Goodwill, Misrepresentation By Defendant And Subsequent Damage Are Prerequisites To Enforce Passing Off Remedy For Unregistered Trademarks: J&K High Court

Brief Facts:

3 Coaching Institutes (“Institutes”) amalgamated under the name of 'EMERGE - KIE HOPE MISSIONe' on January 6, 2024. Earlier, they were operating separately under the names of 'KIE', 'HOPE' and 'MISSIONe'. Out of these names, 'KIE' had obtained a registered trademark. For their new name after amalgamation, the Institutes had also filed for a trademark.

In March/April 2024, the Institutes discovered that Emerge Classes Pvt. Ltd. (“Emerge Classes”) was using a similar trademark "EMERGE Infinity & beyond – powered by KIE" for coaching services in Srinagar. This use was allegedly designed to create confusion and mislead students into believing the services were associated with the Institutes. The Institutes reproduced the logos and devices used by both parties before the Trial Court to demonstrate the deceptive similarity. They contended that Emerge Classes registered social media pages under 'Emerge Srinagar' to capitalize on their goodwill and reputation. The use of the trademark was an unethical attempt to profit from their established brand.

The Trial Court concluded that Emerge Classes' trade name and logo were deceptively similar to the Institutes and related to similar services. The Trial Court temporarily restrained Emerge Classes from using the trademark (device and logo) of the Institutes, while disposing of the application filed by the Institutes. Aggrieved by the order of the Trial Court, Emerge Classes filed an appeal before the Jammu and Kashmir High Court (“High Court”).

Emerge Classes contended that the Institutes' trademark, 'EMERGE KIE HOPE MISSION E PRIVATE LIMITED,' was not registered and had not gained traction in the Kashmir Valley. They had only recently launched this trade name, whereas Emerge Classes had already initiated the registration process for the trademark 'Emerge-infinity and beyond' with a specific logo with the competent authority. Further, the registered trademark 'KIE' was not being used by the Institutes, and they had formed an amalgamation by changing their trade name and brand. Therefore, they could not claim exclusive use of the trademark 'KIE' after abandoning it, nor could they claim exclusive rights to the word 'Emerge'.

Observations of the High Court:

The High Court noted that neither party's trademarks were registered. Under Section 27 of the Trade Marks Act, while no proceedings can be initiated for the infringement of unregistered trademarks, Section 27(2) recognizes common law rights against 'passing off' (when one party misrepresents the goods or services of another person as their own). Therefore, passing off actions are legitimate under common law principles, irrespective of trademark registration.

The High Court referred to S. Syed Mohideen v. P. Sulochana Bai [(2016) 2 SCC 683)], where the Supreme Court held that prior user rights are superior to registration rights. Therefore, the Supreme Court highlighted the premise that passing off claims is founded on common law principles of prior usage and associated goodwill.

The High Court held that to enforce a 'passing off' action, a plaintiff must demonstrate ownership of business goodwill, misrepresentation by the defendant leading to confusion, and consequent damage to the plaintiff's goodwill. Despite Emerge Classes' contention that the goodwill of the Institutes was insufficient due to the short period since their brand launch, the High Court noted that the Institutes had prior goodwill. This fact was substantiated by the registration of the brand 'KIE,' which has been in use since 2013.

Regarding the similarity of the trademarks, the High Court referred to the Supreme Court's criteria in Parle Products (P) Ltd. vs. J. P. & Co. Mysore [(1972) 1 SCC 618]. The Supreme Court assessed the overall similarity rather than detailed side-by-side comparisons. The High Court observed that the logos of Emerge Classes and the Institutes prominently featured the symbol 'Infinity' and the word 'EMERGE,' with additional phrases like 'KIE HOPE MISSIONE' and 'POWERED BY KIE,' respectively. The High Court found that these elements created an overall similarity likely to cause confusion among consumers, particularly since 'KIE' was a registered trademark of one of the Institutes.

The High Court concluded that the Institutes demonstrated a prima facie case of prior use and goodwill sufficient to justify the interim injunction. The similarity between the trademarks and the likelihood of confusion supported the Trial Court's decision. Therefore, the High Court upheld the interim injunction, recognizing the Institutes' rights under common law against passing off, even in the absence of registered trademarks.

Case Title: Emerge Class Private Limited vs Kashmir Institute of Excellence and Others

Citation: 2024 LiveLaw (JKL) 159

Case No.: FAO No. 18/2024; CM No. 3278/2024

Advocate for Emerge Classes: Mr T. H. Khawaja with M/s Imam Abul Muiz & Naseer ul Akbar

Advocate for the Institutes: Mr Mubashir Mushtaq