Author: Sreenidi R.N, Maharashtra National Law University Mumbai
To the Point
In a significant ruling, the Delhi High Court has overturned a 2019 single-judge order, thereby reviving a series of passing off suits filed by US-based footwear giant Crocs Inc.against leading Indian footwear manufacturers such as Bata India, Liberty Shoes, and Relaxo Footwear.The core of the dispute revolves around the alleged copying of Crocs’ distinctive foam clog design, which Crocs asserts constitutes a “shape trademark” or “trade dress.” This decision clears the path for a full trial, reigniting the debate on the interplay between design registration under the Designs Act, 2000, and common law protection for trade dress via passing off actions.
Abstract
Crocs Inc. had initiated multiple lawsuits, alleging that the Indian footwear companies were “passing off” their products by imitating the unique shape, configuration, and perforated design of Crocs’ foam clogs, thereby misleading consumers and leveraging Crocs’ established goodwill. A single judge had initially dismissed these suits, reasoning that seeking perpetual protection under trademark law for features already protected under the Designs Act (which offers limited-term protection) amounted to a “dual monopoly” and would subvert legislative intent.
However, a Division Bench of the Delhi High Court, comprising Justices Yashwant Varma and Ajay Digpaul, has now set aside this dismissal. The Bench clarified that a passing off action is a distinct common law remedy, independent of statutory protections under the Designs Act or the Trademarks Act, and its maintainability cannot be dismissed at a preliminary stage solely on the ground of dual protection. This ruling means that the suits will now move forward before a single-judge bench, where Crocs will have the chance to establish the distinctiveness of its design as trade dress and demonstrate the likelihood of consumer confusion.
Use of Legal Jargon
The present case hinges on several key intellectual property law concepts:
- Passing Off: A common law tort that protects unregistered trademark rights and goodwill. It prevents one trader from misrepresenting their goods or services as those of another, thereby causing confusion among consumers and damage to the original trader’s reputation. The “classical trinity” for proving passing off involves establishing: (1) Goodwill or reputation associated with the claimant’s goods/services; (2) Misrepresentation by the defendant leading to confusion; and (3) Damage (or likelihood of damage) to the claimant’s goodwill as a result of the misrepresentation.
- Trade Dress: The distinctive visual design or appearance of a product or its packaging that helps consumers identify its origin or brand. It can include elements like shape, colour, texture, graphics, and even the layout of a retail store. In this case, Crocs argues that the distinctive shape and perforated design of its clogs function as its trade dress.
- Shape Trademark: A type of trademark where the product’s three-dimensional shape functions as an indicator of its origin.
- Designs Act, 2000: A statute that provides for the protection of industrial designs in India, granting a limited-term monopoly (up to 15 years) for new or original designs applied to articles.
- Trademarks Act, 1999: The statute governing trademark registration and protection in India, including provisions for the protection of shapes as trademarks.
- Dual Monopoly: The legal concept debated in this case, referring to the contention that allowing protection under both design law (limited term) and trademark law (potentially perpetual) for the same features would grant an unfair and unintended monopoly.
- Adjudication on Merits: The process of a court hearing and deciding a case based on the substantive facts and legal arguments, rather than dismissing it on procedural or preliminary grounds.
The Proof
The Division Bench of the Delhi High Court conducted a thorough analysis of the prevailing legal framework and judicial precedents.The original dismissal was based on the premise that features covered by a registered design could not simultaneously form the basis of a passing off action, citing cases like Mohan Lal v. Sona Paint and Carlsberg Breweries v. Som Distilleries. The single judge had interpreted these rulings to mean that once a design is registered, a passing off action based solely on those features would undermine the legislative intent of the Designs Act, which provides limited-term protection.
However, the Division Bench rejected this restrictive interpretation. They emphasized that passing off is a common law remedy that exists independently of statutory protections. The Court clarified that there is no statutory proscription against a passing off action merely because the features in question are also registered designs. The Bench observed that the maintainability of a passing off action should be determined on its own merits, and not be summarily dismissed at the threshold simply because there is an overlapping design registration. This implies that if a design has, through extensive use and promotion, acquired distinctiveness and goodwill in the market such that it acts as a source identifier, it can be protected under the common law of passing off, irrespective of its design registration status.
Case Laws
The Delhi High Court’s decision critically re-examined and distinguished previous judgments, notably:
- Mohan Lal v. Sona Paint & Hardwares (2013) 55 PTC 61 (Del) (FB): The Delhi High Court’s full bench ruled that a combined lawsuit alleging both registered design infringement and passing off claims based on using the design as a shape trademark is typically not permissible. The Division Bench in the Crocs case appears to have re-evaluated the scope of this precedent, emphasizing that passing off is an independent cause of action.
- Carlsberg Breweries v. Som Distilleries (2019): This case was also relied upon by the single judge to dismiss Crocs’ suits, suggesting that a passing off action would only lie if the subject matter of the action was “something more” than the subject matter of the design registration. The Division Bench explicitly clarified that paragraph 43 of the Carlsberg judgment cannot be interpreted to require additional elements beyond the registered design for a passing off claim, provided the design has acquired distinctiveness as a trade dress.
Conclusion
The Delhi High Court’s revival of Crocs’ passing off suits against Bata, Liberty, and Relaxo marks a significant development in Indian intellectual property law. It reinforces the principle that common law remedies, such as passing off, operate independently of statutory protections. The ruling provides a crucial avenue for brand owners to protect their distinctive product aesthetics, even if those designs are also registered under the Designs Act, provided they can demonstrate acquired goodwill and a likelihood of consumer confusion. This decision ensures that the Indian legal landscape continues to evolve in line with global intellectual property trends, balancing the limited monopoly granted by design registration with the broader protection of goodwill and reputation offered by passing off. The case will now proceed to a full trial, and its outcome will undoubtedly set further precedents for how shape trademarks and trade dress are treated in India.
FAQ
Q1: What is a “passing off” suit? A1: A passing off suit is a legal action taken to prevent a party from misrepresenting their goods or services as those of another, thereby causing confusion among consumers and harming the goodwill of the original business. It protects unregistered intellectual property rights, particularly goodwill and trade dress.
Q2: Why were Crocs’ suits initially dismissed? A2: The suits were initially dismissed by a single judge who believed that Crocs was seeking a “dual monopoly” – attempting to get perpetual protection under trademark law for a design that had already received limited-term protection under the Designs Act, 2000.
Q3: What is the significance of the Delhi High Court’s latest ruling? A3: The Division Bench’s ruling is significant because it clarifies that a passing off action is a distinct common law remedy that operates independently of the Designs Act. It means that even if a design is registered, a company can still pursue a passing off claim if they can prove their design has acquired distinctiveness as a trade dress and that competitors are causing consumer confusion.
Q4: What is “trade dress”?
Trade dress refers to the overall visual appearance of a product or its packaging, including elements like shape, color, texture, and graphics that enables consumers to identify and differentiate its source.
In the Crocs case, the distinctive shape and perforated design of their foam clogs are argued to be their trade dress.
Q5: What will happen next in the Crocs case?
The crocs case will be remanded to a single-judge bench for a detailed trial.
Crocs will have the opportunity to present evidence to prove that its clog design has acquired a significant reputation and distinctiveness (goodwill) and that the Indian manufacturers’ products are causing confusion among consumers.
