'Reverse Passing Off' Is Not an Actionable Tort in Indian Trade Mark Law: Delhi High Court:

"The tort of 'reverse passing off' is foreign to Indian trade mark jurisprudence", In a landmark ruling navigating uncharted territory in Indian intellectual property law, the Delhi High Court on March 9, 2026 dismissed a batch of appeals filed by global Hard Disk Drive giants Western Digital Technologies Inc. and Seagate Technology LLC against Indian refurbishers who purchase end-of-life HDDs, erase the original trade marks, refurbish the drives, and resell them under their own brand names.

A Division Bench of Justice C. Hari Shankar and Justice Om Prakash Shukla held that no infringement, no passing off, and no reverse passing off was made out on the facts, and that the principle of international exhaustion of rights under Section 30(3) of the Trade Marks Act, 1999 protects such dealings.

Background of the Case

Western Digital and Seagate manufacture HDDs which they sell to Original Equipment Manufacturers located abroad, who embed them into computers, laptops, and servers. Once these HDDs reach their "end-of-life" stage — meaning the manufacturer's warranty expires — they are extracted from discarded equipment and imported into India, where refurbishers purchase them, erase the appellants' registered marks, load new software, assign fresh serial and model numbers, affix their own brand names, and sell the drives with their own two-year warranty and full disclosure on packaging. The appellants filed suits alleging trade mark infringement, passing off, and reverse passing off. A learned Single Judge dismissed the injunction applications and issued directions permitting sale with disclosure conditions, which the appellants challenged before the Division Bench.

Three distinct legal questions fell for determination: first, whether the respondents' acts constituted infringement of the appellants' registered marks under Sections 29, 30(3), and 30(4) of the Trade Marks Act; second, whether the tort of "reverse passing off" is recognised in Indian trade mark jurisprudence; and third, whether the ingredients of ordinary passing off were made out.

Court's Observations and Judgment

On the Architecture of Sections 29, 30(3), and 30(4)

The Court undertook a meticulous statutory analysis before examining the facts, characterising the exercise as an "intricate navigation" through the interplay of the three provisions. It held with clarity that Section 30(3) does not create a new species of infringement — it merely limits the right to assert infringement where goods bearing a registered mark are lawfully acquired and resold. The only provision that defines infringement as a complete and self-contained code is Section 29 itself.

"Section 30(3) does not create a distinct specie of infringement. It sets out certain circumstances in which the act envisaged in the provision would not be infringement."

Critically, the Court held that since the respondents efface the appellants' marks before selling the drives, and since Section 29 requires the infringer to use the registered mark or a deceptively similar mark in the course of trade, no infringement under Section 29 arises at all. Where no infringement is made out under Section 29, there is simply no occasion to proceed to Section 30(3) or 30(4).

"Before selling the HDDs, the respondents remove the appellants' trademarks. They do not, therefore, use either the appellants' registered trademarks or any mark which is deceptively similar thereto, in the course of trade."

On Section 30(3) and International Exhaustion

Assuming Section 30(3) were to be invoked, the Court found all its conditions fully satisfied. It endorsed and approved the earlier Division Bench decision in Kapil Wadhwa v. Samsung Electronics to the extent that "lawful acquisition" means lawful acquisition under the laws of the country of acquisition, not necessarily the country of registration; that the "market" in Section 30(3) is the international market; and that India adopts the principle of international exhaustion of rights. There was no proscription on the OEMs reselling end-of-life HDDs, no prohibition on import, and the respondents had purchased the drives under commercial invoices bearing GST.

The Court also corrected an error in the learned Single Judge's reasoning. The Single Judge had held that sale of HDDs after effacing the original mark would not qualify as "sale of the goods in the market" under Section 30(3). The Division Bench rejected this interpretation as impermissible, holding that Section 30(3) speaks of "sale of the goods in the market," not sale of "the goods as such in the market" — the learned Single Judge had effectively read in words that did not exist in the statute.

"Even after effacing the originally affixed trademarks of the appellants and substituting, in their place, the trademarks of the respondents, the further sale of the goods in the market would constitute 'sale of the goods in the market' for the purposes of Section 30(3) of the Act."

On Section 30(4) and the Principle of Noscitur a Sociis

The appellants argued that removing their registered marks and loading new software constituted "change or impairment" within Section 30(4), thereby extinguishing the Section 30(3) protection. The Court disagreed, applying the cardinal principle of noscitur a sociis — that words take colour from the company they keep.

"The word 'changed' in Section 30(4) must be read noscitur a sociis with the word 'impaired'; 'change' must partake of a negative character."

Any "change" for the purposes of Section 30(4), the Court held, must be one that reduces the quality or value of the goods or impairs the goodwill of the registered proprietor — not a change that renders non-functional goods functional or makes useless goods useful. Refurbishing old drives, loading new software, and affixing fresh serial numbers does not constitute "change or impairment" in this sense. Moreover, the Court held that once HDDs reach end-of-life stage and the appellants' warranty is extinguished, the umbilical cord is severed: the appellants retain no further legitimate concern with those drives.

"After that point, the appellants did not have any further concern with the HDDs, or what was done with them."

The Court also qualified the Kapil Wadhwa decision in one important respect. While approving its core holdings on international exhaustion, the Court declined to treat the "species" of legitimate reasons identified in para 68 of Kapil Wadhwa — differences in warranties, advertising, packaging, quality control, and language of literature — as absolute grounds. To constitute a "legitimate reason" under Section 30(4), any such circumstance must actually reduce the quality or value of the goods or impair the goodwill of the registered proprietor. The determination is primarily one of fact.

On Reverse Passing Off — A Question of First Impression

The appellants argued that by erasing the appellants' marks and passing off the appellants' goods as the respondents' own, the respondents were committing "reverse passing off." The Court tackled this as a question of first impression in Indian trade mark law, and firmly held that no such tort is recognised in Indian jurisprudence.

The Court anchored its reasoning in the text of Section 27(2), which saves only the right of action "against any person for passing off goods or services as the goods of another person." Reading Section 27(2) alongside the Supreme Court's formulations in Kaviraj Pt Durga Dutt Sharma v. Navaratna Pharmaceutical Laboratories and Satyam Infoway Ltd v. Siffynet Solutions, the Court held that "passing off" inherently means misrepresentation by a defendant of his own goods as those of the plaintiff — not the reverse.

"No right to sue, or obtain an injunction, on the ground of 'reverse passing off', is available in our jurisprudence, at least in trade mark law."

Section 134(1)(c), the Court noted, envisages a suit only where the defendant uses a mark deceptively similar to the plaintiff's — not where the defendant passes off the plaintiff's goods as his own. Equally, Section 135(1) provides relief in suits "for passing off referred to in Section 134," and no injunction can be granted in a case that alleges the defendant is misrepresenting the plaintiff's goods as its own, since that neither constitutes passing off under Section 27(2) nor falls within the scope of Section 134.

On the Ingredients of Passing Off and Reverse Passing Off Being Absent

Even assuming reverse passing off were actionable, the Court held its ingredients were absent. The appellants relied on the Crystal Disk Info tool to argue that any technically literate user scanning the HDD could trace it back to the original manufacturer. The Court rejected this as insufficient, holding that any likelihood of confusion — or, conversely, likelihood of consumer identification of the goods with the original manufacturer — must be assessed at the point of "initial interest," that is, when the consumer first encounters the goods at the point of sale.

"For a case of reverse passing off to be successfully pleaded, it must be shown that the consumer is able to identify the goods as those of the plaintiff at the initial interest stage, i.e., when the consumer first comes across the goods."

The Court also found a complete absence of misappropriation of the appellants' goodwill. The drives are sold under the respondents' marks, not the appellants'. The appellants led no material evidence of any damage to their reputation or goodwill. Since the HDDs are end-of-life products discarded by the OEMs, any subsisting goodwill of the appellants in those specific drives was at best doubtful.

On FAO(OS)(COMM) 104/2025 — The Importer Who Did Not Refurbish

A separate and notable dimension of the judgment concerned one respondent, Hansraj Dugar, who himself imported HDDs from Hong Kong and Korea while the drives still bore the appellants' registered trade marks — without having refurbished them first. The Court held that import of goods bearing a registered mark amounts to "use" of the mark under Section 29(6)(c) and therefore constituted infringement in principle, since Dugar was neither the proprietor nor a permissive user of the mark. Unlike the refurbisher-respondents, Section 30(3) came into direct play here to examine whether infringement could be escaped. The Court held that all conditions of Section 30(3) were satisfied — the purchase abroad was prima facie lawful, import was not illegal, no change or impairment had occurred as the goods lay seized in the Customs area, and no legitimate reason under Section 30(4) existed. Accordingly, this appeal was also dismissed.

On the Concluding Directions of the Single Judge

The Court noted that the learned Single Judge had, despite finding Section 30(3) inapplicable and Section 30(4) applicable, proceeded to issue detailed disclosure directions permitting the respondents to continue selling refurbished HDDs. While the Division Bench respectfully disagreed with those findings on Sections 30(3) and 30(4), it declined to disturb the directions, invoking the principle that a party should not be placed worse off for having appealed. The Court also flagged that a similar set of directions in the Mohd Talha v. Karim Hotels case stood stayed by the Supreme Court, noting the issue of whether a court can issue such directions after finding infringement to be "something of a grey area."

Dismissing all the appeals, the Delhi High Court conclusively settled that "reverse passing off" finds no home in Indian trade mark law, that a refurbisher who effaces the original mark before selling commits no infringement under Section 29, and that India's adoption of international exhaustion under Section 30(3) protects the legitimate refurbishment trade. The Court also calibrated the Kapil Wadhwa precedent to ensure that "legitimate reasons" under Section 30(4) do not become a mechanical checklist but must genuinely threaten the quality of goods or the goodwill of the mark owner before the registered proprietor can invoke them to bar further trade.

Date of Decision: March 9, 2026