Passing off is when one party, whether intentionally or unintentionally, offers services or goods in a way that makes the purchaser believe they are buying from another party. This is seen as a misrepresentation that can damage the goodwill, profit and reputation of a person or business.
Passing off is similar in principle to trademark infringement, except that it is used to protect the unregistered rights of an organisation, its services or goods. Passing off is a risk to business. Without effective IP protection, it is generally more difficult to enforce your rights against others.
What is passing off?
Passing off is concerned with the enforcement of one party’s rights to protect their identifiers from being used without permission by another party to the financial and reputational detriment of the owner of the rights.
In a commercial context, where a business has built up goodwill through an identity for its goods and services that is distinguishable from the competition, the law of passing off may be available to remedy losses suffered as a result of another business passing off goods and services as their own.
Passing off may be relied on where there is no registered trade mark but where sufficient goodwill has been accrued and attached to the goods and services being passed off.
Where a trade mark is in existence, a claim for passing off can made concurrent to the trade mark infringement action. Claims for passing off are however generally more complex and time consuming. It is recommended to take legal advice on all options to enforce and protect your intellectual property rights.
Establishing the elements for passing off
There is no specific legislation or statute governing passing off. This area has developed through case law and court decisions which have led to the development of the three key elements that must be established to bring a claim for passing off:
1. Reputation / goodwill
To make a claim for passing off, you will first need to prove that you have built a reputation with sufficient goodwill related to your name, goods, marks or other identifiers that make your business or your goods/services recognisable and distinguishable from competitors.
Evidencing the measure of goodwill is highly subjective, and will be taken on a case by case basis.
For example, the court will be looking to understand the length of time it has taken to build up the goodwill, and where geographical limits are at issue this presents other challenges.
As such, it is advisable to seek legal advice to determine if you have established a sufficient degree of goodwill to make a claim.
2. Misrepresentation
In addition to establishing the existence of reputation or goodwill, you will also need to prove there was misrepresentation by the other party that lead to customers believing an association existed between their goods and services and your reputation.
The effect on the customer is the key requirement. You must show that the other party caused confusion through their misrepresentation, whether intentional or not and whether the representation was true or not.
3. Resulting damage
Where you can show misrepresentation, the final element to evidence is that this has resulted in actual or likely financial damage and reputational harm to you and/or your business.
What defences are available against a claim for passing off?
Passing off is what is known as a ‘strict liability’ offence. This means it can be difficult to defend.
Depending on the circumstances, there are a number of defences potentially available to a claim for passing off.
A defence may proceed on the basis that the claim for passing off lacks the necessary elements, for example, where the claimant cannot prove sufficient goodwill, or prove misrepresentation or prove damage.
It may be possible to establish that the claimant’s identifiers are not distinctive, have ceased to be distinctive and have become generic or are merely descriptive. Also if a claimant has abandoned the trademark or identifiers they may not have a case for passing off.
The claimant and defendant may have equal rights, or the claimant may have given permission to use the identifier or encouraged its use.
Likewise if the defendant is innocently using their own name, they may establish there was no passing off.
Other possible defences could include using the identifier other than in the course of trade or where the claimant has delayed taking action.
What remedies are available for passing off?
A successful claim for passing off can result in a number of potential legal remedies.
Damages may be awarded for loss of reputation and profit, which may require an inquiry to establish losses incurred and lost profit.
It may be possible to get an injunction preventing the defendant from continuing to use the mark or goodwill (‘injunctive relief’), or an order may be issued for the delivery or destruction of any items or goods that infringe on the act.
The defendant may also receive an order for the delivery up or the destruction of the infringing articles or products.
A claimant in a passing off action may claim any of the following remedies:
Can an individual bring a claim for passing off?
An individual may make a claim if able to demonstrate that their name or image has been used without their consent, where they can prove they have sufficient goodwill attached.
An example would be if a celebrity’s image is used to promote a beauty product that they have not endorsed – a claim for passing off could be pursued if the individual can prove they have suffered damage to their reputation or goodwill as a consequence.
Challenges with this area of law
Passing off claims are typically complex. With no definition of what constitutes passing off, case law continues to evolve as the courts interpret and apply the law. This creates a high degree of uncertainty for businesses that believe they are victims of passing off.
To establish if you have a case and discuss all of your legal options, seek professional legal advice.
It may also be advisable to consider registering a trademark to provide additional protection for your business and reputation.
Author
Gill Laing is a qualified Legal Researcher & Analyst with niche specialisms in Law, Tax, Human Resources, Immigration & Employment Law.
Gill is a Multiple Business Owner and the Managing Director of Prof Services - a Marketing Agency for the Professional Services Sector.
