LAW MANTRA THINK BEYOND OTHERS

(National Monthly Journal, I.S.S.N 23216417)

Reputation & the Law of Passing Off

Introduction
The law of trademark, both in letter and spirit, is laid upon the apriorism that , while it
encourages fair trade in every way and aims to foster and not to trammel competition, no one,
especially a trader, is justified in ruining or jeopardizing anothers business by deceit, trickery,
fraud, or unfair methods of any sort. This necessarily obviates the trading by one dealer upon
the good name and reputation built by others
1

The object of the law of passing off is to restrain commercial piracy
2
and is based on the
principle that unfair competition is calculated to destroy honest business and should not be
allowed. It is not limited to cases of pure trademarks, but is based on much wider cannon,
that the Court will always interpose by injunction to restrain irreparable injury being done to
the plaintiffs property
3
. The law of passing off is designed to protect traders, against that form
of unfair competition which consists in acquiring for oneself, by means of false and misleading
devices, the benefit of the reputation already achieved by a rival trader. The defendant seeks to
acquire this benefits by passing off his goods as the good of plaintiff
4

Passing off is a single common law cause of action which can apply in a very wide range of
factual situations
5
. According to Salmond, the Courts have long wavered between two
conceptions of a passing off action, as a remedy for the invasion of a quasi-proprietary right in
a trade name or trademark, and as a remedy analogous to the action of on the case for deceit for
invasion of personal rightnot to be injured by fraudulent competition
6
. It has recently been
stated that the true basis of the action is that the passing off injures the right of property in the
plaintiff, that right of property being his right to the goodwill of his income.Within the action

1
Baltimore v. Moses , 59 US POQ 409 Para 16.02; Sub Section (2) of Section 27 of the Trade Marks Act,1999
runs as follows:
(2) Nothing in this Act shall be deemed to affect the rights of action against any person for passing off
goods as the goods of another person or remedies in respect thereof
2
Venkatswaran K., Trademarks and Passing Off p.1045 (5
th
ed Volume 1,2010)
3
Samuelson v. Producers Distributing Co. Ltd. (1931) 48 RPC 580 at pp. 593
4
Salmond&Heusten, Law of Torts, London at p.401 (20
th
Ed.2006), quoted in Ellora v. Banarasi Das AIR 1980
Del 257 at pp:488
5
Keeling David; Keryls Law of Trade Marks and Trade Name p.431(14
th
ed 2007)
6
Century Traders v. RoshanLalDuggar and Co. AIR 1978 Del 250 para 19


of passing off there are accommodated and adjusted inter-se three sets of interest. There is
plaintiffs interest in protecting his skills, effort and investment, the interest of defendant in
freedom to attract purchasers for his goods and services, and the interest of consumers in
having available a range of competitive goods and services by consumers without practice
upon them of representation. Whilst most cases appear to treat passing off as a means of
consumer protection, there are others which have granted a business protection against conduct
which amounts to misappropriation, the theft of something of value which is nevertheless
tangible
7
.
Characteristics and Concept
In the interest of fair trading and in the interest of all who may buy or sell goods, the law
recognizes that certain interdiction and off limits upon freedom of action are necessary and
desirable. In some situation the law has had to resolve what might at first appear to be conflict
between competing rights. In solving these problems there has been no need to resort to any
abstruse principles but rather, to a straight forward principle that trading must not only be
honest but must not even unintentionally be unfair
8
. No man is entitled to represent his goods
or business as being the goods and business of another whether such representation is made by
the use of mark, name, sign, symbol device or other means
9
. The gist of the conception of the
law of passing off is that the goods are in effect telling a falsehood about themselves, which is
calculated to misled. The tort is no longer anchored, as in early nineteenth century
formulations, to the name or trade mark of a product or business. It is wide enough to subsume
descriptive materials, provided that such descriptive material has become part of goodwill of
the product.
The law can be expressed in terms of the elements which the plaintiff in such in action has to
prove in order to succeed
10
.First, he must establish a goodwill or reputation attached to the goods or
services which he supplies in the mind of the purchasing public by association with the identifying get-
up whether it consist simply of a brand name or trade description or the individual feature of labelling
or packaging under which his particular goods or services are offered to the public, such that the get up
is recognized by the public as distinctive specially of the plaintiff, Secondly, he must demonstrate a

7
Helenn Norman; Intellectual Property Law (1
st
e.d. 2011)
8
Parker-Knoll v. Knoll International (1962) RPC 265 at 278 applied in B.K. Engineering v UBHI Enterprises AIR
1985 Del 2010 at 212(DB)
9
Singer v. Loog (1881) 18 Ch D 395 at 412; Reddaway v. Banham(1896) 13 RPC 218 at 231; National Sewing v
James Chandwick AIR 1948 Mad 481;Nestle Products v.Milkmade AIR 1974 Del 40 at 43; Ellora v. banarasi Das
AIR 1980 Del 254; Century Traders v Roshanlal AIR 1978 Del 250; BK Engineers v. UBHI Enterprise AIR 1985
Del 210 (DB); Chottu Rao v. BansiLal AIR 1944 Pat 64 (DB); National Electric Stores v General Electric AIR
1944 Lah 386 (DB)
10
Reckitt & Colman v Borden 1990 RPC 341 at pp. 406 Also called the classic trinity.


misrepresentation by the defendants to the public, whether or not intentional, leading or likely to lead
the public to believe that goods or services offered by himare the goods or services of the plaintiff, the
awareness of the public as regard to plaintiffs identity as the manufacturer or the supplier is immaterial
as long as they are identified with a source which in fact is plaintiffs, Thirdly, he must demonstrate that
he suffers or, in a quiatimet action that he is likely to suffer, damage by reason of the erroneous belief
endangered by the defendants misrepresentation that the source of defendants goods is the same as
those offered by plaintiff.
Lord Diplockformulated general proposition of the law of passing off which took into account
of its extended form. They are as follows (i) misrepresentation (ii) made by a person in the
course of trade (iii) 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 trader in
the sense that it 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
11
.One must be
particularly careful, to beware of logical fallacy of the undisturbed middle. It does not follow
that because all passing off action can be shown to present these characteristics, all factual
situations which present these characteristics give rise to a cause of action
12
.
The advantage of classic trinity is that the attention is properly drawn to the essential
relationship between the three elements as all three are intertwined. It is the existence of a mark
or get-up with reputation distinctive especially of the claimants good which provides the
necessary foundation for misrepresentation; the misrepresentation must be operative in the
transaction and causative of the damage claimed; and the damage to goodwill is the heart of
action. Goodwill itself is generated by trading activity, which is usually the source of
reputation.
A person may sell his goods or deliver his services such as in case of a profession under a
trading name or style. With the passage of time such service or business associated with a
person acquiresa goodwill or reputationand becomes a property, which is protected by courts
13
.
A competitor initiating sale of goods or services in the same name or by imitating that name,
results in injury to the business of one who has the property in that name. The law does not
permit any one to carry on his business in such a way as would persuade the customers or

11
ErvenWarnink v.Townend 1980 RPC 31 at 93 HL; Heinz Italia and Anr v Dabur India (2007) 6 SCC 1
12
SakalainMeghjee v.Bm House (India) Ltd 2002 (24) PTC 207 Del; Ms.Subramaniam And Co
vsSanthanakrishnanA.S.No.238 of 1993, Decided on 24-11-2006 available at
http://www.indiankanoon.org/doc/1501154/
13
M/S Inder Industries vs M/S Gemco Electrical Industries, High Court of Delhi RFA No.259/2008 available at
http://indiankanoon.org/doc/135081194/; M/S Surya Food & Agro Ltd. vs M/S Priya Gold Tea Company &Ors
High Court of Delhi CS (OS) 96/2007 available at http://indiankanoon.org/doc/9068748/


clients in believing that the goods or services belonging to someone else are his or are
associated therewith. It does not matter whether the latter person does so fraudulently or
otherwise. The reasons are two. Firstly, honesty and fair play are, and ought to be, the basic
policies in the world of business. Secondly, when a person adopts or intends to adopt a name in
connection with his business or services which already belongs to someone else it results in
confusion and has propensity of diverting the customers and clients of someone else to himself
and thereby resulting in injury
14
.
Reputation
Goodwill can be best described by quoting a passage from Commisisoner of Inland revenue v.
Muller & Co. Margarine Ltd.
15

Goodwill is a thing very easy to describe, very difficult 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. It is the one thing which distinguishes an old
established business from a new business at its first start. The goodwill of a business
must emanate from a particular center or source. However, widely extended or diffused
its influence may be, goodwill is worth nothing unless it has power of attraction
sufficient to bring customers to the source from which its emanates.
Goodwill as the subject of proprietary right is incapable of subsisting by itself as it has no
independent existence apart from the business to which it is attached. Goodwill of a business
should be distinguished from mere reputation. Reputation without goodwill is not protected
16
.It
is a pre-requisite of any successful action of passing off action that the plaintiff goods have
acquired a reputation in the market and are known by some distinguishing feature.
17
The
Courts have to decide the case on the basis of the goodwill which is established on the date, the
defendant commences the activities complained off. It is not possible to say how long the
plaintiffs mark or get up should be used to establish reputation and goodwill sufficient to bring
an action of passing off. It depends on whether the evidence establishes that purchaser would
be led into the belief that the defendant was selling new goods. If the strengthofthe claimants
reputation is great enough to induce the relevant belief in purchaser in the circumstances of the
trade in question, then the claimants goodwill is protected in fields which it has not yet entered
and which it may have the slightest intention of entering. Although injury to a plaintiffs

14
Laxmikant V. Patel v. Chetanbhai Shah, (2002) 3 SCC 65 at pp. 71
15
Commisisoner of Inland revenue v. Muller & Co. Margarine Ltd.(1901) A.C. 217 at 223-24
16
Budweiser 1984 FSR 413 at 464- 71
17
Reckitt & Colman v. Borden (1990) RPC 341 at pp.416-17


goodwill in his trade or business is a necessary ingredient of a cause of action in passing off, it
is not alone sufficient to give such a cause of action, for goodwill can be injured by perfectly
legitimate competition. To give rise to such a cause of action the defendants conduct which
has injured or which is likely to injure the plaintiffs goodwill must be of a kind which the law
does not regard as legitimate. The overriding consideration, in judging extent of reputation is,
whether the claimant has built up goodwill to the point where substantial damage will be
caused to it by the acts he complains of.
It is not right to go on to consider evidence of future development of the claimants business
18
in order to bolster that reputation, either in terms of its size or in term of the scope of the
activities to which it attaches. Such evidence may have some peripheral relevance to the
question whether a wrongly induced belief that the claimant has expanded, to or had expanded
into a new area of business was a credible one, but its role does not extend beyond that.
As regards to transborder reputation
19
the judges of Delhi High Court apparently felt a conflict
of approach between the hardline approach of the English authorities and the liberal
international approach of the courts of Commonwealth countries, and followed a middle
approach. It was observed that we must readily support decisions which seek to promote
commercial mortality and discourage unethical trade practices of making such a situation
where Indian purchasers start presuming a franchise like connection between foreign products
and Indian products which either cause confusion or which appears to be deceptively similar.
This approach is essential to protect interest the interest of Indian users i.e. public in general.
But it cannot be extended to totally different kinds of products, where in order to protect
national economic interest English rigidity appears to be essential.

Common field of Activity

18
Narayan P; Law of Trademarks and Passing Off (6ed 2004) It is wrong in principle to forma view as to what
the goodwill might be in future, and to consider the questions of misrepresentation against the background of that
enhanced goodwill
19
Rob Mathys v. Synthes 1997 PTC 669 at 721 (Del) Indian courts have consistently and rigidly disapproved the
attempt by Indian trade and industry to bask in the warmth of, and make illicit profit fromreputation, not earned
legitimately by their own effort but built by others elsewhere, by the shortcut of trickery and passing off and thus
protected not only private rights but commercial mortality, expanding the scope of passing off action to meet that
end. In Dongre v. Whirlpool Corporation (1995) AIPC 52 at 63-64, the High Court of Delhi came to a conclusion
that even though the appellants are foreign company, they have acqusired a reputation and goodwill in respect of
goods bearing the marks of Whirlpool in the Country


The expression common field of activity was coined by Wayne Parker J in McCulloch v.
Levis. A May
20
wherein it was held that its presence or absence was conclusive in determining
whether or not there was passing off. This was contrary to numerous previous authorities
21
and
is now discredited. The requirement that a Common field of Activity is conclusive in
determining whether there can be passing off was extensively criticized in the case of
Henderson v. radio Corporation
22
and it was furtheradded that it was going too far to say that
the absence of so called common field of activity necessarily bars a plaintiff from relief. With
the passage of time, law on requirement of common field has radically changed. The focus has
shifted from the external objective test of making comparison of activities of parties, to the
state of mind of public in deciding whether it will be confused. There is no requirement that the
defendant should be carrying on a business which competes with that of plaintiff or which
would compete with any natural extension of plaintiffs business
23
.
The Court is empowered to grant an injunction on the ground of passing off even if the
defendant do not operate in the same field of activity however, while doing so the Court must
see whether the plaintiffs are able to establish implacable reputation of such a huge nature that
the business carried out by such persons under the said trade name would tantamount to
suggest that it is the business of plaintiffs
24

There is no rule that the defendant must operate in the same field of activity as the claimant.
However, this does not mean an examination of their respective field of activities is irrelevant.
The more remote the activities of the parties, the stronger the evidence needed to establish
misrepresentation and the real likelihood of damage that are pre-requisites of a right of action
in passing off. To demand a common field of activity would not only be incompatible with
the growing trend towards diversification in business
25
, but also foist an unwarranted limitation
on a tort simply based on the prejudice to goodwill from practices that are actually calculated
to confuse
26
. The absence of common field of activity therefore is not fatal; but it is not

20
McCulloch v. Levis. A May(1947) 65 RPC 58 at p.66
21
Eastman Photographic Material Co. Ltd. v. John Griffin Cycle (1898) 14 RPC 105; Walter v. Ashton (1902) 2
Ch.282;
22
Henderson v. radio Corporation(1969) RPC 218
23
Larsen And Toubro Limited vsLachmiNarain Trades AndOrs 149 (2008) DLT 46; H.M. SaraiyaOrs. vs Ajanta
India Ltd. And Anr 2006 (33) PTC 4 Bom; Hindustan Pencils Limited vs J.N. Ghosh And Bros. Pvt. Ltd 2007
(34) PTC 49 Del; BhavneshMohanlal Amin vsNirma Chemical Works Ltd (2005) 2 GLR 1557; Vinayak Tea Co.
vs Kothari Products Ltd 2002 (2) AWC 1448
24
Bharti Cellular Ltd v. Jai Distilleries Pvt. Ltd 2006 (4) BomCR 280
25
Ellora v. Banarasi Das AIR 1980 Del 257
26
Flemings; The law of Torts pp 702 703 (10
th
ed 2011)


irrelevant either. In deciding whether there is likelihood of confusion it is an important and
highly relevant consideration
27



Conclusion
The concept of passing off which is a form of tort has undergone changes in the course of time.
It has evolved over the years in response to changes in the law of trade as well as to refinement
of legal analysis. It adequately protects the development of growing business. The purpose of
the law of passing off was to vindicate a claimants exclusive right to his goodwill and to
protect it against damage.The law would not allow others to use that goodwill so as to blur or
diminish its exclusivity. The tort is based on economic policy, the need to embolden enterprise
and to ensure commercial stability.
Forms of harm have been recognized which do not accord with the concept of origin
confusion. The cases may be individually explicable because of the way in which evidence of
harm was presented, but that does not make them any easier to reconcile with the origin
confusion. Devaluation of reputation and loss of control have been identified as harms hardest
to reconcile.The time has come when Courts dealing with an action of passing off should not
only grant compensatory damages but award punitive damages also, with a view to dishearten
and discouragedelinquent who indulge in violations with impunity out of lust for money, so
that they become cognizant that in every case they are caught, they would be liable not only to
recompense the aggrieved party, but would be liable to pay punitive damagesalso , which can
spell financial ruin for them.

By:- Akshay Maheshwari and Anjali Bhatt, University of Petroleum and Energy Studies,
B.B.A LL.B. (Hons.) with Specialization in Corporate Laws.



27
Atiebolaget Volvo v. Volvo Steels Ltd 1998 (1) PLR 63 (DB)