India: Is Prior Use The Knock Out Punch In Passing Off Cases

Last Updated: 1 June 2017
Article by N. Mahabir
  1. The tort of passing off is a common law remedy. It is a facet of Unfair Competition. As the term denotes it is a false representation about the source or quality of goods, service or business. Passing off could result from use of similar mark, shapes, get up or even generic terms. There is a falsehood which the goods or service is telling about itself. In the case of Laxmikant V. Patel Vs. Chetanbhat Shah & Anr., the Supreme Court of India quoting from Salmond & Heuston in Law of Torts held that:

    "The legal and economic basis of this tort is to provide protection for the right of property which exists not in a particular name, mark or style but in an established business, commercial or professional reputation or goodwill....The gist of the conception of passing off is that the goods are in effect telling a falsehood about themselves, are saying something about themselves which is calculated to mislead. The law on this matter is designed to protect traders against that form of unfair competition which consists in acquiring for oneself, by means of false or misleading devices, the benefit of the reputation already achieved by rival traders."
  2. Under Section 27 (2) of Trade Marks Act, 1999, the common law remedy of passing is preserved intact. The Division Bench in the case of N.R. Dongre & Ors. vs. Whirlpool Corporation & Anr., while upholding passing off action against a registered proprietor held that:

    "31......Therefore, registration of a trade mark under the Act would be irrelevant in an action for passing off. Registration of a trade mark in fact docs not confer any new right on the proprietor thereof than what already existed at common law without registration of the mark. The right of goodwill & reputation in a trade mark was recognized at common law even before it was subject of statutory law. Prior to codification of trade mark law there was no provision in India for registration of a trade mark. The right in a trade mark was acquired only by use thereof. This right has not been affected by the Act and is preserved and recognized by sections 27(2) and 33."
  3. The general principle adopted to determine prima facie case in some of the cases of passing off is through the "first past the post" principle. Interpreting the judgement of Supreme Court of India in Milmet Oftho Industries vs. Allergan, the Delhi High Court in the case of Austin Nicholas & Seagram vs. Arvind Behl, held:

    "42. I am of the view that the decision of the Supreme Court in Milmet is fully applicable to the facts of the present case and merely being first past the post in India is not enough. The Plaintiffs were first past the post worldwide and this is of crucial importance."
  4. In the celebrated case of Century Traders vs. Roshal Lal Duggar Co, emphasised on the aspect of the prior user. The Court held that:

    "14....Thus, the law is pretty well-settled that in order to succeed at this stage the appellant had to establish user of the aforesaid mark prior in point of time than the impugned user by the respondents."
  5. Would it be the right approximation of Milmet or the principles of Century Traders to merely reach a conclusion of prima facie case on the basis of prior user between the Plaintiff and Defendant at the interim stage. Do other factors have a role in determination of prima facie case at the interim stage or other factors are relevant merely for determination of balance of convenience and irreparable loss?
  6. In a passing off case, to start with prior user tilts a case in favour of the prior user. However, prior user in isolation cannot be the knockout punch to the subsequent user. The length of user by the Defendant, the scale of user by the Defendant, acquiescence by the Plaintiff, nature of the trade mark, honesty in adoption of the mark, nature of the goods / services will play significant role in the evaluation scale. If use of the mark by the Defendant has been very large even though in a shorter period, it may tilt the scale in favour of the Defendant even though he is a subsequent user. When the use by the Defendant is much larger, it would indicate lethargy or inaction or consent on the part of the Plaintiff. Prior user is an important factor to start with but it cannot be the sole factor in the determination process.
  7. It goes without saying that the Defendants conduct must be honest. Trademarks are trust mark and none should be permitted to create any confusion in that primary role of brands by deceptive means. Even if there is a speck of dishonesty in adoption of the mark, the scale will tilt in favour of the Plaintiff. Dishonesty in adoption of a mark, even in isolation, could probably be the Knockout punch.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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