A Division Bench of the Delhi High Court has said that the judgment of a Single Bench holding a suit for passing off based on a design registered under the Designs Act to be not maintainable does not appear to be prima facie correct.
Therefore, Division Bench of Justices S Muralidhar and Asha Menon held that the Single Bench decision will not act as a precedent to bar for suits seeking relief of restraint of passing off registered design used as trademark/tradedress.
The appeal before Division Bench was filed by multinational footwear manufacturer Crocs, against the February 19 judgment of Justice Rajiv Sahai Endlaw holding that a design cannot constitute a trademark, and hence passing off action in relation to the registered design cannot be maintained. This led to the dismissal of six passing off suits filed by Crocs against several footwear manufacturers, who were allegedly selling products by copying the distinct shape trademark of Crocs footwear.
Admitting the appeal by Crocs, the Division Bench observed that the appellant had made out a "prima facie case".
According to Division Bench, the Single Bench judgment was based on an understanding that the five judges' bench decision in Carlsberg Breweries v Som Distilleries and Breweries Ltd had approved the dictum in Mohan Lal v Sona Paint that passing off action was not maintainable in respect of design. This prima facie appeared to be an incorrect understanding by the Single Bench, said the Division Bench.
"Prima facie this understanding by the learned Single Judge in the impugned judgment of what the majority in Mohan Lal held and what Bhat J. as part of the FJB in Carlsberg observed does not appear to this Court to be correct. There is prima facie merit in the contention on behalf of the Plaintiff that the impugned order of the learned Single Judge unwittingly reiterates the minority view in Mohan Lal which by no means was, even impliedly, affirmed by the FJB in Carlsberg", observed the order written by Justice Muralidhar.
The Division Bench proceeded to hold that the Single Bench judgment will not constitute a precedent to bar other shape trademark suits for passing off action qua registered design of the plaintiff.
'Design Cannot Constitute Trademark'; Delhi HC Dismisses Passing Off Suit By Crocs Inc [Read Judgment]
Single bench decision
The Single Bench of Justice Endlaw had held that a design by itself cannot constitute a trademark, and in order to sustain an action for passing off based on design there should be something "extra" other than the design, which goes on constitute "good will" of the manufacturer. To hold the suits to be not maintainable, the Single Bench noted that Crocs had not established any such extra features in its use of design.
It held that "a registered design cannot constitute a trade mark; however if there are features other than those registered as a design and are shown to be used as a trade mark and with respect whereto goodwill has been acquired, it is only those extra features which can be protected as a trade mark"
"A registrant of a design would thus be entitled to maintain an action for passing off against other, not by showing that such another has adopted the registered design of the registrant but by showing that the product of such registrant, besides the registered design, also has other/extra features and goodwill in respect whereof has accrued and which extra features have been adopted / copied by another"
The suits were found to be premised on the registered design per se constituting a trade mark. The Single Judge found that the plaintiff had not pleaded anything extra, other than the registered design, which is used and has goodwill as a trade mark and which can be protected in these actions for passing off.
"It being not in dispute that the passing off pleaded in the plaint is by use by the defendants of what is registered by the plaintiff as a design, in terms of Mohan Lal as well as Carlsberg Breweries supra, the same is not permissible in law. The suits thus, as per averments in the plaints therein, are not maintainable and liable to be dismissed", concluded the Court.
Para 43 of Carlsberg decision, given below, was quoted in support of this by Justice Endlaw. :
"The larger legal formulation in Mohan Lal (supra), that a passing off action i.e. one which is not limited or restricted to trademark use alone, but the overall get up or "trade dress" however, is correct; as long as the elements of the design are not used as a trademark, but a larger trade dress get up, presentation of the product through its packaging and so on, given that a "passing off" claim can include but is also broader than infringement of a trademark, the cause of action against such use lies"(para 43, Carlsberg decision)
According to the Division Bench, the Single Bench had understood this paragraph to be supporting "the position that the majority in Mohan Lal did not recognise the protectability of a registered design when used as a trademark". This was found to be incorrect by the Division Bench.
Crocs had filed separate commercial suits in the High Court against several footwear manufacturers alleging that they were copying and adopting the distinct design of its footwears. Against some manufacturers, it filed separate suits for design infringement and passing off. It also filed some suits with composite actions of design infringement and passing off.
While hearing the prayer for interim relief, the question of maintainability of passing off action on the basis of a registered design arose.
It was plaintiff's case that the distinct design of the footwear can be used as a 'trademark' on the ground that under Trademarks Act 1999, shape can be a trademark and hence action of passing off based on the design was maintainable.
The defendants contended that trademark cannot be design under the Designs Act. They contended that if what is registered as a design is also given protection as a trade mark, it would run counter to the rights for a limited period in a design. That would be akin to permitting using design rights as trademark through backdoor.
The defendants also urged that Carlsberg did not overrule the dictum in Mohan Lal that a suit for passing off based on design can be maintained only if the something extra than the registered design is claimed as trademark. It was pointed out that the the plaintiff did not point out any extra feature over the registered design so as to constitute the trademark.
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