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Watching Passing Off Through The Lens Of Trademark?

Pratik Chaudhari
10 Jan 2021 3:01 PM GMT
Watching Passing Off Through The Lens Of Trademark?

When R. F. V.Heuston penned Salmond's LAW of TORTS, little did he know, that the concept of the passing off action as explained by him would be so much generalized and mixed up by legal interpreters. Hon'bleJustice Lahoti(Supreme Court) in his judgment in the matter of Laxmikant V. Patel v/s Chetanbhai Shah, (2002) 3 SCC 65, which is even today considered a classic judgment on the issue...

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When R. F. V.Heuston penned Salmond's LAW of TORTS, little did he know, that the concept of the passing off action as explained by him would be so much generalized and mixed up by legal interpreters. Hon'bleJustice Lahoti(Supreme Court) in his judgment in the matter of Laxmikant V. Patel v/s Chetanbhai Shah, (2002) 3 SCC 65, which is even today considered a classic judgment on the issue of passing off, referred the content of Salmond's Law on Torts and Christopher Wadlow'sbook titled "The Law Of Passing – Off Unfair competition by Misrepresentation".

The said books written by RFV Heuston and Christopher Wadlow are recognized not only nationally but globally for its biblical content explaining the basic concept of passing off action and the judicial precedents laid down by the several courts in England, which is the mother of all the laws, including the TORT and Intellectual Property Rights law.

The concept of passing off as generally understood in India is a bit out track from the actual meaning and concept thereof. Rather, the said general perception has consumed the actual soul of passing off action.

Understanding OF PASSING OFF IN GENERAL PARLANCE as evident from judicial precedents and arguments advanced across India by the lawyers:

  • The suit for injunction filed by the plaintiff for its unregistered trademark is a suit for passing - off.
  • The plaintiffs trademark if registered and if unauthorizedly used by the defendant, the same amounts to infringement. Whereas, if the trademark is prior used by the plaintiff and if it is unregistered and if unauthorizedly used by the defendant, it amounts to passing off.
  • The passing off action is always considered with regards to unregistered trademarks and in case of entire goods, the shape of the goods is considered as a shape mark which is being passed off.

The aforesaid concept as understood by Bar and Bench across the country is rather over –simplification of passing off and is actually faraway from what passing off actually means.

The Salmond on the Law of Torts in Chapter 9 explains PASSING OFF as follows.

  1. The common law recognizes no monopoly or right of the property vested in the plaintiff but damage done to the plaintiff in his business because of the deceptive mode in which the defendant carries on his own.
  2. Use of the trademark of the plaintiff by the defendant is not the basis of cause of action but use of the trademark is one of the several means by which the defendant may be passing off its goods.
  3. Passing off can even occur in cases which has nothing to do with the trademark viz. the adoption of appearance, get up of the goods or even shape of the goods.
  4. The action under tort against the passing off committed by the defendant does not protect the goodwill of the trademark per se, but it protects the goodwill of the business and of the entity as a whole. A new enterprise or business does not get any protection while it is building the good will.

Thus the perusal of the above in itself makes it abundantly clear that in passing off action, the plaintiff cannot and will not seek protection of the trademark as if it has some sort of monopoly rights under law of Tort, because that is not the ingredient of passing off action. The only question which needs to be decided by the court hearing the matter, is whether the plaintiff has established a goodwill in the market and whether the defendants adoption of the trademark, get-up, shape, appearance etc., is such that it will cause likelihood of confusion or deception in the market and is likely to cause misrepresentation amongst the purchaser. If the answer to the said question is affirmative, then passing off gets proved. It is moot to argue and give reasoning's on the aspect as to whether the plaintiff can claim monopoly over the trademark, get-up, appearance or shape of the goods under the case of passing off action, because the subject matter of claiming the exclusive rights or monopolistic rights over the trademark, get-up, shape or appearance is to be considered in Infringement action under the statutory rights conferred by the Act.

Professor Christopher Wadlow in "The Law OF Passing Off" has referred that "To this extent, passing off is concerned with trademark and service mark in the widest sense, but it is by no means confined to misrepresentation conveyed through the use of such marks or to matter which would be registrable under the Trademarks Act, 1994. The Act expressly leaves the action for passing off unaffected. Passing off and the law of registered trademarks deal with some overlapping factual situation, but deal with them in different ways and from different standpoints. Passing off emphatically does not confer monopoly rights in any names, marks, get-up or other indicia nor does it recognize them as property in their own right.

The aforesaid content can be related to section 27(2) of the Trademarks Act, 1999, which clearly provides that "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."

The legislature was conscious of the fact that concept of exclusive right, trademark, shapemark etc are not the element of passing off and thus the aforesaid provision was inserted in the Trademarks Act, 1999 so that the case of passing off can be seen, deliberated and adjudicated with a wider perspective and thinking outside the ambits of Trademark rights and monopolistic rights.

Thus it is further sufficiently clear that the action under passing off does not recognize the plaintiffs right over the mark, indicia etc and thus the question of deciding the action of passing off against the defendant by the plaintiff cannot be tested upon the standpoint as to whether the plaintiff claims or has monopoly over a particular trademark, get-up, color scheme, appearance, shape or not etc.

In an action of passing off the issue is not even whether the appearance or shape or get-up of the product is such as to assume the nature of the trademark which is unregistered thereby rendering passing off action to be maintainable. The interpretation of passing off action is thus being done in a manner which is far from its true meaning and essence.

The Hon'ble Delhi High Court in the case of Dart Industries Inc & Anr v/s Vijay Kumar Bansal & Ors, CS (COMM) 837/2016, have given following observations

25. I have in Crocs Inc. USA supra, for the reasons stated therein, also held that the meaning of trade mark in an action of passing off cannot be wider than the meaning in the statute relating to trade marks.

26. It thus follows that no action for passing off would lie with respect to what was registered as a design, inasmuch as the plaintiffs, by seeking registration thereof as a design, are deemed to have surrendered, abandoned, acquiesced and waived all rights to use such features as a trade mark, whether during the pendency of the registration as a design or even thereafter.

The perusal of the above observations vis a vis the concept of passing off as explained by SALMOND and WADLOW (supra), would signify that the Hon'ble Delhi High Court associates an action of passing off with the trademark only and the scope of the passing off is only in the terms of a trademark as provided in the Trademarks Act, 1999.

Contradictorily, the actual concept of passing off action has nothing to do with Trademarks in particular or sign or indicia and has simply no connection with the Trademarks act. A trader may not be using the sign, trademark or device and still may be representing the goods as that of the original and prior user of the very goods.

Admittedly, trademarks are excluded from the definition of the Design as provided under section 2(d) of the Designs Act, 2000, however, the oversimplification of passing off action as being a subject matter only qua trademark contradicts the actual concept of passing off under the common law as laid down in texts of Salmond or Wadlow. The above judgment is rendered by the Hon'ble Delhi High Court on the basis of the earlier decision of the very Hon'ble corum in the matter of Crocs Inc. USA Vs. Aqualite India Limited.

The Hon'ble court in Crocs (supra) gave an observation that in order to succeed in the matter of passing off initiated by the plaintiff for its goods per se, the plaintiff must establish that the goods itself has attained the distinctive character as a trademark. The Hon'ble court thus denied injunction to the plaintiff therein even qua passing off action. The plaintiff went in appeal and the Division Bench of the Delhi High Court, stayed the operation of the order passed by single judge and held that the observations given by the Ld. single judge in terms of the passing off action shall not come in the way of CROCS to sue other traders who are passing off their shoes as that of the plaintiff.

It is needless to say that shoes or sandals with holes or bores in the front body are identity of CROCS which shows worldwide reputation and recognition and any average purchaser around the world is aware about the brand CROCS and the peculiar kind of shoe or sandal with holes. The third parties who copy the said shape and concept of the shoe or sandal misrepresent their goods to be that of the CROCS and sell them at the lower cost and thus cause damage to the goodwill of the CROCS which is earned after years of business done by the said company. Thus, the question of shape mark or trademark or Trademarks Act, 1999 or Design Act, 2000 does not arise in an action of passing off. At the most, if the plaintiff is unable to prove the goodwill or reputation of the business and misrepresentation caused by the defendant and if there is a substantial difference in the product of the parties and other circumstances like class of purchaser or price range etc, the court may deny injunction.

Misreading the concept of passing off action to be that of an action of unregistered trademark, can be deduced from reading the decisions of various courts in India in the litigation concerning the Passing off action.

In yet another decision of the Hon'ble Commercial Court, Ahmedabad in a suit for passing off action with regards to air – coolers in the matter of Symphony Ltd versus Groupe SEB (India) Pvt Ltd, Comm TM Suit No. 08/2017, the Hon'ble court dismissed the suit after trial with reasoning given below:

Para 19………….In geometrical shape, the plaintiff cannot claim the monopoly.

Para 20……..In the light of above discussions, though theplaintiff is prior user of the shape, surface and configuration of the subject air coolers but he cannot claim the monopoly over the shape as the shape is geometrical and surface and configurationof subject air-coolersare functional. Hence,present Issue No.1 is decided partly inaffirmative and partly in negative.

Para 42………..Theplaintiff cannot claim the monopoly over the geometrical shape and functional similarities.

The above observations and reasoning given by the Hon'ble court again overlooks the concept that in passing off action claim of monopoly by the plaintiff is not the subject matter and the court must see whether the defendant is misrepresenting its goods as that of the plaintiff. Monopoly rights over the shape mark or trademark etc are the subject matter of the statute i.e. Trademarks Act, 1999, which can only be touched if the mark is registered at the first place. The action in passing off has nothing to do specifically with the trademark, color scheme, shape etc. Though trademark, shape mark, color scheme and other features may be one of the means or ways, by copying which, the defendant may be passing off the goods.

In article titled Passing off: An Uncertain Remedy, the authors: Peter Charleton and Sinead Reilly submitted in Fordham Intellectual Property Conference, Cambridge University, April 2015, the said authors have relied upon the explanation of Salmonds Law on Torts and have narrated the actual ingredients and essence of the passing off action.

The said article in Conclusion, enlists the features of a passing off action which are rather an elaborated version of what Salmonds Law on Torts says about passing off action that " The differences between trademark enforcement by legislation and passing off are summarized by Professor Heuston thus:

  • Passing off does not recognize a monopoly, as does trademark registration, rather passing off is about "damage done to the plaintiff in his business by the deceptive mode in which the defendant carries on his own.
  • Passing off can be used as a weapon in litigation broadly, beyond anything to do with a mark and can encompass imitation of packaging or even the attribution of personality.
  • Passing off only protects established lines of business from predatory practices that confuse consumers but trademark protection is fixed from the registration.
  • An action for trademark infringement "may be simpler and less costly" since it avoids the practical difficulties of proof that the defendants "mode of conducting business is bound to cause confusion. "

Thus, it can be safely concluded that the history, origin and legal concept developed throughout on passing off action, clearly establishes that passing off has nothing to do with trademarks although using the trademark to pass off the goods can be one of the means apart from copying color scheme, shape or other aspects and even without copying these aspects. Further claim of Monopoly over a trademark, numeral, shape-mark or any indicia is not the essence of passing off action and thus when a suit is filed for passing off action solely, the plaintiff does not claim monopoly over the trademark per se but is seeking protection of its goodwill rather than trademark. Understanding the concept of passing off as an action of infringement of unregistered trademark or passing off being a subject matter exclusively related to the trademark is over simplification and is contrary to the gist of passing off. Any observation with such oversimplification in this regards in passing off action, is in contradiction to the true and correct principle of passing off action.

Pratik Chaudhari is a Partner at YJ Trivedi & Co. Views are personal.

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