Passing off

Passing off

Contents

Passing-off

If one business has distinguishing or easily recognisable features, another business cannot mimic them in an attempt to pass them off as their own. There are several possible remedies available if this happens as well as a number of defences in the event of a claim.

Reputation and goodwill of a business is something that is used to try to give an identity to a business and its goods/services that distinguishes them from those of their competitors.

If someone else uses this goodwill and reputation, the owner of the business can stop this by using the law against passing off. In order to succeed in a passing off action the claimant has to prove that:

  • They possess a reputation or goodwill in their goods, name, mark, etc;
  • There has been a misrepresentation by the defendant which has led to confusion;
  • This misrepresentation has caused damage to the claimant's reputation or goodwill in the claimant's goods, name, mark, etc.

Requirements for a claim

To succeed in a claim for passing off, the claimant must first prove that they have established a reputation in a mark by using it in business and that the use is associated with their name personally or their goods/services.

The claimant must also show that the mark distinguishes them and/or their goods/services from others. Marks can have many different forms, for example:

  • Style of packaging (e.g. the Smarties tube);
  • Colour (the gold foil in Ferrero Rocher chocolate).

The length of time required to establish goodwill is a matter of fact in all the circumstances and there is no hard and fast rule on this.

In order to succeed, the claimant must also prove that the infringing act has taken place within the geographical limits of their goodwill. It is not necessary for the owner to set up a business in the UK in order to show that they have established goodwill there.

Cases involving the geographical limits of goodwill are difficult to reconcile and the outcome depends on the facts of each case. Two cases can best explain this.

In 1967, the Crazy Horse Saloon of Paris (which had no UK base but was known here) was unable to stop the opening of a similarly named but otherwise unconnected club in the UK. In contrast, in 1964, the Sheraton Hotel Group (which at that time had no UK base but was known and took bookings for its overseas hotels from here) was able to stop the opening of a similarly named hotel in the UK. Clearly, it is a judgment that a court will make based on the facts of an individual case.

Misrepresentation

The claimant must prove that in the course of trade, the defendant made a representation that was misleading. It does not matter if the representation is true as long the overall effect is to mislead. Moreover, there is no need for the representation to be made by the defendant with the intention that confusion will result.

The real issue is the effect on the customer. Will the customer believe that there is an association between the defendant's goods/services and the reputation of the claimant?

Confusion alone is not enough for an action for passing off. There must be also be loss to the claimant.

Damage to the claimant

To succeed in a passing off claim, the claimant has to show actual or likely business loss associated with the defendant's act. The loss need not be financial and the term 'business' is widely interpreted to include many things.

There can be loss to goodwill even before the claimant's business has begun if advance publicity and marketing has established goodwill. Similarly, there can also be damage to goodwill after the claimant's business has stopped.

Remedies

The claimant in a passing off action may claim any of the following remedies:

  • An inquiry to establish loss
  • Damages or an account of the defendant's profits
  • An order for the delivery up or destruction of the infringing articles
  • Injunctive relief

Defences

A defendant can start by denying that the necessary elements to establish a passing off action exist. Further, the following defences can be used:

  • The claimant's mark is not distinctive
  • The claimant's mark is merely descriptive
  • The mark has ceased to be distinctive and has become generic
  • The claimant and the defendant have concurrent rights
  • The defendant is merely innocently using his own name
  • The claimant has given his or her consent
  • The claimant has delayed in issuing proceedings
  • The claimant has abandoned the mark
  • The claimant has exhausted his or her rights

Often where someone believes that they have the benefit of an unregistered mark, they will seek to warn off others. They can do so by using the ™ sign in order to preserve the mark.