Tuesday, October 23, 2012

Passing Off - A Marketing & Legal Perspective - An eyeopener for the Layman

In a layman’s term, passing off means to pass off or sell your goods as someone else’s.For example, you sell a black coloured fizzy drink with the name Roca Cola in the name of Coca Cola, though it may not be anywhere close to it. In this case the unaware buyer, believing it to be Coca Cola, will purchase the beverage, which he would not have done normally. This is just a very small example giving an insight as to what this post is all about. Coca Cola is indeed not such a brand where consumers are going to make silly mistakes like these. But every single brand of the world is not a Coca Cola. A consumer howsoever vigilant or knowledgeable, would in some or the other manner become a victim of passing off. 

Passing Off is the situation where an existing trader has a reputable and popular product or service.Then, some other trader in the hope of taking advantage of the goodwill that has been established in that product or service confuses customers into purchasing his goods instead of the first trader. Ultimately, the first trader suffers loss of sales as consumer buy goods from the trader who is “passing off” his goods and making consumers to believe them to be the same or of the same quality as those of the genuine trader. All this leads to added damage. Consumers start assuming that the so called substandard goods are coming from the first trader causing loss of sales coupled with loss of reputation for the genuine one. Thus, passing off means a trader giving consumers the impression, that his goods are those of another trader who has an established goodwill[i]. The law against passing off protects commercial dishonesty[ii]. Some very common examples of this phenomenon have already been depicted pictorially. It is indeed a burning issue in today’s world of marketing leading to endless litigation and arbitration worth rupees more than a million.

Passing off has nowhere been statutorily defined but it has been referred to in Section 27(2), 135 and 134(1) of the Indian Trademark Act, 1999. The first two deal with the rights and remedies of a person in case of passing off. In Cadila Health Care Ltd v Cadila Pharmaceutical Limited[iii], the Supreme Court laid down certain tests for ascertaining the case of passing off. They include determining degree of resemblance of the two marks, nature of the goods in question, similarity in character and performance of the goods, class of purchasers, mode of purchasing and placing orders and any other relevant surrounding circumstances.The essential characteristics of a passing off action were laid down in the case of Erven Warnink BV v Townend & Sons (Hull) Ltd[iv] and specially included misrepresentation made, in course of trade, to prospective customers, to injure the business goodwill of another, leading to actual damage.

Recent Relevant Cases
Honda Motors Co. Ltd v Mr Charanjit Singh and Ors[v]
The defendant was selling pressure cookers with the same name ‘Honda’. The plaintiff had been selling motor goods and electric appliances with the same name for a long time. The court held that it was very easy to associate the names and confuse the customers. An injunction was ordered to stop the use of name by defendant.

Godfrey Philips India Ltd v Dharampal Satyapal Ltd & Another[vi]
Both the parties were pan masala manufacturers. Plaintiff’s slogan was ‘Shauq Badi Cheez Hai’ (The new paan masala advert featuring Manoj Bajpai) and defendant used the slogan ‘Swaad Badi Cheez Hain’. Both the slogans are deceptively similar. But the court said that apart from a few words in slogan the actual advertisement did not resemble each other. The plaintiff preferred to appeal which is still pending in the Court.

Dhariwal Industries Ltd. and Anr. v M.S.S. Food Products[vii]
The appellants were using the brand name ‘Malikchand’ for their product and the respondents were using ‘Manikchand’. The Court held that even though the appellant has not registered his trademark but since they were using it for long time, the court granted perpetual injunction against the respondents.
The most recent news with the concerned issue is a petition filed by Dabur against Amar Remedies for passing off Dabur’s toothpaste named ‘sewak’ as ‘meswak’.[viii]

Lastly, in August 2012, a Delhi-based Intellectual Property firm, “Singh & Singh, Advocates” filed a Civil Suit before the High Court of Delhi against another law firm called “Singh & Associates” alleging that Singh & Associates has been using a name, which is deceptively similar to the mark and name of Singh & Singh, Advocates to capitalise on the goodwill generated by the former. The matter is still pending for a hearing for any final decision to be made.

Life is a race, not a morning walk. The same quote very much applies to the huge multi-millionaire world of marketing and advertising also. There is colossal level of cut throat competition and almost every seller is ready to fall down to the lowest levels of honesty, integrity and professional ethics to somehow make his product sell and earn profits. Passing off, as we have noticed above is one of the many ways to achieve the same but unlawfully.All this indeed calls for the need for enactment of a proper statute recognizing wrongs and remedies related to all actions of passing off. In India, reasonable and not strict restrictions and rules need to be imposed on the way sellers present and market their product as there is close competition because of huge population and no one would leave the market unutilised. It is suggested that special courts/tribunals (just like Consumer Courts) be set up to decide cases related to such matters as there is already a huge burden of various other high priority cases on our judiciary.More than half of our population, especially in rural India is uneducated and illiterate and would hardly understand the detrimental effects of such second grade products. This needs Government intervention by formation of Special Task Team comprising of small flying squads. They would make surprise and spontaneous visits to markets keeping a check and reporting the areas/sellers engaged in the activity of passing off etc., so that suitable and necessary action can be taken. All these things when implemented collectively would finally help in curbing the menace of Passing Off.

P.S.: The author would like to give due acknowledgement for the critical and significant contribution made by Ms. Shaifali Singh for making this post possible.

[i] Linda Fazzani, Simon Clark & Tina Hart, Intellectual Property Law, 4th Edition, 2008, Palgrave Macmillan
[ii] Dr S R Myneni, Law of Intellectual Property, 4th Edition, 2007, Asia Law House
[iii] (2001) 5 SCC 73
[iv] (1980) RPC 31
[v] 2003 (26) PTC 1 (Del)
[vi] I.A. No. 6010/2012 in Civil Suit 865/2012 Decided On: 02.07.2012
[vii]AIR 2005 SC 1999

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