Close enough to misrepresent, but not enough to infringe?

A comprehensive analysis of Madras High Court decision in Sangeetha Caterers and Consultants LLP v. Rasnam Foods Pvt Ltd and Ors.[1] 

Introduction

The recent decision of the Madras High Court in the case of Sangeetha Caterers and Consultants LLP v. Rasnam Foods Pvt Ltd and Ors. represents a watershed moment in Indian intellectual property jurisprudence with respect to the interplay between infringement and passing off in trademark law.  Referring to the Trade Marks Act, 1999 and the Commercial Courts Act, 2015, the case provides a nuanced exploration of the intersection between franchise contracts, statutory trademark rights, and the common law doctrine of passing off. Furthermore, the dispute highlights how a brand’s identity is constructed through a ‘get-up’ or trade dress, and the legal consequences that follow when a former partner attempts to misappropriate that identity.

Factual matrix and history of proceedings

The Plaintiff, Sangeetha Caterers and Consultants LLP, is a well-known Indian restaurant chain, having used the trademarks ‘SANGEETHA’ and ‘SANGEETHA VEG RESTAURANT’ consistently since 1985. Over nearly four decades, the brand expanded internationally with 29 outlets in Chennai and 21 units abroad. Their brand identity was anchored by a distinctive composite mark including the word ‘SANGEETHA’ in a specific font, a Veena device, and a recognizable colour scheme- with the word ‘SANGEETHA’ written in red and the word-’VEG’ written in green.

The Defendants, M/s Rasnam Foods Pvt Ltd., were originally franchisees of the Plaintiff pursuant to an agreement dating back to 2001. Following a breakdown in the relationship and a rejected relocation request in March 2022, the parties mutually terminated their franchise agreement on 19 April 2022. The Plaintiffs alleged that despite explicit reminders to withdraw all branded materials, the Defendants launched ‘GEETHAM’ restaurants on 1 June 2022. The Plaintiffs also highlighted the fact that the Defendants continued to operate from the exact same premises while retaining the identical red-and-green trade dress, and interior ambiance of the original Sangeetha outlets.

In the course of the present suit proceedings, the Plaintiff was granted an interim injunction by learned Single Judge on 22 September 2023, which was subsequently modified by the Division Bench on 2 November 2023. Subsequent to the order of the Division Bench, which directed the Defendants to adopt a different colour scheme and modify the font used for the word ‘GEETHAM’, the Defendants modified their trade dress and placed advertisements in the Times of India and New Indian Express declaring that the Defendants’ restaurants in Chennai have no connection with SVR Sangeetha, the Plaintiff’s restaurants.

Decision of the Court

The Hon’ble Court opined on both the original issues- pertaining to the reliefs that the Plaintiffs were entitled to, such as permanent injunction, mandatory injunction, statement of accounts, suit costs, damages and other remedies as well as additional issues framed- on deceptive similarity of the rival marks (prior and subsequent to modification), the Plaintiff’s claim of infringement, the Plaintiff’s claim of passing off and the period in which the Plaintiff was entitled to relief, considering the modification of the Defendant’s trade dress.

The Court declined to grant permanent injunction for trademark infringement, finding a lack of deceptive similarity, and consequently also denied any infringement-based relief such as removal of trade name and domain name. However, the Court allowed the passing off claim in part, for the period prior to the modification of the trade name by the Defendants and found that the earlier trade dress was deceptively similar to that of the Plaintiff. Accordingly, the Court directed the Defendants to provide statement of accounts of revenue earned in the said period as well as pay the Plaintiffs the entire profits derived therefrom.

The Court did not find a claim of passing off for the period after 2 November 2023 due to the modifications made by the Defendant as well as the advertisements taken out by them. However, it directed the Defendants to pay costs of INR 10,00,000 to the Plaintiff towards court fees, lawyer fees and other expenses.

Reasoning of the Court

On the finding against infringement 

In a decision that underscores the nuanced nature of statutory protection against trademark infringement in the Trade Marks Act, the Hon’ble Court rejected the Plaintiff’s infringement claim. The Court noted that Plaintiff’s registrations were for composite marks and that the prominent feature of the Plaintiff’s marks was the word ‘SANGEETHA’. Because the Defendants’ mark, ‘GEETHAM,’ omitted the protected word ‘SANGEETHA’ and the Veena device, the marks taken in isolation were held to be not ‘deceptively similar’ enough to satisfy the statutory threshold of infringement.

On the finding of passing off 

While the Plaintiff’s statutory claim of infringement failed, the Hon’ble Court held the Defendants liable of Passing off for the period between June 2022 and November 2023. Unlike infringement, passing off does not require a registered mark, as a common law right that protects the goodwill of a business from misrepresentation. The Court applied the ‘Classical Trinity’ of passing off to the present facts, finding goodwill in the Plaintiff’s marks, misrepresentation by the Defendant and damage to the business of the Plaintiff.
 

• Misrepresentation: By maintaining the red-green color scheme and operating from the same premises, the Defendants created a ‘visual continuity’. The Hon’ble Court held that a reasonable consumer with ‘imperfect recollection’ would view GEETHAM not as a new competitor, but as an ‘avatar’ or rebranding of Sangeetha.
• Goodwill: The Hon’ble Court found that elements of goodwill and reputation were established in the present case as evidenced by the past relationship of franchisor-franchisee. 
• Damage: The defendants’ turnover surged from INR 8 crore to over INR 100 crore during the period between June 2022 and November 2023. This financial leap, combined with consumer reviews stating, ‘Sangeetha has changed its name to Geetham,’, as well as newspaper articles which stated that everything remained the same except the name proved that the Defendants’ activities caused damage in the form of loss of profits to the Plaintiff. 
   

On relief for the period after modification of trade dress

Subsequent to the order of the Division Bench, which directed the Defendants to adopt a different colour scheme and modify the font used for the word ‘GEETHAM’, the Defendants modified their trade dress by introducing an orange/ochre gradient and uppercase font to their logo. The Hon’ble Court ruled that this substantial redesign was sufficient to break the visual similarity, ending the passing off liability from that date forward.

However, for the period of deception, the Court took a stricter approach. It granted injunctive relief against the red-green trade dress adopted between June 2022 and November 2023 and ordered the disgorgement of profits. The Defendants were directed to render true accounts for six specific outlets and pay the profits earned during the misrepresentation period to the Plaintiff. Additionally, the Defendants were ordered to pay INR 10,00,000 in legal costs.

Critical analysis

The present decision highlights the nuanced legal distinction between statutory trademark infringement and the common law remedy of passing off, especially in the context of surrounding agreements such as franchisee agreements. The Court has carefully delineated the scope of protection afforded under statutory provisions while simultaneously recognizing the equitable safeguards available through passing off, ensuring that both legal boundaries are respected during the course of action. While the Court rejected the infringement claim finding that the mark ‘GEETHAM’ was phonetically and visually distinct from the registered ‘SANGEETHA’ composite mark, it unequivocally upheld the plea for passing off. By maintaining Plaintiff’s signature red-and-green trade dress in the same physical locations, the Defendants created a visual continuity that misled the public into believing the brand had simply metamorphosed, a deception reflected in the Defendants’ massive revenue spike.

Additionally, the High Court established a high evidentiary bar in terms of dismissing Google search results as proof of deceptive similarity, emphasizing that algorithmic relevance does not equate to consumer misinterpretation. Lastly, the Court ordered the disgorgement of profits for the infringing period between June 2022 and November 2023, keeping in mind the terms of royalty that would have existed if the franchisee agreement were still in place.

Clear takeaways for businesses

The ruling of the Hon’ble Madras High Court highlights the potential Intellectual Property challenges that businesses could face during the transition from a franchise partnership to a competitive relationship. In this case, even though the Court rejected the statutory trademark infringement claim by finding that the mark ‘Geetham’ was sufficiently distinct from Sangeetha’s composite registration, it upheld the common law claim of passing off. By maintaining Plaintiff’s signature red-and-green trade dress in the same physical locations, the Defendants created a ‘visual continuity’ that misled consumers, a fact underscored by the Defendants' surge in revenue during the infringing period.

The present decision also serves as a warning to trademark practitioners, highlighting how statutory protection is often limited to the specific elements registered, and how a clever omission by a Defendant could bypass claims of infringement. To mitigate such risks, businesses should adopt a tiered registration strategy. By securing independent trademarks for the word mark, the device/icon, and the composite look-up brand a claim for infringement can be maintained even if the competitor appropriates only one element. Furthermore, the case establishes that trade dress is a protectable asset once it achieves ‘secondary meaning’. To capitalize on the same, businesses must maintain absolute uniformity across outlets and meticulously document marketing spend to prove that their specific colour palettes and layouts function as source identifiers.

From a contractual standpoint, the dispute underscores the necessity of robust post-termination audits. Franchise agreements must move beyond simple ‘name-change’ clauses to include detailed de-branding schedules for pantone colours, signage, and interior layouts, ideally backed by rebranding deposits held in escrow. Finally, since passing off is an evidentiary tort, brand owners must look beyond cluttered search engine results. To achieve success in establishing passing off, businesses must prepare evidence files that mirror the conditions the classical trinity test- i.e., goodwill, misrepresentation, and damage, supported by professional consumer surveys and side-by-side photographic comparisons to prove actual market confusion.

Conclusion

This decision of the Madras High Court is an important decision that clearly delineates trademark infringement from passing off, while demonstrating how relief can be granted to businesses with respect to passing off even in the absence of a finding of infringement. The Hon’ble Court has taken a holistic approach to the finding of passing off, especially in the light of franchise agreements, and has set an important precedent on disgorgement of profits. Lastly, the decision also emphasizes on the importance of trade dress in trademark disputes, especially in the modern marketplace where the ‘look and feel’ of a brand is as identifiable as the trade name itself.

[The author is an Associate in IPR practice at Lakshmikumaran & Sridharan Attorneys]

[1] C.S(COMM DIV) No. 116 of 2023, 2026:MHC:1249