Passing Off Action (Sections 27, 134, 135) — Common Law Remedy

Passing off is the most dominant portion of the law of trade marks. It is the common-law cause of action that protects the goodwill of a trader against the false representation that another trader's goods or services are his. The substantive law of passing off is almost entirely judge-made; the Trade Marks Act, 1999 deals only with the rules of procedure and the remedies. Its statutory foundation in India is the trio of Sections 27, 134 and 135 — Section 27 preserves the common-law remedy untouched by the Act, Section 134 fixes the forum, and Section 135 enumerates the reliefs the court may grant.

The architecture has been carried forward from the 1958 Act. Section 27(1) bars any action for the infringement of an unregistered trade mark. Section 27(2) saves the common-law right of action against passing off — nothing in the Act shall be deemed to affect the rights of action against any person for passing off goods as the goods of another person, or the remedies in respect thereof. The result is a bifurcated regime: registered proprietors enjoy the statutory remedies in Section 29 infringement, while unregistered proprietors must go to the common law. Both, however, share the procedural and remedial provisions in Sections 134 and 135.

Section 27 — the statutory anchor for passing off

Section 27 of the 1999 Act, like Section 27 of the 1958 Act before it, is the textual hinge of the passing-off regime. Sub-section (1) closes the door on infringement actions for unregistered marks: no person shall be entitled to institute any proceeding to prevent, or to recover damages for, the infringement of an unregistered trade mark. Sub-section (2) immediately re-opens the door for the common-law action: nothing in the Act shall be deemed to affect rights of action against any person for passing off goods as the goods of another person or the remedies in respect thereof.

The bifurcation between Section 27(1) and Section 27(2) is the cleanest illustration in the Act of the difference between statutory infringement and common-law passing off. The 1999 Act could have absorbed passing off into the statutory infringement regime; it did not. Parliament chose instead to preserve the common-law route as a parallel and independent remedy. The result is a system in which an Indian trader who has built up goodwill in a mark can sue to protect that goodwill even without registration — a structural choice that has been heavily relied on by foreign plaintiffs without Indian registrations and by Indian traders whose marks have been adopted or are too descriptive to qualify for registration.

The classical trinity — Lord Diplock in Erven Warnink

The leading articulation of the ingredients of passing off is the speech of Lord Diplock in Erven Warnink BV v. J. Townend & Sons (Hull) Ltd. (1980) RPC 31. The essential characteristics, in Lord Diplock's words, are: (1) misrepresentation, (2) made by a person in the course of trade, (3) to prospective customers of his or ultimate consumers of goods or services, (4) which is calculated to injure the business or goodwill of another trader (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.

Indian courts have repeatedly accepted the Erven Warnink formulation. The five Diplock characteristics are sometimes compressed in Indian judgments into the three-element "classical trinity" — goodwill, misrepresentation, and damage. The two formulations are equivalent: the trader-in-the-course-of-trade and prospective-customer elements are subsumed in goodwill and misrepresentation, and the calculated-injury limb is treated as part of damage. Whether the question is put as five elements or as three, the analysis is the same: did the plaintiff have a goodwill the law will protect, did the defendant make a misrepresentation likely to confuse, and did that misrepresentation cause or threaten damage to the plaintiff's goodwill?

Goodwill — the protectable interest

The interest the law of passing off protects is goodwill — the attractive force which brings in custom. Goodwill must be distinguished from reputation. Reputation is the bare knowledge among the public of the existence of a product or trader. Goodwill is the state of mind which makes the public wish to patronise particular goods or services. The Privy Council in Star Industrial Company Ltd. v. Yap Knee Kor (1976) RPC 256 (PC) defined the tort of passing off as an invasion of a right of property in goodwill or business and observed that goodwill cannot exist independently of a business. The proposition matters: a plaintiff who has reputation in a class of goods but no business or goodwill in that class will fail in passing off, no matter how well-known the mark.

The point was applied by the Bombay High Court in Balkrishna Hatcheries v. Nandos International Ltd. 2007 (35) PTC 295 (Bom). The plaintiff had a registered trademark NANDUS for processed and frozen meat products. The defendants opened a chain of NANDOS restaurants in India. The court held that the plaintiff did not claim any reputation in the restaurant or food-outlet business — it had no business or goodwill or reputation in the business of running a restaurant — and that no question of passing off by the defendants of their restaurant business as that of the plaintiff could arise. Goodwill in one class of business did not transmute into goodwill in another.

Goodwill is acquired by use. A trader acquires a right in a distinctive mark merely by using it upon or in connection with his goods, irrespective of the length of such user and the extent of his trade. Priority in adoption and use of the trade mark is superior to priority in registration. Common-law rights are left wholly unaffected by registration. The same priority-of-use principle informs the rules on duration, renewal and removal of registered marks under Section 25, where the prior user can defeat a later registration even after grant. The Bombay High Court in Consolidated Food Corporation v. Brandon & Co. Pvt. Ltd. AIR 1965 Bom 35 stated the principle in classic form, and the proposition was applied by the Delhi High Court in Ganga Prashad v. S.C. Gudimani AIR 1986 Del 329 — where the plaintiff's prior use of GOODMANS for medicinal preparations defeated the defendant's later use of the same mark for a disinfectant.

Misrepresentation — the deceit element

Misrepresentation is the act by which the defendant induces the consuming public to believe that the goods or business of the defendant are those of the plaintiff. The misrepresentation may be made by statement or by conduct — that is, by the adoption of the distinctive mark, name, design, get-up or appearance of another trader's goods. The Delhi High Court in Ellora Industries v. Banarsi Dass AIR 1980 Del 254 reduced the question to whether the defendant's conduct is such as to tend to mislead the public to believe that the defendant's business is the plaintiff's, or to cause confusion between the business activities of the two.

The misrepresentation need not be fraudulent. As the Delhi High Court observed in Honda Motors Co. Ltd. v. Charanjit Singh 2003 (26) PTC 1 (Del), the plaintiff is not required to establish fraudulent intention on the part of the defendant. The main consideration is the likelihood of confusion and consequential injury to the plaintiff. The court in Honda restrained the defendant from using the well-known trademark HONDA for pressure cookers — even though pressure cookers and motor vehicles were obviously different goods — on the strength of the changed concept of passing off action under which it is now not material that the plaintiff and the defendant should trade in the same field.

Whether there is a misrepresentation amounting to passing off is in each case a question of fact. No previous case can be an authority for any other case; each case must depend upon the facts applicable to it alone. This fact-sensitive standard mirrors the analogous fact-finding required when assessing distinctiveness for absolute grounds under Section 9. The principle was stated in Cellular Clothing v. Maxton (1899) 16 RPC 397 and has been reiterated by Indian courts in countless decisions.

Damage — actual or apprehended injury to goodwill

Damage is the gist of an action for passing off. But actual proof of damage is not necessary. The plaintiff may prove either an intent to deceive or actual damage, and it is enough if he shows that the conduct of the defendant was calculated or likely to deceive or mislead the public. He must show a reasonable probability of being injured by the defendant's action — even if the conduct is merely calculated to deceive. On proof of these facts the plaintiff is entitled to an injunction or damages: the proposition was stated in Borthwick v. Evening Post (1888) 37 Ch D 499 and remains good law.

Once it is established that the defendant's action will lead to passing off his goods as those of the plaintiff, it can be assumed that the natural consequence will be damage to the plaintiff's business. Mere fear of damage is not sufficient — it must be based on substantial grounds — but where the conduct of the defendant is shown to be calculated or likely to deceive, the law presumes the consequential damage. This evidential treatment runs in parallel with the rules on opposition to registration under Section 21, where the opponent need not establish actual confusion to succeed.

Common field of activity and the modern broadening

The older case-law required a common field of activity between the plaintiff's business and the defendant's. If the trades were not closely correlated and the goods were not analogous, the chances of deception were treated as too remote to support an injunction. The Privy Council in Thomas Bear & Sons (India) Ltd. v. Prayag Narain AIR 1940 PC 86 stated the limit. The Delhi High Court in Delco Engineering Works v. General Motors Corp. ILR (1974) 1 P & H 502 enumerated the principles.

The modern Indian position is that the common-field-of-activity requirement has been relaxed. The Allahabad High Court in Bata India Ltd. v. Pyare Lal & Co. AIR 1986 All 242 held that a passing-off action lies even if the goods of the defendants and of the plaintiffs are not similar. The defendants had used the word BATA — the registered mark of the plaintiff for shoes — as part of "Batafoam" for mattresses and cushions. The court refused to follow the older decision in Rustam Ali v. Bata Shoe Co. AIR 1957 Cal 120, observing that the wrongful appropriation of trade reputation is itself an injury to the plaintiff. The main consideration is whether there is a misrepresentation, not whether the goods are the same. The court in Reddaway v. Banham (1869) AC 199 had already held that passing off may occur in cases where the plaintiffs do not in fact deal in the offending goods.

The Delhi High Court in Ellora Industries (above) put the principle in a sentence: to demand a common field of activity would not only be incompatible with the growing trend towards diversification in business but also foist an unwarranted limitation on a tort based simply on the prejudice to goodwill from practices actually calculated to confuse. The plaintiff's proprietary right to his name and trade reputation is invaded by conduct of the defendant which anticipates the plaintiff's exercise of that right in a field of activity sufficiently close to the plaintiff's present activities. The diversification logic also informs how courts approach the Section 30 limitations on the effect of a registered mark, where the same honest-practices yardstick recurs.

Cadila Healthcare — the Supreme Court's restated test

The leading Indian authority on the test for deceptive similarity in a passing-off action is Cadila Healthcare Ltd. v. Cadila Pharmaceuticals (2001) 5 SCC 73. The two appellants had taken over the business of the erstwhile Cadila Group and both had the right to use the name CADILA as a corporate name. The dispute concerned the marks FALCITAB and FALCIGO, both used for medicines for the treatment of falciparum malaria.

The Supreme Court overruled the earlier position in S.M. Dyechem Ltd. v. Cadbury (India) Ltd. AIR 2000 SC 2114 (which had held that dissimilarity in essential features was more important than similarity) and re-established the law that what has to be seen in a passing-off action is the similarity between the competing marks and whether there is a likelihood of deception or confusion. The court held that, where medicinal products are involved, the test is not at par with cases involving non-medicinal products: a stricter approach must be adopted. Confusion between two medicinal products may have disastrous effects on health and even life. Drugs are poisons, not sweets. The court reasoned that public interest supports a lesser degree of proof of confusing similarity in the case of trade marks for medicinal products, given the linguistic, urban-rural divide and the possibility of accidental negligence in the supply chain.

For the broader test, the court enumerated seven factors to be considered in deciding deceptive similarity in a passing-off action on the basis of an unregistered trade mark:

1. The nature of the marks — whether word marks, label marks or composite marks.
2. The degree of resemblance — phonetic, visual or in idea.
3. The nature of the goods.
4. The similarity in the nature, character and performance of the goods of the rival traders.
5. The class of purchasers — their education, intelligence and the degree of care they are likely to exercise.
6. The mode of purchasing the goods or placing orders.
7. Any other surrounding circumstances which may be relevant in the extent of dissimilarity between the competing marks.

The weightage to be given to each factor depends on the facts of the case. The Cadila seven-factor test is now the canonical Indian formulation in passing-off actions and is applied across the entire spectrum from medicinal products to ordinary consumer goods. The same factors carry through to the analysis of confusion-based infringement under Section 29(2), although the burden of proof on the proprietor is lower in an infringement action because of the statutory presumptions in Section 29(3).

Transborder reputation — passing off without local sales

The Indian doctrine of transborder reputation is the most distinctive contribution of Indian courts to the law of passing off. A foreign plaintiff may be able to bring a passing-off action even without selling his branded products in India — provided he can show that the reputation of his mark has reached India through advertisement, satellite television, international magazine circulation, or through Indians who have travelled abroad and become familiar with the product.

The leading decision is N.R. Dongre v. Whirlpool Corporation (1996) 5 SCC 714. The Supreme Court accepted that even advertisement of a trade mark, without the existence of goods in the market, can be considered as use of the trade mark, and that a product and its trade name transcend the physical boundary of a geographical region and acquire a transborder, overseas, or extra-territorial reputation through advertisement. The earlier strand of decisions — Apple Computers v. Apple Leasing (1993) IPLR 63 (Del HC), WWE International v. Mahavir Spinning (1995) IPLR 148 (Del), and Calvin Klein Inc. v. International Apparel Syndicate (1995) IPLR 83 (Cal) — fed into the Whirlpool conclusion. The transborder doctrine has been applied since to a long line of cases including The Gillette Company v. A.K. Stationery 2001 PTC 513 (Del), where the Delhi High Court reaffirmed the protection of transborder or spillover reputation of trade marks of overseas companies.

The Delhi High Court in Rob Mathys India Pvt. Ltd. v. Synthes Ag Chur 1997 (17) PTC 669 (DB) cautioned that Indian courts must follow a middle path between the hard-line national approach of the English authorities and the liberal international approach of other Commonwealth countries. The middle-path approach is to readily support decisions promoting commercial morality and discouraging unethical trade practices where the goods are the same or similar or closely related — but not to extend the doctrine to totally different kinds of products, where English rigidity in the national economic interest may be preferable. The transborder doctrine sits alongside the statutory well-known mark regime in Section 11(6) to 11(11) and supplies the common-law route to similar protection.

Sections 134 and 135 — forum and remedies

Section 134 fixes the forum for both infringement and passing-off suits. A suit for the infringement of a registered trade mark, or for passing off, or related causes of action arising under the Act, shall be instituted in a District Court having jurisdiction. The provision allows the registered proprietor or the plaintiff to file suit in the District Court within whose jurisdiction he carries on business — a significant procedural advantage over the ordinary CPC forum rule that locates jurisdiction with reference to the defendant. The forum rule applies to passing-off actions even though passing off is a common-law cause of action: Section 27(2) preserves the substantive right, and Section 134 supplies the procedure.

Section 135 enumerates the reliefs the court may grant in any suit for infringement or for passing off. The relief includes (a) injunction subject to such terms as the court may think fit, restraining further use of the infringing or passing-off mark, (b) damages or an account of profits at the option of the plaintiff, and (c) an order for delivery-up of infringing labels and marks for destruction or erasure. The 1999 Act extended the court's powers to grant ex parte injunctions and interlocutory orders intended to preserve evidence or documents relating to the subject matter of the suit, and to restrain the defendant from dealing with assets in a manner which would affect the plaintiff's ability to recover damages or other pecuniary remedies after final orders (Section 135(2)).

The architecture of Sections 134 and 135 is that a single suit can plead both infringement and passing off in the alternative — and most plaintiffs do. The 1999 Act's enlarged Section 29 has narrowed the gap between the two causes of action, but the practice of pleading both remains universal because passing off can pick up cases where infringement fails (for example where the registration is vulnerable to attack) and infringement can pick up cases where passing off fails (for example where the plaintiff's goodwill is hard to prove). The two heads converge for procedural and remedial purposes through Sections 134 and 135.

Convergence and divergence — passing off vs Section 29 infringement

The 1999 Act has obliterated some distinctions between infringement and passing off. The expanded Section 29(2) allows infringement on similar goods or services; Section 29(4) allows infringement on dissimilar goods or services for marks of repute; Section 29(5) allows infringement by use as a trade name. The doctrine has narrowed the gap with the modern broad-field passing-off action.

But the divergences remain. Infringement is a statutory right based on the violation of a proprietary right in a registered mark. Passing off is a common-law right based on the protection of goodwill. The use by the defendant of the trademark of the plaintiff is the sine qua non in an infringement action; in passing off it is not — the defendant's mark may differ from the plaintiff's so long as the overall get-up and presentation cause confusion. In an infringement action, the colourable imitation of the registered mark is enough; the deception is presumed. In passing off, the plaintiff must establish the misrepresentation as a matter of fact. The Supreme Court explained the distinction in Durga Dutt v. Navaratna Pharmaceuticals AIR 1965 SC 980 — the foundational Indian authority on the divergence — and the analysis carries through to the present day.

In an infringement action, the dissimilarities in get-up, packing or other features are immaterial if the essential features of the registered mark have been adopted. The Supreme Court in Parle Products (P) Ltd. v. J.P. and Co. (1972) 1 SCC 618 held the defendant's wrapper deceptively similar to the plaintiff's GLUCO BISCUITS wrapper — both depicted a girl in a farmyard with a cow and chickens — even though there were detailed differences. In passing off, by contrast, the defendant may escape liability if he can show that the added matter is sufficient to distinguish his goods from those of the plaintiff. The two tests carry different burdens.

Defences in a passing-off action

The standard defences in passing off are: (a) that the name, mark or get-up is not in fact distinctive of the plaintiff's goods or business, (b) that the defendant's use is not such as to be likely to pass off his goods as those of the plaintiff, (c) that the defendant has a right of his own to use the name, mark or get-up, (d) that the goods or business of the plaintiff and of the defendant are wholly different, and (e) that the plaintiff is disentitled to relief on account of delay, estoppel, acquiescence, deceptive use of his own mark, misrepresentation of facts or fraudulent trade.

Acquiescence operates differently in passing off than in infringement. In infringement, the five-year acquiescence rule in Section 33 supplies a fixed limit; in passing off, the acquiescence defence is governed by general equitable principles and depends on knowledge, conduct and the time that has elapsed. The five-year statutory window is treated separately in the chapter on use of trademark — genuine use and acquiescence under Section 33. The defendant who pleads acquiescence in a passing-off action must show conduct on the plaintiff's part inconsistent with assertion of the right. The defendant may also resist by showing that his use is on goods or services so wholly different from the plaintiff's that no question of confusion can arise — the fall-back of the older common-field-of-activity rule.

Distinguishing passing off from cognate provisions

Passing off vs Section 29 infringement. Passing off requires the classical trinity of goodwill, misrepresentation and damage. Infringement requires only the use of an identical or deceptively similar mark in the course of trade. Passing off is available without registration; infringement is not. Passing off requires proof of the deception as a fact; infringement, in many cases, is presumed.

Passing off vs Section 29(4) dilution. Section 29(4) is a statutory dilution remedy available only to registered proprietors of marks of repute against use on dissimilar goods. Passing off is the common-law route to similar protection — but it requires proof of misrepresentation, which Section 29(4) does not. The differences are mirror-image in some respects: Section 29(4) is wider in not requiring misrepresentation but narrower in requiring registration and reputation; passing off is wider in being available to any plaintiff with goodwill but narrower in requiring proof of misrepresentation.

Passing off vs the well-known mark regime. The well-known mark regime in Section 11(2) and 11(10) operates at the registration stage and refuses registration to similar marks on dissimilar goods. Passing off operates at the use stage and restrains the use itself. The two often run together — a foreign proprietor of a well-known mark can both oppose the registration of a similar mark in India under Section 11 and bring a passing-off action against any actual use of that mark.

Practical and exam takeaways

For state judiciary mains, CLAT PG and SEBI Legal Officer papers, the passing-off action is most often tested through:

1. The classical trinity — goodwill, misrepresentation and damage — as articulated in Lord Diplock's five-element formulation in Erven Warnink, and as compressed in the Indian three-element shorthand.
2. The Cadila seven-factor test for deceptive similarity, including the heightened standard for medicinal products. Drugs are poisons, not sweets — the court takes a stricter approach where confusion may threaten health.
3. The bifurcation in Section 27 — sub-section (1) bars infringement actions for unregistered marks; sub-section (2) saves the common-law passing-off remedy. The bifurcation explains why the 1999 Act preserves a parallel common-law route for unregistered proprietors.
4. The transborder reputation doctrine — Whirlpool, Apple Computers, Calvin Klein — and the middle-path caution in Rob Mathys against extending the doctrine to wholly different products.
5. The relaxation of the common-field-of-activity rule in Bata India v. Pyare Lal and Honda Motors v. Charanjit Singh — passing off may now lie even where the goods are different, provided the misrepresentation is established.
6. The forum and remedies in Sections 134 and 135 — proprietor-friendly forum, ex parte injunction power, damages or account of profits at the option of the plaintiff, and delivery-up for destruction.

The two most common errors in exam answers are (a) confusing reputation with goodwill — the Star Industrial point that goodwill cannot exist independently of a business is what defeated the plaintiff in Balkrishna Hatcheries — and (b) treating passing off as identical to Section 29(4) dilution. The two regimes overlap but are not co-extensive: passing off requires misrepresentation; Section 29(4) does not. For the wider statutory and procedural setting, see also our chapters on the exclusive right conferred by registration under Section 28, on the Section 29(4) dilution head, on the Section 11 well-known mark regime, on the Section 9 absolute grounds for refusal, and on the Section 11 relative grounds and confusing similarity, and on the statutory definitions of trade mark, mark and service.

Frequently asked questions

What is the classical trinity of passing off?

The classical trinity is the three-element shorthand for the ingredients of a passing-off action — goodwill, misrepresentation and damage. It is the Indian compression of Lord Diplock's five-element formulation in Erven Warnink BV v. J. Townend & Sons (Hull) Ltd. (1980) RPC 31. The plaintiff must show that he has goodwill in his mark or get-up, that the defendant has made a misrepresentation likely to confuse the public, and that the misrepresentation has caused or is likely to cause damage to the plaintiff's goodwill. Misrepresentation need not be fraudulent; intent is irrelevant if the conduct is in fact calculated to deceive.

Can a passing-off action be brought without registration of the trade mark?

Yes. Section 27(1) of the Trade Marks Act, 1999 bars an action for the infringement of an unregistered trade mark, but Section 27(2) expressly preserves the common-law action for passing off. A trader who has built up goodwill in a mark by use can sue in passing off even without registration. Indeed, the principal users of the passing-off remedy are unregistered Indian traders and foreign plaintiffs without Indian registrations. Priority in adoption and use of the mark is superior to priority in registration; common-law rights are unaffected by the registration system.

Does passing off require the plaintiff and the defendant to trade in the same field?

Not under the modern Indian position. The older case-law required a common field of activity, but the Allahabad High Court in Bata India Ltd. v. Pyare Lal & Co. AIR 1986 All 242 and the Delhi High Court in Honda Motors Co. Ltd. v. Charanjit Singh 2003 (26) PTC 1 held that a passing-off action lies even if the goods are different, provided the misrepresentation is established. The wrongful appropriation of trade reputation is itself an injury. The further removed the fields of activity, the less likely deception is — but the rule is one of evidence rather than of jurisdiction.

How is the test for deceptive similarity stricter for medicinal products?

The Supreme Court in Cadila Healthcare Ltd. v. Cadila Pharmaceuticals (2001) 5 SCC 73 held that, where medicinal products are involved, the test must not be at par with non-medicinal products. Confusion between two medicines may have disastrous effects on health and even life; drugs are poisons, not sweets. The court therefore requires a lesser quantum of proof of confusing similarity for drugs, having regard to the linguistic and educational divides in India and the possibility of accidental negligence in dispensing. The Cadila seven-factor test is the standard Indian formulation in passing-off actions for both medicinal and non-medicinal products.

Can a foreign plaintiff sue in passing off in India without local sales?

Yes, on the doctrine of transborder or spillover reputation. The Supreme Court in N.R. Dongre v. Whirlpool Corporation (1996) 5 SCC 714 accepted that even advertisement of a trade mark without the existence of goods in the market amounts to use, and that a product and its trade name transcend physical boundaries through advertisement and international magazine circulation. The doctrine has been applied in Apple Computers v. Apple Leasing, WWE International, Calvin Klein and the Gillette decisions. The Delhi High Court in Rob Mathys India v. Synthes Ag Chur cautioned that the doctrine should not be extended to wholly different products in the national economic interest.

What is the difference between goodwill and reputation in the context of passing off?

Reputation is the bare knowledge among the public of the existence of a product, mark or trader. Goodwill is the state of mind which makes the public wish to patronise particular goods or services — the attractive force which brings in custom. The Privy Council in Star Industrial Company v. Yap Knee Kor (1976) RPC 256 held that the tort of passing off is an invasion of a right of property in goodwill or business and that goodwill cannot exist independently of a business. The distinction was applied in Balkrishna Hatcheries v. Nandos International Ltd. (2007) — the plaintiff's goodwill in frozen meat products did not extend to a restaurant business, and the passing-off action failed.