What is Passing Off and protection available to you against it?

Imagine pouring your heart and soul into building a brand. Night after night, you've worked tirelessly, crafting not just a logo but a promise, a symbol of quality and trust that your customers recognize and love. Now, picture waking up one morning to a startling reality: there's a shadow lurking in the marketplace, a doppelganger brand that's eerily similar to yours, leeching off your hard-earned reputation. In the following sections, we'll dive into what 'passing off' really means, why it's a critical issue for businesses, and the steps we can take to fight back and safeguard our brands. Join me on this journey of learning, empowerment, and resilience.

What is Passing Off?

“Nobody has any right to represent his goods as the goods of somebody else.” - Halsbury

Passing off is the act of using another person's trademark to represent that one's goods or services belong to the same trademark, i.e., suggesting that they have same quality, characteristics, goodwill and reputation. It is often confused that the right to take action against unfair use of trademark exists only against registered trademark. However, Section 27(2) of the Trade Marks Act, 1999 clearly suggests that it is present against unregistered marks as well.

Section 27: No action for infringement of unregistered trade mark. (1) No person shall be entitled to institute any proceeding to prevent, or to recover damages for, the infringement of an unregistered trade mark. (2) Nothing in this Act shall be deemed to affect rights of action against any person for passing off goods or services as the goods of another person or as services provided by another person, or the remedies in respect thereof.

It is based on the principle that “A man may not sell his own goods under the pretence that they are the goods of another man”, noted in NR Dongre v. Whirlpool Corporation, 1995. Supreme Court has in Cadila Healthcare Ltd. v. Cadila Pharmaceuticals Ltd., noted that “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”. So, right against passing off is independent of statutory right with holder. However, instead of protecting the interest of the owner of the trademark, the objective is to protect the interest of the consumer community (Consumer Distributing Co. v. Seiko Time Canada Ltd.). As noted by Lord Morris in Parker – Knoll v. Knoll international Limited, (1962) the underlining principle is that trading must not only be honest but must not be dishonest unintentionally

What are the elements to establish Passing Off?

Thus far we know that right against passing off is available even for unregistered trademarks (Section 27(2) of TMA,1999). The right-holder may initiate a suit for infringement, before the District Court having jurisdiction in the matter (refer CPC, 1908), arising out of passing off (Section 134.1.c), clearly mentions whether the plaintiff's mark is registered or not, the right exists.

Further, Section 135 lays down the reliefs available in such suits- 1) injunction, 2) damages, 3) account of profits, 4) delivery-up of the infringing labels and marks for destruction or erasure. The reliefs provided under the Section will help one guage the wide powers available with rightholder (whether registered or unregistered) to enforce their rights. One might ask, then why do we need trademark protection, if similar level of protection is available regardless of the status of protection accorded to the trademark. Well, to answer this, one must understand the types of infringement possible and the bundle of rights available with the trademark owners. This will be a subject matter of another blog.

Passing off is a common law tort, the essentials of the same have not been elaborated in the Act, however, over the years the concept has been elaborated to include: the "Classical trinity" as laid out in the case of Harrods v. Harrodian School, 1996- 1) reputation, 2) deception, and 3) damage.

The elements have remained the same in Indian precedents as well. In Baker Huges Ltd. v. Hiroo Khushalani, 2000, the Delhi High Court held that the plaintiff in an action of passing off must establish the following elements:

1. the plaintiff has acquired a reputation or goodwill in his goods, name or mark;
2. a misrepresentation, whether intentional or unintentional, which proceeds from the defendant by the use of the name of mark of the plaintiff or by any other method or means and which leads or is likely to lead the purchaser into believing that the goods or services offered by the defendant are the goods and services of the plaintiff; or that the goods and services offered by the defendant are the result of the association of the plaintiff;
3. the plaintiff has suffered or likely to suffer damage due to the belief endangered by the defendant’s representation.

Similarly, in the case of Satyam Infoway Ltd. v. Siffynet Solutions Pvt. Ltd. (2004), Supreme court reiterated the principle elements of establishing passing off:

1. The defendant must have sold its goods or offered its service in a manner which has deceived or would be likely to deceive the public into thinking that the defendant's goods or services are the plaintiff's. The action is normally available to the owner of a distinctive trademark and the person who, if the word or name is an invented one: invents and uses it. If two trade rivals claim to have individually invented the same mark, then the trader who is able to establish prior user will succeed. The question is, as has been aptly put, who gets these first? It is not essential for the plaintiff to prove long user to establish reputation in a passing off action. It would depend upon the volume of sales and extent of advertisement.
2. The second element that must be established by a plaintiff in a passing off action is misrepresentation by the defendant to the public. It is irrelevant whether the misrepresentation is intentional or unintential (relevant only to decide the quantum of punishment). One only needs to establish the likelihood of confusion in the minds of the public, (the word "public" being understood to mean actual or potential customers or users) that the goods or services offered by the defendant are the goods or the services of the plaintiff.
3. The third element of a passing off action is loss or the likelihood of it.

Is there a difference between passing off and infringement?

1. At the outset, our discussions will clearly higlight that right against infringement is a statutory right whereas, passing off is a common law tort recognised in trademark cases to safeguard the interest of trademark owners and customers.
2. Next, right against infringement is only avaiable in case of registered trademark whereas, passing off can be claimed against registered or unregistered trademark.
3. The use of TM by the plaintiff is a sine qua non in the case of passing off but not in infringement cases.
4. In the case of infringement, the use of TM by plaintiff is not necessary but to claim passing off the plaintiff has to estbalish goodwill and reputation.
5. This question was addressed by the Hon'ble Supreme Court in the case of Durga Dutt v. Navratna Pharmaceuticals Laboratories (1965).