The Concept of Passing off in the Indian Trademarks Act, 1999

The notion of Passing off in the Indian Trademarks Act, 1999 seeks to safeguard the goodwill associated with unregistered trademarks. Passing off is a common law tort which occurs when a person sells his products as the goods of another, wherein the trademark owner can take legal action to remedy this violation. This idea was developed in the seminal English case of Perry v Truefitt (1842) where the Court held that “a man is not to sell his own goods under the pretense that they are the goods of another man”. The concept of the Passing Off in Trademark Act has since expanded to include various commerce, services, business, and non-business activities.

Passing off is especially important in circumstances where the owner’s trademark has not been registered. However, establishing passing off can be difficult since claimants must demonstrate the possibility of public misunderstanding about the origin of the products or services. Finally, the essential question in passing off cases is whether the defendant’s behavior is such that it causes uncertainty and possibly harms the plaintiff’s goodwill.

In this article, we will examine the complexities of passing off under the Indian Trademarks Act of 1999, including its evolution, legal ramifications, and the difficulties involved in proving a successful passing-off claim. We will also explore the significance of passing off in safeguarding intellectual property rights. Moreover, we will also look at the available remedies for trademark owners in cases of deception and unfair business practices.

What is Passing off in Trademark Act?

While passing off is not defined under the Indian Trademarks Act 1999, Section 27 recognizes the common law rights of a Trademark owner wherein the owner can initiate legal proceedings against any person for passing off goods or services as the goods of another person or as services provided by another person. 

Passing off occurs when illegal use of a trademark or trade name in such a way that the public is misled into believing that the products or services supplied by one party are genuinely those of another. This misrepresentation can harm the goodwill and reputation of the legitimate owner of the trademark. 

Passing off is recognized under the Act as a way of protecting unregistered trademarks and preventing unfair competition. When a person offers products or services under a deceptively similar mark to another’s existing mark, it can cause consumer confusion and dilute the distinctiveness of the original trademark. Passing off in Trademark Act provides the aggrieved party a legal remedy to seek retribution and prohibit such unlawful use of their mark.

Furthermore, passing off encompasses a larger variety of commercial operations, including trade, business, and non-business initiatives, in addition to commodities and services. This growth reflects the changing nature of unfair commercial practices as well as the necessity to protect against misrepresentation in a variety of economic and social interactions.

Under the Indian Trademarks Act of 1999, the idea of passing off is a critical instrument for safeguarding trademark owners’ rights, preserving the integrity of their marks, and maintaining consumer trust and confidence in the marketplace. We shall explore the legal complexities of passing off, its repercussions for trademark owners, and the hurdles connected with proving a passing off claim in the next portions of this blog.

Types of Passing Off in Trademark Act

Passing off can take several forms in trademark law, each with its own set of obstacles and ramifications for trademark owners. There are many categories of passing off, reflecting various ways in which unlawful use of trademarks can cause confusion and impair the goodwill of legitimate owners.

1. Direct Passing Off:

Direct passing off happens when a person intentionally uses an identical or deceptively similar mark to that of another party, causing consumer confusion. This sort of passing off entails a blatant and purposeful misrepresentation of the origin of products or services, which frequently results in damages to the original trademark’s reputation and distinctiveness. 

2. Indirect Passing Off:

Indirect passing off occurs when one party uses a trademark or trade name that, although not identical, produces confusion or connection with another party’s mark. This might happen due to slight similarities in the overall impression provided by the marks, causing consumers to credit products or services to the wrong source incorrectly. Indirect passing off presents difficulties in determining the level of misunderstanding and the subsequent impairment to the original mark’s goodwill.

3. Reverse Passing Off:

Reverse passing off happens when a trader replaces the trademark owner’s products and rebrands them for sale to customers as their own, making the public believe that the  goods are its own. In this case, the public would come to associate the qualities of the trademark owner’s product with the substituted product and the original trademark’s goodwill would become diluted over time.

Establishing Criteria for Passing Off in Trademark Act

Several important criteria must be established in order to establish a successful passing off claim under the Trademark Act, 1999, to demonstrate the presence of misrepresentation and the resultant injury to the goodwill of the lawful trademark owner. These aspects serve as the foundation for establishing passing off before a court of law.

1. Goodwill and Reputation:

The existence of goodwill and reputation connected with the unregistered trademark is important to a passing-off claim. The claimant must show that the trademark in question has acquired distinctiveness and familiarity among consumers, resulting in the formation of a valuable reputation and goodwill in the marketplace. This goodwill serves as the foundation for enforcing the trademark owner’s rights against unlawful use and misrepresentation.

2. Misrepresentation:

At the heart of passing off claims is the element of misrepresentation. It involves the unauthorized use of a trademark that confuses consumers about the origin of products or services. The claimant must show that the defendant’s actions have or are likely to cause public association with the claimant’s trademark.

3. Damages:

In addition to demonstrating deception and the likelihood of confusion, the claimant must also establish actual or potential harm. This can be in the form of financial loss, reputational harm, or dilution of the trademark’s distinctiveness and goodwill. Demonstrating such injury to the plaintiff’s business is critical in proving the passing-off claim.

What is the difference between Passing Off and Infringement of a trademark?

Infringement and passing off trademarks are two distinct concepts. While Infringement is a statutory remedy, passing off is a common law remedy. Both aim to protect the interests of business owners and the integrity of trademarks, operating through different legal mechanisms. 

Trademark infringement refers to the breach of a party’s exclusive rights over a registered trademark. The only prerequisite for initiating an infringement action is registration on account of which the trademark owner acquires exclusive rights to use the trademark for goods/services the mark is registered for. A trademark infringement occurs when a party uses an identical or a deceptively similar trade mark for marketing similar goods and services as that of the registered proprietor. 

Whereas the concept of passing off grants the trademark owner the right to initiate legal action against unauthorized use of their unregistered trademark.

In essence, the distinction between passing off and trademark infringement is determined by the trademark’s registration status. When a person registers a trademark and another party infringes upon it, a case of trademark infringement occurs. In contrast, if someone misuses an unregistered trademark, it constitutes passing off. Understanding this distinction is critical for resolving trademark disputes and enforcing applicable legal provisions.

Legal Remedies for Addressing Passing off in Trademark Law

In instances of passing off, a variety of remedies are available to preserve the trademark owner’s rights. These remedies are critical for restoring the trademark’s integrity and compensating for the losses caused by such passing off. The following are the remedies available in passing off actions:

1. Injunction:

Seeking an injunction to prevent the defendant from unauthorized use of the plaintiff’s trademark is a remedy in passing-off cases. An injunction prevents further unlawful use of the trademark, protecting the claimant’s goodwill. Under Section 135 of the Act, a party can seek an injunction to restrain the defendant from committing passing off.

  • Anton Piller Order: This form of injunction provides for partial orders to investigate the defendant’s premises. This order is issued when there is a risk of the defendant destroying items bearing the plaintiff’s trademark.
  • Mareva Injunction: A Mareva injunction freezes the defendant’s assets to prevent them from dissipating assets to evade the judgment.
  • Interlocutory Injunction: One of the most commonly granted forms of injunction is the interim injunction. This type of injunction prevents or compels the defendant for indulging in certain acts pending final determination of the case. 
  • Perpetual Injunction: The final judgment grants a permanent injunction that bars the defendant from infringing the trademark owner’s rights.

2. Infringing Goods Destruction:

Apart from the above, the court may also issue a seizure order prohibiting the defendant from the sale of such unauthorized goods. In order to put an end to such trademark misuse, the court poses a requirement upon the defendant to return the goods and/or destroy infringing items in possession of the defendant. 

3. Damages and Accounts of Profits:

Trademark owners can seek damages to compensate for genuine losses incurred as a result of passing off. This involves monetary losses as well as damage to the reputation of the brand. Depending on the nature and circumstances of each case, courts assess damages and compensate the rightful owner for losses incurred.

Judicial Reference

Syed Mohideen v. P. Sulochana Bai [(2016) 2 SCC 683

This Judgment is a landmark decision rendered by the Supreme Court of India where, inter alia, the Court held that a passing off action can even lie against a registered proprietor of a trademark. 

The Respondent was in the business of selling halwa in the name of ‘Iruttukadai Halwa’ since 1900 in Tirunelveli. The respondent had further obtained registration for the trademark ‘Iruttukadai Halwa’ as per the provisions of the Indian Trademarks Act

The Appellant registered the name ‘Tirunelveli Iruttukadai Halwa’ in 2008 and also sold halwa under this trade name. The Honorable Supreme Court had to decide between the rights of two registered owners and while doing so, the Court held that a passing off action can even lie against a registered proprietor of a trademark. 

The court went on to elaborate that a trademark exists independently of the registration which merely affords additional protection under statutory law. In case of conflict between two registered proprietors, the evaluation of the better rights in common law is essential as the same would determine whose rights between the two registered proprietors are better and superior. The Respondent won the court case as the court recognized the rights of prior user as superior to the registration. Even the registered proprietor was unable to disturb or interfere with the rights of the prior user, as concluded by the court.

Conclusion

While Trademark Registration is crucial and aids in protection of the interests of business owners, the concept of Passing off serves as a remedy for the protection of unregistered trademarks. Making a passing off claim is not particularly simple and involves numerous complexities but however, it protects overall looks of a product/service in the absence of registration and even when trademarks are not closely similar to establish infringement, a person will succeed if they are able to prove overall similarities between the goods/services in question. 

Author: Gautham Balaji, Trademark Attorney

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