Goodwill in Passing Off Lies in the Trademark, Not in the Goods: VIP v. Carlton Shoes

Introduction

In an important ruling with respect to trademark law and the passing off action, the Delhi High Court held that goodwill for the purposes of passing off action is in the trademark. It is not limited to a particular good or service. The judgment was delivered on 2nd July, 2025 by a Division Bench. The Court maintained the Single Judge’s decision that barred VIP Industries Ltd, one of the largest producers of luggage and travel paraphernalia in India, from adopting the mark “CARLTON” for any of the bag or travel related products, and granted relief to Carlton Shoes Ltd. (CSL) who was opposing the use of the mark.

Factual Background

Carlton Shoes Ltd., a lifestyle brand headquartered in the United Kingdom, had been using the trademark “CARLTON” in India for footwear since 1991. VIP Industries, on the other hand, began using the mark “CARLTON” for its luggage products in 2004 and had subsequently established itself as a well-known brand in the luggage sector.

VIP argued that since CSL had used the mark only in connection with footwear, and had entered the luggage market long after VIP, the goodwill associated with “CARLTON” in relation to bags should be presumed to be VIP’s. It contended that goodwill is product-specific and must be determined with reference to the category of goods in which the mark is used.

Issue Before the Court

The core issue before it was, whether in a case of passing off respect of goods does the plaintiff must show any specific category for his goodwill or any sort of natural linkage between the goods itself is enough to protect him against their misuse

Court’s Observations and Findings

The Goodwill comes from the Mark, not the Product.

In fact, the Division Bench also negatived VIP’s argument that goodwill would be confined to only those class of goods in which mark was used initially and held that goodwill is an aspect of a trade mark itself. The Court observed:

“The concept of ‘goodwill’, for the purposes of passing off, is in the name under which the business is carried out… even if the goodwill ultimately attaches to the goods or services in respect of which the mark is used, that goodwill is attributable, not to the goods or services, but to the mark or name under which the goods or services are provided.”

The Court emphasized that it is not uncommon for businesses to expand the use of a mark across multiple categories. A well-established mark often carries its goodwill into other areas of trade, and trademark law cannot be interpreted in a manner that limits this protection.

Illustration Using Well-Known Brands

The judgment illustrated this point by referring to brands like “Mercedes-Benz”, which are widely recognized not only in the automobile sector but also in perfumes and other merchandise. The Court remarked:

“It would be facile, therefore, to suggest that the reputation that the market carries is only when used with a particular category of goods or services.”

No Degrees of Goodwill Recognized in Law

VIP’s counsel contended that the nature of goodwill depends on its degree, and that lesser-known brands might require stricter evidence of reputation in each category. This submission was categorically rejected by the Court, which held:

“The law does not recognise, or envisage, such distinct categories of goodwill. Goodwill either exists, or it does not exist… This principle applies, as much to marks such as Mercedes-Benz or Mont Blanc, as to ‘humbler’ marks.”

Precedents Relied Upon

The Court relied on the Supreme Court’s decision in Laxmikant V. Patel v. Chetanbhai Shah, (2002) 3 SCC 65, which held that the name under which a business operates generally carries with it goodwill and reputation that are capable of legal protection. The Court observed that:

“A person may carry on business under his own name or under a fictitious or trade name… The principles of common law apply to protect such names where they have acquired a reputation.”

This precedent reinforced the idea that passing off law does not require goodwill to be limited to a particular category, so long as there is evidence of a distinctive and recognised mark in the market.

Outcome

The Delhi High Court dismissed the appeal filed by VIP Industries Ltd., affirming the injunction issued by the Single Judge. VIP was restrained from using the mark “CARLTON” for any bags or travel-related goods.

Implications of the Judgment

1. Clarifies the Scope of Goodwill in Passing Off Actions: This ruling provides much-needed clarity on the legal position that goodwill attaches to the mark as a whole, not to a narrow category of goods. It removes ambiguity for businesses seeking to protect a mark across evolving product lines.
2. Reinforces Trademark Protection Across Product Categories: Trademark owners can now take comfort in the fact that their reputation under a mark may be protected even as they diversify into new product categories.
3. Discourages Opportunistic Use of Established Marks: The judgment sends a strong message against opportunistic encroachment by other entities into categories where the original brand owner has built a strong presence and consumer recognition.

Conclusion

The ruling in VIP Industries Ltd. v. Carlton Shoes Ltd. serves as a trademark reminder that goodwill associated with trademarks is not tied to specific products. In today’s trademark environment, where trademarks are frequently licensed for a multitude of products, this ruling is reassuring and bolsters the trademark protection laws in India.