Passing Off Action by Mid-Size Foreign Companies Having Unregistered Marks in India

There are often cases that we undertake for representation, wherein the cases relate to enforcement of trademarks by/of mid-sized foreign corporations that have not been filed and/or used in India against Indian companies that have deceptively used their marks thereby constituting misrepresentation, which might amount to passing off. Rupkatha and Poorva, interns at Khurana & Khurana, look at some of these cases and try to identify certain parameters based on which the mid-sized foreign companies can protect their interest.

Perry v. Truefitt[1], the English case where the tort of passing off was first articulated had clearly pointed out that “a man is not to sell his own goods under the pretence that they are the goods of another trader.” The House of Lords further laid down the essential elements of passing off in Reckitt & Colman Ltd v Borden Inc [2] as:

• The existence of claimant’s goodwill
• Misrepresentation
• Damage or likely damage

Section 27(2) of the Trade Marks Act, 1999 authorizes any trader to institute passing off action against another in spite of the fact that his mark is unregistered. The Hon’ble Supreme Court of India has laid down three elements that need to be fulfilled in order to institute a passing off action by the plaintiff in Satyam Infoway Ltd. v. Sifynet Solutions Pvt. Ltd.[3]:

• The defendant must have sold its goods or offered its services in a manner which has deceived or would be likely to deceive the public into thinking that the defendant’s goods or services are the plaintiffs.
• The likelihood of confusion in the minds of the public that the goods or services offered by the defendant are the goods or the services of the plaintiff.
• The likelihood of confusion in the minds of the public that the goods or services offered by the defendant are the goods or the services of the plaintiff.

Unregistered Marks of Foreign Companies

Section 18 of the Act allows foreign nationals to register their mark in India. Once a mark is registered, the company can take action for infringement against any person who tries to do so. The problem arises when the mark is unregistered. Is there any remedy for the company in such a situation? Or will it remain at the receiving end?

The Indian judiciary has played its role in filling up the gap in the law in such situations. Time and again it has granted relief to foreign companies who are yet to register their marks in India even though the defendant had registered its mark. In N.R Dongre v. Whirlpool Corporation[4], the injunction was granted in favour of Whirlpool Corporation based on the fact that although their mark was not renewed, they had gained enough goodwill and reputation in the Indian market which was being wrongly used by the defendant.

The general trend has been to grant relief only to multinational corporations who have a good market in India or who are big names in the international arena. The Hon’ble Bombay High Court in Centrol Industrial Alliance Ltd. versus Gillette U.K. Ltd.[5], the Hon’ble Delhi High Court in Jolen Inc. vs Doctor & Company[6] and Indian Shaving Products Ltd. v. Gift Pack[7] and several other High Courts have held that in order to get injunction in favour of a foreign company with an un-registered trademark, goodwill in the Indian market is an essential pre-requisite.

The problem then arises with the mid-sized companies. There are about 40 marks in the latest trademark journal published by the Controller General of Patents, Designs, and Trademark which is deceptively similar or rather have been ‘copied’ from the trademark of some foreign company, big or small. Till now, the trend has been to provide no relief to companies having without any trans-border reputation. The Intellectual Property Appellate Board rejected the opposition posed by the appellant in Kraft Jacobs Sucharc Ltd. v. Government of India by Secretary[8] on the ground that the opponent did not have any presence in the Indian market and did not intend to come to do business here in the near future.

The road ahead

The Court has definitely observed in the Jolen Inc. case[9] “even if it is assumed that such advertisements or marks do not travel beyond the borders of the countries where the plaintiff has the business, still it has a right to protect its reputation and goodwill. It is more so where the trade name has been pirated in totality and not by way of having deceptive or confusing similarity.” The Supreme Court in Milment Oftho Industries & Ors. v. Allergan Inc.[10] held that non-use in India would be irrelevant if the plaintiff was the first in the world market. However, the decision carried a word of caution that foreign brand owners who have no intention of coming to or introducing their product in India will not be allowed to stifle an Indian company by not permitting it to sell a product in India if the Indian company has genuinely adopted the mark.

Therefore, if it can be shown that the defendant had adopted the complete mark knowing very well that another company of some other country has already adopted that mark, then mala fide on part of the Indian company can be argued.

Now, the Indian courts have been conservative in their approach and constantly relied upon the circulation of magazines, journals, and extent of Indian travellers going abroad while deciding these types of cases. This approach is outdated in light of modern means of exchanging information. The internet, for example, provides a global forum for any product manufactured in one country. Thus, when an Indian company launches a website bearing the trademark of some foreign company, it becomes easier to hold it liable. The Internet Corporation for Assigned Names and Numbers (ICANN) manages the top-level development and architecture of the internet domain namespace. It authorizes domain name registrars through which domain names can be registered and re-assigned. Thus, any person who seeks to register a domain name is informed about the availability of that domain name. Rule 2 of the Uniform Domain Name Dispute Resolution Policy[11] requires an applicant to determine that the domain name for which registration is sought does not infringe or violate another’s rights. Thus, if the proposed domain name violates another person’s trademark rights, it will violate Rule 2 of the policy. In such eventuality, the registrar can refuse to register the domain name. Thus, a domain name that is properly registered under international requirements is still subject to the Trademarks Act if a rights owner successfully proves that it has rights flowing from the act.

It was held in the celebrated UK case of Marks and Spencer’s v. One in a Million[12] that any person who deliberately registers a domain name on account of its similarity to the name, brand name or trademark of an unconnected commercial organization must expect to find himself on the receiving end of an injunction to restrain the threat of passing off. This was reiterated by the Delhi High Court in Yahoo!, Inc. v. Akash Arora[13]. After the celebrated case of Satyam Infoway Ltd. v. Sifynet Solutions Pvt. Ltd.[14], there is no doubt that internet domain names are subject to the legal norms applicable to trademarks.

Conclusion

A person who has directly copied the trademark of a foreign company having a proper accessible website and trading in the same goods and services, cannot take the plea that he was not aware of his opponent’s presence in the market. Further, it is strongly recommended that the plight of the mid-sized companies be addressed soon and the internet as an advertising and communicating forum gets acknowledged. After all, this is a wrong committed by the Indian company and thus a remedy must be sorted out.