2026 (3) TMI 500 - HC - Indian Laws

Exhaustion of trademark rights: lawful acquisition and resale escape infringement unless refurbishing materially impairs quality or goodwill.

Interpretation of trademark rights emphasises that infringement requires use in the course of trade of the proprietor's registered mark or a deceptively ... International exhaustion of rights - importation, refurbishment, debranding and resale of end-of-life HDDs infringement under Section 29 - registered trade marks Or amounted to passing off Or reverse passing off - noscitur a sociis principle - Seeking decrees of permanent injunction restraining them from altering, impairing, repacking, rebranding or performing any similar activity on the HDDs originally manufactured and sold by the appellants, as would amount to infringement or passing off - Whether the respondents have infringed the registered trade marks of the appellants, or are guilty of passing off, or reverse passing off. Principle of Noscitur a sociis - The noscitur a sociis principle is as old as the hills, and is a hallowed principle of interpretation of statutes, predicated on the principle that words, in a statue, take colour from the company they keep. As far back as in Angus Robertson v. George Day, referenced in M.K. Ranganathan v. Govt. of Madras [1955 (4) TMI 20 - SUPREME COURT] and Ahmedabad Primary Private Teachers Assn v. Administrative Officer [2004 (1) TMI 639 - SUPREME COURT] the Privy Council observed that it was “a legitimate rule of construction to construe words in an Act of Parliament with reference to words found in immediate connection with them”. A subset of the noscitur a sociis principle is the ejusdem generis doctrine, which applies where there are a number of expressions used together, which may be said to constitute a genus, in which case each of the said expressions is to be so interpreted as to be part of the genus. The ejusdem generis doctrine has, however, no application in a case in which there are only two words keeping company with each other as, just as one swallow cannot make a summer, one word cannot make a genus. In such a case, therefore, it is the noscitur a sociis principle which applies. The application of the principle is, of course, subject to the statute itself not indicating to the contrary. Here, the opening words of Section 30(4) would eminently support interpreting the word “changed”, as used later in the provision, noscitur a sociis with the word “impaired”. Reverse passing off not actionable under Indian trade mark law - No cause of action for 'reverse passing off' is available under the Trade Marks Act in India. - HELD THAT:- In Kaviraj Pt Durga Dutt Sharma v. Navaratna Pharmaceutical Laboratories [1964 (10) TMI 83 - SUPREME COURT] the Supreme Court observed that “an action for passing off is a Common Law remedy being in substance an action for deceit, that is, a passing off by a person of his own goods as those of another”. Similarly, in Satyam Infoway Ltd v. Siffynet Solutions (P) Ltd. [2004 (5) TMI 529 - SUPREME COURT] the Supreme Court held that “an action for passing off, as the phrase ‘passing off’ itself suggests, is to restrain the defendant from passing off its goods or services to the public as that of the plaintiff’s”. The Court held that Section 27(2), read with Sections 134 and 135, and settled Supreme Court authorities, confine the saved right to actions against a defendant who passes off his goods or services as those of the plaintiff. The statutory scheme and authorities treat passing off as an action by a proprietor against a user who misrepresents his own goods as those of the plaintiff; they do not support a cause of action against a person for representing another's goods as his own. Consequently, claims framed as 'reverse passing off' under the Trade Marks Act cannot sustain relief in trademark proceedings. [Paras 91, 92, 93, 94, 148] The appellants' claim of 'reverse passing off' under the Trade Marks Act is rejected as not actionable. Passing off requires misrepresentation, goodwill and damage - HELD THAT: - While “passing off” envisages confusion in the mind of the consumer, when he sees the goods, or the mark, of the defendant, “reverse passing off” envisages exactly the opposite, i.e., clarity in the mind of the consumer, regarding the origin of the goods, despite the defendant seeking to mask it. The likelihood of confusion, for the purposes of passing off, must exist at the initial interest stage, and we see no reason why this principle should not apply to the likelihood of clarity, in the mind of the consumer, in a case of reverse passing off. There is nothing to indicate that the shapes of the colours of the HDDs were unique to the appellants, and were not used by anyone else in the industry, nor is there enough material for us to come to a prima facie conclusion that an average consumer would be able to identify the HDDs as originating from the appellants solely on that basis. The onus, to make out such a case, was undeniably on the appellants and, to our mind, the onus has not been satisfactorily discharged. There is yet another reason why the appellants cannot, prima facie, seek an injunction against the respondents on the ground of “passing off” or “reverse passing off”. “Passing off” involves not merely an aspect of misrepresentation, but also misappropriation of the goodwill of the plaintiff, resulting in damage to the plaintiff. The three ingredients of passing off, it is trite, are goodwill, misrepresentation and damage [Refer S. Syed Mohideen v. P. Sulochana Bai [2015 (3) TMI 1197 - SUPREME COURT] Toyota Jidosha Kabushiki Kaisha v. Prius Auto Industries Ltd. [[2017 (12) TMI 1886 - SUPREME COURT] Cadila Health Care v. Cadila Pharmaceuticals Ltd. [2001 (3) TMI 928 - SUPREME COURT] Brihan Karan Sugar Syndicate [2023 (9) TMI 707 - SUPREME COURT]. If these are the ingredients of passing off, we see no reason why they would also not be the ingredients of reverse passing off. Applying the established threefold test (goodwill, misrepresentation and damage or likelihood of damage), the Court found no prima facie misappropriation of appellants' goodwill nor material to show that consumers, at the initial interest stage, would identify the refurbished HDDs as originating from the appellants. Alleged identification by technical tools (e.g., Crystal Disk Info) does not establish initial-interest clarity and is evidentiary, requiring trial. Absent evidence of goodwill misappropriation or probable damage, passing off is not made out. [Paras 106, 107, 108, 109, 148] There is no prima facie case of passing off; the appellant's passing-off claims are rejected. Infringement under Section 29 requires use of the registered trade mark in the course of trade - Section 30(3) is a limitation on infringement; Section 30(4) excepts the limitation where legitimate reasons to oppose further dealings exist - HELD THAT:- It is nobody’s case that the respondents’ trade marks are either identical with, or deceptively similar to, the appellants’ registered trade marks. Sale of goods bearing a registered trademark, after removing the trademark, cannot constitute “infringement” under any of the sub-sections of Section 29. Without proceeding sub-section by sub-section, a bare reading of Section 29 reveals that infringement, within the meaning of the Section, takes place only where the infringer uses the allegedly infringed registered trademark, or a trademark which is deceptively similar thereto, in the course of trade. “Use of a registered trademark” is defined in Section 29(6). It includes, in clause (b), offering or exposing the goods, bearing the registered trade mark, for sale, but does not include purchase of goods bearing a registered trademark. Before selling the HDDs, the respondents remove the appellants’ trademarks. They do not, therefore, use either the appellants’ registered trademarks or any mark which is deceptively similar thereto, in the course of trade. They do not, therefore, commit any act of infringement, as defined in Section 29 of the Act. The Court reiterated that infringement is governed by Section 29 and requires the defendant's use of the registered mark (or a deceptively similar mark) in the course of trade. Here, respondents effaced the appellants' marks before selling refurbished HDDs and did not use identical or deceptively similar marks; therefore Section 29 is not triggered and there is no infringement. Even assuming Section 30(3) needed consideration, the Court found the goods were lawfully acquired and imports were not shown to be unlawful, so the conditions of Section 30(3) are satisfied. Section 30(4) applies only where legitimate reasons exist to oppose further dealings-in particular where the goods are 'changed or impaired' in a manner that harms the proprietor's goodwill-and must be read with 'impaired'; the acts pleaded (debranding, reformatting, relabelling and loading new software) did not prima facie constitute such change or impairment nor show legitimate reasons to oppose further dealings. Accordingly, no prima facie infringement is made out. No prima facie infringement is established; Section 30(3) protections are satisfied on the material before the Court and Section 30(4) does not apply to bar that protection. Final Conclusion: On the interlocutory record, the Court found no actionable 'reverse passing off', no prima facie passing off, and no prima facie infringement of the registered marks; the appellants' interlocutory reliefs therefore fail and the appeals are dismissed. Issues: (i) Whether the respondents' importation, refurbishment, debranding and resale of end-of-life HDDs infringed the appellants' registered trade marks or amounted to passing off or reverse passing off; (ii) Whether Sections 30(3) and 30(4) of the Trade Marks Act, 1999 (including the doctrine of international exhaustion and the ''change or impaired'' exception) apply to permit or deny protection to subsequent dealers of lawfully acquired trade marked goods.Issue (i): Whether the respondents' acts constituted infringement under Section 29 or the torts of passing off or reverse passing off.Analysis: Section 29 defines infringement by requiring use in the course of trade of the registered mark or a deceptively similar mark. The respondents removed the appellants' marks prior to sale and used their own marks; no use of identical or deceptively similar marks in trade is prima facie shown. The ingredients of passing off require goodwill, misrepresentation and damage or likelihood of damage at the point of initial interest; no prima facie misappropriation of appellants' goodwill or evidence of initial-interest confusion at the point of sale was established. The concept of ''reverse passing off''-a defendant representing another's goods as its own-is not recognised as an actionable tort within the saved passing off rights under Section 27(2) read with Sections 134 and 135; alternatively, even assuming arguendo its availability, the necessary elements (initial-interest identification of the original manufacturer and misappropriation/damage) are absent on the record.Conclusion: On the issues of infringement, passing off and reverse passing off, the appellants have not made out a prima facie case in their favour; the respondents' acts do not, at this interlocutory stage, amount to infringement or to passing off, and reverse passing off is not actionable under the Trade Marks Act in the circumstances.Issue (ii): Whether Sections 30(3) and 30(4) operate to protect the respondents' dealings in lawfully acquired goods or to deny protection where the condition of goods is changed or impaired.Analysis: Section 30(3) operates as a limit on the proprietor's rights where goods bearing a registered mark are lawfully acquired and have been put on the market by the proprietor or with his consent; it does not create a new specie of infringement but provides an escape where Section 29 otherwise applies. Section 30(4) carves out exceptions where legitimate reasons exist to oppose further dealings, in particular where the condition of the goods has been changed or impaired; the term 'changed' must be read noscitur a sociis with 'impaired' and thus implies a negative alteration diminishing quality, value or goodwill. On the facts at the interlocutory stage: (a) acquisition and import of end-of-life HDDs were not shown to be unlawful; (b) no material establishes that the respondents' refurbishing materially impaired the goods in a manner legitimately prejudicial to the proprietors; and (c) even if Section 30(4) were invoked, Section 29's requirements must still be satisfied for infringement to follow.Conclusion: Sections 30(3) and 30(4), properly interpreted, do not afford the appellants a prima facie basis to restrain the respondents; Section 30(3) protections apply on the present record and Section 30(4) is not attracted.Final Conclusion: The appellants have failed to establish a prima facie case of trademark infringement, passing off or actionable reverse passing off, and Sections 30(3) and 30(4) do not yield a contrary result; the interlocutory appeals are dismissed and the operative directions of the learned Single Judge are maintained so that the appellants are not placed in a worse position for having appealed.Ratio Decidendi: For purposes of infringement under the Trade Marks Act, 1999, use in the course of trade of the proprietor's registered mark or a deceptively similar mark is indispensable; Section 30(3) limits the proprietor's rights by applying the principle of international exhaustion where goods bearing a mark are lawfully acquired and put on the market by the proprietor or with his consent, while Section 30(4) excepts cases where legitimate reasons (in particular material change or impairment that prejudices quality, value or goodwill) justify opposition to further dealings.