The Madras High Court, in a recent judgment, has delivered a sharp reminder that trademark law does not end with mere comparison of marks. In a dispute arising out of a terminated franchise relationship, the Court drew a clear distinction between trademark infringement and passing off, ultimately focusing on commercial impression, trade dress, and post-termination conduct.

The dispute arose between Sangeetha Caterers and Consultants LLP and its former franchisees, who, upon termination of the franchise arrangement, commenced operations under the name “GEETHAM”/ “GEETHAM VEG” from the very same locations using an identical/ similar   colour scheme as that of the Plaintiff. The suit was filed in May, 2023, post issuance of a legal notice, seeking injunction, accounts and costs under the Trademarks Act, 1999. The Single Bench granted an interim injunction in September 2023, restraining the Defendants, and the Defendants appealed against the order. The Division Bench in November 2023 modified the interim order, permitting operations upon the Defendant (i) altering the logo colours and publishing disclaimers in news-papers stating that they have no connection with the Plaintiffs.

The Court’s Approach: Beyond the Mark

At the outset, the Court examined whether the competing marks were deceptively similar and held that the claim of trademark infringement was not made out. The Court then examined the dispute not merely through the lens of competing marks, but by placing significant weight on context, continuity, and consumer perception. It noted that the defendants were not strangers to the plaintiff’s business. They had operated as franchisees for several years and were fully aware of the plaintiff’s goodwill and reputation. Following termination, they continued operations from the same premises, targeting the same customer base, and positioned their business in a manner that suggested continuity. This background became central to the Court’s evaluation of misrepresentation.

Misrepresentation Through Trade Dress and Messaging

A decisive factor in the Court’s analysis was the trade dress adopted by the defendants immediately after exit. The evidence demonstrated that the defendants used a colour scheme identical to that of the plaintiff, with the name in red and “VEG” in green. This visual similarity, when combined with continued operation from the same locations, contributed to a strong likelihood that consumers would associate the defendants’ establishments with the plaintiff. Equally significant was the manner in which the defendants positioned their business to the public immediately after their exit from the franchise. Representations indicating that everything remained the same except the name reinforced the impression that the business had merely undergone a change in branding, rather than ownership. The Court viewed this as a deliberate attempt to retain and transition the plaintiff’s customer base.

Finding on Passing Off

On a holistic assessment, the Court observed that the defendants’ conduct during the immediate period of 17 months, post-termination of franchise amounted to misrepresentation sufficient to sustain a claim of passing off. The goodwill of the plaintiff stood established, particularly in light of the prior franchise relationship. The defendants’ adoption of a similar trade dress immediately after termination of franchise, coupled with their advertisements at that time indicating that except for a change in name, everything remained the same, was found to create confusion and mislead consumers into believing that there was an association with the plaintiff.  The Court therefore concluded that the defendants had leveraged the plaintiff’s goodwill in order to build their own business under a different name, during the relevant period in which such misrepresentation operated, which is precisely what the law of passing off seeks to prevent. Hence the defendants were held liable to pay the plaintiff the profits earned during the said period. As regards the modified trade dress post November, 2023, the court found that this coupled with the disclaimers published by the Defendant eliminated confusion and passing off.

Relief and Directions

Consequent to these findings, the Court granted relief directed at curbing the misrepresentation and restoring market clarity. The defendants were restrained in respect of the earlier trade dress and manner of business presentation that gave rise to the misrepresentation, and were directed to ensure that their business presentation did not create any association with the plaintiff. The Court also directed rendition of accounts, recognising that the defendants had commercially benefited during the period in which such misrepresentation operated.

Importantly, the relief is limited in scope and is confined to the period prior to the defendants’ modification of their branding, following the Order of the Division Bench. The order does not extend to the defendants’ current, modified logo and business presentation. The structure of relief reflects the Court’s recognition that the injury lay not merely in the use of a name, but in the manner in which the business was carried on.

Significance of the Ruling

This decision reinforces a critical principle in trademark law: consumer perception is shaped by the entirety of the commercial presentation, not just the mark in isolation. In cases involving former franchisees, the threshold for scrutiny is naturally higher. Where a party continues business from the same location, with the same presentation and customer targeting, the Court will closely examine whether the transition is genuine or merely cosmetic.  The ruling also underscores the growing importance of trade dress as an independent basis of liability, particularly in service industries where visual identity and customer experience are closely linked.

At the same time, the judgment clarifies that liability for passing off is fact-specific and time-bound, and does not automatically extend to subsequent business conducted under a modified identity. The judgment serves as a clear reminder that trademark law protects goodwill in its practical, commercial sense. A business cannot exit a brand and simultaneously preserve its identity through visual continuity and messaging. A change in name, without a corresponding change in presentation and perception, is insufficient. In the Court’s view, what matters is not how the business is described internally, but how it is understood by the consumer in the marketplace.

 By
Team P&A