Recently, the DHC in VIP v. Carlton has held that in passing off cases, the goodwill of a mark abroad will be irrelevant unless accompanied by evidence of its goodwill in India. Analysing the judgement, Shailraj Jhalnia explains the international jurisprudence on goodwill and some of the issues that may arise due to this judgement. Shailraj is a third year law student pursuing B.A. LL.B. from National Law School of India University, Bangalore, with a keen interest in IP Law, Arbitration and Criminal Law. His previous posts can be accessed here.
Suitcases v Shoes: Who Really Owns Carlton?
By Shailraj Jhalnia
The VIP Industries v Carlton Shoes case posed a deceptively simple yet profound question: In a passing off suit, must a trader prove goodwill in the mark itself, or only in its use on specific goods? In July 2025, the Delhi High Court squarely answered that goodwill must be tied to real market use within India. As the bench explained, a company cannot depend entirely on global fame to stop a rival – “worldwide goodwill is irrelevant unless accompanied by evidence of territorial goodwill”. This dispute is thus more than a battle between two brands; it cuts to the heart of trademark law’s territorial, product‐specific nature. The Court held that “the existence of goodwill has to be shown in India” and that “global goodwill and reputation, sans any evidence of territorial goodwill, will be insufficient” in a passing off claim. In other words, trademark protection must rest on concrete reputation among Indian consumers, not on abstract international celebrity.
Passing Off and the Facts of VIP v Carlton
Passing off is the common‐law tort that protects a trader’s goodwill – the reputation and customer loyalty built under a brand – from misuse by competitors. A plaintiff succeeds only by showing (a) goodwill in a mark, (b) a false representation by the defendant, and (c) damage or likely damage from that misrepresentation. Crucially, passing off guards against consumer confusion, not business monopoly.
In VIP v Carlton, the dispute concerned the mark “CARLTON”. Carlton Shoes Ltd. (CSL) had used “CARLTON” in India (for shoes and fashion accessories) since the early 1990s and registered it in Class 18 (footwear) in 1994. VIP Industries, meanwhile, acquired international rights to “CARLTON” in 2004 and began selling CARLTON‐branded travel luggage in India in 2006. Both companies held Class 18 registrations (CSL for shoes/bags, VIP for luggage), so no straightforward trademark infringement lay: each was a registered proprietor user. Instead, each sued the other for passing off. After cross‐suits and an interim injunction, the single judge and then the Division Bench focused on the legal issue: Does goodwill in a passing off action attach to the mark as such, or only to its use on particular goods?
The Court’s Use of Precedent and Doctrinal Clarification
The Delhi Court treated this as a doctrinal test case for goodwill. It drew heavily on the territoriality principle of trademark law. Citing Toyota Jidosha v Prius, the Court reiterated that “the existence of goodwill and reputation has to be shown to exist in India” – foreign fame alone will not suffice. In Toyota Jidosha (SCC 2018), the Court emphasised that without evidence of “territorial goodwill and reputation,” a mark’s international renown cannot support passing off. [Edit: Please note that previously it was incorrectly stated that the Toyota case was passed by J. Harishankar, Delhi High Court. The same has been corrected now.]
The Court also contrasted goodwill with mere registration. Under the Trade Marks Act Section 28(3), a senior registration can bar a junior’s infringement claim, but this does not create passing off rights. Here, both parties had Class 18 registrations, so their rights hinged on actual goodwill. As the Court put it, “mere priority of user is not sufficient unless the plaintiff can establish that such prior user has resulted in accumulation of goodwill and reputation in the mark”. In this way, good-faith use and reputation, not a technical registration, govern passing off.
In clarifying the scope of goodwill, the Court noted that some judges have said goodwill is shown only “in the product/service in respect of which the mark is used”. For instance, in Beiersdorf AG v Sukhwani (2009), the single judge held that passing off requires proof of goodwill in the goods or services bearing the mark, not goodwill in the brand abstractly. However, the VIP Bench declined to enforce that narrow reading. It agreed instead that trademark law “protects the name or mark per se,” not just its use on a single product.
This was a rare engagement by an Indian Court with the doctrine of goodwill in passing off. By focusing on whether goodwill existed at all, rather than parsing nuances of misrepresentation, the judges stressed that passing off is to shield consumers’ associations with a brand, not to grant a sweeping monopoly to an owner. In doing so, they differentiated goodwill (earned reputation) from the mere fact of registration or title.
Current International Jurisprudence on Goodwill – Specific to Marks or Goods
The Delhi High Court’s strict territorial approach aligns with global trends in passing-off law. In common-law jurisdictions, courts routinely require domestic goodwill, not merely foreign reputation. For instance, the UK Supreme Court in Starbucks (Hong Kong) v British Sky Broadcasting (2015) reaffirmed that mere reputation, unaccompanied by UK customers or use, cannot satisfy passing-off. In that case (involving a Hong Kong pay-TV service “NOW TV” and a UK launch by Sky), the Court emphasised that without any UK business, Starbucks HK had no goodwill in the UK for passing off, regardless of its brand’s recognition among some UK residents. As Lord Oliver noted decades ago in Jif Lemon, goodwill implies an association in the purchasing public’s minds, which requires actual trade. Reiterating this, the UK Supreme Court held that allowing reputation alone to block a mark would unduly tilt protection: “without any business or any consumers in this jurisdiction, a claimant could prevent another person using a mark”. This mirrors India’s stance that “goodwill” (customers or sales) must precede protection, not just awareness. For instance, in Today Tea Ltd. vs Today Foods Pvt. Ltd., the Court treated tea and biscuits as “cognate” because they are “served and consumed together,” and thus using the same mark on both was deemed likely to confuse customers. By the same token, a world-famous mark in cars wouldn’t automatically bar use on, say, pens in the UK unless some consumer link (common trade field or confusion) is shown. In practice, UK courts will protect a brand-owner’s reputation beyond their products only when there is a realistic connection in the marketplace.
In the European Union, the regime is somewhat analogous. EU law (Article 5(3) of Directive 2015/2436, formerly 5(2)) grants special protection to well-known marks irrespective of goods. Under the Modern Directive, the owner of a mark with reputation can stop use of identical or similar signs on any goods (even dissimilar) if the use (without due cause) “takes unfair advantage of, or is detrimental to, the earlier mark’s distinctive character or repute”. In landmark ECJ cases (Intel v CPM, L’Oréal v Bellure), the Court held that a strong mark is diluted if a later mark evokes an immediate association, and that a mark-owner need not prove actual injury – only a serious risk of taking advantage of the mark’s power. Importantly, EU law explicitly breaks the link between goods: a luxury perfume brand, for example, can enjoin a cosmetics or clothing brand if consumers jump to associate them. In short, well-known EU marks enjoy a broad “dilution” net beyond their sectors, reflecting a policy to guard accumulated brand value across classes.
In summary, India’s VIP v Carlton approach is relatively cautious. Unlike EU law (or even Section 29(4) of the Indian Act) that can confer broad protection for truly famous marks, the Delhi bench tied rights strictly to actual use and marketplace presence over the senior-junior mark registration. It refused the product-specific goodwill test, emphasising that a passing off plaintiff must establish a genuine consumer association in India.
A further implication is a check against cross‐sector squatting. By insisting that goodwill be shown in context, the Court effectively prevents a shoe brand from monopolising the Carlton name on luggage without having ever sold luggage. As the Court noted, a right of passing off must “attach to the name or mark per se,” but only insofar as that goodwill actually exists. The outcome promotes genuine competition: it “resists treating registrations as carte blanche to block unrelated uses, protecting consumer association rather than brand monopolies”.
In effect, India (for now) leans towards the UK‐style rule: a mark’s reach extends only as far as its territorial reputation and related goods.
Unanswered Questions and the Road Ahead
An issue that persists after this judgment is whether the burden of showing product-specific goodwill should be codified or left to judicial development. VIP v Carlton effectively imposes that burden on the plaintiff; future cases will need to apply it with little legislative guidance beyond Section 29(4). How should we draw the line for “allied and cognate” goods? Here, luggage and handbags were deemed related enough for confusion, but that may not always be obvious. If, say, a coffee brand sues a biscuit maker (as in Today Tea v Today Foods), Courts will need a nuanced approach to overlaps in trade streams.
VIP v Carlton unequivocally settles one of the underpinnings of the law of passing off, deciding that goodwill is associated with the mark itself as a source identifier, and not limited to the specific goods or services upon which the mark is utilised. That is, the moment a trader gains goodwill in a mark, that protection extends to bar use on allied goods.
Though this ruling makes clear the general character of goodwill once acquired territorially, the outer limits of ‘reputation’ law, e.g., the complete extent of Section 29(4)’s dilution provisions or protection for worldwide renowned but domestically unutilized marks, continue to be rich soil for future judicial elaboration.
H/t to Srikanthan S, Adjunct Professor, School of Law, SASTRA University, Thanjavur, for sharing this development with us.