Passing Off and Trademark Infringement: What's the Difference?

The Golden Arches of McDonald’s, the Silver Arrows of Mercedes, or Nike’s Swoosh- All evoke certain distinct and easily recognizable imagery that helps consumers identify a brand. Trademarks authenticate the source and the quality of a particular product, which consequently influences the decision making of buyers. This is precisely why companies go to great lengths to protect their trademarks and ensure that they are not misused by third parties. Such misuse usually occurs in two forms: ‘trademark infringement’ and ‘passing off’. This article will discuss the two violations and clarify the subtle differences between them.

Trademark

Section 29 of the Trademarks Act, 1999 contains elaborate provisions on what constitutes trademark infringement. Simply put – infringement occurs when an unauthorized person or entity uses a mark that is ‘deceptively similar’ to a pre-existing registered trademark. In order to establish deceptive similarity, there must be a likelihood that the two trademarks would create confusion in the eyes of the public. Furthermore, it must also be established that the goods/services sold by the infringer are similar to that of the trademark owner.

While there exists no specific provision for it in the Trademarks Act, one can also be held liable for indirect infringement of a trademark. This happens in cases of contributory infringement and vicarious liability. Contributory infringement occurs when a person knows of the infringement, knowingly contributes to it, and induces the primary infringer to commit such infringement. Vicarious liability usually occurs in employer-employee relationships. This is indirectly alluded to in Section 114 of the Act, which provides that if a company is held liable for infringement, every person in that company who knew of and contributed to the same would also be held liable.

Passing Off

Passing off refers to the misrepresentation of one’s goods and services as that of another. Such misrepresentation should be of a nature that might lead the public to believe that the goods and services being offered by the person committing the misrepresentation are actually that of another person. For instance, if a businessman started selling kitchen appliances under the name ‘Honda’ and advertised it in a way that established a connection between his products and the company ‘Honda’, he might be liable for passing off.

For a claim of passing off to succeed, it must be established that a loss of business or goodwill has been incurred by the trademark owner. Furthermore, the plaintiff must also show that the disputed trademark is unequivocally associated to his products. Simply put, the public must associate the trademark with the plaintiff upon seeing it.

How are the two different?

Ostensibly, both of the aforementioned offences might seem similar. However, they have certain subtle differences between them. Imagine you have a long-standing family business of selling halva in your town. The people of that town associate your brand with high-quality and distinctive taste. Now imagine if another shop opens up with a similar name, which leads some to believe that the new shop is the original shop. The remedy here would be that of passing off.

Let us explore why this would be the case. Passing off is generally viewed as a broader offence as it is not defined in any statute and is open to interpretation by the courts. It simply operates on the basic principle that a man should not sell his goods under the pretense that they belong to another man.

1. Firstly, passing off applies to unregistered trademarks whereas a claim of infringement can only be brought against registered trademarks. The remedy of passing off is usually more helpful for smaller businesses with limited resources who don’t possess a registered trademark. Thus, the above example would be a case of passing off since we’re dealing with an unregistered trademark.
   

2. This brings us to another key difference between the two offences- it is merely necessary to show deceptive similarity to prove infringement, whereas one must prove a likelihood of damage to one’s business or goodwill for passing off. In the same example, the original shop would likely lose business as some consumers might confuse the two establishments. Therefore, the remedy here would be of passing off as there has been palpable damage to the business of the original halwa shop.
   

3. Lastly, trademarks are given for a particular class of goods and the infringer must be dealing in that same class of goods for it to constitute infringement. This is not the case with passing-off, where type of good or service is immaterial. Let us look at the very first example we discussed while understanding passing-off, where a businessman was selling kitchen appliances under the name ‘Honda’. Even if the original ‘Honda’ may not deal in kitchen appliances, they would still have a claim of passing of provided they are able to establish actual or probable damage to their business because of such misrepresentation.

A trademark is the backbone of any business; it is what signifies a company’s reputation, quality, and respect in the market. Third parties often leech off a business’ goodwill through acts that constitute either trademark infringement or passing off. As a business owner, it is imperative to be vigilant of such acts and understand the nuanced differences between them.

This post is written by Siddhaant Verma, a member of Legal Entrepeneurship Cell and a student at Jindal Global Law School.