Infringement and Passing Off of Trademarks under Trademarks Act: Meaning and Difference

Introduction

A trademark in relation to goods conveys to the general public and specifically to the consumers about the origin and quality of those goods, thereby acquiring reputation in the course of business and time. Therefore the concept of a trademark is the foundation of one’s business to distinguish from others. A good trademark is often the best salesman of the goods and is a visual symbol of goodwill and stamp of quality.

Every businessman who has spent considerable amount of money making his mark popular will try to secure it from usage by unscrupulous competitors. Protection of trademark is important not only from the business point of view but also for the protection of consumer from fraud and imposition.

The Trademark Act of 1999, both in letter and spirit, lays down that, while it encourages fair trade in every way and aims to foster and not to hamper competition, it also provides that no one, especially a trader, is justified in damaging or jeopardizing another’s business by fraud, deceit, trickery or unfair methods of any sort. This necessary precludes the trading by one dealer upon the good name and reputation built up by another.

The first Trademark legislation was enacted in India in 1940, but before that, protection to trademarks in the country was governed by the principles of common law based on English cases. The law relating to protection of this form of industrial property is intricate and complex. The reputation of a business symbolized by a mark, under common law, can be protected only by an action for Passing off. Registration of a trademark under the Trade Marks Act of 1999 gives statutory rights and slight infringement of it can invite an action for Infringement. However, even the unregistered trademarks are also protected as the Act itself provides that an action of passing off remedy is available for unregistered trademark.

Passing Off of Trademarks:

Passing off action is based on common law principle. The damages claimed for in an action for passing off is “un-liquidated damages”. The action against passing off 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.” Similar view has been held in ICC Development (International) Ltd. vs. Arvee Enterprises that “the passing off action depends upon the simple principle that nobody has any right to represent his good as the goods of somebody else”. In a passing off action, the priority in adoption and use of trade mark is superior. Passing off is not defined in the Trademark Act, 1999. It is referred to in Section 27 (2), 134 (1)(c) and 135 of the Act.

Section 27 (2) states that the rights of action against any person for passing off as the goods of another person or the remedies in respect thereof are unaffected by the provision of the Act. Section 134 (1) (c) refers to jurisdiction of courts to try suits for passing off arising out of the use of any trademark. Section one 135 specifies the remedies available in respect of passing off arising from the use of a trademark.

Passing off cases are often cases of “deliberate and intentional misrepresentation, but it is well settled that fraud is not a necessary element of the right of action and the absence of the intention to deceive is not a defence in an action for passing off though proof of fraudulent intention may materially assist a plaintiff in establishing probability of deception.”

The concept of passing off which is a form of tort has undergone changes in the course of time. At first it was restricted to the representation of one’s goods as those of another. Later, it was extended to business and services. Subsequently, it was further extended to professions and non-trading activities. Now a days, it is applied to many forms of unfair trading and unfair competition where the activities of one person cause damage or injury to the goodwill associated with the activities of another person or group of persons.

The law of passing off applies whenever there is the prospect of confusion between marks and getup or where there is the prospect of confusion of identity through the unauthorised use of similar marks or get-up. It is because the main consideration of passing off is whether deception or confusion is likely to arise, passing off can be used to protect any kind of distinctive name, mark, logo or get-up used to identify a company or business as well as products or services.

Issue in a Passing off Action

The issue in a passing off action may be stated as follows:

“would the users of the defendants, either the actual user or the proposed user conceded for the purposes of the action, be likely to lead persons, either members of trade or of the public, to suppose that the defendant’s goods so sold were the product of the plaintiff’s, or that the business concerned in its production was the plaintiff’s or was associated with the plaintiff’s business.”

Factors to be considered in case of an action for passing off:-

The Hon’ble Supreme Court in Cadila Health Care Ltd. Vs. Cadila Pharmaceuticals Ltd.19, held that the following factors to be considered in case of an action for passing off action of an unregistered trademark for deciding the question of deceptive similarity:-

1. The nature of the marks, i.e, whether the marks are word marks or label marks or composite marks, i.e, both words or label works.

2. The degree of resemblance between the marks, phonetically similar and hence similar in idea.

3. The nature of goods in respect of which they are used as trademarks.

4. The similarity in nature, character and performance of goods of the rival traders.

5. The class of purchasers who are likely to buy the goods bearing the marks they are likely to exercise in purchasing and/or using the goods.

6. The mode of purchasing the goods or placing orders for the goods.

7. Any other surrounding circumstances which may be relevant in the extent of dissimilarity between the competing marks.”

Defences to a passing off action:-

In a suit for passing off, apart from denying the plaintiff’s allegations generally, the defendant may be able to plead the following in defence in his case:-

1. The defendant may prove that the plaintiff’s business is either fraudulent or forbidden by law. If any particular business could be shown to be a fraudulent business or one forbidden by law or one which the public policy of law was to prevent, then in those cases the proprietor cannot claim protection of the court. For example, if a trader who sells through street markets counterfeit versions of sound recordings and DVD’s bearing a famous trademark might not be allowed to rely on his sales to maintain a passing off action against another counterfeiter who has come into the market after him.

2. A false representation contained in the mark itself did furnish a defence at law and at equity. Where a trademark is used exclusively in connection with a trade which was itself fraudulent, the fraud in the trade which was itself carried on by the trademark is a defence.

3. The mark complained of is not distinctive of the plaintiff’s business and there is no likelihood of passing off by reason of defendant’s use of the mark.

4. The plaintiff is guilty of acquiescence, latches, etc. or the defendant has prior used the mark.

5. The defendants mark represent his own name which he has the right to use. “A man is entitled to carry on his business in his own name so long as he does not do anything more than that to cause confusion with the business of another, and so long he does it honestly”.

6. The field of activities of the parties are completely different.

7. The defendant claims right of concurrent use of his mark of his mark. Honest and concurrent user of a trademark when established will constitute a defence.

8. The defendant’s use of the mark is the bona fide description of the character or quality of goods or services. However, the defence of the name being ‘surname’ or ‘personal name’, though available to individuals, is not applicable to a corporate body.

9. Innocent misrepresentation by the defendant also constitutes a valid defence against passing off action. Under Section 135 (3).

Infringement of a TradeMark

Section 27(1) of the Trademarks Act, 1999 provides that a person shall be entitled to initiate legal proceeding to prevent or recover damages for the infringement of a registered trademark. Infringement occurs when someone else uses a trademark that is same as or deceptively similar to registered trademark for the identical or similar goods or services as to cause confusion in the mind of the public. This right of bringing an infringement action against the defendant has been conferred by Section 28 of the Trademarks Act, 1999. Section 28 of the Act provides that the registration of a trademark gives to the proprietor of a registered trademark an exclusive right to use the trademark in relation to the goods and services in respect of which the trademark is registered and to obtain relief in respect of infringement of the trademark.

Trademark infringement claims generally involve the issues of likelihood of confusion, deceptive marks, identical marks and dilution of marks. Likelihood of confusion occurs in situations where consumers are likely to be confused or mislead about marks being used by two parties. The plaintiff must show that because of the similar marks, many consumers are likely to be confused or mislead about the source of the products that bear these marks. Dilution is a trade mark law concept forbidding the use of a famous trade mark in a way that would lessen its uniqueness. In most cases, trade mark dilution involves an unauthorized use of another’s trade mark on products that do not compete with, and have little connection with, those of the trade mark owner. For example, a famous trade mark used by one company to refer to hair care products, might be diluted if another company began using a similar mark to refer to breakfast cereals or spark plugs.

What constitutes Infringement?

Section 29 of the Trademarks Act, 1999 deals with infringement. In this context, the ingredients of Section 29 (1) are as follows:-

1. The plaintiff’s mark is registered.

2. The defendant’s mark is identical with, or deceptively similar to plaintiff’s registered mark;

3. The defendant has taken any essential feature of the mark or has taken the whole of the mark and then made a few additions and alterations.

4. The defendant’s use of the mark is in course of the trade in respect of goods/services covered by the registered trademark.

5. The use of the infringing mark must be printed or usual representation of the marking advertisements, invoices or bills. Any oral use of the trademark is not infringement.

6. The use by the defendant is in such manner as to render the use of the mark likely to be taken as being used as a trademark.

7. The defendant’s use of the mark is not by way of permitted user and accordingly unauthorised infringing use.

While the above is the general proposition of law as per Section 29 (1), the various circumstances in which the trademark is infringed are enumerated in sub-sections 29(2) to (9) of Section 29.

Difference between Passing-Off and Infringement

Conceptual Difference:-

1. Passing off action is based on common law principle that nobody has any right to represent his goods as somebody else. Such action is recognised both in respect of unregistered as well as registered trademark. An action for infringement on the other hand is based on the right acquired by registration and is possible only in respect of registered trademarks.

2. An action for infringement is a statutory right. It is dependent upon the validity of the registration and subject to other restriction laid down in the Act.49 On the other hand, in a passing off action registration of trademark is not relevant. It is based on property in goodwill acquired by use of the mark.

3. The proprietor of an unregistered trademark whose mark is unauthorisedly used by another cannot sue for infringement of a trademark. His only remedy lies in bringing a passing off action.

4. In an infringement action, the plaintiff is not required to prove the reputation of his mark, which is not the case in case of passing off. In passing off action, the plaintiff has to prove that his mark has acquired reputation in relation to any goods delt with by him.

5. An infringement action can result in the restraining of defendant from using the registered trademark whereas in a passing off action the defendant is restrained from selling the article without clearly distinguishing from the goods of the plaintiff.

6. In an action for infringement, the use of trademark of the plaintiff, in relation to goods is a sine qua non for the action. In contradiction, in a passing off action, it is deceit as practiced on the public and not the use of the trademark that is to be shown.

Procedural Difference:-

1. In an infringement action, if there was colourable imitation, the fact that the get up was different was not relevant in an infringement action though it might have had relevance in a passing off action.

2. In passing off action identity or similarity of marks is not sufficient, there must also be likelihood of confusion. But in case of infringement if the marks are identical or similar no further proof is required.

3. An infringement action is based on the violation of the proprietary right and deception can be one of the ways whereas in a passing off action deception or likelihood of deception is the only thing to be established.

4. An infringement action does not require the use of the mark. The proprietor could have never used the mark in the course of the business and still bring an action for infringement whereas in a passing off action the plaintiff must establish that the mark by usage has become distinctive of his goods i.e. the goods are identified by the mark.

5. In an action for infringement, the plaintiff must make out that the use of the defendant’s mark is so close either visually, phonetically or otherwise and the court reaches the conclusion that there is an imitation, no further evidence is required to establish that the plaintiff’s rights are violated. Whereas, in case of passing off thedefendant may escape liability if he can show that the added matter is sufficient to distinguish his goods from the goods of the plaintiff.

6. In case of a passing off action, the defendant’s goods need not be same as that of the plaintiff, they may be allied or even different. In case of an action for infringement, the defendant’s use of the offending mark may be in respect of the goods for which the mark is registered or similar goods.

Combined action for infringement and passing off

Where a mark is registered, the plaintiff may combine his action for infringement along with an action for passing off, where the plaintiff has used his mark and can establish goodwill and reputation in connection with his business. This provides for a better protection of trademark.

Conclusion:-

Thus, from the above discussion it can be said that protection of trademark is important not only from the business point of view but also for the protection of consumer from fraud and imposition. However, it is beneficial if combined action for infringement and passing off is brought in one suit as incorporating a plea of infringement, if the mark gets registered can always amend the plaint. But in an action for infringement alone the plaintiff may not be allowed to include a fresh cause of passing off in order to save the action. Since the scope of passing off action is wider than an infringement action, if an action fails, there is a chance of other succeeding. As stated in the preamble of the Trademarks Act, 1999, the law provides for a better protection of trademarks, the fact that the trademark law provides protection to trademarks has come out to be a reality. The present Act expressly recognises the common law remedy and thus saves both the registered and unregistered trademarks from being misused.

Author Details: Srishti Soni [Amity Law School, Jaipur]