Goodwill, and What Passing Off Protects
Chapter One Hundred Four
Syllabus topic 3.3, "Infringement and Passing Off."
Pages 466 to 470 of 742
In one line
Goodwill is the attractive force which brings in custom, it belongs to the business and not to the mark, it is local to the country where the custom is, and without it there is no passing off action at all.
Why this is the whole case
A registered proprietor proves his right by producing the certificate. A passing off plaintiff has no certificate. He must prove that the public associates the name, mark or get up with him, and that association is his goodwill.
Everything else follows from it. If there is no goodwill there is nothing for the defendant's misrepresentation to bite on, and nothing to damage. Two of the three elements collapse.
What goodwill is
It is the benefit and advantage of the good name, reputation and connection of a business, the attractive force which brings in custom. That is the classical description, and Indian judgments use it.
Three consequences of that definition are examinable.
First, goodwill attaches to a BUSINESS, not to a mark in the air. You cannot own goodwill in a word you have never traded under. This is why section 39 permits assignment of an unregistered mark with or without the goodwill of the business, and why an assignment without goodwill of a registered mark needs the section 42 machinery worked in chapter 850.
Second, goodwill is LOCAL. It exists where the custom is. A trader with a queue outside his shop in Tirunelveli has goodwill there.
Third, goodwill is a species of PROPERTY. It can be sold, licensed, inherited and damaged, and its damage is the injury the tort compensates.
Reputation and goodwill
The two words are often used interchangeably and should not be.
Reputation is knowledge of the name among the public. Goodwill is the custom that knowledge attracts.
Indian courts have not insisted on the distinction as sharply as the English courts do, and in most Indian passing off cases proof of reputation is treated as proof of goodwill. But the distinction is what Toyota v Prius turns on, so it must be understood.
How goodwill is proved
| Evidence | What it shows | Weight |
|---|---|---|
| Length of continuous use | The oldest and best proof | Very high, Mahendra & Mahendra, Syed Mohideen |
| Sales turnover, year by year | The size of the custom | High, and easy to prove from accounts |
| Advertising expenditure | Effort to build the association | High, Laxmikant Patel |
| Advertisements in publications circulating in India | Reputation reaching India without the goods | High, Whirlpool |
| Registrations elsewhere in the world | First in the world market | Relevant in pharmaceuticals, Milmet Oftho |
| Evidence of actual confusion | That the association is real | Very high but rarely available |
| Awards, press coverage, third party references | Independent recognition | Useful corroboration |
| Mere presence on the internet | Little by itself | Low, Toyota v Prius |
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