Vasundhra vs Vasundhara: Notes on Section 35 and the Goodwill Question
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Vasundhra vs Vasundhara: Notes on Section 35 and the Goodwill Question
By Subhalaxmi Mukherjee
In an order dated August 18, the Delhi High Court had occasion to examine the scope and applicability of Section 35 of the Trade Marks Act, 1999 (“the Act”), while also clarifying the prerequisites for establishing goodwill in a passing off action. Section 35 of the Act protects the bona fide use of a person’s own name or place of business, or that of their predecessor, against any remedy under the Act, including trademark infringement (previously discussed here, here and here). The litigation arose from an appeal filed by Vasundhra Jewellers challenging the July 19, 2023, decision of a single-judge bench, which had dismissed its application for an interim injunction against its near namesake, Vasundhara Fashion Jewellery. The conflict began in June 2019, when Vasundhra Jewellers became aware of the respondent’s use of the ‘identical’ mark VASUNDHARA. After a cease-and-desist notice failed to resolve the issue, the appellant instituted a suit seeking a permanent injunction on the grounds of trademark infringement and passing off. That suit continues to remain pending before the single-judge bench.
This blog post seeks to deconstruct the competing arguments advanced before the Court and examine the order delivered, particularly its interpretation of Section 35 and the appellant’s inability to establish a successful passing off claim, while asking the larger question – does the Court’s reasoning really hold up?
Setting the Stage: The Whats and Whys
Before we get to what the Court thought, we must understand what the parties thought they were arguing – and why it worked or didn’t.
Vasundhra Jewellers, established in 1999, claimed that the mark VASUNDHRA had become a source identifier through continuous use, and that the respondent’s use of a deceptively similar mark, VASUNDHARA, amounted to trademark infringement and passing off. The primary defence raised against this claim of injunction was Section 35 of the Act. This defence arose because Vasundhara Fashion Jewellery had originally been started as a sole proprietorship by Vasundhara Mantri in her own name, later incorporated as a company, with all rights (including intellectual property) assigned to the present respondent. The appellant, however, argued that Section 35 did not apply for three reasons: first, the provision applies only to natural persons and not corporate entities; second, it protects the use of a person’s full name, not merely a first name; and third, it can be invoked only in cases of trademark infringement, not passing off. For the third argument, we note an inconsistency. The appellant had initially pleaded both trademark infringement and passing off, yet later they conveniently omitted one cause of action to sidestep the impact of Section 35.
Interestingly, Vasundhara Fashion Jewellery conceded that the case was one of passing off, but only to establish that it was not a case of trademark infringement, since both marks were legally registered. To reinforce this point, they relied on the appellant’s own statements made before the Trade Marks Registry in 2019, where the appellant had admitted that the marks were neither identical nor deceptively similar. Their primary opposition, however, hinged on the applicability of Section 35. They argued that questioning its applicability to a corporate entity had no merit, as the business had originally been started by an individual in their own name. They further rejected the contention that Section 35 applies only where a person’s full name is used.
From the competing contentions, two primary issues arise: first, whether Section 35 applies at all, and second, whether passing off has been established, particularly since both parties appear to accept its relevance. An ancillary issue also emerges: what weight, if any, should be given to statements made by parties before the Trade Marks Registry during the course of a subsequent litigation.
So, What Did the Court Do with All This?
To set the premise, the Court upheld the single-judge bench’s decision and stated that the appellants had not been able to establish a case for an interim injunction. Firstly, the Court clarified that Section 35 applies equally to passing off actions, since the remedy for passing off is also located under Section 135 of the Act, meaning that an injunction against passing off stands on the same footing as one sought for trademark infringement. Having confirmed its applicability, the Court endorsed the respondent’s submission that questioning Section 35’s extension to corporate entities was redundant, as the company had been founded by an individual in her own name, precisely the kind of scenario Section 35 was designed to protect. It also rejected the argument that Section 35 protects only full names, relying on Precious Jewels and Anr. v. Varun Gems (Supreme Court, 2014) (for a detailed discussion see here), where even a surname was held to fall within its ambit, and refused to create an artificial limitation unsupported by precedent or legislative intent. Finally, it emphasised that the only statutory requirement under Section 35 is bona fide use, which had already been judicially confirmed in Vasundhara Jewellers Pvt. Ltd. v. Kirat Vinodbhai Jadvani and Anr. (Delhi High Court, 2022), another case that involved the respondent. On this basis, the Court held that Section 35 would operate as a robust defence for the respondents, even if a case of passing off was made out.
Secondly, the Court held that the claim of passing off was not established. An action for passing off requires proof of goodwill, misrepresentation, and consequent damage. The Court observed that goodwill had not been demonstrated, relying on Brihan Karan Sagar v. Yashwantrao Mohite (Supreme Court, 2023), where it was held that goodwill is assessed primarily through sales figures and advertisement reach. In the present case, both were found inadequate, and the claim accordingly failed.
Finally, the Court struck at the very foundation of the suit, holding it to be non-maintainable. It was observed that the appellant, having made earlier contradictory statements before the Trade Marks Registry, was now estopped from asserting that the two marks were similar. In reaching this conclusion, the Court relied on Raman Kwatra v. Kei Industries (Delhi High Court, 2023). However, the appellants argued that this precedent was inapplicable, since they had never pursued the trademark registration to completion, as in the cited decision. The Court rejected this contention, clarifying that the outcome of the application was irrelevant; what mattered was that a party cannot adopt diametrically opposite positions for convenience, hence the precedent squarely applied.
Conclusion
Put simply, the Court adopted a broad interpretation of Section 35. While I agree with its refusal to create an artificial exception for the use of first names, it is troubling that this approach indirectly extends protection to corporate entities distinct from the individuals whose names they bear, effectively granting them an expansive shield against trademark infringement. In doing so, the Court at times equates the company with its creator, an unnecessary instance of lifting the corporate veil, as no matter the contribution and number of shares, Vasundhara Mantri remains separate from her company. While I do not dispute the reasoning in this case, given the complete assignment of rights to the present respondent, the reality remains that the company now bears no substantive connection to its original creator beyond sharing a name – yet it continues to enjoy broad protections on that basis.
Equally concerning is the Court’s narrow view of goodwill, which hinges almost exclusively on sales figures and advertising reach. Such a quantitative approach privileges larger corporations while sidelining smaller enterprises that may maintain a sustained and loyal consumer base, if not a massive one. Which begs the uncomfortable question: Is passing off slowly turning into an exclusive privilege for deep-pocketed litigants?