Passing Off Action Maintainable For A Registered Design; Not Limited To 'Something More' Than The Design Itself: Delhi High Court

Passing Off Action for a Registered Design is Maintainable, Rules Delhi High Court in Crocs Case

New Delhi – In a significant ruling clarifying the interface between design rights and trademark law, a Division Bench of the Delhi High Court has held that a lawsuit for passing off can be maintained based on the shape of a product, even if that shape is registered as a design under the Design s Act, 2000. The Bench, comprising Justices C. Hari Shankar and Ajay Digpaul , set aside a Single Judge's order that had dismissed several suits filed by footwear giant Crocs Inc. USA .

The Court ruled that a passing off claim is not barred simply because its subject matter is a registered design and that the plaintiff is not required to plead "something more" than the registered design to sustain the action.

Case Background

The case stems from a series of lawsuits filed by Crocs Inc. USA against several Indian footwear manufacturers, including Bata India Ltd., Liberty Shoes Ltd., and Relaxo Footwear Ltd. Crocs alleged that these companies were manufacturing and selling footwear with a shape and design identical to its iconic perforated clogs.

Crocs held a registered design (No. 197685) for its footwear since 2004. While it also filed suits for design infringement, the present appeals related to separate suits for passing off. In these suits, Crocs claimed that the unique shape of its footwear had acquired immense goodwill and reputation, functioning as a "source identifier" or "trade dress" in the minds of consumers. Consequently, it argued that the defendants, by copying this shape, were passing off their goods as those of Crocs , thereby violating its common law rights.

A Single Judge of the High Court had dismissed these passing off suits in February 2019, holding them to be not maintainable. The Single Judge, relying on an interpretation of the five-judge bench decision in Carlsberg Breweries A/S v Som Distilleries and Breweries Ltd , concluded that a passing off action cannot be founded on a registered design per se . It was reasoned that for a passing off claim to lie, the plaintiff must plead and prove that the action is based on "something extra" or elements beyond the registered design, such as a larger trade dress or packaging.

Key Arguments

Crocs (Appellant) , represented by Senior Counsel J. Sai Deepak , argued that a passing off action is a common law remedy to protect goodwill and reputation, which exists independently of statutory rights under the Design s Act. They contended that the Single Judge had misinterpreted the Carlsberg judgment and that nothing in law prevents the proprietor of a registered design from suing for passing off if that design has acquired secondary meaning as a trademark.

The Respondents (Defendants) , represented by counsels including Saikrishna Rajagopal , defended the Single Judge's decision. They argued that allowing a passing off action for a registered design would effectively grant perpetual monopoly, defeating the limited protection period (maximum 15 years) prescribed under the Design s Act. They maintained that the Carlsberg ruling correctly limited such actions to cases where the claim involved a "larger trade dress" beyond the registered design itself.

Court’s Analysis and Precedents

The Division Bench undertook a detailed analysis of the two key precedents: the three-judge Full Bench decision in Mohan Lal v Sona Paints & Hardwares and the five-judge Full Bench decision in Carlsberg Breweries .

The Court noted that while the Carlsberg judgment had found an observation in Mohan Lal to be "inaccurate," it had explicitly approved the "larger legal formulation" in Mohan Lal —that a passing off action lies. The Bench clarified what this meant:

"The larger legal formulation in Mohan Lal (supra), that a passing off action i.e. one which is not limited or restricted to trademark use alone, but the overall get up or “trade dress” however, is correct; as long as the elements of the design are not used as a trademark, but a larger trade dress get up, presentation of the product through its packaging and so on... the cause of action against such use lies."

The Division Bench interpreted this to mean that the distinction is between mere trademark use (which could lead to an infringement claim) and the use of the design as a larger trade dress or get-up to deceive consumers, which forms the basis of a passing off action. Crucially, the Bench held that this does not imply the plaintiff must plead "something more" than the registered design.

The Court emphasized the fundamental difference between the two actions:

* Design Infringement: A statutory action to protect the monopoly granted by registration, based on novelty and originality.

* Passing Off: A common law action to protect goodwill and reputation earned through use, based on misrepresentation and the likelihood of public confusion.

In a pivotal observation, the Court stated:

"We cannot, therefore, read, into para 43 of Carlsberg any proposition that an action for passing off would lie only if the subject matter of the action is “something more” than the subject matter of the design registration... The very same subject matter can, therefore, constitute the basis of the claim of design infringement, as well as the claim of passing off."

The Court further held that passing off is a sui generis (of its own kind) common law remedy, statutorily protected by Section 27(2) of the Trade Marks Act, 1999, and its availability cannot be denied unless a law explicitly does so, which is not the case here.

Final Decision

Concluding that the Single Judge had erred in law, the Division Bench quashed the judgment dated February 18, 2019. It restored all the suits filed by Crocs to the file of the Single Judge for trial on merits.

The decision reaffirms the right of a design holder to protect the goodwill vested in the design's shape through a passing off action, provided the necessary ingredients of reputation, misrepresentation, and damage can be established.