What is “Passing off”?

It is common sense that “a man is not to sell his own goods under the pretence that they are the goods of another man.” This is the underlying principle of the tort of passing off, which is a common law action developed to prevent one party from using the goodwill associated with another party for their own benefit. Passing off protects goodwill associated with a mark, logo, signs or other distinctive descriptive material. Passing off is often referred to as “the law of unregistered trademarks” (ie: you mark/logo does not have to be a registered trademark to commence a passing off claim) although passing off is also available for registered trademark users.

Elements of Passing Off:

To successfully establish a claim for passing off, three requirements must be met:

1. Goodwill – reputation attached to a business
2. Misrepresentation – any misrepresentation must be made by a trader in the course of trade and must have led to confusion in the mind of a purchasers.
3. Damage– establishing actual or likely financial loss

1. Goodwill

Goodwill is defined as “the benefit and advantage of the good name, reputation and connection of a business, the attractive force which brings in customers. It is the one thing which distinguishes a well-established business from a new business at its first start…” Goodwill is established over time through the use of a distinguishing mark/logo/figure, advertising campaign or special slogan which is distinctive of the business in question. For example, everyone recognise the ‘Tick’ logo on Nike, which has tremendous goodwill attached to it, as it is the distinguishing figure which differentiates itself from its competitors.

2. Misrepresentation

For a successful claim under passing off, there must be a misrepresentation as to the goods or services offered by the other party, which leads to an element of deception or confusion arising in the minds of the public. Common forms of misrepresentation include a person/business represents that his goods or services are those of another person/business by having a mark/sign/logo that is the same or very similar; or the infringer represents that the two businesses are the same (ie: the two products come from the same source) or in some way related to one another. Whether the misrepresentation is intentional or not is irrelevant (ie: it is no defence that you unintentionally use another business’s mark/logo). However, the misrepresentation must be a material one to be actionable, creating a real, tangible risk of damage to the infringed party.

3. Damage

The infringed party must prove that they have incurred actual or reasonably foreseeable damage to the business due to the alleged misrepresentation. This can be difficult to prove and on a practical basis, often involves inspecting the books of account of both parties.

Remedies

If the passing off claim is successful, a number of legal remedies are available to the infringed party, including an injunction to prevent the infringer from continue using the mark/logo and damages or an account of loss of profit arising from the misrepresentation.