Passing off: who can claim? and on what grounds?

Passing off claims can be brought by anyone who can establish the existence of 3 three elements of goodwill, misrepresentation & damage

Only traders who have generated goodwill can bring a passing off action

If a company or individual has not traded, the cause of action is unlikely to be available, but passing off claims are open to all types of traders, including companies, partnerships and sole traders

Claims in passing off are about the use by a competitor of the name, mark or get-up used by the claimant to denote its product or business

The grounds to sue have been extended over time to include the use by a defendant of other branding or marketing techniques of the claimant, such as slogans or visual images from advertisements

It is irrelevant whether or not the wrongdoer intended to pass his goods or services off as those of another, or whether he acted maliciously, negligently or fraudulently

No defence of innocence: As with actions for infringement of registered trade marks under the Trade Marks Act, innocence (that is, a lack of awareness that the relevant activity amounted to passing off) is not a defence to an action for passing off

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Trade marks: Brand strength can be crucial to success in the marketplace. Our clients and international correspondent firms instruct us in registrations, oppositions & renewals; devising and policing protection programmes; transfers of title; infringement & passing off proceedings; revocation actions & challenges to validity; as well as negotiating and documenting licence & franchise arrangements.

Intellectual property: Solicitors here offer comprehensive support in all areas of intellectual property law including trademark registration, infringement of registered trademarks, passing off, patents, designs, copyrights and misuse of confidential information and trade secrets.

The principles of passing off

The principles of law applicable to a case of this sort [passing off] are well known. On the other hand, apart from the law as to trademark, no one can claim monopoly rights in the use of a word or name. On the other hand, no one is entitled to the use of any word or name, or indeed in any other way to represent his goods as being the goods of another to that other’s injury.

If an injunction be granted restraining the use of a word or name, it is no doubt granted to protect property, but the property to protect which it is granted is not property in the word or name but property in the trade or goodwill which will be injured by its use.” Burberry’s v Cording [1900]

Goodwill

 [Goodwill] It is a thing very easy to describe, very difficult to define. It is the benefit and advantage of the good name, reputation, and connection of a business. It is the attractive force which brings in custom. It is the one thing which distinguishes an old established business from a new business at its first start. The goodwill of a business must emanate from a particular centre or source. However widely extended or diffused its influence may be, goodwill is worth nothing unless it has power of attraction sufficient to bring customers home to the source from which it emanates.” Commissioners of Inland Revenue v Muller & Companies Margarine Limited [1901]

“It seems to me that the Plaintiff has proved enough. He has proved that the Defendants have adopted such a name as may lead people, who have dealings with the Plaintiff, to believe that the Defendant’s business is a branch of, or associated with the Plaintiff’s business. To induce the belief that my business is a branch of another man’s business may do that other man damage in all kinds of ways. The quality of the goods I sell; the kind of business I do; the credit or otherwise which I might enjoy all those things may immensely injure the other man, who is assumed wrongly to be associated with me. It is just that kind of injury which what the defendants have done here is likely to occasion, and I think the learned judge is perfectly right.” Ewing v Buttercup Margarine Co Ltd [1917]

Where a trader adopts words in common use for his trade name, some risk of confusion is inevitable. But that risk must be run unless the first user is allowed unfairly to monopolise the words. The Court will accept comparatively small differences as sufficient to avert confusion. A greater degree of discrimination may fairly be expected from the public where a trade name consists wholly or in part of words descriptive of the articles to be sold or the services to be rendered.” Office Cleaning Services v Westminster Window and General Cleaners [1946]

Misrepresentation

A passing-off action is a remedy for the invasion of a right of property not in the mark, name or get-up improperly used, but in the business or goodwill likely to be injured by the misrepresentation made by passing-off one person’s goods as the goods of another. Goodwill, as the subject of proprietary rights, is incapable of subsisting by itself. It has no independent existence apart from the business to which it is attached.” Star Industrial Company Limited v Yap Kwee Kor [1975]

First, he must establish a goodwill or reputation attached to the goods or services which he supplies in the mind of the purchasing public by association with the identifying “get-up” (whether it consists simply of a brand name or a trade description, or the individual features of labelling or packaging) under which his particular goods or services are offered to the public, such that the get-up is recognised by the public as distinctive specifically of the plaintiff’s goods or services. Second, he must demonstrate a misrepresentation by the defendant to the public (whether or not intentional) leading or likely to lead the public to believe that goods or services offered by him are the goods or services of the plaintiff. … Third, he must demonstrate that he suffers or … that he is likely to suffer damage by reason of the erroneous belief engendered by the defendant’s misrepresentation that the source of the defendant’s goods or services is the same as the source of those offered by the plaintiff.” Reckitt & Colman Products Ltd v Borden Inc. (No 3) [1990]

Instruments of fraud

Whether any name is an instrument of fraud will depend upon all the circumstances. A name which will, by reason of its similarity to the name of another, inherently lead to passing-off is such an instrument. If it would not inherently lead to passing-off, it does not follow that it is not an instrument of fraud. The court should consider the similarity of the names, the intention of the defendant, the type of trade and all the surrounding circumstances. If it be the intention of the defendant to appropriate the goodwill of another or enable others to do so, I can see no reason why the court should not infer that it will happen, even if there is a possibility that such an appropriation would not take place. If, taking all the circumstances into account the court should conclude that the name was produced to enable passing-off, is adapted to be used for passing-off and, if used, is likely to be fraudulently used, an injunction will be appropriate.

It follows that a court will intervene by way of injunction in passing-off cases in three types of case. First, where there is passing-off established or it is threatened. Second, where the defendant is a joint tortfeasor with another in passing-off either actual or threatened. Third, where the defendant has equipped himself with or intends to equip another with an instrument of fraud. This third type is probably mere quia timet action.” British Telecommunications plc v One in a Million Ltd and Others[1998]

There is one other general matter to deal with before turning to the facts, namely the size of the claimant’s reputation. At some point a reputation may be respected by such a small group of people that it will not support a passing−off action. Neither Mr Purle nor Mr Speck were able to formulate a test for this bottom level. Mr Purle said it was a matter of fact and degree. I agree with that. The law of passing−off protects the goodwill of a small business as much as the large, but it will not intervene to protect the goodwill which any reasonable person would consider trivial.” Sutherland v V2 Music [2002]

Intellectual property at a glance

  • Patents, trade marks, copyright, designs and trade secrets in their national, EU and international contexts.
  • Trade marks principally indicate the origin of goods or services. They can be protected in the UK through either passing off or registration. The choices for registration are a UK or a Community trade mark or international registration.
  • A registered trade mark may afford protection against use of the same or a similar sign for the same, similar or dissimilar goods or services.
  • Patents confer monopoly rights in inventions. The invention must be new, inventive, capable of industrial application and not excluded.
  • Patents must be licensed in accordance with the Block Exemption on Technology Transfer Agreements. They may be subject to compulsory licences and Crown use.
  • Copyright subsists in works not ideas. Related rights include moral rights and rights in performances.
  • Copyright is infringed by taking a substantial part of the claimant’s work.  Additional damages are available for flagrant infringements.
  • Database right subsists in electronic and paper databases if a substantial investment is made in obtaining the contents.
  • Designs are protected in UK law by registered and unregistered design rights.  Community designs co-exist with UK designs laws.
  • Trade secrets may be protected by a civil law action for breach of confidence. The information must be confidential, imparted in circumstances importing a duty of confidence and the defendant must make unauthorised use of the information.
  • Intellectual property rights are generally litigated in the High Court. A general pre-action protocol sets out the steps that parties should follow when considering litigation.
  • Expert evidence can be the key to success in intellectual property cases.

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