India: Counterfeiting of Goods: Loss in Reputation & Goodwill

Last Updated: 25 April 2006
Article by Manisha Singh

Preface

The goodwill of a business is a recognized form of property and it can be protected against infringement by others by process of law. The difficulty lies in the fact that goodwill though can be described, is very difficult to define. It has no independent existence apart from the business to which it is attached and can be therefore attempted to define it as a thing which distinguishes an old established business from a new business or can be termed as the power of attraction sufficient enough to bring customers again and again. Goodwill includes whatever adds value to a business, it is the whole advantage which may have been built up by years of honest work or gained by strategic advertising. Goodwill is invariably symbolized or identified by a trademark or tradename. The above propositions can well be acknowledged by the case Le Chemise Lacoste vs. R.H. Garments & Others.

Factual Background & Decision

A suit for permanent injunction and damages was instituted against the defendants for using trademark LACOSTE / CHEMISE LACOSTE and the device CROCODILE against passing off and infringement of copyright. It was averred by the plaintiff that they are internationally renowned manufacturer and dealer of clothing articles including T- Shirts under the trademark Lacoste & Chemise Lacoste using the device of a Crocodile (the copyright of the artistic work owned by them). The crocodile device was prepared by Robert George and was first published in France in 1927. Further it was averred that the plaintiffs are proprietor in India and have registration in 'Lacoste and crocodile device' and 'crocodile device' and both the registration are valid and subsisting. The device of the plaintiff is used extensively in India and the products manufactured undergo the highest and most stringent quality standards in the state of the art facility. The yarn used is spun in-house into fabric on specially imported machines and the spinning is done at a very low speed so as to achieve the right quality of fabric. The fabric is dyed with Vat and reactive dyes and the yarn is put through special processing control before dying so that there is no shrinkage. The buttons used are made of mother of pearl and LACOSTE labels and packaging bags have immaculate quality standards. Finished garments are put through stringent quality control test and the colour fastness is tested at 90 degrees Celsius. The quality of the product is checked against the chlorine and light and to wet and dry rubbing and even to acid and alkaline perspiration.

The plaintiffs asserted that the defendants dealing in counterfeit products bearing registered trade mark 'LACOSTE', 'CROCODILE' and 'CHEMISE LACASTOE' did not only used the trade mark 'LACOSTE' but the labels and T- shirts sold by the defendants also reproduced the Crocodile device of the plaintiffs in entirety. The defendants did not only infringe the trade mark rights but also infringed the copyright of the plaintiffs.

The plaintiff’s pleading was that their internationally renowned goodwill, reputation and fame has been affected adversely by use of any of their marks by defendant and such counterfeit goods are causing confusion and deception in the minds of public and members of trade. These counterfeit goods have not originated from the plaintiff nor have they any affiliation with the persons who are counterfeiting the goods of the plaintiff. Counterfeiting and infringement of their trademark is also leading to dilution of the distinctive character of plaintiffs' trade mark and their trade marks are being debased and eroded. It was held that the plaintiffs, in the facts and circumstances and on the basis of the documents produced and the deposition of their witnesses, have been able to make out a case for grant of permanent injunction against the defendants from using their trade mark LACOSTE and/or CHEMISE LACOSTE and/or CROCODILE device.

In consideration of the facts and circumstances that the plaintiffs shall suffer irreparable loss in case the defendants were not restrained from manufacturing counterfeit products and any monetary compensation will not adequately compensate the loss which has caused to the plaintiffs, a decree of perpetual injunction was passed against the defendants restraining them from using the trade mark LACOSTE and/or CHEMISE LACOSTE and/or CROCODILE device in respect of any goods manufactured, selling or offering for sale, marketing, advertising, promoting, displaying, using the trade mark of the plaintiffs without any permission and consent and licence of the plaintiffs and infringing the rights of the plaintiffs in any manner and passing off their goods as the goods of the plaintiffs and in any way incorporating the plaintiffs' trade mark in any manner whatsoever.

Comments

Passing off is a form of tort or an actionable wrong. The object of this law is to protect the goodwill and reputation of a business from dishonest encroachment. No man is entitled to represent his goods as the goods of another man and no man is permitted to use any mark, symbol, device or other means thereby misrepresenting to the ultimate customer. The misrepresentation leads to erosion of the distinctiveness of the brand name consequently damaging the goodwill of the business with which the mark or symbol is attached. The concept of dilution of trademark has an important role to play in proving a passing off action. To succeed in a passing off action, the plaintiff has to establish sufficient goodwill and reputation in a trademark in relation to a business, deception or misrepresentation caused by the defendant in relation to the business and irreparable loss or damage suffered towards business and goodwill as a consequence of the defendants’ action. Therefore the law of passing off can be summarized in one short general proposition – no man may pass off his goods as those of another.

© Lex Orbis 2006

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