PASSING OFF IN TRADEMARKS: AN ANALYSIS OF CUTIS BIOTECH V. SERUM INSTITUTE OF INDIA
This article has been authored by Sidra Javed, a third-year student at Amity Law School, Lucknow.
The Trademarks Act, 1999, provides rights and protection in the form of remedies to not only the registered trademarks in the form of a statutory remedy but also for the unauthorized use of unregistered trademarks. Passing off falls under the ambit of common law tort which is most commonly used to protect goodwill affiliated to the unregistered trademarks. Passing off happens when one person passes off their goods or services as that of another person. The action of passing off is available to both registered and unregistered trademarks, while a suit for infringement is available only to registered trademarks.
In early January, a Nanded based pharmaceutical company had filed a lawsuit against Pune’s Serum Institute of India (SII) for using the name ‘Covishield’ for their COVID-19 vaccine. Cutis Biotech, the pharmaceutical company, claimed that they had applied for the trademark of ‘Covishield’ before the SII and their products had also started circulating in the market under the same tradename. Why, then, did a Pune Civil Court reject Cutis Biotech’s move to stop the SII from using the trademark?
PASSING OFF IN INDIA
A passing off action in India protects the goodwill affiliated with both registered and unregistered trademarks. Section 27(2) of the Trade Marks Act, 1999 states:
“Nothing in this Act shall be deemed to affect rights of action against any person for passing off goods or services as the goods of another person or as services provided by another person, or the remedies in respect thereof.”
Unlike in Indian law, ‘passing off’ as a concept has been developed in the UK through judicial precedents rather than statutes. The Supreme Court of India has, on several occasions, acknowledged the common law origins of this tort. In Ramdev Food Prod. Pvt. Ltd. v. Arvindbhai Rambhai Patel & Ors., the Supreme Court held that:
“[t]he doctrine of passing off is a common law remedy whereby a person is prevented from trying to wrongfully utilize the reputation and goodwill of another by trying to deceive the public through passing off his goods.”
The test for passing off is laid out by the Supreme Court in Cadila Healthcare Ltd. v. Cadila Pharm. Ltd.:
The principle that lays the foundation of passing off is that no person has the right to represent their goods as the goods of someone else. Five elements constitute the modern tort of passing off:
1. a misrepresentation;
2. made by a trader in the course of trade;
3. 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 this 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 or (in a quia timet action) will probably do so.
The Cadila Healthcare case is frequently referred to for describing the requirements for a passing off action. In addition to the five-element test in Cadila Healthcare, the Supreme Court has also often referred to the trinity test of goodwill, misrepresentation, and damage.
Passing off has remained an independent cause of action regardless of a statutory regime regarding registered trademarks. In RK Patel & Co. & Ors. v. Shri Rajdhar Kalu Patil & Ors., the court held that if a specific property right acquired under and recognized by the statute is violated, an infringement action is available. However, in a passing off action, the plaintiff’s right is independent of such a statutory right and is against the defendant’s conduct, which leads to or is calculated or intended to lead to deception.
WHAT IS NOT PASSING OFF?
Passing off or not?
Cutis Biotech claims that they coined the term ‘Covishield,’ did a prior trademark search for the same, and when the search returned no similar results, applied for the trademark on 29 April 2020 under Class-5. They entered the market trade soon after on 30 May 2020 as they started placing orders with manufacturers receiving them bearing the trade mark Covishield.
SII had applied for the trademark Covishield on 06 June 2020 under Class-5 for the product ‘vaccine for human use.’ Cutis Biotech in their suit claimed that their trade partners and manufacturers had denied to supply them the products and work with them due to a ‘possibility of confusion’ regarding Covishield, which led them to suffer losses. They claimed that both parties are trading in a common field of activity and that they have been using the trademark prior to the SII. Further, the act of SII is misrepresenting and deceitful to the consumers. Their act is ‘passing off’ of the trademark Covishield, and that Cutis Biotech has already earned goodwill and reputation by its prior use of the trademark.
SII, on the other hand, contended that it is ‘seriously doubtful’ whether Cutis Biotech is using the trademark prior to the Institute. Further, the nature and visual appearance of the products of both parties are entirely different, therefore, there exists no possibility of creating any confusion, misrepresentation, or deceit to the consumers. The SII also claimed that Cutis Biotech has, at the most, entered the market in May 2020, and hasn’t been trading for long enough to earn substantial goodwill or reputation which can be taken advantage of by the SII. Therefore, the basic ingredients of passing off are missing.
SII also relied upon the Cadila Healthcare case and stated that there is neither deceptive similarity nor is there misrepresentation. They further relied upon N. R. Dongre & Ors. v. Whirlpool Corporation & Anr. to establish that comparative hardship and balance of convenience must be considered while granting an injunction for the act of passing off of trademark.
Reasons for rejecting Cutis Biotech’s claims
The court held that Cutis Biotech has prima facie failed to emphasize that any individual customer has been deceived through the acts of the SII.
“Though, it is a settled principle of law that the probable or likelihood deception can also be considered in case of passing off. In the present matter, prima facie such likelihood of deception or probable future deception, also could not be pointed out by the plaintiff.”
Since there is a difference in the visual appearance between the products of the SII and Cutis Biotech and the purpose of the products of both parties, prima facie such likelihood of deception can also not be established. Further, the court also held that Cutis Biotech prima facie failed to establish the trinity of the passing off a trademark, i.e.,
1. goodwill of the plaintiff (Cutis Biotech);
2. misrepresentation by the defendant (SII); and
3. damages to the plaintiff.
Cutis Biotech was also unable to establish that balance of convenience lies in their favor. The court held that all the people are eagerly waiting for a COVID-19 vaccine. Since the SII is developing the vaccine, it is a much more desirable and awaited product. If the Institute is barred from using the trademark Covishield at this stage and distributing the vaccine under the said trademark, the people will face great hardship to identify the product of the SII. Therefore, both comparative hardship and balance of convenience lie in the favour of the SII.
When registration for a trademark is granted in a particular class, it does not mean that the proprietor of that trademark will have the monopoly for the entire class. If the visual appearance of the trademark of the plaintiff and the defendant differs, the products are for different purposes, and they do not create confusion in the mind of a person of ordinary prudence, then deception and misrepresentation do not exist.
In the present case, the Government of India is the buyer of the SII’s vaccine, indicating that it is available via government channels. As a result, the kinds of customers who purchase the items of both parties are vastly different, and the plaintiffs as such do not have international buyers. The defendant, on the other hand, is selling the medicine to other countries as a COVID-19 vaccine. As a consequence, the problem of misrepresentation or misunderstanding in the minds of an ordinary individual of average intelligence does not arise.
The Pune Civil Court has dealt with the present case admirably and has opined its view after close scrutinization of various facts, arguments, evidence, and established precedents on the subject and provided an enhanced awareness and impeccable understanding of various aspects of the concept of passing off. Put simply, the order is a worthy addition to the domain of Indian trademark law.