CASE COMMENT

Summary of Facts of the case

In this case, the plaintiffs are Scotch Whiskey Association, a company incorporated under the statutory legislation the Companies Act of the United Kingdom with a basic objective to protect the interests and promotion of famous Scottish Whiskey trade in the United Kingdom and even abroad and it has about 116 members who carry on the business of distilling, blending and selling “scotch whisky” and one of its member (Plaintiff No. 2) is a company incorporated as under the Companies Act of the United Kingdom carrying on business of and as a distiller, blender and dealer of scotch whisky; specifically caters the market of India and has been making extensive export of scotch whisky to India over the years.

The defendant, Pravara Sahakari Shakar Karkhana Limited, is a Cooperative Society incorporated under the provisions of the Maharashtra Co-operative Societies Act, 1960 and carries on the business of a manufacturer, distiller and dealer of Indian whisky.

It is a known fact that the plaintiff has a definite distinguished reputation and goodwill in the market across the world related to the speciality of a distinctive type of Whiskey famous on the name of its origin- the Scottish Whiskey. It is also known that the famous Scotch Whiskey is exported to various countries and have a distinguished reputation in the market.

The plaintiffs instituted the action of passing off against the defendant on the fact that the defendant is misleading the other traders and customers and damaging the reputation and goodwill of Scotch Whisky and its genuine distillers, blenders and dealers by using the device of a Scottish Drummer wearing a kilt or the tartan band on the label and/or using the word ‘Scotch’ in the specific description as label “Blended With Scotch” on their Indian whisky product marketed under the mark “Drum Beater” and also “Gold Tycoon”.

They have also prayed for issuance of permanent injunction and interim injunction against the defendant from advertising or offering for sale or selling or distributing whisky which is not “Scotch Whisky” in any country bearing the impugned label of “Blended with Scotch” or the impugned carton bearing the mark “Drum Beater” or “Gold Tycoon” containing the word “Scotch” or the device of a Scottish Drummer wearing a kilt or the tartan band or the word “Scotch” or any other mark, label, carton, device or description suggesting Scottish origin, so as to pass off or enable others to pass off its whisky as that of “Scotch Whisky.”

Issues Raised

1. Whether the plaintiffs had a locus standi in passing off action against the defendants under the Trade and Merchandise Marks Act, 1958?
2. Whether the delay by the plaintiff in passing off action against the defendant could disentitle them to interim relief?

Judicial Reasoning Analysis of the Case

*Locus Standi

The court while examining the facts and circumstances specifying the dominant market the Scotch Whiskey has and the reputation and goodwill across the world held that the plaintiffs had sufficient interest and locus standi to prevent passing off of Indian whisky manufactured by the defendants as Scotch Whisky and damage reputation and goodwill of Scotch whisky trade.

*Point related to intention by using the term “Blended with Scotch”

While referring to the copy of the booklet entitled “Scotch Whisky: Questions and Answers” published by the 1st plaintiff, stated the definition of the expression “Scotch Whisky” which has been defined by the British legislation as whisky which has been distilled and matured in Scotland and the expression “Blended Scotch Whisky” as a blend of a number of distillates each of which separately is entitled to the description Scotch Whisky, hence it is well established and it is indisputable that blended scotch whisky consists of two or more scotch whiskies each of which is exclusively a scotch whisky and in practice it is usually a blend of as many as fifty different scotch whiskies. Hence, the usage of words “Blended with Scotch” can mislead the customers. The court dismissed the defendants’ contention that they mix the part of “scotch whisky” with its Indian whisky and hence used the term “blended with scotch” on the ground that no permission to market its product as blended scotch whisky merely by using the word “with” in between can be allowed as the unwary customer with his average intelligence and imperfect recollection is bound to treat the product as Blended Scotch Whisky i.e. whisky of which each of the blends is exclusively scotch. The customer is not expected to compare the words used with due care and caution and serious risk of confusion and deception is sufficient to prove the tort of passing off but that too subject to other ingredients being proved.

The usage of the extra word “with” does not make any difference and as observed by Lord Diplock in case Ervin Warnik B. V. v. J. Townend & Sons (Hull) Ltd (1979) 2 All ER 927 that the theory of added material as an escape route in passing off action has been considered irrelevant when the cause of action pleaded was ‘not passing off in its classic form but it its expanded form’ and such additions did not distinguishes the defendants’ goods from those of the plaintiffs or it could not releases the defendant from attempting to damage the business reputation and goodwill of scotch or wipe out the glaring misrepresentation.

Also, while referring to the case of B. K. Engineering Co. v. USHI Enterprises, MANU/DE/0404/1984: AIR1985Delhi210, the Court pointed out that even if the defendants were to prove that they were mixing genuine scotch whisky of Scottish origin with their product, the defendants would not be entitled to market their product by describing the same “Blended with Scotch”. 

*Related to label showing the device of a Scottish Drummer wearing a kilt

While examining as a whole, the label containing image of the device of the Scottish Drummer and also usage of the term “Blended with Scotch” clearly shows the fraudulent intention on the part of the defendants to pass off and misrepresent their goods as Scotch whisky and thus damage reputation and goodwill of ‘Scottish whisky trade’.

And it was further held that the defendant would be restrained from advertising or offering for sale or selling or distributing whisky which is not “Scotch Whisky” in any country bearing the impugned label of “Blended with Scotch” or the impugned carton bearing the mark “Drum Beater” or “Gold Tycoon” containing the word “Scotch” or the device of a Scottish Drummer wearing a kilt or the tartan band or the word “Scotch” or the term “Blended with six year old Vatted Malt Scotch” or any other mark, label, carton, device or description suggesting Scottish origin, so as to pass off or enable others to pass off its whisky as that of “Scotch Whisky.”

*Related to affecting the reputation and goodwill

The Court held that there was no restrictive concept for passing off and hence the plaintiffs had a cause of action to obtain relief to prevent unlawful competition where the goodwill and trade reputation of the persons dealing in a particular product genuinely indicated by a trade description was damaged by the defendants by attaching to their product a name or description with which it had no natural association and with a mere intention to misrepresent themselves in the market. And the same fact should be examined in order to keep the check that the similarity has taken place in order to deceive or cause confusion and whether the customers were likely to be confused on the first impression, the customers being persons of average intelligence and imperfect recollection. Hence, creating the higher chances that the customers were likely to be misled into thinking that the defendant’s firm had an intimate connection with the plaintiffs and such misrepresentation of some connection with the plaintiffs was sufficient to constitute the tort of unfair trading, forming part of the law of passing off.

*Related to interim relief

The Court held that the denial of interim relief would indirectly constitute the allowance and permission of continual of the wrong of the defendants. Hence, interim relief was granted.

Critical Analysis and Developments evolved over the time

The main object of the trademark recognition is to give recognition to goods and/or services of manufacturers/ traders/ service providers in order to accrue its reputation in the market. 

The object of the trademark law has been discussed and explained by the Supreme Court in the case Dau Dayal v. State of Uttar Pradesh AIR 1959 SC 433 as: “the object of trademark law is to protect the rights of persons who manufacture and sells goods with distinct trademarks against invasion by other persons passing off their goods fraudulently and with counterfeit trademarks as those of manufacturers….”

Even the Constitution of India under Article 19 (1) (g) enshrines the fundamental right the freedom to practise any profession, or to carry on any occupation, trade or business; hence the right of free trade and business without any legal infringement.

The Preamble of the Trade and Merchandise Marks Act, 1958 states that the Act is to provide for the registration and better protection of trademarks and for the prevention of the use of fraudulent marks on merchandise.

Generally, Geographical Indication (GI) is a recognition given to products that have a specified geographical origin and possesses reputation due to the origin. Typically, such a name conveys an assurance of quality and distinctiveness which is essentially attributable to the fact of its origin in that defined geographical locality, region or country.

Prior to 1999, there were no specific laws and legislations in India related to geographical indications in order to protect the interests of the manufacturers or traders or producers.

However, the judicial interpretation related to various aspects of geographical indication has been observed by preventing individuals to take any such unlawful advantage of geographical indications and grants an assurance of its distinctiveness to the producers at large. One of such landmark judgment is Scotch Whisky Association v. Pravara Sahakari Shakar Karkhana Ltd. (1992).

Earlier, various remedies have been provided available under the Trade and Merchandise Marks Act, 1958 according the reliefs in suit of infringement and passing off under Section 106 of the said act. 

But later it was repealed. As the globalization of trade, brand names, trade names, marks, etc. started attaining an immense value, a uniform minimum standard of protection and efficient procedures for enforcement as were recognized under the Trade-Related Aspects of Intellectual Property Rights were found to be required. In view of the same, extensive review and consequential amendment of the old Indian Trade and Merchandise Marks Act, 1958 was carried out and the new Trade Marks Act, 1999 was enacted. The said Act of 1999, with subsequent amendments, conforms to the Trade-Related Aspects of Intellectual Property Rights and is in accordance with the international systems and practices.

India, being a common law country, follows not only the codified law, but also common law principles, and as such provides for infringement as well as passing off actions against the violation of trademarks. Section 135 of the Trade Marks Act recognizes both infringement as well as passing off actions, which has been seen in conformity with that time established provision Section 106 of the Trade and Merchandise Marks Act, 1958 and even extends to include criminal complaints relief and also providing ex parte or interlocutory order and interim injunctions as per the facts and circumstances of the case.  

The said case is related to the passing off action. Passing off, as similar to trade mark infringement, applies to protect unregistered rights associated with a particular business, its goods or services.

The principle related to the tort of passing out has been stated in the case Perry v. Truefitt (1842) that “A man is not to sell his own goods under the pretence that they are the goods of another man”.

In Kerly’s Law of Trade Marks and Trade Names, “Passing off” is defined as “an actionable wrong for the defendant to represent, for trading purposes, that his goods are those or that his business is that of the plaintiffs…” Thus, the basic essence of the cause of action for passing off consists of misrepresentation by the defendant in respect of goods marketed by the defendant by colourable imitation and by using labels or badges resembling those of others in such manner as to be calculated to cause the goods to be taken by ordinary purchasers for the goods of the plaintiffs.

In each and every case of action of passing off, the main issue is the risk of misrepresentation and deception by someone as to the origin of the goods or services to general public.

If someone creates a belief in the minds of the consumers that their goods or services are connected with another business when in reality it’s not the case, such situation might put the reputation of the other company in the market at stake. Hence, this is one of such grounds of suing for passing off action.

The assertion on which this common law remedy is established is that no man through representation by way of trading name, mark, sign, symbol, or any other means, either intentionally or unintentionally, is entitled to represent his goods as being the goods of another or as in conformity with another’s business.

Lord Diplock has identified various characteristics in order to categorise an act as action of passing off in case Ervin Warnik B. V. v. J. Townend & Sons (Hull) Ltd (1979) 2 All ER 927. The essentials are:

1. “Misrepresentation,
2. The act must be made by the defendant in course of trade,
3. The prospective or ultimate customers of the plaintiff’s goods and services have been misrepresented,
4. Such an act of misrepresentation is calculated to injure the business or goodwill of the plaintiff, and
5. Such act causes actual damage to the business or goodwill of the plaintiff.”

These essential characteristics has been recognised and adopted by Indian courts also. In case Baker Huges Ltd. v. Hiroo Khushalani (2000) 102 Comp Cas 203 (Del), it has been held that “the plaintiff in an action of passing off must establish the elements that:

1. the plaintiff has acquired a reputation or goodwill in his goods, name or mark;
2. a misrepresentation, whether intentional or unintentional, which proceeds from the defendant by the use of the name of mark of the plaintiff or by any other method or means and which leads or is likely to lead the purchaser into believing that the goods or services offered by the defendant are the goods and services of the plaintiff; or that the goods and services offered by the defendant are the result of the association of the plaintiff;
3. the plaintiff has suffered or likely to suffer damage due to the belief endangered by the defendant’s representation.”

The laws related to action of passing off has been designed to protect the distinctive traders and manufacturers against the unfair competition of acquiring through means of misleading devices and ways and hence affecting the goodwill and reputation of them in the market.

Conclusion

The country where around 65% of the population lives in rural areas, the action of passing off and creating a deception of others’ product as own is quite easy. Thousands of cases can be observed related to such misrepresentation; starting from the essential good- toothpaste to the luxury- Scotch whisky.

With the enactment of the Trademarks Act, 1999 in conformity with TRIPS, it has provided even criminal protection against action of passing off. The scenario has been evolved long way from common law principle to well defined principles and reliefs specified under the codified act and accordingly improved, as can be observed from a huge spree in the number of cases related to action of passing off in the recent past. But there is still scope of development as we can see that market is dynamic and so the principles and laws should be enacted and made accordingly as per need at that moment.

Author: Mannat Sardana