Law of Passing off in India is a tort actionable under common law and mainly used to protect the goodwill attached with the unregistered trademarks. It is founded on the basic tenet of law that one should not benefit from the labour of another.
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Passing off is not defined in the act. It is defined in section 27 (2), 134 (1) (c) and Section 135 of Trademarks Act. Section 134 (1) (c) refers to jurisdiction/power of District courts to try the suit and even issue injunction in matter pertaining to Passing off suits. The plaintiff is supposed to establish its case and satisfy the court concerned the irreparable loss/injury caused to them.
Why Passing Off Necessary
The trademark 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
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.
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.