Author- Kimaya Dalvi
A Trademark’s unauthorized use that could lead to consumer confusion or deception is illegal under the legal doctrine of trademark passing off. It is a common law tort that aims to defend a company’s reputation and goodwill and stop unfair competition.
Passing off is defined by The Trademark Act, 1999 as any false statement made by a person in the course of trade or commerce that is likely to mislead or confuse the public as to the source, caliber, or features of the goods or services.
In many jurisdictions, passing off is considered a form of intellectual property infringement and is actionable in court. To establish a claim of passing off, the plaintiff must demonstrate three elements:
- The existence of goodwill or reputation associated with the trademark or trade name: The plaintiff must demonstrate that their trademark or trade name has a reputation and goodwill in the marketplace, which is associated with their products or services.
- Misrepresentation by the defendant: The plaintiff must demonstrate that the defendant has made a false or misleading representation that their products or services are associated with the plaintiff’s trademark or trade name.
- Damage or likelihood of damage: The plaintiff must show that the defendant’s misrepresentation caused them to sustain damage, or that they will likely sustain an injury in the future. This harm can take the shape of reduced sales, reputational harm, or other forms of harm.
The plaintiff must show that the defendant’s application of the trademark or trade name is probably leading customers astray to establish passing off. The two marks’ likeness or a false assertion that the defendant’s goods or services are connected to the plaintiff’s mark may confuse.
Passing off can take many different forms. For instance, it might involve using a mark that is substantially similar to a competitor’s competitors or using a mark that is the same as or similar to one on goods or packaging. Passing off could also take place when a product’s distinctive elements, such as its packaging or design, are imitated.
To defend against a passing-off claim, the defendant may argue that there is no likelihood of confusion between their mark and the plaintiff’s mark. Alternatively, they may argue that they have not made any misrepresentations and that any similarities between the two marks are purely coincidental.
Case Laws
Durga Dutt Sharma v. Navaratna Pharmaceutical Laboratories
Facts: Durga Dutt Sharma was the proprietor of a medicinal preparation for hair oil called “Navratna Tel,” which had been in use since 1924. Navaratna Pharmaceutical Laboratories started selling a similar preparation under the name “Navaratna Tel” in 1952.
Durga Dutt Sharma filed a suit against Navaratna Pharmaceutical Laboratories alleging that their use of the name “Navaratna Tel” was deceptively similar to his trademark “Navratna Tel,” and was likely to cause confusion and deceive the public.
Issues: The main issue, in this case, was whether the defendant’s use of the name “Navaratna Tel” constituted passing off and was likely to confuse consumers.
Arguments: The plaintiff argued that the name “Navaratna Tel” was deceptively similar to his trademark “Navratna Tel,” and that the defendant’s actions were calculated to pass off their goods as those of the plaintiff. The plaintiff also argued that his trademark “Navratna Tel” had acquired a distinctive character because of long and continuous use.
The defendant argued that the name “Navaratna Tel” was not distinctive, as it was commonly used in the Ayurvedic medicine trade. The defendant also argued that they had not copied the plaintiff’s mark and that their product was different from the plaintiff’s.
Legal Framework: In making its decision, the court referred to the common law of passing off. A common law tort called passing off shields a person’s reputation and goodwill from unfair competition. In situations involving passing off, the court takes into account the plaintiff’s damages suffered or anticipated as a consequence of the defendant’s activities, in addition to if the act of the defendant is likely to confuse customers.
Judgment: The court held that the defendant’s use of the name “Navaratna Tel” amounted to passing off. The court considered the nature of the goods, the mode of purchasing, and the class of purchasers, and found that the defendant’s mark was likely to cause confusion and deceive the public.
The court observed that the plaintiff’s trademark “Navratna Tel” had acquired a distinctive character because of long and continuous use and that the defendant’s mark was deceptively similar to it. The defendant intentionally used the name “Navaratna Tel” to sell off their products as those of the plaintiff, the court found. The court granted an injunction restraining the defendant from using the name “Navaratna Tel” for their product and ordered them to pay damages to the plaintiff for the losses suffered due to the infringement.
Significance: The case established the importance of protecting a trademark owner’s goodwill and reputation from unfair competition through passing off. It also clarified that a trademark need not be registered to be protected and that a mark could acquire distinctiveness through long and continuous use. The case emphasized the importance of considering the likelihood of confusion among consumers while determining whether to pass off. The case has been cited in several subsequent trademark cases in India
Why should there be laws regarding trademark passing off?
- Protecting reputation: Trademark passing off helps protect the reputation of a business that has built a strong brand and a loyal customer base. By preventing others from misrepresenting their goods or services as those of the established business, it ensures that consumers continue to associate the brand with high quality.
- Promoting fair competition: Trademark passing off promotes fair competition by preventing businesses from gaining an unfair advantage by misleading consumers into believing that their goods or services are associated with a more established business.
- Encouraging innovation: Trademark passing off encourages innovation by incentivizing businesses to invest in building strong brands and reputations. This helps create a competitive market that rewards quality and innovation.
- Protecting consumers: Trademark passing off protects consumers from confusion and deception by ensuring that they can trust that the goods or services they are purchasing are associated with the business they intended to support.
Conclusion
Using a similar or identical trademark or logo to misrepresent one company’s goods or services as those of another is known as trademark passing off, which is a form of unfair competition. The purpose of this misrepresentation is to lead consumers to believe that the lesser-known company’s products or services are linked to the well-known company. The plaintiff must demonstrate that they have a reputation in the market, that the defendant made a false statement likely to confuse consumers, and that they have suffered or would soon suffer harm as a result to establish a claim for passing off. In many nations, passing off is considered a tort and can be punished by injunctions, financial penalties, or an account of profits.
