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Evolving contours of passing-off law : Certain salutary developments

“A man is not to sell his own goods under the pretence that they are goods of another….”

— Lord Langdale M.R. in Perry v. Truefitt[1]

A simple truism stated almost two centuries ago has over the years evolved into a multifaceted branch of law — given the myriad means that human ingenuity can conjure in order to subtly convey this “pretence”. However, the law has slowly but distinctly kept pace with the creativity of those seeking to ride another’s goodwill.

Dishonest adoption as a distinct head of challenge: Midas and its legal basis

The Supreme Court, in a short and pithy order, observed that an injunction must necessarily follow: “if it prima facie appears that the adoption of the mark (or trade dress) was itself dishonest”.[2] It was again reiterated in Heinz Italia v. Dabur India Ltd.[3] that “if it could be prima facie shown that there was a dishonest intention on the part of the defendant in passing-off goods, an injunction should ordinarily follow”. Though captured in cryptic language, these observations rest on sound legal foundations and are a logical culmination of decades of development of the law.

“Dishonesty” being a state of mind, it could well be argued that this is a matter of trial and hence cannot be presumed at the interim stage. It therefore becomes essential to examine the circumstances in which an inference of “dishonest adoption” must necessarily be drawn, even at the interim stage.

As Lord Simonds opined in Office Cleaning Services Ltd. v. Westminster Window and General Cleaners Ltd.[4]:

Confusion innocently caused will be restrained. But if the intention to deceive is found, it will be readily inferred that deception will result. Who knows better than the trader the mysteries of his trade.

So the question that begs an answer is, how is this “intention to deceive” to be inferred? As far back as in 1977 the Delhi High Court in Anglo-Dutch, Colour & Varwish Works (P) Ltd. v. India Trading House[5], while considering the protection of colour combinations, quoted Harman Lord Justice who had observed[6] that:

“Goods of a particular get-up just as much proclaim their origin as if they had a particular name attached to them, and it is well known that when goods are sold with a particular get-up for long enough to be recognised by the public as goods of a particular manufacturer it does not matter whether you know who the manufacturer is.”

Having appreciated the significance of colour combinations, the Court then quoted with approval the observations of Graham J.[7]:

I cannot see why other manufacturers should want to adopt the applicants’ colour arrangements here except for the improper motive of trying to benefit from the latter’s established goodwill.

Later the same High Court observed in Cadbury, that “the question why the defendant chose to adopt a particular name or get-up, is always highly relevant”.[8]

The test of confusion in such a case, as rightly accepted by the Delhi High Court in Cadbury[9] is what was laid down in Slazenger & Sons v. Feltham & Co.[10] where the Court held that:

One must exercise one’s commonsense, and if you are driven to the conclusion that what is intended to be done is to deceive if possible, I do not think it is stretching the imagination very much to credit the man with occasional success or possible success. Why should we be astute to say that he cannot succeed in doing that which he is straining every nerve to do?

The same sentiment has been echoed by the Australian High Court in Australian Woollen Mills Ltd. v. F.S. Walton and Co. Ltd.[11]:

… the instinct and judgment of traders is not to be lightly rejected, and when a dishonest trader fashions an implement or weapon for the purpose of misleading potential customers, he at least provides a reliable and expert opinion on the question whether what he has done is in fact likely to deceive.

In N.R. Dongre v. Whirlpool Corpn.[12], the Supreme Court upheld the observations of the High Court to the effect that:

There is no plausible and convincing explanation by the appellants as to how they came to adopt the mark “WHIRLPOOL”. In absence of any satisfactory explanation by the appellants, the adoption of the mark by them cannot prima facie be regarded as honest….

In other words, by seeking an explanation for the adoption of a particular mark, the Supreme Court implicitly shifted the onus on to the subsequent entrant into a field who chooses to consciously adopt a get-up or name that is seemingly fancy for that particular trade and which enjoys sufficient goodwill. This lay the germ for the proposition that the subsequent entrant into a market owes a duty to ensure that he chooses his own mark and trade dress in such manner as to cause minimal consumer confusion or damage to established goodwill.

This obligation of a subsequent entrant into the market was specifically accepted in N. Ranga Rao v. Anil Garg[13] in the following words: “Thus, in Harold F. Ritchie Inc. v. Chesebrough-Pond’s Inc.[14], it was held that the second comer has a duty to so name and dress his product as to avoid all likelihood of confusion amongst the consumers.”

In T.V. Venugopal v. Ushodaya Enterprises Ltd.[15], while reiterating that a mark or trade dress may consist of common or descriptive elements to begin with but may “acquire” distinctiveness over a period of time by virtue of extensive user, the Supreme Court emphatically laid down that

once it is found by the court that such a mark has attained distinctiveness and is associated with the business of the plaintiff for a considerable time and thereafter the defendant adopts a similar word (or trade dress) to induce innocent consumers … which itself establishes dishonest intention and bad faith…. In such a situation, it becomes the bounden duty and obligation of the Court not only to protect the goodwill and reputation of the respondent Company but also to protect the interest of the consumers.[16]

This case also accepted the principle that where a mark or trade dress enjoys extensive goodwill by virtue of long user, likelihood of erosion or dilution thereof would per se be actionable inasmuch as dilution itself is evidence of damage. The more extensive the user, the larger the field in which protection will be granted including allied or even unconnected goods. In Mattel Inc. v. Jayant Agarwalla[17], the Delhi High Court while dealing with the question whether the word “scrabble” had become generic for similar word games, held that in case of established goodwill by virtue of long and extensive use, “genericness” cannot be argued at the interim stage and must be established at trial, for by bringing the action the plaintiffs are seeking to prevent this very possibility of loss of distinctiveness.

American courts have generally applied an allied logic and have accepted the obverse principle, namely, that the very fact of copying is itself persuasive evidence of the existence of secondary meaning and in such event the law imputes the subsequent entrant, who attempts an imitation, with the intent to capitalise on this acquired goodwill.[18] “There is no logical reason for the precise copying, save an attempt to realise upon a secondary meaning that is (evidently) in existence.” For, who knows the pulse of the trade better than the trader himself! In other words, the act of intentional imitation itself raises a presumption that the mark or trade dress has acquired distinctiveness and goodwill and hence an injunction must follow at the interim stage.

Thus, as a matter of legal proposition it can be stated that, at least in case of long and extensive user of a trade dress (in terms of length of time as well as turnover), more so where it is coupled with worldwide reputation, the act of imitation by a rival or even a close resemblance of the trade dress, itself demonstrates dishonest adoption and the law, in such circumstances imputes an intention to deceive. In such event an injunction must necessarily follow at the interim stage itself and defences, if any, must be established only at trial.

The duplicity of different labels : The law of “dilution” and the attempted dilution of that law

In Schweppes Ltd. v. Gibbens[19], a case involving virtually identical bottles of soda water bearing different labels and which, seen from a distance, bore a strong resemblance to one another, Lord Halsbury L.C. famously observed:

… if a person is so careless that he does not look, and does not, as I think Lord Macnaghten described it in another case, “treat the label fairly”, but takes the bottle without sufficient consideration and without reading what is written very plainly indeed upon the face of the label on which the trader has placed his own name, then you certainly cannot say he is deceived — in fact he does not care which it is. … it seems to me it is only necessary here to put the two things side by side to say that, if you do look and if you do treat the two labels fairly, no human being could be deceived.

He further observed that “I should have thought if you looked at the two bottles together no human being could have mistaken one for the other.”

These observations of Lord Halsbury themselves created a lot of confusion in the minds of the consuming legal fraternity! Defendants have often relied upon these observations to argue that different names or labels are sufficient to obviate the possibility of confusion even if the trade dress is similar.

In William Edge & Sons v. William Niccolls (hereinafter referred to as “Dolly Blue case” the House of Lords had struck a different note and had in fact gone as far as to say that affixing their own label to the plaintiff’s trade dress would in effect tantamount to “appropriation of the get-up [by the defendant] as their own”.[20] These observations are significant inasmuch as they bring out the principle that adopting a trader’s trade dress and thereafter seeking to ostensibly distinguish the goods by affixing a different label, even if displayed prominently and even in absence of evident deception, nevertheless inevitably leads to the dilution of the original trade dress over time.

Finally in Reckitt & Colman Products Ltd. v. Bonden Inc.[21], Lord Oliver consigned the observations of Lord Halsbury to the facts of that case and observed that “it can be no answer, in a case where it is demonstrable that the public has been or will be deceived, that they would not have been if they had been more careful, more literate or more perspicacious”.[22]

However, in Kellogg Co. v. Prawin Kumar Bhadabhai[23] a Division Bench of the Delhi High Court accepted Lord Halsbury’s view, without noticing Reckitt & Colman. In this case corn-flakes were being sold in cartons that were similar in get-up, though a different trade name was displayed on the carton. It was held that the labels were sufficient to dispel deception. It was also observed, quoting Kerly, that “Such [trade dress] cases are rare, since few traders rely on get-up alone to distinguish their goods….” and that “… these days, in this country, a difference in names is enough to warn the public that they are getting one trader’s goods and not the others.[24] (M. Sapers Ltd. v. Specter’s Ltd. and Boxes Ltd.)25

Courts have been struggling to distinguish the Kellogg’s judgment since it has not been specifically overruled. In N. Ranga Rao26 a Single Judge distinguished the above judgment on the ground that it was passed in circumstances where the consumers were found to be “sophisticated and discerning”. The Calcutta High Court also sought to distinguish Kellogg’s on the same ground in Euro-Solo Energy Systems Ltd. v. Eveready Industries India Ltd.27 However, Kellogg’s again seems to have been relied upon recently by the Division Bench of Delhi High Court in Real House Distillery (P) Ltd. v. Pernod Ricard SA.28

The observations of Lord Halsbury again found acceptance in S.M. Dyechem Ltd. v. Cadbury (India) Ltd.29, wherein the Supreme Court observed that Halsbury (3rd Edn., para 992) says:

Where there are common elements to two or more marks, more regard must be paid to the parts that are not common….

It was further observed that30:

As to scope of a buyer being deceived, in a passing-off action, the following principles have to be borne in mind. Lord Romer, L.J. has said in Payton & Co. v. Snelling, Lampard & Co.31 that it is a misconception to refer to the confusion that can be created upon an ignorant customer. The kind of customer that the courts ought to think of in these cases is the customer who knows the distinguishing characteristics of the plaintiff’s goods, those characteristics which distinguish his goods from other goods in the market so far as relates to general characteristics. If he does not know that, he is not a customer whose views can properly be regarded by the Court. (See the cases quoted in National Sewing Thread & Co. Ltd. v. James Chadwick and Bros. Ltd.32 which was a passing-off action.) In Schweppes case33 Lord Halsbury said, if a person is so careless that he does not look and does not treat the label fairly but takes the bottle without sufficient consideration and without reading what is written very plainly indeed up the face of the label, you cannot say he is deceived.

However, the Supreme Court was quick to rectify the above error and Dyechem, to the above extent, was specifically overruled by a larger Bench in Cadila Health Care Ltd. v. Cadila Pharmaceuticals Ltd.34 It was reiterated that while comparing marks or trade dress, the focus must remain on similarities rather than dissimilarities and that the question of confusion must necessarily be examined “from the point of view of a man of average intelligence and imperfect recollection”. The test of a discerning customer with a subtle and keen sense of observation, was emphatically rejected and so was the test of a “side by side” comparison.

Thus it can be safely stated that after Cadila, Kellog is also no longer good law and stands implicitly overruled. It is no answer in case of a dishonest adoption of trade dress, to affix a different label and contend that as a result thereof the consumer is likely to discern the difference between the two sources. Even if the label is prominently displayed, Dolly Blue case35 rightly observed that this in effect would tantamount to “appropriation of the get-up (by the defendant) as their own” and consequently lead to the dilution of the original trade dress, irrespective of whether or not confusion can be shown. In such a case misrepresentation occurs by subtle association and damage to the goodwill by way of dilution.

In other words if, despite all the myriad permutations of marks and colours available, a trader seeks to achieve maximum proximity to an established trade dress in order to subtly convey a trade connection and yet seemingly seeks to distinguish his goods by affixing a different label, he nevertheless employs an implement designed to mislead customers. In such event the law presumes that he shall succeed in his endeavour to ride upon the goodwill of another.

The problem of de facto monopoly over colours

Though what is protected under law is the get-up and colour combination with reference to the particular goods, having regard to the goodwill acquired by virtue of long user, it is often argued by those who seek to ride on that goodwill that there can be no monopoly over common words or colours. This argument often tends to negate the very concept of acquired distinctiveness.

In “Jif” lemon case36 what was protected was the trade dress of the product itself, namely, the yellow lemon-shaped containers used for the purpose of selling lemon juice. While doing so Lord Oliver laid down the larger principle that deception occurs whenever goods are sold in circumstances so fashioned as to suggest that they emanate from the source with which the public is familiar.37 He further observed that

“In the end, the question comes down not to whether the respondents are entitled to a monopoly in the sale of lemon juice in natural size lemon-shaped containers but whether the appellants, in deliberately adopting, out of all the many possible shapes of container, a container having the most immediately striking feature of the respondents’ get-up, have taken sufficient steps to distinguish their product from that of the respondents”.38 Lord Jauncy in the same case, took the argument head-on and observed that in a case where a trader has established his goodwill in a particular get-up or colour combination, and the get-up has in fact acquired distinctiveness, a passing-off action will necessarily recognise the de facto monopoly of the trader over that colour combination.39 He further accepted the principle that passing-off law will protect the overall get-up and trade dress of the article itself.40

It would be an erroneous approach to breakdown the trade dress into its constituent elements and then argue that what is sought to be protected by the plaintiff are but common colours. Indeed what is protected is not the individual colours but the entirety of the trade dress in the particular context of those goods. The complexity or simplicity of the colour combination might be a pointer towards its inherent distinctiveness or the period of use required to be shown in order to establish “acquired” distinctiveness — but having acquired such distinctiveness, it would be antithetical to then contend that the trade dress protection seeks to monopolise colours.

“Variations in detail”: A typical subterfuge

Deception by subtle associations is nevertheless deception. Hence courts have always endeavoured to stultify attempts by rivals to subtly conjure up an association with existing marks or trade dress, which may be less evident on a micro-comparison of the competing get-up and yet may subconsciously convey a kinship as to the source of the goods. It is for this reason that a side by side comparison of the two marks or trade dress has always been considered an erroneous approach. This was accepted by the Supreme Court in Parle Products (P) Ltd. v. J.P. and Co. wherein it was held that what is to be considered is the overall similarilty and the general idea conveyed by the two marks or trade dress41. Furthermore, while making a comparison the focus must remain on the similarities rather than the dissimilarities between the two.

An ingenious method often employed by the defendants to subtly circumvent the above approach is to introduce or suggest minor variations in the mark or trade dress during the course of hearing or trial, thereby subconsciously shifting the discourse onto the details rather than the “overall similarity”; as also shifting the focus from similarities onto dissimilarities. A Judge is bound to explore the possibility of a compromise and hence is sure to examine the variations introduced — and for that purpose end-up focussing on the differences.

However, this tendency undermines the emphatic observations approved by the Supreme Court in Parle that “… variations in detail might well be supposed by customers to have been made by the owners of the trade mark they are already acquainted with for reasons of their own.”42

In Reckitt & Colman case43, Lord Jauncey also recognised the peril of such an argument based on variations in detail and observed:

“If, … goods have been in the market for a long time with a particularly distinctive get-up then A, seeking to market his goods with a similar get-up, will require to take far more drastic steps to inform the public that his goods are not those of B, since the public, having long become used to such a get-up as identifying the goods of B, are likely to be less mindful of differences in detail.”

As discussed above, it is the subsequent entrant into a market who owes a duty to ensure that he chooses his own mark and trade dress in such manner as to cause minimal consumer confusion or damage to established goodwill. A “deliberate attempt to achieve maximum proximity with the plaintiff’s trade dress” in order to test the legal limits of tolerable transgression, as it were, is itself frowned upon as being dishonest.44 For, as was observed in Florence Mfg. Co. v. J.C. Dowd & Co.45

It is so easy for the honest businessman, who wishes to sell his goods upon their merits, to select from the entire material universe, which is before him, symbols, marks and covering which by no possibility can cause confusion between his goods and those of his competitors, that the courts look with suspicion upon one who, in dressing his goods for the market, approaches so near to his successful rival that the public may fail to distinguish between them.

Thus this tendency of defendants to satisfy the conscience of the court by tweaking the details in a trade dress, thereby shifting the focus onto the differences rather than on similarities, must be eschewed.

Significantly, in Seven Towns Ltd. v. Kiddiland46 the Delhi High Court, while relying on the above principles laid down in Parle47 and in Colgate48, rejected this endeavour by the defendant and concluded that in the absence of compromise acceptable to parties, it would be a flawed approach for the court to examine the minor variations introduced by the defendant (post?institution of the suit) and consider whether the same would be enough to allay apprehensions of confusion. The Court rightly held that in the absence of agreement, a defendant can use a variant only at the peril of contempt and the trial court has to decide the question based on the impugned trade dress used at the time of filing the suit.

Stretching the limits: Is misrepresentation or deceit an essential ingredient of the classical trinity of passing off

As observed by the Supreme Court49, goodwill, misrepresentation and damage have long been considered to be the classical trinity of prerequisites for a successful passing-off action. However, at times brands that achieve an iconic status, over the years also tend to signify an “idea” apart from a source indication — such as a Rubik’s cube may signify brilliance or the name of an iconic actor (as a brand) may signify stardom and authenticity. There may be several examples but they are best left unmentioned. The point here is that there may be cases where traders may seek to abstract just this idea and use it to promote their own product, for example, an advertisement for a mind-games television series that may show Rubik’s cubes hanging in the backdrop or a service provider seeking to describe himself or his services by using the analogy of an iconic actor. It may be difficult to discover deceit in this portrayal or ascribe confusion in the mind of a consumer as to the source — yet it cannot be gainsaid that the goodwill of the established brand suffers. It suffers dilution inasmuch as its portrayal as an abstract idea weakens its strength as a source indicator; it suffers erosion of reputation to the extent the latter hasn’t achieved the iconic status that it seeks to ride on.

Should a passing-off action fail in such event because it fails to establish deceit or confusion as to the source? At the same time, if goodwill is property then damage to goodwill is certainly a tort, of which passing off is but a species, and should be actionable.

As observed by Lord Scarman in Cadbury Schweppes Pty. Ltd. v. Pub Squash Co. Pty. Ltd.50, “… the tort of passing off is no longer anchored in its early 19th century formulation….” Should we then be tied down by the shackles of establishing overt deceit or misrepresentation in order to succeed in a passing-off action? It may not be incorrect to say that deceit is implicit whenever a person seeks to ride on the reputation of another, whether or not the customer is likely to be deceived as to the source of the goods.

Another way of approaching the issue is to take cue from the proposition already accepted by the Delhi High Court in N. Ranga Rao51, relying on Yves St Laurent Parfums v. Louden Cosmetics Ltd.,52 a judgment of the High Court of New Zealand, to the effect that “… a misrepresentation need not to be crass, but may involve a complex mechanism of misrepresentations. Thus, the representation may operate in a number of ways, no single one of which may be compelling but a combination of which is effective”.53 In other words, misrepresentation may be subtle yet actionable. The misrepresentation involved in the above examples lies in the subtle appropriation of the abstract idea that the established brand symbolises; at the same time the erosion of goodwill cannot be gainsaid.

Thus, in the further development of this field, especially considering the ingenuity that defendants employ, it is hoped that courts may accept the wider proposition that no business entity ought to be permitted to derive commercial advantage at the expense of another’s goodwill, whether or not it involves overt deceit or pretence as to the source of the goods.

————————-

* Advocate, practising at the Supreme Court.

[1] (1842) 6 Beav 66, 73. This pithy statement has been approved by the Supreme Court in S. Syed Mohideen v. P. Sulochana Bai, (2016) 2 SCC 683, 699-700, para 31.1 while observing that a “passing-off action is essentially an action in deceit where the common law rule is that no person is entitled to carry on his or her business on the pretext that the said business is of that of another …”

[2] Midas Hygiene Industries (P) Ltd. v. Sudhir Bhatia, (2004) 3 SCC 90, 91, para 5.

[3] (2007) 6 SCC 1, 7-8, para 16.

[4] (1946) 63 RPC 39, 42.

[5] 1976 SCC OnLine Del 55 : AIR 1977 Del 41.

[6] F. Hoffmann-La Roche & Co. AG. v. DDSA Pharmaceuticals Ltd. : 1972 RPC 1, 20.

[7] Smith, Kline and French Laboratories Ltd. v. Applications, Trade Mark, 1974 RPC 91, 99.

[8] Cadbury India Ltd. v. Neeraj Food Products, 2007 SCC OnLine Del 841 : (2007) 142 DLT 724, 735, para 32.

[9] Id., para 30.

[10] (1889) 6 RPC 531.

[11] 1937 HCA 51 : (1937) 58 CLR 641, 657.

[12] (1996) 5 SCC 714, 724, para 10.

[13] 2005 SCC OnLine Del 1293 : (2006) 32 PTC 15, 667.

[14] 126 USPQ 310 (2d Cir. 1960).

[15] (2011) 4 SCC 85.

[16] Id., 111, paras 75 & 92(d).

[17] 2008 SCC OnLine Del 1059 : ILR (2009) 2 (Del) 193.

[18] Ideal Toy Corpn. v. Plawner Toy Mfg. Corpn., : 685 F 2d 78, ; Ferrari v. Carl Roberts, : 944 F 2d 1235.

[19] (1905) 22 RPC 601, 606-607.

[20] 1911 AC 693, 709.

[21] (1990) RPC 341 (HL).

[22] Id., RPC, p. 415.

[23] 1996 SCC OnLine Del 170 : (1996) 62 DLT 79 (DB) : (1996) 16 PTC 187.

[24] Id., DLT, p. 82.

[25] (1953) 70 RPC 173.

[26] 2005 SCC OnLine Del 1293 : (2006) 32 PTC 15, 51.

[27] 2009 SCC OnLine Cal 1991 : (2009) 4 Cal LT 116.

[28] 2014 SCC OnLine Del 977 : (2014) 58 PTC 309.

[29] (2000) 5 SCC 573, para 31.

[30] Id., para 54.

[31] (1900) 17 RPC 48.

[32] 1947 SCC OnLine Mad 289.

[33] (1905) 22 RPC 601.

[34] (2001) 5 SCC 73.

[35] 1911 AC 693.

[36] Reckitt & Colman, 1990 RPC 341 (HL).

[37] Id., RPC, p. 411.

[38] Id., p. 414.

[39] Id., p. 422.

[40] Id., p. 425-426.

[41] (1972) 1 SCC 618, paras 8-9.

[42] (1972) 1 SCC 618, paras 8.

[43] 1990 RPC 341 (HL).

[44] Frito-Lay India v. Radesh Foods, 2009 SCC OnLine Del 714 : (2009) 40 PTC 37, 51.

[45] 178 F 73, 75 (2d Cir. 1910).

[46] 2016 SCC OnLine Del 5168 : (2016) 160 DRJ (SN) 675.

[47] Parle Products (P) Ltd. v. J.P. and Co., (1972) 1 SCC 618.

[48] Colgate Palmolive Co. Ltd. v. Patel, 2005 SCC OnLine Del 1439 : (2005) 31 PTC 583.

[49] S. Syed Mohideen v. P. Sulochana Bai, (2016) 2 SCC 683, para 31.1.

[50] (1980) 2 NSWLR 851.

[51] 2005 SCC OnLine Del 1293 : (2006) 32 PTC 15.

[52] (1997) 39 IPR 11.

[53] 2005 SCC OnLine Del 1293 : (2006) 32 PTC 15, 80.

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