Passing off

Legal provision

• Trade Marks Act, 1999, section 27(2): the Act does not affect rights of action against any person for passing off goods or services as the goods or services of another.
• Section 134: a suit for infringement or passing off can be filed in the District Court within whose limits the plaintiff resides or carries on business.
• Section 135: reliefs in a suit for infringement or passing off: an injunction, damages or an account of profits, and delivery up or destruction of infringing labels and marks.
• Specific Relief Act, 1963, sections 36 to 42: injunctions.
• No Indian Act defines passing off. It is a common law tort developed by courts.

Meaning and definition

Passing off is the tort committed when a trader makes a misrepresentation in the course of trade. The misrepresentation leads, or is likely to lead, the public to believe that his goods or services are those of another trader, or are connected with that trader. The wrong is to the other trader's goodwill, which is the attractive force that brings in custom.

Detailed explanation

Step 1: The classic trinity

1. Goodwill. The claimant has a reputation in the market for his name, mark or get-up. A trader with no reputation cannot sue.
2. Misrepresentation. The defendant, in the course of trade, leads the public to believe that his goods are the claimant's or are connected with him. It need not be intended. Innocent confusion is actionable, but intention strengthens the case.
3. Damage. The claimant suffers, or is likely to suffer, damage to his goodwill, such as lost sales, loss of distinctiveness or harm to reputation.

Step 2: Lord Diplock's five characteristics

Erven Warnink BV v. J. Townend & Sons (Hull) Ltd (The Advocaat Case) is the Advocaat case. The House of Lords protected the name "advocaat" for the genuine Dutch drink against a cheaper imitation drink made by the defendants and sold under the same name. Lord Diplock set out five characteristics of passing off:

1. a misrepresentation;
2. made by a trader in the course of trade;
3. to prospective customers or ultimate consumers of goods or services supplied by him;
4. which is calculated to injure the business or goodwill of another trader, in the sense that this is a reasonably foreseeable consequence; and
5. which causes actual damage to the business or goodwill of the trader bringing the action, or will probably do so.

The case also showed that the goodwill of a class of traders in a distinctive product can be protected.

Step 3: The Jif Lemon case

In Reckitt and Colman Products v. Borden (1990), the House of Lords restated the five characteristics as the three-part classic trinity: goodwill, misrepresentation and damage. The defendant sold lemon juice in a plastic lemon, like the claimant's Jif lemon. The House of Lords held that the get-up was likely to deceive the public.

Step 4: How courts decide deception

• The court compares the marks as a whole, from the viewpoint of an average buyer with imperfect memory.
• In Cadila Health Care v. Cadila Pharmaceuticals (2001), the Supreme Court held that for medicines the test of confusion is stricter, because a mistake can harm health. It listed factors such as the nature of the goods, the class of buyers, the degree of care in buying and the nature of the marks.
• In Laxmikant V. Patel v. Chetanbhai Shah (2002), the Supreme Court held that a trader who has used a business name or mark can stop another from using it. Delay alone does not cause an injunction to be refused where the use is dishonest.
• In Satyam Infoway v. Sifynet Solutions (2004), the Supreme Court held that domain names can be protected by passing off.

Step 5: Defences

• No goodwill in the claimant's mark in that market.
• No likelihood of confusion, because the marks or goods are different.
• Honest concurrent use of one's own name in a business.
• Delay and acquiescence by the claimant in the face of long open use.
• Descriptive or generic words that no trader can claim alone.

Step 6: Remedies

• Injunction. The main remedy, to stop confusion, including an interim injunction on the test in American Cyanamid.
• Damages for the loss caused.
• Account of profits. The defendant hands over the profits that he made.
• Delivery up or destruction of infringing goods, packaging and labels.

Don't confuse: passing off and trade mark infringement

Common mistakes

• Saying that a registered mark is needed. It protects unregistered goodwill.
• Saying that intention to deceive is essential. Innocent confusion is actionable.
• Forgetting that goodwill must exist in the market where the defendant trades.
• Mixing passing off with trade mark infringement.
• Forgetting the statutory preservation in section 27(2) of the Trade Marks Act.

Apply it

Leading case laws

• Erven Warnink BV v. J. Townend & Sons (Hull) Ltd (The Advocaat Case) (1979)

  Facts. An imitation drink was sold under the name "advocaat" and was not the Dutch original.

  Principle. Lord Diplock set out five characteristics of passing off. The goodwill of a class of traders in a distinctive product is protected.

  Significance. The Advocaat case.

• Reckitt and Colman Products v. Borden (1990)

  Facts. A rival sold lemon juice in a plastic lemon, like the claimant's Jif lemon.

  Principle. The test is the classic trinity: goodwill, misrepresentation, damage.

  Significance. The Jif Lemon case.

• Cadila Health Care v. Cadila Pharmaceuticals (2001)

  Facts. Two companies sold medicines under similar names.

  Principle. For medicines the test of likely confusion is stricter.

  Significance. Leading Indian case on deceptive similarity.

• Satyam Infoway v. Sifynet Solutions (2004)

  Facts. A dispute over similar internet domain names.

  Principle. Domain names are protected by passing off.

  Significance. Passing off on the internet.

How to write this answer in the exam

Key points to remember

• Passing off protects unregistered goodwill. Registration is not needed.
• Classic trinity: goodwill, misrepresentation, damage.
• Innocent confusion is actionable.
• Section 27(2) of the Trade Marks Act preserves the action.
• Remedies: injunction, damages, account of profits, delivery up.

Quick self-test

Related topics

• Torts against Business Relations
• Injurious falsehood
• Digital Torts