On 26 February 2024, the Delhi High Court (DHC) in Western Digital Technologies Inc & Anr vs Geonix International Private Limited, granted an ex-parte ad interim injunction to the plaintiff on the basis of trademark infringement and reverse passing off. In the extant suit, the plaintiff, Western Digital Technologies Inc. (WD), a well-known manufacturer of storage devices, claimed that the defendant, Geonix International Private Limited, was refurbishing and rebranding “WD” hard disks as “Geonix” hard disks, presenting reports from their own engineers and an independent expert to support its claim that these products originally belonged to the plaintiff. Additionally, it argued that an internal report, generated after connecting the disputed products with a device, further confirmed the link to the plaintiff as the original manufacturer.
However, the defendants, represented in an advanced service, countered by asserting that there was no infringement since the plaintiff’s rights had been exhausted through the defendants’ lawful procurement. Despite this argument, the Court found a strong case of reverse passing off, emphasizing that the connection between the disputed goods and the plaintiff could harm the plaintiff’s reputation.
Interestingly, a similar ex-parte injunction was also grabbed by WD earlier in 2022 in the case of Western Digital Technologies Inc. vs. Raaj Computer. In that case, the court emphasized that presenting the plaintiff’s goods as new and unused could deceive customers, leading to loss and injury, the potential dilution of trademarks, and unfair trade practices. DHC had ruled that passing off old and used hard disk drives as new products after altering their labels and printed circuit boards constitutes trademark infringement. As a result, the court granted an ex-parte interim injunction in favor of WD. While the circumstances bear a striking resemblance to the current case, the court’s analysis in this previous case did not delve into the aspects of reverse passing off. While the facts are much similar to the extant case, the court’s analysis in the Raaj case was silent on the aspects of reverse passing off.
No ‘Straightforward’ Crime: Why Reverse Passing Off?
Passing off as understood generally, occurs when someone knowingly or unknowingly presents their goods or services as those of another party In a typical trademark passing-off scenario, Party X accuses Party Y of offering and selling goods under a mark that closely resembles Party X’s mark. In such a case, both parties are selling their own products, but Party Y presents its products as being affiliated with Party X due to the confusingly similar mark.
“Reverse passing off” involves a similar situation, but this time instead of producing their own products, Party Y buys Party X’s products, removes or hides Party X’s trademark, and then sells the product under Party X’s trademark. In instances of reverse passing off, the defendant may be held liable even if their mark is completely different from the plaintiff’s. Unlike the multifactor likelihood of confusion test for typical trademark passing off, in a reverse passing off case, the plaintiff only needs to show that the defendant falsely attributed the origin of the plaintiff’s products, leading consumers to believe the product came from the defendant, thereby harming the plaintiff.
In the extant case, the court observed that the defendant had removed the original trademarks from the Impugned Products without the registered proprietor’s permission and proceeded to sell them as brand-new products under their “Geonix” mark. Since the same products (originally manufactured by the Plaintiff) were being sold by the Defendants but represented as products of the Defendants, the court applied the concept of reverse passing off, not straightforward passing off (where the Defendants manufacture goods to appear as those of the Plaintiffs).
In Paragraph 22 of the order, the Court noted that a linkage between the mark used by the plaintiff and the defendant was not immediately apparent on the Impugned Products but became evident upon closer inspection. This linkage, in the Court’s prima facie opinion, could have a potentially damaging effect on the Plaintiffs’ reputation. Therefore, the Court deemed this a case of reverse passing off, as the defendant was falsely attributing the origin and source of the Impugned Products. Consequently, the DHC noted that the Plaintiffs could invoke Sections 30(3) and 30(4) of the Act.
No ‘Straightforward’ Answers Either: Some Dilemmas to Ponder Upon
The scope of reverse passing off is rather varied and can lead to different outcomes depending on the circumstances. When a part in the product is replaced with another and then released into the market, the holding of the court may vary for passing off given the replaced part is now an additional component of the final product and no longer the product as it was manufactured originally. Similarly, reselling a competitor’s product without removing their trademark could also result in a different conclusion, calling upon the application of sections 102 and 103 of the Trademarks Act, 1999 (falsely applying any trademark to goods or services). Customized goods also raise interesting questions under the scope of reverse passing off. Would a highly customized piece of a branded item fall under the Test of Confusion for a reverse passing-off claim? Moreover, this case has intriguing implications for the Right to Repair. If the hard disks were repaired and installed into “Geonix PCs,” would that constitute reverse passing off? It’s often observed that even a repair job can potentially transform a product into something different, but if it still leads to potential post-sale confusion, the trademark can be held to be passed off based on the likelihood of confusion. The implications that flow out of this concept will be interesting to note.