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It is further notable that Clause (v) of Section 2(1) of the Trade Marks Act which defines the expression trade mark clarifies that when a person gets a trade mark registered he acquires valuable rights of exclusive user in connection with the goods in respect of which it is registered and it also confers another right that registered proprietor of a trade mark can protect his trade mark by an action for infringement. In cases of unauthorized use of an unregistered trade mark the proprietor of unregistered trade mark could only file a suit in passing off action. For success in such an action the proprietor of unregistered trade mark has to prove that his mark has by user acquired such a reputation as to become distinctive of its goods so that if it is used in relation to the goods of any other kind dealt with by him it will be understood by the trade and public as meaning that the goods are his goods. In an infringement action to protect a registered trade mark reputation of the goods mark is not required to be proved for registration of the mark is prima facie evidence of its validity. Acquisition of proprietary right in any trade mark whether registered or unregistered is always found to be a question open for consideration by the Courts.
How far passing off action is governed by the Act ?
Before proceeding further, it would be desirable to appreciate that the Trade and Merchandise Act 1958 "is an Act to provide for the registration and better protection of trade marks and for the prevention of use of fraudulent marks and merchandise". This Act came into force on 25th November, 1959. It covers not only the matters related to infringement action but also certain matters relating to passing off action. Though in sub-section (2) of Section 27 it is provided that nothing in this Act shall be deemed to affect the rights of action against any person for passing off goods of another person or the remedies in respect thereof, yet it is notable that it prohibits assignment of unregistered trade marks by providing in Section 38 for assignability and transmissibility of unregistered trade marks and in Sections 39 and 40 where multiple or exclusive rights would be created in different parts of India. Section 41 also provides for conditions of assignment otherwise then in connection with the goodwill of business covering registered as well as unregistered trade marks. There are other Sections 42 and 43 which relate to the assignability and transmissibility of certification trademarks, of associated trade marks. All these provisions are sufficient indication of the intention of the legislature to regulate certain areas relating to passing off action also.
38. Assignability and transmissibility of unregistered trade marks - (1) An unregistered trade mark shall not be assignable or transmissible except alongwith the goodwill of the business concerned.

(2) Notwithstanding anything contained in sub-section (1), an unregistered trade mark may be assigned or transmitted otherwise than alongwith the business concerned it -

(a) at the time of assignment or transmission of the unregistered trade mark, it is used in the same business as a registered trade mark; and

(b) the registered trade mark is assigned or transmitted at the same time and to the same person as the unregistered trade mark; and

(c) the unregistered trade mark relates to goods in respect of which the registered trade mark is assigned or transmitted."

It is notable that the term "assignment" has been defined in Section 2(1)(a) of the Act which reads as under :

2. (1) In this Act, unless the context otherwise requires -
(a) "assignment" means an assignment in writing by act of the parties concerned;"