Claims under Passing-off

Introduction to Passing Off

Law on Passing off protects traders against misrepresentations, made by other traders that confuse customers as to the source of goods or services. It involves a practice where one trader gives consumer the impression that his goods are those of another trader or his goods are of the same quality as those of another trader.

Example

  • Alan is selling counterfeit goods he can be held liable under passing off as he is misrepresenting customers about the source and quality of goods and he is also causing a damage to the reputation of the original trader.

Trade Marks and Passing off

Trade Mark Act 1994 provides a significant security to registered marks and provides traders with an opportunity to protect their brand names and brand identifiers such as logos, packaging details and slogans. However, under the strict requirements for registration of a trademark, if a trader is unable to register a trademark for any reason, he can invoke the protection of his trade name or get-up under passing off. Passing-off often overlaps with copyrights and trademark rights.

Passing off requirements

In order to have a valid claim a person has to prove that there was

  1. A Misrepresentation on the behalf of the defendant
  2. Claimant has a Goodwill
  3. There is Damage to claimant’s goodwill

Misrepresentation

Misrepresentation is aimed to confuse the consumer. The essence of passing-off is misrepresentation either, express or implied. A misrepresentation is “an unambiguous but false statement of facts which induces the other party into a contract”.

 A misrepresentation must be material, in that it deceives or is likely to deceive and that the claimant is likely to suffer damages by such deception. For an actionable misrepresentation, it is sufficient if it indicates an association between the business of claimant and defendant.

Example

  • Alan is operating a corner store with the name of Sainsbury. He has no authorization or franchise or any other arrangement which allows him to use the name, Allan is committing a misrepresentation and will be held responsible under the law of passing off.
  • Mr Singh is operating a corner shop under the name of Singbury’s, which indicates an association between Singbury’s and Sainsbury’s. It will be held sufficient to have a claim under passing off.

Goodwill and damage to goodwill

The essence of passing-off is in deception which misleads customers and harms claimant’s goodwill as the ultimate consumers are taken in by that misrepresentation.  However, without a misrepresentation, there is no action, even if customers are confused and even if goodwill is damaged. The claimant must have a goodwill in the business. If there is no goodwill any misrepresentation is not effective as it does not affect or cause damage to the claimant.

Distinctiveness

A claimant has to prove distinctiveness of his sign, merely copying the name or style of another trader can be copyright infringement but may not be an actionable misrepresentation. Descriptive words including geographical names which are devoid of distinctiveness may not acquire the goodwill as they are difficult to prove that there is the likelihood of confusion in the mind of buying public.

Example

  • Alan has copied the logo of SKY TV for his corner shop Sky groceries. Sky trading name is a distinctive name and Allan may be held liable in passing off

Common Field of Activity

Misrepresentation has to be in the common field of activity between a claimant and defendant. In the absence of common field of activity, any misrepresentation is deemed irrelevant and there can be no damage to the claimant’s goodwill because public will not make a connection between traders and their different field of activity.

Example

  • Alan is trading as Sky Groceries a local corner shop. Sky trading name is a distinctive name, however, for SKY to bring a case under passing off, it has to prove that SKY Ltd and Alan’s Sky groceries are in the same field of activity as the mere distinctiveness of Sky name will not be sufficient.

Reason:  As it does not create any confusion in the mind of the public. Public knows that Sky Tv is not operating the local corner shop run by Alan

  • Alan is running a local corner shop as Sainsbury’s without their permission. As there is a common field of activity (Both sell groceries), Alan may be held liable under passing off.

Cybersquatting

The Development of the Internet has given rise to “Cybersquatting”. Cyberpirates have tried to register the names of famous companies as domain names in the hope to sell it to the goodwill holder. The basic test of passing off is applied nonetheless to issues about the internet. It was noted in Marks & Spencer plc v One in Million that any person who entered “markmsandspencer” in an internet register to find the identity of the owner would obtain the details of one in million instead of Marks & Spencer, which was held an actionable misrepresentation based on deceit. Courts through passing off and Trademark Act have counteracted the issue of cybersquatting efficiently.

Example

  • Alan managed to register a domain name Sainsbury.co.uk and has the intention to sell it to Sainsbury’s. Alan will be held liable for passing off and will not be allowed to use the domain name.

Disclaimer

While every effort has been made to ensure the accuracy of the information provided in this article, it does not constitute legal advice and cannot be relied upon as such. Each legal case and issue may have unique facts and circumstances, as a result legalally does not accept any responsibility for liabilities arising as a result of reliance upon the information provided. For further help and guidance, you can always rely on and seek advice from our experienced lawyers.

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