Law of Passing off in India

Setindiabiz TeamSeptember 20, 2024

The law of passing off in India is a legal claim recognized under common law. It serves as a crucial mechanism to safeguard the goodwill associated with unregistered trademarks. Founded on the principle that one should not unfairly benefit from the efforts of another, passing off enables the original trademark owner to take action against unauthorized parties who engage in deceptive practices.

Unlike infringement actions that primarily apply to registered trademarks, passing off focuses on preventing the misrepresentation of goods or services that could potentially deceive consumers. By asserting a passing off claim, the owner of an unregistered trademark can seek legal remedies to protect their reputation, business interests, and prevent unjust exploitation of their hard-earned goodwill.

The term ‘passing off’ is not explicitly defined within the Trademarks Act. However, its legal framework and scope are delineated in Section 27(2), 134(1)(c), and Section 135 of the Trademarks Act. Section 134(1)(c) specifically outlines the jurisdiction and authority of District courts to hear passing off cases and grant injunctions when necessary. In a passing off suit, the plaintiff is responsible for presenting a compelling case and demonstrating to the court the significant harm or injury they have suffered as a result of the defendant’s actions, emphasizing the need for immediate legal remedy to prevent irreparable loss.

Why Passing Off Necessary

The trademark act provides protection to registered trademark, in case of any infringement occurring to said trade mark. While law of Passing Off is a remedy available to unregistered trademark. The said remedies are governed by common law and court may pass a judgement in favor of prior user granting permanent injunction against the subsequent user of the trademark on being satisfied based on facts and circumstances of a particular matter.

Object of Passing Off

The object of law of passing off is to protect some form of property – usually the goodwill of the plaintiff in the business or the goods or the services. The law of passing off provides a remedy against a false representation tending to deceive customers into believing that the goods which the other party is selling or the services which the other party is providing are really the first party’s goods/services.

So, the law of passing off comes into application when the following elements are present:

Goodwill need to be established by the person seeking benefit for passing off action
There must be deceptive similarity in the products in question.
The party asking for remedies for passing off might incur losses/ damages due to such action of passing off by other party

The Hon’ble supreme court uphold the similar view in Laxmikant V. Patel vs. Chetanbhai Shah

Elements of Passing Off Action

Goodwill

The action of passing off lies where there is a real possibility of damage of goodwill to some business or trading activity. Therefore, the plaintiff has to establish a goodwill in his business or his goods or services with which the trade or public will be led to associate the defendant’s activities. Goodwill need not be established in the mind of every member of the relevant public, but in a significant section of it.

Deceptive Similarity

The pertinent judgements on “what is deceptive similarity” and “what facts need to be considered to opine whether there is a deception in the products and/or service of the parties concerned” are mentioned herein under:

According to Kerby’s Law of Trade Marks and Trade Names (9th edition, para 838): Two marks, when placed side by side, may exhibit many and various differences, yet the main idea left on the mind by both may be the same. A person acquainted with one mark, and not having the two side by side for comparison, might well be deceived, if the goods were allowed to be impressed with the second mark, into a belief that he was dealing with goods which bore the same mark as that which he was acquainted.
In a case titled as Delco Engg. Works V/s General Motors ILR(1974) I P & H 502, in which the principles governing the passing off action were enumerated. “ That an action for passing off is founded on the desirability of preventing commercial immorality or dishonesty on the part of the trader… who falsely represent that his goods are the goods of someone else. The whole thing has to be approached from the point of view of a man of average intelligence and of imperfect recollection.
In case titled as MilmetOftho V/s Allergan Inc,(AIR 2004 SC 3355), the apex court held that in a passing-off action for deciding the question of deceptive similarity exacting judicial scrutiny is required if there is a possibility of confusion over marks on medicinal products because the potential harm may be far more dire than that in confusion over ordinary consumer products.
In the matter CADILA HEALTH CARE LTD. Vs CADILA PHARMACEUTICALS (2001 5 SCC 73), the apex court observed that public interest would support lesser degree of proof showing confusing similarity in the case of trade mark in respect of medicinal product as against other non-medicinal products. Drugs are poisons, not sweets. Confusion between medicinal products may, therefore be life threatening, not merely inconvenient. Broadly stated, in an action for passing off on the basis of unregistered trade mark generally for deciding the question of deceptive similarity the following factors to be considered:
The nature of the marks i.e whether the marks are word marks or label marks or composite marks i.e. both words and label marks.
The degree of resemblances between the marks, phonetically similar and hence similar in idea.
The nature of goods in respect of which they are used as trade mark.
The similarity in the nature, character and performance of the goods of rival traders.
The class of the purchasers who are likely to buy the goods bearing the marks they require, or their education or intelligence and a degree of care they are likely to exercise in purchasing goods.

Loss due to passing off

Finally, it is very important that the party claiming benefit under passing off might incur loss due to other party’s action of passing off their goods / services as of the goods / services of the first party.

It is very important to be vigilant about your rights as a trader / service provider and must initiate appropriate action against illegitimate users of your identity to save the identity of your business and the money effort and time involved into creating it as law is for them who are aware of their rights and has means to enforce the same.

The law of passing off in India plays a vital role in safeguarding the interests of businesses and protecting their goodwill. It provides a remedy for unregistered trademarks and serves as a deterrent against unfair competition and deceptive practices. To leverage the benefits of passing off, it is crucial for businesses to establish and protect their goodwill through consistent branding and quality offerings. Additionally, staying vigilant and promptly taking legal action against unauthorized users is essential to maintain the integrity of one’s business identity. Understanding and utilizing the provisions of passing off can help businesses foster trust, preserve their reputation, and thrive in a competitive market.

Conclusion

FAQs

Q1: What is passing off in trademark law?

Passing off is primarily an actionable wrong, or an infringement, under the common law of trademarks. It refers to the unauthorized use of a similar trademark, trade name, or get-up that may mislead consumers into believing that the goods or services offered by one party are associated with or endorsed by another party. Passing off allows the original business to seek legal remedies to protect its goodwill and reputation from being harmed by such deceptive practices.

Q2: How do you prove your claim against passing off?

To prove your claim against passing off, several elements must be established. These include demonstrating the existence of goodwill associated with the trademark, establishing deceptive similarity between the infringing and original goods/services, and showing actual or potential loss or damages suffered as a result of the passing off.

Q3: What is the difference between passing off and trademark infringement?

Passing off and trademark infringement are distinct legal claims. Passing off is the misrepresentation of a trademark by third parties, either registered or unregistered. On the other hand, trademark infringement is concerned with unauthorized use of a registered trademark. Passing off can apply to both registered and unregistered trademarks, while trademark infringement is specific to registered trademarks.

Q4: Can an unregistered trademark claim passing off?

Yes, an unregistered trademark can claim passing off protection. Although registration provides additional benefits and stronger legal grounds, passing off can be used to protect unregistered trademarks as well. The claimant must demonstrate the existence of goodwill, deceptive similarity, and actual or potential damage caused by the passing off.

Q5: How can I prevent passing off of my brand or products?

To prevent passing off, there are several proactive measures you can take. First, establish a strong and recognizable brand identity through consistent branding and marketing. Regularly monitor the market for potential infringements and take prompt legal action if necessary. Consider registering your trademark to obtain stronger legal protection and deterrent against passing off.