Business

Passing Off Claims

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Sometimes, it is not possible for a business to protect its brand via trade mark registration. Usually, this is as a result of a lack of distinctiveness in its trading name or brand and likelihood of association with the goods and services that it provides. It is therefore common that businesses trade via unregistered trade marks, signifying their apparent ownership over that mark with the "TM" symbol. However, this then raises the following question: a third party has been using my unregistered trade mark, what recourse is available to me?

In short, it may be the case that the third party has infringed your unregistered intellectual property rights under the laws of passing off. Unlike registered trade marks (which are primarily governed by the Trade Marks Act 1994), passing off claims have no statutory basis, and are instead based on the historical principle that "A man is not to sell his own goods under the pretence that they are the goods of another man" (Perry v Truefitt (1842) 5 Beav. 66). In more recent years, it has been widely accepted that in order for a passing off claim to succeed, the following must be established:

  1. A goodwill or reputation is attached to the goods/services provided by the innocent party;
  2. A misrepresentation has taken place by the guilty party, leading ordinary members of the public to believe that the goods/services provided by the innocent party are actually provided by the guilty party; and
  3. Damage to the innocent party, caused as a result of the mistaken belief.

Our intellectual property solicitors have extensive experience in bringing and defending passing off claims on behalf of clients, and in the majority of cases the likelihood of success depends on whether element 1 of the above test can be established.

Additional Information

Misrepresentation

 

Once the innocent party has established that it has a goodwill or reputation attached to its goods/services, for a passing off claim to be successful, it must then be established that the guilty party has misrepresented itself as being the provider of those goods/services, causing the public to believe that it is the provider of those goods/services. Importantly, it is not a requirement for this misrepresentation to be deliberate; and it is common for an otherwise innocent misrepresentation (i.e. one that has been made without any knowledge of the existing goodwill/reputation held in the trading name/brand by a third party) to satisfy this requirement, providing of course that the claimant can establish that the public are or may be confused as a result.

Damage

 

In order for a passing off claim to succeed, the claimant must establish that the defendant's misrepresentation has caused identifiable damage to the claimant's goodwill, or that such damage is reasonably foreseeable. Typically, this element of the claim is based upon a diversion of sales from the claimant's business to the defendant's business and the loss of profits that is caused to the claimant as a result. However, damage to the claimant's reputation and goodwill (as the provider of the goods/services) is also generally sufficient to establish this element of the claim.

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FAQs

What do passing off laws protect?
 
 

The tort of passing off has been developed via the common law (case law before the Courts) and it broadly prevents businesses from misrepresenting their goods or services as being the goods or services of another (most likely, more successful and prominent business). Passing off claims are often brought in conjunction with trade mark infringement claims (if there is a registered trade mark in place), however passing off laws can also protect the goodwill and reputation that may attach to unregistrable trade marks and thus prevent the selling of second-hand or imitation goods or services.

What is a passing off claim?
 
 

A passing off claim is legal action that a business (A) can take if they believe that another company (B)is trading by using goods or services that are misrepresenting them. For example, if company B is using almost identical branding or packaging to business A and customers may believe they are buying from business A when in fact it's a totally unaffiliated company B that they are buying from.

Passing off claims can be brought even if company B is unknowingly or unintentionally 'passing off' their goods or services as those belonging to business A.

Is there a goodwill or reputation attached to my business’ goods/services?
 
 

Goodwill is often described as "the attractive force that brings in the custom", with such being established when a business has a strong trading name and brand, that as a result brings in custom for its goods/services. Unlike registered trade marks, under passing off laws a business' goodwill protects that business as a whole, rather than the individual marks that is uses. Therefore, passing off is concerned with a misrepresentation of that business as a whole, rather than copying of individual goods (albeit, if a third party was to copy your products' unique name or logo, this could be sufficient).

Questions as to whether the innocent party has a goodwill or reputation in its business are assessed on a case-by-case basis. However, where there is an alleged infringement of a potentially descriptive mark, it must be established that ordinary members of the public associate that trade mark with the innocent party and nobody else; this becomes more complex when regional goodwill is considered, and a party is seeking to rely on that regional goodwill against a party trading in a completely different region.

Our intellectual property solicitors can assist you when determining whether your business (or - if it is being alleged that you have passed off your business as being that of another - the opposing business) has sufficient goodwill in order to establish this element of a passing off claim.

What is considered evidence in passing off claims?
 
 

In order to succeed in a claim for passing off, you need to ensure you have gathered sufficient evidence to support your claim in order to prove that the above has occurred.

You need to know about the alleged infringer's activity and what they have been doing to file a passing off claim. Do you have evidence to support their activity? It is important to collect as much evidence as possible before alerting the alleged infringer to a potential issue. The more evidence you obtain in advance, the better, particularly in the Intellectual Property Enterprise Court ("IPEC") where you would need to plead the evidence in the particulars of claim. Things to consider/evidence to obtain could revolve around the following:

  • Who is the alleged infringer?
  • Where is the alleged infringer based?
  • What resources does the alleged infringer have?
  • If the alleged infringing activity is online, have you taken screens shots as evidence?
  • If the activity is offline, have you collected physical materials as evidence, such as photographs?
  • Should you carry out a trap purchase?
  • Have you informed your staff to take notes of any calls and capture any emails where the consumer has been confused between your business, goods or services and the alleged infringer's?
  • Have you considered using an investigator to obtain more evidence?
  • Have you gained public survey evidence?

You will also need to evidence your own rights and provide proof of use or acquired distinctiveness. For example; you could have been using your trade mark for the past 7 years but do you have the evidence to demonstrate this? You could demonstrate this through documents, sales figures, marketing figures, or account details. Everything in your business should be documented and evidenced in order to support your passing off claim to the fullest capacity.

Our intellectual property solicitors can assist in helping you ensure you have all the evidence that is required to support your claim before notifying the third party of your dispute. They can assist with ensuring you have sufficient merits in the case to then putting forward the claim to the third party and dealing with the negotiations or litigation that comes with.

What are the remedies for a successful passing off action?
 
 

Once a passing off claim has been filed, you could gain an interim relief which can be crucial to a passing off action. This would be obtained to restrain further dealings by the third party pending a full trial, which would prevent further damage to your goodwill during the intervening period.

Although an injunction is normally the most valuable remedy for you in a passing off action, if the matter however proceeds to a trial and is successful you would be entitled to an award of damages or an account of profits. The measure of damages can be however difficult to quantify, but our intellectual property solicitors will be with you every step of the way and will give you advice accordingly.

As experts in passing off claims, our team can provide the specialist support you need at every stage of the process. Call us on 0800 689 0831 for more information.

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Our dedicated Intellectual Property team

John Pickervance

John Pickervance

Partner and Head of Commercial

Commercial

PinCentral Lancashire

Call0333 207 1134

Daniel Fletcher

Daniel Fletcher

Associate

Commercial

PinCentral Lancashire

Call0333 207 1145

Katie Lee

Katie Lee

Solicitor

Commercial

PinCentral Lancashire

Call0333 207 4463

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