get up that the plaintiff should showthat the disputed mark or get up has become by userdistinctive of the plaintiff’s goods so that the use inrelation to any goods of the kind dealt in by the plaintiffof that mark or get up will be understood by the trade andthe public as indicating the plaintiff’s goods.[5] there ismisrepresentation, when it is harm the existence plaintiff’sgoodwill, when it is made by a trader in the course of trade,which is injure the business of another trader and whichcause actual damage to the business or goodwill of the traderby the whom action is brought.[6]But these requirements were reduced to three in Reckitt &Colman Products Ltd. V. Borden Inc.[7] now there are threeessential requirements for the passing off action:

 The Claimant’sGoodwill: Although damage is the gist of an action forpassing off, but the plaintiff must show that there is areasonable reason of his being injured by the defendant’s

action, even if the conduct of the defendant might becalculated to deceive the public. A private individual cannotinstitute a suit for passing off even if the defendantpractices deception upon the public, unless it is proved thatthe defendant’s action is likely to cause damage to theindividual.

 Misrepresentation: Misrepresentation in the simplest form of passing off. If Asays falsely these goods I am selling are B’s goods. It is aclear case of passing off. In simple way we can say thatmisrepresentation should lead. Or be likely to lead confusionon the part of consumers. In case of Khemraj v. Garg[8], in this case thedefendants had copied the get up, layout, design and colourscheme, etc. and the name “manavpanchang,mani ram panchang”and “shri vallabh Mani Ram panchang” of the plaintiff’spanchang.The court held that it is similar to the plaintiff’sproduct and Interim injunction was granted.In the case of Rupa & Co. Ltd v. Dawn Mills Co. Ltd.[9] In this case thedefendant manufacture an underwear which named dawn assimilar to the plaintiff’s manufactured underwear don, whichis creating confusion in the minds of people because thelayout, get up and colour combination is same to theplaintiff’s product.

 Damage: Damages areavailable in a passing off action. And remedy is available inboth cases whether the infringement suit or passing offaction in both the cases remedy is given. Now the question of how the passing off action arises?The question of how the passing off action established. Ijust referred the two cases first case is relating to passingoff action in domain name in this regard I just refer thecase of Akash Arora vs. Yahoo Inc<!--[if !supportFootnotes]--

>[10], in this case the court held that theyahooindia is creating a confusion in the mind of the people.And the defendant yahooindia is same as the plaintiff’syahoo. But as a student of law I am not go with the casedecision because my views regarding to the case is that hissite may be better than his competitors. And second importantthing is that those who access the Internet they are capableto distinguish which site is yahoo. in and which one isyahooindia.So the question of confusion is not create whenthe people are able to distinguish between the sites thenthere will be no question of passing off arise.The second case In Reckitt & Colman of India Ltd. vs. M.P.Ramachandran & Anr[11], Hon’ble Calcutta High Court (Barin Ghosh, J.)laid down five principles for granting an injunction in caseof comparative advertising:i. A tradesman is entitled to declare his goods to be best inthe world even though the declaration is untrue;ii. He can also say that his goods are better than hiscompetitors, even though such statement is untrue;iii. For the purpose of saying that his goods are the best inthe world or his goods are better than his competitors he caneven compare the advantages of his goods over the goods ofothers;iv. He however, cannot, while saying that his goods arebetter than his competitors, say that his competitor’s goodsare bad. If he says so, he really slanders the goods of hiscompetitors and their goods, which is not permissible.v. If there is no defamation to the goods or to themanufacturer of such goods no action lies, but if there issuch defamation an action lies and if an action lies forrecovery of damages for defamation, then the court is alsocompetent to grant an order of injunction restrainingrepetition of such defamation.

The Hon’ble court also observed in this case that “One canboast about technological superiority of his product andwhile doing so can also compare the advantages of his productwith those which are available in the market. He can also saythat the technology of the products available in the markethas become old or obsolete. He can further add that the newtechnology available to him is far more superior to the knowntechnology, but he cannot say that the known technology isbad and harmful or that the product made with the knowntechnology is bad and harmful. What he can claim is only thathis product and his technology is superior. While comparingthe technology and the products manufactured on the basisthereof, he can say that by reason of the new superiortechnology available to him, his product is much superior toothers. He cannot, however while so comparing say that theavailable technology and the products made in accordancetherewith are bad and harmful.”CONCLUSIONIn the conclusion the researcher concludes that the passingoff action is applied in unregistered goods and services, andin infringement of suit and passing off in both the cases theremedy will be same. Then the passing off is arise in threecases first when it is injured the claimants good will,secondly in misrepresentation and thirdly in damages, wherethe position is same like in infringement suit. And lastlywhen the concept of passing off is reading with domain nameand technological changes then the concept of passing off isin different dimension.

LUXURY TAX FILE NO.1274

passing off

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