Passing off and infringement: Spate of litigation in store

Ravi Singhania

The history of the passing off law can be traced back to the 19th century in the case of Millington versus Fox, where the Chancery court decided that in the cases of passing off what was necessary was a probability of deception and whether the goods of the defendant were passed off as the goods of the plaintiff. The concept of passing off, which is a form of tort, has undergone changes. Initially it was restricted to the representation of one person’s goods as those of another. Later it encompassed business and services and covered professions and non-trading activities.

In the present context it is applied to many forms of unfair competition where the activity of one person causes damage or injury to the goodwill associated with the activities of another person or group. It is designed to protect traders against unfair competition where a trader acquires for himself, through false or misleading means, the benefit of the reputation already achieved by rival traders.

The recent Supreme Court judgement in Cadila Healthcare Limited (CHL) and Cadila Pharmaceuticals (CPL) highlights the present scenario wherein the court opined that in the case of passing off what has to be seen is the similarity between competing marks and whether there is a likelihood of deception or confusion.

CHL, which produces Falcigo, challenged the trademark of Falcitab granted to CPL on the ground that the latter was deceptively similar to Falcigo, both being used for treatment of falciparum malarial disease. Thus the emphasis is on similarities rather than on dissimilarities.

The frailty of human nature and the pressure placed by society on doctors necessitates the existence of clear indicators which enable a person to distinguish between two medicinal products. Also, the essential features to be looked into are the nature of goods of rival traders, the class of purchasers, their intelligence and mode of purchase.

The principles were reinforced in the Levi Strauss case where the high court pointed out that the goodwill and reputation of the multinational company would suffer if goods of local companies were passed off as those of the former. Here, with regards to the transborder reputation, the court held that it was essential to prove the reputation in India. Levi Strauss, a US-based MNC, is the registered proprietor of the trademark (TM) Levi’s in respect to readymade garments and cloth, including footwear and headwear. In this case, the court restrained a Delhi-based company from manufacturing and marketing footwear and related accessories bearing the trade mark Levi’s.

Passing off law, which is also called the common law remedy, is basically designed to protect the goodwill of the plaintiff in his business or his goods. It provides remedy against false representation tending to deceive customers. False representation may be made by statement, conduct, adopting distinctive marks, designs, get up or appearance.

While dealing with passing off what is essential is the presence of misrepresentation made by a person in the course of trade to customers, which is calculated to injure the business or goodwill of another trader which causes actual damage to the business or goodwill of the trader by whom the action is brought is essential.

The plaintiff may prove either intent to deceive or an actual damage, and it is enough if he shows that the conduct of the defendant was calculated to deceive or mislead the public. The plaintiff must show that there is a reasonable probability of his being injured by the defendant’s action. Common law remedy is available to the proprietor of an unregistered trade mark if it is infringed.

An action for TM infringement is a statutory right, conferred on the registered proprietor of a registered TM for the vindication of the exclusive right to its use in relation to those goods. Passing off is a common law remedy, an action for deceit that is passing off by a person of his own goods as those of another. In the case of infringement what needs to be proved is that the plaintiff was the first to adopt and use the mark and the mark is registered. In a passing off action the use of a mark for a sufficient long time so as to be known to the public is one of the conditions precedent to the filing of such action. The use by the defendant of the TM of the plaintiff is not essential in an action for passing off but is the sine qua non in the case of an action for infringement.

In infringement action, the issue is whether the defendant is using a TM which is the same or which is a colourable imitation of the plaintiffs registered mark. Whereas in the passing off goods, the important thing is whether the defendant is selling goods so marked as to be designed or calculated to mislead the purchasers that they are goods of the plaintiffs.

Passing off action is based solely on deception. In an infringement action the plaintiff must make out that the use of the defendant mark is likely to deceive but where the similarity between two marks is so close and the court reaches the conclusion that there is an imitation no further evidence is required to establish that the plaintiff’s rights are violated. If the essential features of the trade mark of a plaintiff have been adopted by the defendant, the fact that the get-up, packaging, other writing or marks on the goods show marked differences or indicate clearly a trade origin different from that of the registered proprietor of the mark is immaterial.

In an infringement, the defendant must use the offending mark on the same goods for which the plaintiff’s mark is registered. In passing off, the defendant’s goods need not be same it may be allied or even different. In an infringement action, an injunction can be issued against using the TM. In a passing off action the defendant is prevented not only from using the TM but is also stopped from using it in such a way to pass off his goods as that of another. In an infringement case the main issue that the court is concerned with is what the defendant is doing and not with what it might do.

The new law embodied in the 1999 Act has given statutory recognition to certain types of passing off, when the goods are different and also to concepts like dilution of TM. It has extended the scope of infringement to the use of a similar mark in relation to goods or reputation. It also includes the use of the mark as a trade name or as a part of the business name or used in labelling or packaging and its use in comparative advertisement to take advantage of the reputation. The new Section also recognises an infringement in terms of affixing of the mark to goods or its packaging, offering or exposing for sale or stocking such goods or offering or supplying of services under the mark or the use of such mark in business papers or advertising. The purpose of such extension is to give statutory recognition with respect to the protection of the reputation of the registered TM which were formerly available only in a passing off action.

The statutory recognition and protection of well known TMs and tests for their determination have also been inserted so as to protect the interests of persons who have adopted and used the mark in bonafide manner. The new law defines well-known TMs in relation to any goods or services, a mark which has become so to the substantial segment of the public which uses such goods or receives such services that the use of such TM in relation to other goods or services would be likely to be taken as indicating a connection in the course of trade or rendering of services between those goods or services and a person using the mark in relation to the first mentioned goods and services.

The jurisdiction of district court to entertain suits for infringement and passing off has been made same as for infringement of copyright thus enabling a plaintiff to file the suit in the district court within whose jurisdiction he resides or carries on business. There has also been substantial enhancement of punishments for offences relating to trade marks and false description.

The Indian economy is flooded with various changes so incorporated with regards to the various obligations imposed by the World Trade Organisation (WTO). The Trade Mark Act 1999 is no different. In fact, all the changes incorporated in it are planned meticulously to safeguard the interests of bonafide users from litigation and harassment by registered owners of the trademark apart from protecting the purchasing public from fraud. As soon as the new law is notified there will be a maddening rush for its registration, thus enlarging the scope of passing off and infringement remedy.

(The writer is managing partner, Singhania & Partners)