Passing-Off in India: Looping the Loop Holes
1.What is Passing-Off
Passing off is a form of tort, and its substantive part is founded upon the common law principles. The general principle of passing-off states that no man can have any right to represent his goods as the goods of another person. The gist of the concept of passing-off is that the goods are, in effect, telling a falsehood about themselves; they are saying something about themselves which is calculated to mislead. The spirit of law contemplates that unfair competition destroys honest business and should not be allowed. This term has undergone judicial scrutiny several times.
2.The law of Passing Off in India
The Supreme Court of India has defined passing-off in Cadila Healthcare Ltd v. Cadila Pharmaceuticals Ltd as the species of unfair trade competition or of actionable unfair trading by which one person, through deception, attempts to obtain an economic benefit of the reputation , which the other has established for himself in a particular trade or business.“Passing-off” has not been defined in the Trade Marks Act, 1999 , but the expression has been used under certain provisions of the act. The Act denies the registration of any trademark in India if the use of the mark is prevented in India by virtue of the law of passing off and enables an individual to claim his rights under the Act even if the mark is unregistered under the Act. The jurisdiction to try the matters of passing-off has been given to every court which is not inferior to a District Court and the relief which can be granted in the matters of passing-off is also mentioned under the Act.
In the law related to trademark, claim against a person can be made either for infringement or for passing-off. Both, the action for infringement and the action for passing-off, are different from each other. An action against infringement is a statutory right, while the right for an action against passing-off is derived from the common law principles. The former has been conferred only upon the proprietor of the registered trademark. On the other hand, the latter has been conferred even upon the user of unregistered trademark. An action against infringement has its own leverage over the action against passing-off. Though the latter right has been conferred upon the unregistered user, the burden of proof is more severe than that in any action for infringement. A person claiming an action for passing-off has to pass the classical trinity test which makes the claim difficult while any claim for infringement succeeds if the plaintiff is able to prove that the impugned trademark is a colourable imitation of the plaintiff’s trademark. Moreover, the plaintiff is not required to prove the reputation of the trademark. Deception is an important element for a claim against passing-off but it hardly holds any significance in an action for infringement. Both the actions are different from each other in many aspects, but none can be said to be superior to the other.
Identification of an act as passing-off is very important and that can be done only by ascertaining certain characteristics which are essential for classification of an act as passing-off. These characteristics were identified by Lord Diplock in Ervin Warnik B. V. v. J. Townend & Sons (Hull) Ltd. The five characteristics recognized are: (i) Misrepresentation, (ii) the act must be made by the defendant in course of trade, (iii) the prospective or ultimate customers of the plaintiff’s goods and services have been misrepresented, (iv) such an act of misrepresentation is calculated to injure the business or goodwill of the plaintiff, and (v) such act causes actual damage to the business or goodwill of the plaintiff. Essentiality of these characteristics has also been recognized by the Indian courts. Ascertainment of these characteristics is highly subjective in nature and varies from case to case depending upon the facts of the case.
For the success of claim against passing-off, the plaintiff has to pass the Classical Trinity test. This test was used in Perry v. Truefitt and was later upheld in the landmark case of Reckitt & Colman Products Ltd. v. Bordan Incorporation. The test requires the plaintiff to prove the presence of the following three elements in the act of the defendant: (i) that the plaintiff had acquired a reputation or goodwill in his goods, name or mark, (ii) there was a misrepresentation, whether intentional or unintentional, which was done by the defendants by the use of mark of the plaintiff or by any other means (which includes use of similar marks) and which led the purchasers/consumers to believe that the goods and services which were being offered by the defendants are goods and services of the plaintiff or were associated with the plaintiff’s goods and services , (iii) that the plaintiff has already suffered damage or is likely to suffer damage due to such misrepresentation. The apex court of India has also upheld this test and has applied it in the case of Laxmikant V. Patel v. Chetanbhat Shah.
Once the plaintiff has qualified the Trinity test, the court can grant him the remedy for his damage. The relief which the plaintiff can get in any suit for passing off includes injunction and, at the option of the plaintiff, either damages or an account of profits, together with or without any order for the delivery-up of the infringing labels and marks for destruction or erasure. The injunction applied by the court is subjective in nature and is dependent upon the nature of passing-off. The usual form of injunction is to prohibit the use of the mark or the name ‘without clearly distinguishing’ the defendant’s goods or his business from the goods or the business of the plaintiff. In a few exceptional cases where the defendant could not clearly distinguish his goods or business from the plaintiff’s, injunctions in absolute terms have been granted.
3.Importance of Passing off in India
The importance of the law of passing-off cannot be denied even though it is not a statutory right. This law gives priority to the prior use of trademark over the registered trademark. This action can be brought against the registered user under section 27 (2) of the Act, if the plaintiff is a prior user of the trademark. Any of the statutory provisions of the Act does not bar an action for passing-off by an anterior user of a trademark against a registered user of the same. This action is not only limited to the sale of goods but also restrains a person from the usage of the trade name, even if the person is not involved in the selling of the same goods. Limitation has also been imposed on this action, this action is available only to a trader to protect his proprietary right in his goodwill or business and it is not open to the consumers who have been misrepresented or deceived. This is the only way by which an unregistered user can secure his rights. It is not easy to successfully claim an action for passing-off, as there is a burden on the claimant to pass through the trinity test. In the present scenario, it is very difficult for the claimant to pass the test as the deception of the customers or the damage to goodwill cannot be ascertained easily which are essential for a successful claim. The whole scheme of the Indian Trademarks Law indicates that the right of the prior user of a trademark, whose use has made the mark distinct, prevails over the rights of any other user. In India, the process of getting a trademark registered is very lengthy and complex. The procedural complexity and the long time taken discourage people to get their trademarks registered. This takes away their right to claim an action against infringement. The only remedy they are left with is the claim against passing-off. The stringent tests of passing-off are difficult for the claimant to qualify most of the times which results in the denial of justice. The concept of passing-off has expanded and reached new dimensions. A variety of passing-off, namely ‘reserve passing-off’ has emerged in the recent case of John Roberts Powers School v. Tessensohn . “Reserve passing-off” occurs where the defendant markets the plaintiff’s product as his own. As the concept of passing-off has evolved in recent times, there is a need for changes in the law of passing-off so that it becomes capable of handling these situations in a fair and efficient manner. Further, India is a signatory to the Paris Convention and its Article 10 Clause 1 lays down that the countries are bound to assure protection against unfair competition. Since, passing-off is a kind of unfair competition, the principle of pacta sunt servanda binds our state to adhere to the Convention.
Article 253 of the Indian Constitution empowers the Parliament to legislate any law for implementing any treaty, agreement or any convention with any international conference or body. Keeping in mind the widening ambit of passing-off, we need to be liberal on the part of the plaintiff so that his genuine case does not suffer hardship because of the procedural defects.
The concept of passing-off has been governed by judicial pronouncements which have led to the subjective treatment of the actions for passing-off. The Legislature should give the laws related to passing-off a concrete shape in the form of legislation and should try to remove the procedural infirmities and maintain consistency.
This article has been authored by Amit Sinha who is pursuing law at National Law University, Odisha