INTRODUCTION 

Passing off action refers to the unauthorised use of goods, services, or the goodwill attached to another person’s business, which amounts to misrepresentation. In a way, such authorised use causes confusion or deception in the marketplace, leading to unfair competition.

In legal parlance, the action of passing off takes place when one party misrepresents the goods or services of another person as their own. It leads to confusion among customers and consumers and is detrimental to the business of the original or legitimate owner of the trademark.

MEANING OF TRADEMARKS

A trademark serves as an indicator that a specific business's personalised goods are unique from those of other companies. To put it simply, trademarks are valuable forms of intellectual property because they are associated with quality and consumer expectations for a product or service. It, being one of the most popular forms of intellectual property, conveys to buyers the source and nature of the products, and it helps build a reputation throughout the business.

The trademark defines the source of the product and makes it unique from its substandard replicas or substitutes present in the market.

A mark is a symbol, and it is used in the course of trade to indicate that there is a business connection between the person or entity, even if it's a corporate entity that uses the mark concerning such goods or services that are tagged with such a mark. Once this trademark is registered, it preserves exclusive markets and maintains profit margins by providing a market axis and freedom to operate. The registration prevents the other businessman from taking any unfair advantage of the reputation of another mark-bearing goods or services, as it provides remedies for such conflicts in the record.

The World Intellectual Property Organisation handbook on intellectual property information and documentation defines 'trademarks' as a sign that an individual is the goods of any given enterprise that distinguishes them from the goods of their competitors.

With regards to trademarks, Article 15 of the Trade-related Intellectual Property Rights Agreement states that it is any sign or even the combination of signs that is capable of distinguishing the goods and services of one undertaking from those of other undertakings that are capable of constituting a trademark. The provision goes on to state that such signs, especially words including personal names, numerals, security elements, colour letters, or combinations of such signs, qualify for registration as a trademark.

The Trademarks Act, 1999, defines 'trademarks' under Section 2(1)(zb) as a mark that is capable of being represented graphically and which is also capable of distinguishing the goods and services of one person from others. Furthermore, it states that trademarks include the shape of goods, their colour combinations, and their packaging.

MEANING OF PASSING OFF 

"If a person sells his goods as the goods of another," the trademark owner can take action, as this constitutes passing off. Passing off is used to protect the goodwill associated with an unregistered trademark. When the owner registers the trademark and infringement occurs, it becomes a suit for infringement; if the owner does not register the trademark and infringement occurs, it becomes a case of passing off.

The principle of passing off, i.e., "Nobody has the right to represent his goods as the goods of somebody else," was decided in the case of Perry v. Truefitt (1842) [Perry v. Truefitt, 49 Eng. Rep. 749 (1842)]. The passing-off law has changed over time. Previously, it was restricted to depicting one person's goods as another's. Later, it was extended to trade and services. This was later expanded to business and non-business activities. Now, it applies to many forms of unfair trade and unfair competition in which one person's activities harm the goodwill associated with another person's or group's activities.

It is challenging to prove passing off, as claimants must demonstrate that at least some members of the public are at risk of confusion between the two businesses. The most crucial question in passing off is whether the conduct of the defendants is such as to confuse the public into believing that the business of the defendants is a plaintiff's, or to cause confusion between the business activities of the two. This Act of misrepresentation often damages a person's or a business's goodwill, causing financial or reputational harm.

Passing off action finds its origin in the common law principle, and the damages claimed in this action are unliquidated damages. The common law principle states that any person should not sell their goods, deceiving the other in a manner that person is buying, under the pretence that those goods are of another person.

Although the passing-off action is not defined in the Trademarks Act, 1999, it is referred to in Section 27 of the Act. The provision recognises the rights of a trademark owner to take action against any person who passes off his goods as those of another person.

CHARACTERISTICS OF PASSING OFF 

The act of passing off depends entirely on a business's or its owner's goodwill and reputation. In light of the above-mentioned statement, the characteristics of the passing-off action are as follows:

• There has to be a misrepresentation of the owner's trademark.

• The misrepresentation must be made by the concerned person in the course of or furtherance of trade.

• This misrepresentation is made to the prospective consumers or customers who are the ultimate customers of goods or services supplied by the owner.

• This misrepresentation must have been done with intent and should have resulted in injury to the business or goodwill of the original owner of the trademark.

The substance of the remedy of passing off action is that the concerned goods or services are, in effect, speaking for themselves, a false story that is misleading the ultimate consumers or customers.

ORIGIN OF PASSING OFF 

As the passing off action originated as a common law principle, it was born in the United Kingdom. The reign of Elizabeth I was in the 16th century, when the action was legally recognised. It was also called a classical trinity, encompassing goodwill, representation, and the likelihood of damage as its essential elements. However, the protection under the passing-off remedy was only available to those who had registered their trademarks at that time. The common law principle applies to all trademarks, whether registered or not.

In India, the passing off action is still not a statutory remedy, as the substantive Trademarks Act of 1999 addresses only its procedural aspects and does not define it in toto. Time and again, the substantive meaning of the term passing has not changed in a distinct way from what was prevalent when it was initially developed.

INTERNATIONAL STANCES OF PASSING OFF 

Passing off, as is known and understood, means that the goods of the defendant are falsely represented as the goods of the plaintiff, usually by using a plaintiff's indication as a means of misrepresentation. The root of passing off lies in the tort of deceit (the tort of fraudulent misrepresentation or deceit is a legal action that arises when one party makes a false statement to another knowingly with the intention to deceive). The object of the law is to protect the goodwill of the plaintiff's business, his goods or services, the work that he produces, or something of that kind.

Passing off prevention originated in the United Kingdom's common law. In the United States of America, this practice is called palming off and is commonly considered unfair competition elsewhere.

KINDS OF PASSING OFF 

There are two kinds of passing off:

Extended passing-off: Misrepresentation is a particular quality of a product or service that damages the harmony or goodwill of another person or business.

Reverse passing off: Where a trader markets, sells or produces the goods or services of another person or business. Reverse passing off arises when the defendant markets the plaintiff's products as his own. This act of reverse passing off involves substituting the concerned trademark.

What actually happens here is that a person does not manufacture his own goods but purchases products from a different source and sells them under his own trademark.

ELEMENTS OF PASSING OFF 

There are three basic elements of passing off. The three elements are also known as the Classical Trinity, as restored by the House of Lords in Reckitt & Colman Ltd v. Borden Inc. (1990) [Reckitt & Colman Prods. Ltd. v. Borden Inc., [1990] 1 W.L.R. 491 (1990)]. They are

1. Misrepresentation,

2. Goodwill, and

3. Damage.

NECESSITY OF TRADEMARKS AND PASSING OFF 

Where trademark law protects registered goods and services, passing off protects unregistered goods and services. The functions of both trademark and passing-off actions are similar, but the material factor here is whether the goods and services involved are registered or unregistered.

The Supreme Court highlighted the differences between the two, recognising the necessity of both in the case of Durga Dutt Sharma v. Navratna Pharmaceuticals (1960) [Durga Dutt Sharma v. Navaratna Pharm. Labs, A.I.R. 1965 S.C. 980 (1964)]. The apex court stated that the act of infringement is a statutory right conferred upon the registered owner of a registered trademark. The owner enjoys the exclusive right to use the trademark for the goods, while unregistered goods and services benefit from the defence of passing off.

An action for infringement fails where the plaintiff is unable to prove the registrability of the goods or services in question, or where the registration is invalid; by contrast, in an action for passing off, the imitation of the trademark becomes material.

REMEDIES OF PASSING OFF 

To succeed in passing off, the plaintiff must show that the defendant's misrepresentation has damaged the goodwill. In a passing-off action, the plaintiff can claim any of the following remedies:

• Apply for an injunction prohibiting the business from using your trademark or goodwill: An injunction to prevent further use of the trademark by the defendant. An interim injunction may continue until the claim has been thoroughly tested and is intended to avoid additional harm to the goodwill of the claimant during the intervening period. The injunction is an effective remedy for preventing infringement of registered or unregistered trademarks. Section 135 of the Trademark Act, 1999, provides injunctive relief. An injunction can be given in various types:

• Anton Piller Order: These are prior partial orders to inspect the defendant's premises. The court may order the plaintiff where the defendant is likely to destroy or dispose of materials which contain the trademark of the plaintiff.

• Mareva injunction: In such an order, the court has the power to freeze the assets of the defendant where the property is likely to be dissolved or cancelled, so granting judgment against him will not be enforced.

• Interlocutory Injunction: It is one of the most commonly used forms of an injunction. It acts to take action against the defendant based on the former violation. Interlocutor prohibition is an order to prevent the defendant from continuing to use the trademark, which leads to infringement of the unregistered trademark. It has the objective of preventing further infringement.

• Perpetual injunction: It is an injunction that prevents the defendant completely, for all time, from performing any act that violates the rights of the owner of the trademark. A perpetual injunction is usually granted when the case is finally settled.

• Infringing goods to be destroyed: A court-issued search and seizure order prohibits the defendant from delivering any goods or products bearing the brand name. Here, the court can direct the return of related material accounts and the destruction of all such goods.

• Sue for damages or seek to account for lost profits: Damages are compensation for the loss that the real owner of the trademark can recover from the defendant. The monetary value of financial loss or loss of brand reputation is recovered under damages. The amount of the damage and the account of lost profits will be awarded by the court after taking into consideration the actual and inevitable loss to the owner resulting from the passing off.

DEFENCE OF PASSING OFF 

Use of own name carefully: The defendant has the right to use his name, mark, or any symbol, and the fact that there may arise confusion. If any confusion arises, which comes to the attention of that defendant, it is the obligation of the defendant to take reasonable care to qualify the representation to avoid confusion among customers.

1. The name, sign, or other marks that are sought to be withheld are not specific to the plaintiff’s goods or business.

2. There is no presence of goodwill in the mark.

3. The plaintiff has given consent or encouraged the use of the mark.

4. A separate case of passing off.

5. The goods and services or business of the plaintiff and the defendant are entirely different. If both the defendant and plaintiff share the same trademark but are providing various goods and services or businesses, then they can take the defence in the case of passing off. For example, LLOYD is a trademark used by both the plaintiff and the defendant, but one is an educational institution, and the other provides electric appliances. So, in this case, one can use the defence of offering different services.

The passing off law is complicated, and it’s more complex and more expensive for the plaintiff to prove the claims than in trademark infringement cases. The plaintiff must prove goodwill, misrepresentation, and damage caused by the defendant.

CASES

Britannia Industries Ltd. v. ITC Ltd. (2017) [Britannia Indus. Ltd. v. ITC Ltd., 240 D.L.T. 156 (2017).]

In this case, the respondent, i.e., ITC Limited, filed a civil suit against the appellant, Britannia Industries Limited, for the infringement of the copyright of the trade dress of the respondents' product, Sunfeast Farmlite All Good, which is No Added Sugar and No Maida Digestive Biscuits. The court said that the appropriation of and exclusivity claimed vis-à-vis a get-up, and particularly a colour combination, stands on a different footing from a trademark or a trading name because colours and colour combinations are not inherently distinctive.

It should, therefore, not be easy for a person to claim exclusivity over a colour combination, particularly when the same has been in use only for a short while. It is only when it is established, even prima facie, that the colour combination has become distinctive of a person's product that an order may be made in his favour. The present is not such a case. When the first element of passing off, in our view, is not established, we need not examine the other aspects of misrepresentation and the likelihood of damage.

CONCLUSION

Trademark protection is necessary from a business perspective and to protect customers from fraud and cheating. The passing-off action applies to unregistered goods and services. The scope of passing off is broader than that of trademark infringement.

Even though the process and remedies for passing off suits are the same for both registered and unregistered marks, the burden of proof is greater in unregistered mark cases, as it is more challenging to establish goodwill and reputation. To allow unregistered trademarks, the Act provides limited relief to several users who would otherwise not be able to seek any legal remedy for infringement of their marks.

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