This article is written by Shubhangi Sharma, a 5th-year student of BA LLB in Lloyd Law College, Greater Noida. The article discusses Passing Off in Trademark Act, 1999.
Meaning of Passing-Off
“If a person sells his goods as the goods of another” then the trademark owner can take action as this becomes a case of passing off. Passing off is used to protect or safeguard the goodwill attached to an unregistered trademark. When the trademark has been registered by the owner and infringement happens, then it becomes a suit for infringement, but if the trademark has not been registered by the owner and infringement happens then it becomes a case of passing off.
The principle of passing off, i.e. “Nobody has the right to represent his goods as the goods of somebody else” was decided in the case of Perry v Truefitt (1842). The passing off law has changed over time. Previously it was restricted to depicting one person’s goods as another. Later it was extended to trade and services. This was later expanded to business and non-business activities. Now, it applies to many forms of unfair trade and unfair competition where one person’s activities harm the goodwill associated with the activities of another person or group of individuals.
It is difficult to prove passing off as claimants need to demonstrate that at least some of the public is at risk of confusion between the two businesses. The most important question in Passing off is whether the conduct of the defendants is such as to confuse the public that the business of the defendants is a plaintiff or a cause of confusion between the business activities of the two. This Act of misrepresentation often damages the goodwill of a person or business, causing financial or reputational damage.
Kinds of Passing off
There are two kinds of passing off-
Extended Passing-Off –
Where misrepresentation as a particular quality of a product or service damages the harmony or goodwill of another person or business.
Reverse Passing Off –
Where a trader markets, sells or produces the goods or services of another person or business.
Elements of Passing-Off
There are three basic elements of passing off. The three elements are also known as the Classical Trinity, as restored by the House of Lords in the case of Reckitt & Colman Ltd v Borden Inc. which established the three elements of passing off, i.e. misrepresentation, goodwill, and damage. They are:
Where the defendant takes or tries to make the public believe that the goods and services which he is providing are of the plaintiff.
It must be proved that the person or the goods and services own some kind of reputation in the mark which associates the public with that specific goods or services. It has been more broadly defined in the case of Trego v. Hunt by Lord Macnaughten as:
Often it happens that the goodwill is the very sap and life of the business, without which the business would yield very little or no profits. It is the whole advantage whatever it may be, of the reputation and connection of the firm, which may have been made up by years of honest work or gained by the bountiful expenditure of money.’
In the case of CIT v. B.C. Srinivas Seti, it was held that that goodwill is influenced by everything related to the business, the personality of the owners, the nature and character of the business, its name and reputation, its location, its influence on the contemporary market and the current socio-economic psychology.
At last, to succeed in taking action to stop the infringing party, the offended party must prove that it has suffered an actual or reasonable loss of business due to the alleged misrepresentation. This is generally difficult to prove and involves the inspection of books of account of both parties on practical grounds. This is sufficient to prove the possibility of loss. It must be proved that the misrepresentation must have harmed the goodwill or cause loss to the reputation.
Difference between Passing Off and Infringement of Trademark
Passing off and trademark infringement is distinctive and is of different concepts. Passing Off is the protection of the goodwill of traders about to with concerning goods and services. “Goodwill” is the reputation of the brand that was built about to with concerning specific goods or services and which attracts customers. It can be shared between an individual merchant or in some cases, such as all manufacturers of a specific product in a specific area.
A party who holds the rights to a certain trademark can sue other parties for trademark infringement. The possibility of confusion determines whether a person can sue another business or person for trademark infringement. If the use of another person’s trademark to sell a product or service is likely to cause consumer confusion about the source of the product or service, then the person poses a potential for trademark infringement.
The main difference is that trademark infringement is related to registered rights, and passing off related to unregistered rights of a person or company, entity, etc. In simple words when the trademark has been registered by the owner and infringement happens, then it becomes a suit for infringement, but if the trademark has not been registered by the owner and infringement happens, then it becomes a case of passing off.
Common law remedy
Trademark need not be registered.
Trademark must be registered.
The Plaintiff has not only to prove the deliberate similarity among two conflicting marks but also have to prove the presence of confusion among customers and the likelihood of damage to the plaintiff’s goodwill and reputation.
The Plaintiff has to prove that the infringing mark is deliberately the same as the registered trademark in the matter of similar goods or services, and no further proof is required as there is an assumption of confusion.
Prosecution under criminal remedies is higher as compared to trademark infringement. The plaintiff has to prove goodwill, misrepresentation, and damage has been caused in his part.
Prosecution under criminal remedies is easier than passing off. If anyone of the prohibited acts has been committed, the infringer will be liable unless a specified defence applies.
But in passing off this benefit is not present and under Section 20 of civil procedure code, 1908 the suit can be instituted where the defendant resides or where the business is carried on or where the cause of action had arisen.
The suit can be instituted under Section 134 of the Trademarks Act, 1999 where the registered user of the particular trademark actually or voluntarily resides or where the business is carried on. So, this is a benefit in part of the plaintiff.
Remedies for Passing Off
To succeed in passing off claims, the plaintiff must show that the misrepresentation made by the defendant, which has damaged the goodwill. In a passing-off action, the plaintiff can claim any of the following remedies:
- Apply for an injunction prohibiting the business from using your trademark or goodwill: An Injunction to prevent further use of the trademark by the defendant. An interim injunction may continue until the claim has been fully tested and is intended to prevent the goodwill of the claimant from further harm during the intervening period. The injunction is an effective remedy in the prevention Infringement of registered trademark or unregistered trademark. Section 135 of the Trademark Act, 1999 provides injunctive relief. An injunction can be given in various types:
- Anton Piller Order: These are prior partial orders to inspect the defendant’s premises. The court may order the plaintiff where the defendant is likely to Destroy or dispose of materials which contain the trademark of the plaintiff
- Mareva injunction: In such order, the court has the power to freeze the assets of the defendant where the property is likely to be dissolved or cancelled, so granting judgment against him will not be enforced.
- Interlocutory Injunction: it is one of the most commonly used forms of an injunction. It acts to take action against the defendant based on former Violation. Interlocutor prohibition is an order to prevent the defendant from continuing usage of the trademark, which is leading to infringement of the unregistered trademark. It has the objective of preventing one from further infringement.
- Perpetual injunction: It is an injunction that prevents the defendant completely, for all time from performing any act that violates the right of the owner of the trademark. A perpetual injunction is usually granted when the case is finally settled.
- Infringing goods to be destroyed: A search and seizure order from the court prohibits the defendant from delivering all goods or products that are labelled with the brand name. Here, the court can direct the return of related material accounts and destroy all such goods.
- Sue for damages or seek to account for lost profits: Damages are compensation for the loss which can be recovered by the real owner of the trademark from the defendant. The monetary value of financial loss or loss for the reputation of the brand is recovered under damage. The amount of the damage and the account of lost profits will be awarded by the court after taking into consideration the actual and certain loss of the owner because of the passing of.
Defence for Passing Off
Use of own name carefully: The defendant has the right to use his name, mark or any symbol and the fact that there may arise of confusion. If any confusion arises, which comes in the attention of that defendant, it is the obligation upon the defendant to take reasonable care to qualify the representation to avoid confusion among customers.
- The name, sign or other marks that are sought to be withheld is not specific to the plaintiff’s goods or business.
- There is no presence of goodwill in the mark.
- The plaintiff has given consent or encouraged the usage of the mark.
- A separate case of passing off.
- The goods and services or business of the plaintiff and the defendant are completely different: if both the defendant and plaintiff are sharing the same trademark but they are providing different goods and services or business then they can take the defence in the case of passing off. For example, LLOYD is a trademark that is used by both the plaintiff and defendant but one is an educational institution and the other is providing the services of electric appliances. So, in this case, one can take the defense of providing different services.
The passing off law is complicated, and it’s hard and expensive for the plaintiff to prove the claims as compared to trademark infringement. The plaintiff has to prove goodwill, misrepresentation, and damage has been caused in his part.
The respondent, i.e. ITC Limited who filed a civil suit against the appellant, Britannia Industries Limited, for the infringement of the copyright of the trade dress of the respondents’ product Sunfeast Farmlite All Good, which is No Added Sugar and No Maida Digestive Biscuits. The court said that the appropriation of and exclusivity claimed vis-à-vis a get-up and particularly a colour combination stands on a different footing from a trademark or a trading name because colours and colour combinations are not inherently distinctive.
It should, therefore, not be easy for a person to claim exclusivity over a colour combination, particularly when the same has been in use only for a short while. It is only when it is established, maybe even prima facie, that the colour combination has become distinctive of a person’s product that an order may be made in his favour. We feel that the present is not such a case. When the first element of passing off, in our view, is not established, we need not examine the other elements of misrepresentation and the likelihood of damage.
Plaintiff (Nirma Limited) was the owner of the trademarks’ Nirma ‘and in Nima’, registered in 1979 and 1982 respectively, for dealing with detergent powder, toilet soap, etc. The plaintiff was facing the infringement of his trademark by ‘Defendants’ (Nimma International and Anr.), The use of the marks’ Nimma International’ and ‘Nimson’s Nima Care’ for its cosmetic products.
The plaintiff sued for a permanent injunction against the defendants, who wanted to prevent the use of the aforesaid mark, as an amount for the plaintiff’s trademark infringement as well as the passing off. The court held that the two marks’ Nimson’ and ‘Nirma’ are phonetically as well as semantically different, and the trade channels and classes of purchasers of goods sold under these marks also differ. Hence, ‘Nimson’ is not deceptively similar to ‘Nirma’.
But in the case of ‘Nimma International’ is different. Ownership of any registered trademark in the matter of ‘Nimma’ is not proved through the Defendants’ documents, while the Plaintiff’s registration in the matter of its mark ‘Nirma’ was strong and had a reputation in three decades. The Use of ‘Nimma’ will create confusion in the mind of the public to believe that the goods and services belong to the Plaintiff. Therefore, the defendants were permitted for the usage of ‘Nimson’ but were restrained from the usage of ‘Nimma’, or any other mark including ‘Nima’.
The protection of the trademark is necessary for the business point of view as well as for the protection of customers from fraud and cheating. The passing-off action is applicable in unregistered goods and services. The scope of passing off is wide as compared to infringement of the trademark.
Even though the process and remedies of passing off suit are the same for both registered and unregistered marks, the burden of proof becomes greater when it is for unregistered marks as it becomes difficult to establish goodwill and reputation. To allow unregistered trademarks, the Act provides relief to a certain extent to several users who would otherwise not be able to take any kind of legal remedy for infringement of their marks.
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