Supreme Court Upholds Crocs' Passing Off Suits, Leaving Key Design Law Question Open

NEW DELHI – The Supreme Court of India has dismissed petitions from major footwear manufacturers, including Bata India and Liberty Shoes, allowing US-based Crocs Inc. to proceed with its long-standing 'passing off' lawsuits. The decision upholds a Delhi High Court ruling on the maintainability of these suits, which allege that the Indian companies copied the iconic trade dress of Crocs' foam clogs.

In a significant order that reverberates through the intellectual property landscape, a bench comprising Justice Sanjay Kumar and Justice Alok Aradhe declined to interfere with the High Court Division Bench's judgment. However, in a crucial clarification, the bench stated that the "question of law is kept open," signaling that the fundamental legal conflict between design rights and passing off remedies remains unresolved at the apex court level. The suits will now return to a single-judge bench of the Delhi High Court for trial on merits.

The Genesis of the Dispute: A Decade-Long Legal Battle

The legal saga began over a decade ago when Crocs Inc. USA initiated six separate lawsuits in the Delhi High Court. The company claimed that prominent Indian footwear makers—Bata India, Liberty Shoes, Relaxo Footwear, Action Shoes, Aqualite, and Bioworld Merchandising—were engaging in passing off by imitating the distinctive shape, configuration, and perforated design of its clogs.

Crocs' central argument is that these design elements have transcended their purely aesthetic function to become a source identifier, or 'trade dress,' exclusively associated with the Crocs brand in the minds of consumers. By copying this design, Crocs alleges, the defendants are misleading the public and unfairly capitalizing on the immense goodwill and reputation the company has cultivated globally.

The initial round of litigation favoured the Indian manufacturers. In a judgment dated February 18, 2019, a single-judge of the Delhi High Court dismissed all six suits at the preliminary stage, deeming them non-maintainable. The core reasoning was that a party could not simultaneously claim statutory protection for a product configuration as a registered design and common law protection for the very same features through a passing off action. This created a seemingly clear demarcation between the two forms of intellectual property protection.

However, this position was decisively overturned in July 2023. A Division Bench of the High Court, featuring Justices C Hari Shankar and Ajay Digpaul, reversed the single-judge's order. It held that a passing off action concerning a trade dress that is also registered as a design under the Designs Act, 2000, is indeed maintainable. This revival of Crocs' suits prompted Bata, Liberty, and the other manufacturers to appeal to the Supreme Court.

The Core Legal Conundrum: Designs Act vs. Common Law

The arguments before the Supreme Court bench delved into the complex and often contentious interface between the Designs Act and the common law tort of passing off.

The Appellants' Position: Preventing 'Evergreening' of Monopoly

Senior Advocate Neeraj Kishan Kaul, representing Bata and others, and Senior Advocate Saikrishna Rajagopal, for Liberty Shoes, mounted a robust challenge based on the statutory scheme of the Designs Act. Their primary contentions were:

• Statutory Limitation: The Designs Act provides a limited monopoly for a maximum of 15 years. They argued that allowing a passing off claim on the same design features would permit companies to "evergreen" their monopoly, effectively perpetuating it indefinitely through the common law route, thereby circumventing the express legislative intent of the Act.
• Lack of Additional Elements: Counsel argued that for a passing off claim to be maintainable alongside a design claim, it must be based on something more than just the registered design. As Mr. Rajagopal submitted, "If Design Act claim features x, y, z elements, then the passing off claim must have some additional elements a,b,c." They contended that Crocs' plaint contained no allegations beyond the imitation of the registered design itself.
• Interpretation of Carlsberg : The appellants invoked the Delhi High Court Full Bench's decision in Carlsberg Breweries v. Som Distilleries and Breweries , which held that causes of action for design infringement and passing off could be combined. They interpreted this to mean that a standalone passing off suit based solely on a registered design was not maintainable, arguing the precedent supported their case.

Crocs' Counter: The Sanctity of Common Law Rights

Senior Advocate Akhil Sibal, appearing for Crocs, countered that the High Court's decision was based on foundational legal principles. His arguments centered on the distinct nature of the two remedies:

• Separate Causes of Action: Mr. Sibal emphasized that design infringement is a statutory right arising from registration, while passing off is a common law remedy protecting goodwill earned through use. He argued, "Passing off is a common law remedy aimed at protecting one's hard earned goodwill from others who deceitfully try to capitalise on it."
• No Statutory Bar: He pointed out that unlike the Trademarks Act, which under Section 27(2) explicitly saves the common law remedy of passing off, the Designs Act contains no provision that excludes it. The absence of such a bar, he contended, implies that the common law remedy remains available.
• Goodwill as the Foundation: The essence of Crocs' case, Sibal explained, is not the mere existence of a design registration, but the "immense goodwill" generated through its iconic trade dress since 2004. The suit, he clarified, is purely for the common law remedy. He stated, "I have to establish that I have generated goodwill through my trade dress. My suit is only for the common law remedy."

The Supreme Court's Stance and Future Implications

The Supreme Court's refusal to interfere at this stage is a procedural victory for Crocs, allowing its suits to finally proceed to trial after years of being stalled on the question of maintainability. The bench directed the single judge to proceed with the suits "without being influenced by any observations in the Division Bench's Judgment," ensuring that the trial will be conducted on the basis of the evidence presented.

However, by explicitly keeping the overarching question of law open, the Court has deferred a definitive ruling on this critical IPR issue. This leaves a degree of uncertainty for brand owners and manufacturers.

For IP practitioners, the case underscores a pivotal strategic consideration: the dual-pronged approach to protecting product designs. While design registration offers a potent but time-limited statutory shield against copying, actively building and documenting goodwill in a product's shape and configuration can create a parallel, and potentially perpetual, line of defense through passing off.

The trial in the Delhi High Court will now be closely watched. Crocs will bear the evidentiary burden of proving that its clog design has acquired a secondary meaning and is unequivocally associated with its brand, and that the defendants' products are causing confusion and damaging its goodwill. The outcome of this trial, and any subsequent appeals, will likely bring this fundamental question back to the Supreme Court for a final, authoritative pronouncement that will shape the future of design and trademark law in India.