VIP Industries Ltd Vs. Carlton Shoes Ltd

Territorial Goodwill and the Limits of Passing Off

Introduction: The case of VIP Industries Ltd v. Carlton Shoes Ltd & Anr., decided by the Division Bench of the Delhi High Court, is a significant pronouncement in the domain of trademark law, particularly in determining the parameters of passing off where multiple registered proprietors of an identical mark co-exist. It presents a complex legal conflict involving cross-suits by two entities, each asserting goodwill and prior user rights over the trademark “CARLTON” in respect of goods under Class 18. The judgment settles the essential question of whether goodwill in a mark can be claimed generically or must be tied specifically to the goods/services concerned.

Factual Background: Carlton Shoes Ltd (CSL), a footwear brand, claimed adoption and use of the trademark “CARLTON” in India since 1994 through its registration for various goods under Class 18, including bags and luggage, although its use had been predominantly for footwear and accessories. VIP Industries Ltd (VIP), a reputed manufacturer of luggage products, acquired rights over the CARLTON mark from a UK-based entity (Carlton International PLC) via an Assignment Agreement in 2004. Since then, VIP asserted that it had been using the CARLTON mark exclusively for travel luggage, suitcases, and related goods, accruing considerable goodwill in the Indian market.

The dispute arose when CSL initiated plans to extend its use of the CARLTON mark to travel luggage. VIP objected, claiming exclusive goodwill in the luggage segment under that mark, which led to cross-suits asserting rights and seeking injunctive reliefs against each other’s use of “CARLTON”.

Procedural Background

CSL filed CS (Comm) 730/2019 seeking a permanent injunction against VIP from using “CARLTON” for goods in Class 18, relying on its prior registration and user in India. VIP responded with CS (Comm) 52/2020, requesting a similar injunction to prevent CSL from using “CARLTON” for bags and luggage. Both parties filed applications under Order XXXIX Rules 1 and 2 CPC seeking interim reliefs pending trial.

By the impugned order dated 17 July 2023, the learned Single Judge dismissed VIP’s interim injunction application and granted interim relief to CSL, restraining VIP from using the CARLTON mark for luggage and allied goods. VIP preferred two appeals: FAO(OS)(COMM) 151/2023 and FAO(OS)(COMM) 152/2023 before the Division Bench of the Delhi High Court.

Legal Issue: The central issue before the Court was whether goodwill for the purpose of a passing off action attaches to the mark generally or to the mark as used for particular goods? Additionally, the Court examined whether VIP, as a later user in India, could restrain CSL from using the mark for luggage, when CSL was the first user in India, albeit in a different product category.

Discussion on Judgments:  The parties referred to various precedents to buttress their respective positions on trans-border reputation, territoriality of trademark rights, and the essentials of a passing off claim.

VIP cited Milmet Oftho Industries v. Allergan Inc., (2004) 12 SCC 624, and Neon Laboratories Ltd v. Medical Technologies Ltd, (2016) 2 SCC 672, to emphasize the principle of “first in the market” and to support its claim of prior user through its predecessor internationally, and domestically since 2004.

They also relied on Beiersdorf AG v. Ajay Sukhwani, 2008 SCC OnLine Del 1226, and Mittal Electronics v. Sujata Home Appliances Pvt. Ltd., 2020 SCC OnLine Del 2658, to argue that goodwill must be shown in the mark specifically for the goods concerned—in this case, travel luggage.

CSL placed heavy reliance on Toyota Jidosha Kabushiki Kaisha v. Prius Auto Industries Ltd., (2018) 2 SCC 1, where the Supreme Court clarified that trans-border reputation alone is insufficient to claim passing off; the mark must have goodwill in India at the relevant time. CSL also cited S. Syed Mohideen v. P. Sulochana Bai, (2016) 2 SCC 683, to assert the precedence of territorial use in passing off actions.

The Court further referred to the principles enunciated by Lord Diplock in Erven Warnink BV v. J. Townend & Sons (Hull) Ltd., [1979] 2 All ER 927, to define the foundational ingredients of a passing off claim: misrepresentation, damage to goodwill, and likely deception among average consumers.

Reasoning and Analysis of the Judge:  The Division Bench agreed with the learned Single Judge’s core findings. It held that since both parties were registered proprietors of the CARLTON mark under Class 18, neither could claim exclusive rights against the other under Section 28(3) of the Trade Marks Act, 1999. The controversy, therefore, was to be resolved purely on the principles of passing off.

On the issue of trans-border reputation, the Court reiterated the territoriality principle as settled in Toyota Jidosha. It concluded that VIP had not placed sufficient material to show spillover of reputation in India before 2004, i.e., before it began domestic use of the CARLTON mark. It found VIP’s evidence of foreign advertising and brand recognition to be weak in demonstrating substantial awareness among Indian consumers.

More crucially, the Court ruled that CSL had substantiated its claim of goodwill in India from as early as 2003, supported by sales invoices, marketing in Indian publications, and a presence on Indian e-commerce platforms. The Bench dismissed VIP’s argument that goodwill must be tied to the specific product (luggage) rather than the mark itself, noting that CSL had, at the very least, established goodwill in the CARLTON mark for accessories falling under Class 18, including handbags, thereby making the likelihood of confusion real and imminent.

The Court emphasized that passing off is a tort rooted in protecting goodwill from misrepresentation, and since CSL had shown prior commercial use of the mark in India, VIP’s use, even if innocent, would amount to misrepresentation likely to cause confusion.

It further rejected VIP’s allegation of CSL’s dishonest intent, noting that CSL had earlier rights and that VIP’s claim of launching “Carlton” luggage in 2004 was not convincingly supported by contemporaneous evidence. On the contrary, VIP’s own annual reports suggested a “soft launch” of Carlton luggage only in 2010-11.

The Bench also declined to grant relief to VIP on the grounds of delay or balance of convenience. It held that the iniquitous consequence VIP complained of—being injuncted despite longer usage for luggage—was a result of its own inability to establish goodwill prior to CSL’s user.

Final Decision:  The Division Bench upheld the decision of the learned Single Judge. It dismissed VIP’s appeals (FAO(OS)(COMM) 151/2023 and FAO(OS)(COMM) 152/2023), thereby maintaining the interim injunction against VIP. Consequently, VIP is restrained from marketing or selling bags and related goods under the CARLTON mark in Class 18, while CSL is permitted to continue its use.

Law Settled in This Case: This judgment reinforces the principle that in a passing off action between proprietors of the same registered mark under Section 28(3), priority of goodwill and actual territorial use in India determines the right to injunctive relief. The Court clarified that goodwill in a mark need not always attach to a specific sub-category of goods if confusion is likely to arise. The territoriality principle remains dominant, and trans-border reputation must be backed by evidence of actual recognition in India. The ruling also underscores that misrepresentation, even if innocent, may support a claim of passing off if confusion is probable and goodwill exists.

Case Title: VIP Industries Ltd Vs. Carlton Shoes Ltd & Anr.:  Date of Order: 1 July 2025:  Case Number: FAO (OS) (COMM) 151/2023 & FAO (OS) (COMM) 152/2023:Neutral Citation: 2025:DHC:5042:DB:Court: High Court of Delhi at New Delhi:Coram: Justice C. Hari Shankar and Justice Ajay Digpaul

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Written By: Advocate Ajay Amitabh Suman, IP Adjutor [Patent and Trademark Attorney], High Court of Delhi