Passing off protects the goodwill of a business from misrepresentation
Background of the Case:
The present matter before the High Court of Delhi involves Akemi Chemisch Technische Spezialfabrik GmbH (plaintiff) versus Devki Nandan Malik trading as Delhi Hardware and Engg Works (defendant). The case revolves around allegations of intellectual property infringement, with the plaintiff asserting that the defendant is selling counterfeit products that unlawfully bear the plaintiff’s trademarks and copyrighted materials. The case is being heard under the jurisdiction of the Code of Civil Procedure, 1908 (CPC) and the Commercial Courts Act, 2015, which govern procedural aspects for civil litigation and commercial disputes in India.
Facts of the Case:
Akemi Chemisch Technische Spezialfabrik GmbH, a German-based company, is engaged in the business of manufacturing and selling high-quality adhesives and stone care products. It has gained substantial goodwill in the market, with its trademarks enjoying widespread recognition. The defendant, operating under the name Delhi Hardware and Engg Works, is alleged to be selling counterfeit products falsely representing them as genuine Akemi products.
The plaintiff claims that these counterfeit goods are not only substandard and inferior but also hazardous, damaging both the plaintiff’s reputation and posing a risk to consumer safety. As a result, the plaintiff has filed a suit for trademark and copyright infringement, along with an application for an interim injunction to restrain the defendant from continuing its unlawful activities.
Legal Issues:
The key legal issues in this case are:
Trademark Infringement: Whether the defendant has infringed the plaintiff's registered trademarks by selling counterfeit products under the same or deceptively similar marks.
Passing Off: Whether the defendant's conduct amounts to passing off, where the defendant has created confusion among consumers by falsely representing their counterfeit goods as those of the plaintiff.
Copyright Infringement: Whether the defendant has violated the plaintiff’s copyright by using packaging, labels, or promotional material that copies or imitates the plaintiff's original works.
Public Safety and Consumer Protection: Whether the sale of counterfeit products poses a danger to consumers, given the inferior quality and potential hazardous nature of the goods.
Trademark Rights: The plaintiff contends that their trademarks have acquired secondary significance, meaning they have come to be closely associated with their business and products. Any use of these marks by the defendant would create confusion in the market, misleading consumers to believe they are purchasing genuine Akemi products when, in fact, they are being sold inferior, counterfeit goods.
Passing Off and Infringement: The plaintiff alleges that the defendant is engaged in the practice of passing off their products as genuine Akemi products, which constitutes trademark infringement under the Trade Marks Act, 1999. The plaintiff claims that this not only causes irreparable harm to its brand and reputation but also misleads and deceives consumers.
Copyright Infringement: The plaintiff argues that the defendant has copied the packaging, labels, and branding of Akemi products without permission, infringing on the plaintiff’s copyrighted material.
Consumer Safety: The plaintiff asserts that the sale of counterfeit products poses serious risks to consumers, as these products are of substandard quality, potentially hazardous, and could cause damage to property or health.
Legal Analysis:
Trademark Infringement and Passing Off: Under Section 29 of the Trade Marks Act, 1999, a registered trademark is considered to be infringed if an identical or deceptively similar mark is used in relation to goods or services without the trademark owner's consent. In this case, the court observed that the defendant was using marks identical or confusingly similar to those of the plaintiff, leading to a clear case of trademark infringement.
Additionally, the common law principle of passing off protects the goodwill of a business from misrepresentation. By selling counterfeit goods under the Akemi name, the defendant is engaging in passing off, leading consumers to falsely believe they are purchasing genuine Akemi products, thereby damaging the plaintiff’s brand.
Copyright Infringement: Under the Copyright Act, 1957, copyright protects the artistic, literary, and aesthetic elements of a product, including packaging, labels, and promotional material. The defendant’s unauthorized use of packaging and branding similar to that of the plaintiff constitutes copyright infringement. This aspect of the case highlights the defendant’s attempt to pass off counterfeit goods by copying the "trade dress" of Akemi products, which is protected under copyright law.
Consumer Safety: The issue of public safety also plays a critical role in this case. The plaintiff has convincingly demonstrated that the counterfeit products being sold by the defendant are not only substandard but also hazardous, posing a potential risk to consumers. This is a matter of public concern, and the court recognizes the need to protect consumers from such dangerous, counterfeit goods.
Interim Injunction and Court’s Ruling:
Based on the strength of the plaintiff’s arguments, the court was persuaded to grant an interim injunction against the defendant. The injunction restrains the defendant from:
Manufacturing, selling, or distributing counterfeit products bearing the plaintiff's trademarks;
Using any marks deceptively similar to the plaintiff’s registered trademarks;Infringing upon the plaintiff’s copyright through unauthorized use of similar packaging or branding;Engaging in any acts of passing off that create confusion in the marketplace.The court emphasized that the sale of counterfeit products not only violates the plaintiff’s intellectual property rights but also poses a significant threat to consumer safety. As a result, the court granted the injunction to prevent further harm to the plaintiff’s business and to safeguard public interest.
Conclusion:
In cases involving the sale of counterfeit goods, the defendant has no legal right to sell products that infringe upon the intellectual property of another party. The court’s decision in this case highlights the importance of protecting trademark owners from the sale of counterfeit products, which can cause irreparable harm to their business and reputation. Additionally, the court underscored the need to protect consumers from the dangers of substandard and hazardous counterfeit goods.
Case Citation: Akemi Chemisch Vs Devki Nandan Malik: 21.08.2024: CS(COMM) 706/2024: Delhi High Court: Mini Pushkarna, H.J.
Written by: Advocate Ajay Amitabh Suman
IP Adjutor [Patent and Trademark Attorney] United & United
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