BY RIDDHI KASHYAP
INTERN, H.K. LAW OFFICES
ORIGIN AND EVOLUTION
The tort of Passing-Off has originated from Common laws. It is pretty regular in countries like United Kingdom, Philippines, and New Zealand. In the case of Frank Reddaway Ltd v. Banham[1], Lord Halsbury held that common law protects a man’s goodwill and rights and prevents others from misrepresenting it. However, the exact definition was not accepted later on in the case of AG Spalding and Bros v. AW Gamage Ltd.[2]. This case law changed the basic proportions of the tort of passing off where Lord Parker established a three-fold element of passing off. According to him, there must be some goodwill of the claimant, there must be an element of misrepresentation on the part of defendant, and the claimant must have suffered some loss or damage. Goodwill, as defined by Lord Macnaghten in the case of “Inland Revenue Commissioners v. Muller & Co’s Margarine Ltd[3]”, “…is a thing effortless to describe, complicated to define. It is the benefit and advantage of the good name, reputation, and connection of a business. It is the attractive force which brings in custom…”. The three elements mentioned were named as Classic Trinity by the house of lords in the case of “Reckitt & Colman Products Ltd v. Borden Inc”[4]. The tort of passing off has evolved in the past few years. Initially, it was recognized only when one person misrepresented another’s products or services as his own. However, later on, it was also applied in the case of business or administrations. In the present time, it is involved in various cases of exchanging and rivalries where an individual’s exercises harm the goodwill of another. The case of “Erven Warnink B. V. v. J. Townend & Sons (Hull) Ltd”.[5] Brought changes in the concept of Passing Off and established modern elements of it. Famously known as the Advocaat case, it is one of the leading decisions of the House of Lords where Lord Diplock gave the following leading points:
A. Misrepresentation
B. Made by an individual throughout business or trade
C. To his imminent customers or extreme shoppers of products or services given by him.
D. That is determined to harm the trade or business or generosity of another businessman or trader.
E. That does actual harm to a trade or business or altruism of the trader/business person by whom the claim is brought.
POSITION IN INDIA
However, the tort of passing off is not restricted to the common laws. Indian legal system has very well recognised this tort as already defined in sections 134 (1) (c), 135, and 27 (2) of the Trademarks Act. The jurisdiction of the regional courts in the matter of passing off suits to attempt the suit order alludes to in segment 134(1)(c). The party finishes the Foundation of the case or misfortune causes at a loss. No individual is qualified for addressing the products of someone else as his own. Utilizing of any images, imprints, signs, gadgets or any different methods wherein a direct bogus portrayal to an individual is allowed. Going off through duplicity, was a sort of out-of-line exchange or noteworthy out-of-line exchange through the methods for which an individual gets the financial advantage of the set up standing by someone else. Furthermore, consequently utilizes in a specific business or exchange to be profited by it. Such activity is viewed as an activity for duplicity. In the case of “Honda Motors Co. Ltd. v. Mr. Charanjit Singh and Ors”[6], plaintiff party was utilizing brand name “HONDA” in regard of cars and force types of gear. Respondents began utilizing the imprint “HONDA” for its pressure cookers. Honda Motors filed a suit against the respondents for passing off the trade of the offended party. It was then noted by the court that the utilization of the imprint “Honda” by the respondents couldn’t be supposed to be a genuine selection. The suit of the plaintiff was allowed.
The tort of passing off is taken from the common laws to protect the goodwill of a trader. It is a civil wrong which by which a trader or business man tries to sell his goods and make profit of his business under the impression of someone other’s goods or business. The purpose behind developing a law for passing off is to protect the goodwill of a trader. It promotes healthy market competition and protects damage of business or profit. The case of Frank Reddaway Ltd. v. George Banham[7], is one of the landmark judgements by the House of Lords in the tort of passing off. The plaintiff had a business of selling machine belting under the name of ‘Camel Hair Belting’. The defendant, his former employee, started a business of his own of the same product under the same name. the plaintiff brought the suit in House of Appeals where it was held that no tort of passing off has been committed since the name of the product is mere descriptive. However, the judgement was over ruled in House of Lords where Lord Herschell noted that “I cannot help saying that, if the defendants are entitled to lead purchasers to believe that they are getting the plaintiffs’ manufacture when they are not, and thus to cheat the plaintiffs of some of their legitimate trade, I should regret to find that the law was powerless to enforce the most elementary principles of commercial morality.” Thus, the case was constituted as tort of passing off. Nobody has the right to use similar name or give similar getup as someone else’s to his products. Intention or damage does not matter. As long as the design or name of defendant’s product is similar to that of plaintiff, he will be said to have committed tort of passing off. “All that need be proved is that the defendant’s goods are so marked, made up, or so described by them as to be calculated to mislead ordinary purchasers and to lead them to mistake the defendant’s goods for the goods of the plaintiff”.[8] Tort of passing off might be considered as complementary of Trademark laws but trademark is the registered monopoly of the person which is protected from copying. However, the major concern in passing off is to protect the goodwill earned by a person from his business over time.
ELEMENTS & INGREDIENTS
The important elements of passing off are as follows:
i. A trader has to represent his goods or products as someone’s else.
ii. He can do so by giving a similar name or similar design or getup to his product.
iii. It is not necessary that the person should have knowledge of the same. Neither intention is required, the tort of passing off can be done unknowingly.
iv. Proof of damage is not necessary.
v. The purpose of passing off is to protect the goodwill of the person.
Goodwill has been described as “the attractive force by that brings in custom” by Lord Macnaghten in IRC v Muller & Co.’s Margarine.[9] This case attracted a broad discussion on what goodwill is. It was concluded that goodwill is hard to describe as it can be a property acquired, bought or sold. It can also be a benefit or advantage obtained by the name, connection, quality or reputation of business. Goodwill is something that attracts customers and demarcates between two businesses. The burden of proof of proving goodwill in the business is upon the plaintiff. Also, he needs to proof that defendant has falsely represented his products as the plaintiff’s and this similarity of products has caused confusion in the minds of ordinary people. This clearly came out in the case of Kala Niketan v. Kala Niketan[10] where the plaintiff was known to carry business of selling saree in Karol Bagh, New Delhi from past 20 years. The defendant took the same name and started a business of selling saree in South Extension Market, New Delhi. It was held that the name ‘Kala Niketan’ has become the identity of plaintiff’s business and therefore it is wrong on the part of defendant to adopt the same name. The plaintiff was entitled to the remedy of permanent injunction.
PASSING OFF v. DECEIT
The tort of passing off is often confused with deceit. However, there are a number of differences between the two. In the tort of passing off neither the plaintiff nor the defendant is deceived. Rather, any third person is put under wrong impression by the conduct of defendant. On the other hand, in deceit, the plaintiff is the one deceived on the hands of defendant. There is no concept of goodwill in the tort of deceit. However, the whole purpose of passing off is to protect the goodwill of the trader. The plaintiff need not prove any actual or special damage in the case of passing off but the presence of damage is a must in deceit. Difference also lies in the mode of remedies available in both the cases. Compensation and injunction are generally awarded in Passing off. On the other hand, only compensation is the available remedy in tort of deceit.
CASE LAWS & ILLUSTRATIONS
The nature of tort of passing off was explained by Delhi High Court in the case of Ellora Industries v. Banarsi Das.[11]The plaintiff has their registered trademark as ‘Ellora’ in a proprietorship business. the same was taken by the defendants for their product. It was observed by the court that “The tort is based on economic policy, the need to encourage enterprise and to ensure commercial stability. It secures a reasonable area of monopoly to traders. It is thus complimentary to trade mark which is founded on statute rather than common law. But there is a difference between statute law relating to trademarks and the passing off action; for, while registration of relevant mark, itself gives title to the registered owner, the onus in a passing off action lies upon the plaintiff to establish the existence of business reputation which he seeks to protect.” Similarly in the case of Scotch Whisky Association v. Pravara Sahakar[12] where plaintiff had a large business of selling distill scotch whisky all around the world. They usually used Scottish signs like soldiers, emblems and other figures. The defendants started a business of whisky claiming it to be of Scottish origin. They also used similar signs and name with tag ‘Blended with scotch’. The plaintiff brought a suit against the defendants where it was held that plaintiff’s goodwill has been damage and they were awarded with temporary injunction.
There is also a provision for interim injunction against defendant till trial of the case is pending in the court. This can be observed from the case of M/s Virendra Dresses v. M/s Varinder Garments[13]. The plaintiff owned a business with the name ‘Virendra dresses. Two years later the defendant opened a shop with the same name and style in the same street. The suit was filed for the tort of passing off. The court held that since there is no difference between the names of the two businesses. Therefore, an interim injunction is necessary to protect the plaintiff’s goodwill until the final decision is passed by the court. Sometimes it might happen that the mane of two products is different but the get up or style is same. In such situation it is checked whether the customers are misled by the description or not. The same happened in the case of White Hundson & Co. Ltd. v. Asian Corporation Ltd[14] where the plaintiff sold sweet coughs with the name of ‘Hacks’ in the red cellophane papers. Further, the defendant started selling cough sweets with a different name ‘Pecto’ but in the similar red cellophane paper. It was held by the court that customers are confused and misled because of the similar wrapping. Therefore, it harmed plaintiff’s goodwill and they were rewarded injunction against the defendant.
DEFENSES & REMEDIES
The defendants can use following as defense against the tort of passing off:
A. The defendant can use the defense of delay. If the plaintiff does not file any suit within the reasonable time, then the defendant obtains acquiescence of the business and no case can be filed against him. This can be seen in the case of Blinkx UK Ltd v. Blinkbox Entertainment Ltd[15] where the claimant’s appeal regarding interim injunction was dismissed on the grounds of delay in taking action. The court stated the delay as unreasonable and unjustifiable.
B. If the defendant can prove that the name used by his business is bonafide or under his name, this might act as a valid defense. In the case of Reed Executive Plc v Reed Business Information Ltd[16] the claimant had his business under the name ‘Reed’. The defendant carried a business on the name ‘Reed Business Information’ and ‘Reed Elsevier’. It was held by the court that the defendant did not use the exact name of plaintiff’s product and no average customer would confuse defendant’s product as claimant’s product. Therefore, the defendant is not liable because his business was named under him and not adopted from somewhere else.
C. If the defendant is able to prove that he and the other trader has right to sell in the same name then he can be exempted from any liabilities. The case of Woolley v Ultimate Products[17] is an example where the case was dismissed on the grounds that there was no damage of goodwill of the plaintiff. Mere loss of sales is no proof for loss of goodwill. The defendant granted license on the name of its product, although it was somewhat similar to that of plaintiff’s. The defendant successfully proved their concurrent use and no liability was imposed on them.
D. The general remedies available in tort of passing off are Injunction, Damages, Destruction, Statement by defendant and Accounts for profit out of which injunction and damages are the most availed remedies.
[1] Frank Reddaway Ltd v. Banham, [1896] A. C. 199
[2] AG Spalding and Bros v. AW Gamage Ltd., (1915) 32 RPC 273
[3] Inland Revenue Commissioners v. Muller & Co’s Margarine Ltd
[4] Reckitt & Colman Products Ltd v. Borden Inc, [1990] 1 All E.R. 873
[5]Erven Warnink B. V. v. J. Townend & Sons (Hull) Ltd., [1979] AC 731
[6] Honda Motors Co. Ltd. V. Mr. Charanjit Singh and Ors, 101 (2002) DLT 359
[7] Frank Reddaway Ltd. v. George Banham, 1896 A.C 199
[8] Supra Note 7
[9] IRC v Muller & Co.’s Margarine, [1901] AC 217
[10] Kala Niketan v. Kala Niketan, AIR 1983 Del 161
[11]Ellora Industries v. Banarsi Das, AIR 1980 Del 254
[12]Scotch Whisky Association v. Pravara Sahakar, AIR 1992 Bom 294
[13] M/s Virendra Dresses v. M/s Varinder Garments, AIR 1982 Del 482
[14] White Hundson & Co. Ltd. v. Asian Corporation Ltd, 1964 I W.L.R. 1466
[15] Blinkx UK Ltd v Blinkbox Entertainment Ltd [2010] EWHC 1624
[16] Reed Executive Plc v Reed Business Information Ltd [2004] RPC 40
[17] Woolley v Ultimate Products [2012] EWCA Civ 1038
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