IPR

PASSING OFF ACTION: UNFAIR COMPETITION

The passing off action arises when an unregistered trade mark is used by a person or entity being not the owner of trade mark in relation to goods or services of the trade mark owner. It is used to protect goodwill attached with goods or services.
Perry vs Truefitt (1842) 6 Beav. 66 is a famous English case where the tort of passing off was formally articulated. Christopher Wadlow (The Law of Passing-off, Unfair Competition by Misrepresentation) account of the development of the tort of passing-off is a contemporary authority on the topic. This is because Wadlow wrote a detailed history of the tort of passing-off and Laddie J cited this historical account with approval in Inter Lotto (UK) Ltd v Camelot Group Plc [2003] EWCA Civ 1132.
The modern tort of passing off, as per Lord Diplock in Erven Warnink BV v. J. Townend & Sons: (1979) 2 All ER 927 also known as the “Advocaat case” and as approved in Cadila Health Care Ltd. v. Cadila Pharmaceuticals Limited: 2001 (5) SCC 73 and reiterated in Heinz Italia and Another v. Dabur India Limited: 2007 (6) SCC 1, has five elements:
(1) a misrepresentation,
(2) made by a trader in the course of trade,
(3) to prospective customers of his or ultimate consumers of goods or services supplied by him,
(4) which is calculated to injure the business or goodwill of another trade (in the sense that this is a reasonably foreseeable consequence), and
(5) which causes actual damage to a business or goodwill of the trader by whom the action is brought or (in a quia timet action) will probably do so.
In Reckitt & Colman Ltd v Borden Inc [1990] 1 All E.R. 873, the House of Lords (also known as the Jif Lemon case) held that to establish right of action, the claimant must show following three elements sometimes referred to as the ‘classic trinity’ to establish passing off :
• The goods or services have acquired goodwill or reputation in the marketplace that distinguishes such goods or services from competitors;
• The defendant misrepresents his goods or services, either intentionally or unintentionally, so that the public may have the impression that the offered goods or services are those of the claimant; and
• The claimant may suffer damages because of the misrepresentation.
India is a signatory to the Paris Convention for the Protection of Industrial Property, 1883. The Article 10bis reads as follows:

Article 10bis
Unfair Competition
(1) The countries of the Union are bound to assure to nationals of such countries effective protection against unfair competition.
(2) Any act of competition contrary to honest practices in industrial or commercial matters constitutes an act of unfair competition.
(3) The following in particular shall be prohibited:
(i) all acts of such a nature as to create confusion by any means whatever with the establishment, the goods, or the industrial or commercial activities, of a competitor;
(ii) false allegations in the course of trade of such a nature as to discredit the establishment, the goods, or the industrial or commercial activities, of a competitor;
(iii) indications or allegations the use of which in the course of trade is liable to mislead the public as to the nature, the manufacturing process, the characteristics, the “
The detail historical account leading to present Article 10bis is aptly described by Christopher Wadlow in The Law of Passing-Off: Unfair Competition by Misrepresentation (London: Sweet & Maxwell);
TYPES:
Clssic/Orthodox passing off:
In classic or orthodox passing off, the classical trinity, as expounded in Jif and other cases, is normally be applicable and is applied. In other words, a man is not to sell his goods or his services under the pretence that they are those of another man (Perry v. Truefitt per Lord Langdale (M.R.). This is the classic form of passing-off.
Extended passing off:
One of the instances where passing off is actionable is the extended form of passing off, where a defendant’s misrepresentation as to the particular quality of a product or services causes harm to the plaintiff’s goodwill. An example of this is Erven Warnink v J Townsend & Sons (Hull) Ltd [1979] AC 731, in which the makers of advocaat sued a manufacturer of a drink similar but not identical to advocaat, but which was successfully marketed as being advocaat. In extended passing off, one can apply either the classical trinity or the Advocaat tests.
Reverse passing off
Another variety, somewhat rarer is so-called ‘reverse passing off’. This occurs where the defendant markets the plaintiff’s product as being the defendant’s product (John Roberts Powers School v Tessensohn [1995] FSR 947.
It will be recalled that orthodox passing off entails the defendant representing that his product is the plaintiff’s product. In many cases, reverse passing off can be explained under the ordinary rules: for example where a defendant may represent that he or she made goods which were in fact made by the plaintiff so as to pass off his own business as a branch of the plaintiff’s. A person can be benefited immensely by taking course of reverse passing off because he does not have to work on the manufacturing of a unique product, instead, he take an already established product and pass off the same under his own trademark as being his product. The difference between this in comparison to the classical passing off is regarding the accessory of passing off. In classical passing off the trademark is being used as the accessory where as in reverse passing off, it is the goods that are being used as accessory.
TYPICAL CASE OF PASSING OFF:
In T.V. Venogopal vs Ushodaya Enterprises Ltd. & Anr ((2011) 4 SCC 85), the Hon’ble Supreme Court of India held that it was a case of passing off and not dilution of trade mark:

100. The respondent company’s mark `Eenadu’ has acquired extra-ordinary reputation and goodwill in the State of Andhra Pradesh. `Eenadu’ newspaper and TV are extremely well known and almost household words in the State of Andhra Pradesh. The word `Eenadu’ may be a descriptive word but has acquired a secondary or subsidiary meaning and is fully identified with the products and services provided by the respondent company.
101. The appellant is a Karnataka based company which has started manufacturing its product in Bangalore in the name of `Ashika’ and started selling its product in the State of Andhra Pradesh in 1995. The appellant started using the name `Eenadu’ for its Agarbathi and used the same artistic script, font and method of writing the name which obviously cannot be a co-incidence. The appellant company after adoption of name `Eenadu’ accounted for 90% of sale of their product Agarbathi.
102. On consideration of the totality of facts and circumstances of the case, we clearly arrive at the following findings and conclusions :
a) The respondent company’s mark `Eenadu’ has acquired extraordinary reputation and goodwill in the State of Andhra Pradesh. The respondent company’s products and services are correlated, identified and associated with the word `Eenadu’ in the entire State of Andhra Pradesh. `Eenadu’ means literally the products or services provided by the respondent company in the State of Andhra Pradesh. In this background the appellant cannot be referred or termed as an honest concurrent user of the mark `Eenadu’;
b) The adoption of the words `Eenadu’ is ex facie fraudulent and mala fide from the very inception. By adopting the mark `Eenadu’ in the State of Andhra Pradesh, the appellant clearly wanted to ride on the reputation and goodwill of the respondent company;
…………………………………………..
h) Permitting the appellant to sell his product with the mark `Eenadu’ would be encroaching on the reputation and goodwill of the respondent company and this would constitute invasion of proprietary rights vested with the respondent company.
i) Honesty and fair play ought to be the basis of the policies in the world of trade and business.

A trademark which has acquired goodwill in the market is prone to passing off. This passing off is due to the quality of product and its goodwill, which is the biggest contributing factor in a brand success.
Rajni Sinha
Advocate, Bombay High Court

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