In the business and branding world, a trademark is a thing of great value that can differ one company's goods or services from another's. A registered or unregistered trademark is some unique identifier that customers associate with a particular source, quality, or reputation. But what about when someone tries to benefit from the goodwill and reputation of another's trademark? That is where the doctrine of passing off comes in.
What is Passing Off Under Trademark?
Passing off is a legal claim that can be filed when one party passes off the goods or services being sold to the public as those belonging to, or identical with, another. In other words, passing off involves misleading the public to believe that the goods or services being sold belong to someone else. The aim here is the protection of goodwill and reputation of a business, even though the trademark in question is not registered.
In simpler terms, passing off occurs when a business "passes off" its products or services as those of another, intending to deceive customers or confuse them into believing they are getting something of the same origin, quality, or standard.
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Section 27 of The Trade Marks Act, 1999
Passing off is a common law action. This means it has evolved through judicial decisions. Passing off claims can be brought under the Trade Marks Act, 1999, in India even if the trademark of the aggrieved party is not registered.
Although the Indian Trade Marks Act, 1999 does not give a definition to passing off, Section 27(2) states that nothing in this Act shall affect the right to take or continue an action against another for passing off. This section recognizes the need to preserve the goodwill and reputation of unregistered marks.
Section 27 of The Trade Marks Act, 1999 has to do with the infringement of an unregistered trademark. It has two sub-sections:
Sub-section (1)
No suit for infringement of an unregistered trade mark:
This section prohibits any legal action (like a suit) for the infringement of a trade mark that is not registered.
Meaning: If your trademark is unregistered, you cannot file a suit in court to prevent someone from using a similar mark or claim damages for the infringement of your trademark.
Also, Learn What are Relative grounds for refusal of Trademark Registration under Section 11 of the Trade Marks Act, 1999
Sub-section (2)
Passing off action not abated:
While you can't file a suit for an infringement of an unregistered trademark, there is one exception: passing off.
Passing off refers to the misrepresentation of goods or services to mislead customers into thinking they come from another person or organization. You can even use a legal cause of action in passing off even if your mark is not registered, against the business, if it has a mark that makes people think its goods/service is connected to or is actually identical to your business.
Meaning: The remedy of passing off is still available if someone is false representing his goods or services to the public as if they belong to you.
Summary
No action can be availed of for infringement of unregistered trademarks.
Passing off is still a valid cause of action even if it is an unregistered trademark.
Key Elements of Passing Off Under Trademark
For a successful passing off claim, the plaintiff must establish the following three essential elements:
Goodwill or Reputation: The claimant needs to prove that there has been goodwill or reputation developed within the market. In proving this, the case will be supported by demonstration through the use of distinctive names, logos, packaging, and other marks that the public would associate with the goods and services of the claimant.
Misrepresentation: The defendant should have made some kind of misrepresentation, either by using a similar mark or by duplicating some aspect of the plaintiff's trade dress (product design, packaging, etc.). It can be done either willfully or unconsciously but must create confusion in the minds of the public about the origin of the goods or services.
Damage to Reputation or Goodwill: The passing off must have caused or be likely to cause damage to the plaintiff's reputation or goodwill. This could appear as consumer confusion, loss of sales, dilution of brand value, or damage to the reputation that the plaintiff has created over time.
Know What is a Class in Trademarks
Legal Remedies for Passing Off
If a party proves a passing off claim, they are entitled to several remedies, including:
Injunction: A preliminary and permanent injunction can also be directed through a court order such as enjoining the defendant not to further his passing off. Mostly the first sought remedy to save a brand from further harm against that brand.
Damages: Damages may include compensation for lost sales or even for damages inflicted on their brand and reputation, lawyer fees of all forms.
Account of Profits: The defendant can be liable to account for profits he may have made resulting from the passing off. It simply means the defendant should pay over the profits made by using the misleading mark.
Destruction of Infringing Goods: The Court may order the destruction or delivery of goods or services by the defendant if those goods or services pass off the plaintiff's goodwill.
Also, Learn about Which are the Best IPR Law Firms In India
Types of Passing Off
Passing off can take many forms. Some common examples include:
1. Direct Passing Off
Direct passing off is when a defendant passes off his goods or services as that of the plaintiff, in such a way that consumers are misled into believing that the goods or services originated from another source. The defendant seeks to reap the reputation, goodwill, and consumer recognition of the plaintiff's trademark.
Example:
A company selling watches using a logo and branding that is remarkably similar to that of a well-known brand such as Rolex, in a hope that customers will buy it, thinking it to be the real Rolex product, would involve direct passing off.
2. Indirect Passing Off
Indirect passing off occurs in a situation where the defendant either uses a name, logo, design, or packaging that relates to the plaintiff's goods and services but does not pass for the plaintiff's trademark. In this case, the defendant can't copy the trademark word to word, but uses visual elements or advertising strategies that make consumers believe there is some affiliation between the two brands.
Example:
A company selling shoes may use a similar-looking logo or tagline, and mimic the exact color scheme or design used by Nike. The logo may not be identical, but the packaging and branding might be close enough to lead consumers to think they are purchasing from Nike.
3. Reverse Passing Off
Reverse passing off is when the defendant sells goods or services originally belonging to the plaintiff but removes or alters branding or trademark and passes off those goods or services as his own.
Example:
A smartphone manufacturer may purchase parts or designs from Apple, assemble a phone and strip off the Apple-branded information from it, selling them under a different company's banner. The consumers are convinced to believe that the smartphones originated from an alternative brand where, in fact, the basis came from Apple's design and technology.
Passing Off vs. Trademark Infringement
Both passing off and trademark infringement are legal doctrines that aim to protect business rights from unfair competition. Though alike in the goal of preventing consumer confusion, they do differ in various important ways. Let's break down the main differences between passing off and trademark infringement:
Notable Passing-Off Cases
There have been several landmark cases in India and around the world that have shaped the legal understanding of passing off:
Amritdhara Pharmacy v. Satyadeo Gupta (1963)
One of the leading cases on passing off in India, where the plaintiff was able to successfully prove passing off based on the similarity of packaging and name, even though the trademark was not registered.
Cadbury v. Neeraj Food Products (2011)
A case where Cadbury sued a competitor for using packaging and marketing that closely resembled Cadbury’s iconic chocolate products. The court ruled in favour of Cadbury, finding that the defendant’s actions amounted to passing off.
Also, Get to Know How to Check Trademark Availability
Summary
Passing off is a core legal doctrine that has evolved to protect businesses from unfair competition and deception in the marketplace. Even if a company does not possess a registered trademark, it can safeguard its reputation and goodwill through passing off principles. The knowledge of principles of passing off and enforcing rights is vital for any business wanting to protect its brand identity and maintain consumer trust.
Passing Off Trademark FAQs
Q1. What is passing off in trademark law?
Passing off is a misrepresentation that goods or services are the goods or services of another with intent to deceive or likely to deceive.
Q2. Do I need a registered trademark to file a passing off case?
No, you can file a passing off case if you have goodwill in your unregistered mark.
Q3. What are the elements of passing off?
The three essential ingredients are goodwill, misrepresentation, and damage to reputation or goodwill.
Q4. How does passing off differ from trademark infringement?
Passing off can be used for unregistered marks, whereas trademark infringement can only be used for registered trademarks.
Q5. What remedies can be claimed in passing off cases?
Remedies include injunctions, damages, accounts of profits, and destruction of infringing goods.
