An introduction to the world of “passing off”

Definition and Overview

In short, "passing off" is a common law legal right of action which you can pursue if someone deliberately or even unintentionally misrepresents, or passes off, their goods or services as belonging to your organisation.

A right to take legal action arises where such misrepresentation damages the goodwill in your mark or sign relating to the goods and services of your organisation, which causes your entity financial or reputational damage.

The common law right of action can involve specific types of damaging misrepresentation including:

• "Extended passing off": this is where a misrepresentation is about of a particular quality of your product or service, and causes harm to your goodwill arising from that quality of your product or service; and

• "Reverse passing off": this is where a party markets your business's goods or services as being their own.

• "False endorsement": this is where a party falsely represents that you have endorsed their organisation, goods or services, and as a result, you have or are likely to suffer damage. 

Interestingly, while English law does recognise image rights (which would allow a person to control the use of their name or image), "Passing Off" can be used to prevent someone from falsely using your image or name to endorse a product. (To do so, you would have to be able to prove that you had established a significant reputation or goodwill in your name or image, and then, that the relevant misrepresentation was that goods or services were being endorsed, recommended or approved of by you.)

Passing Off and Trade Mark Infringement

Passing off actions are often pursued on their own (where your mark or sign involved is not a registered trade mark) and can be pursued in addition to actions for infringement of a registered trade mark. 

There are three core elements of legal proof which you must establish on the balance of probabilities (more likely than not) in order for one party to succeed in a passing off claim:

Goodwill

Also known as "claimant's goodwill", proof that you have generated a 'reputation' in your mark that members of the public associate with your business's goods or services.

Misrepresentation

Proof that the other party has caused confusion and deceived or misled your or your customers into believing that that other party's goods or services are actually those of your organisation. In other words the business misrepresents its goods and services as your goods and services.

Damage to the Claimant

Proof that the other party's misrepresentations have damaged or are likely to have damaged the goodwill which you have generated in your goods or services or have caused actual or foreseeable financial or reputational loss to your organisation.

Passing Off vs Trade Mark Law

This is a common law ‘civil wrong’ or tort which is closely related to but separate from common law and statutory law relating to unregistered and registered trade mark, respectively. It is however, often associated with trade mark infringement.

Is there a difference between "Misrepresentation" and "Passing Off"?

"Passing off" involves different kinds of misrepresentation. However, it has three elements to it. These are:

• goodwill
• misrepresentation
• damage.

Provided damage has been suffered as a result of a defendant's misrepresentation, then it is likely to be able to bring a successful claim. Some of the above are very subjective test.

Conventional misrepresentation – an untrue statement is made by the defendant which induces the public to enter into a contract – for example, they are made to believe the defendant’s goods or services are those of the claimant when they are not. In the Jif Lemon case, it was held that the reproduction of a lemon shaped container for lemon flavouring amounted to passing off because of the reputation and goodwill that the shape of the Jif lemon container had established.)

What process is involved in bringing a Passing Off claim?

The process of suing is similar to starting any legal action. These rights are sometimes referred to as unregistered trade mark rights. However, there is a plethora of case law.

It is crucially important to follow the rules throughout, including before even issuing proceedings: you must make the defendant aware of what your claim is about, so they have enough information to work out what case they have to answer. In other words you must prove you have unregistered rights. It is no good to simply state that your get up is too close to mine. One trader must show that the similarity is too close.

Firing off a simple “cease and desist” letter is likely to be a bad move: your solicitor will be able to advise what you can and cannot say.

Bear in mind also that, although there is no remedy for someone who receives a groundless threat of a passing-off action, it is common to link passing off and trade mark infringement and a threat might well cover both – and if it extends to trade mark infringement, and the threat is groundless, the recipient of the threat or someone else damaged by it could sue you.

While most cases will go to the High Court, smaller claims could be handled by the Intellectual Property Enterprise Court at much less cost to the parties. The catch is that IPEC’s procedures are intentionally quick, to save money, and in a passing-off claim you might need more witnesses than IPEC is prepared to permit. This should always be done by intellectual property solicitors.

What Evidence Do You Need for a "Passing Off" Claim?

"Passing-Off" actions rely heavily on facts (evidence).

You will need to demonstrate to a court that you have established goodwill in your organisation and that the claimant's mark has been used as described.

You will also need to demonstrate by facts that the other party's misrepresentations have damaged your entities' goodwill. 

To prove these facts, you will probably need to provide one or more witnesses who can provide evidence to demonstrate that some key quality or element in a mark or sign made them think of your business and its mark or sign and goods and services so that they were led to engage with the other party rather than you and yours. This is all to do with the attractive force of the claimant's reputation.

While you can provide evidence of 'consumer surveys' to try and establish this, courts prefer to hear the evidence direct from real witnesses. You must show that the bad actor misrepresents someone else's goods and that reputation or goodwill is being damaged.

Key requirements are evidenced needed to prove that you have generated "goodwill" in your organisation and its unregistered mark or sign, (which is inherent in proving the three elements of the claim), is often difficult to establish, because goodwill is only established gradually over time as a result of the use of the claimant's mark or sign. 

Also, what actually constitutes "goodwill" in a mark can often be difficult to describe. Generally, however, the reputation and "goodwill" in a mark or the business that owns it is considered as something which gives the organisation and its goods or services its and their unique marketplace identity and distinguishes it and them from those of its competitors.

Time Limitations to Bringing A Claim

"Passing Off" is a common law actionable tort, so the general rule is that you must bring claims in tort within six (6) years of the date when the tort occurred. 

Legally, when you became aware of the claim is irrelevant, however, practically, if a party's actions are diverting sales away from your own pipeline of sales, you are hopefully going to pick up the issue quite quickly. 

Are there any Jurisdictional Limits for bringing a "Passing Off" Claim?

While, legally, you are able to sue a foreign party for "Passing Off", this can be difficult, and even harder than suing a party who is a UK based party. 

Nevertheless, bringing an action against a foreign party will help to protect your organisation's reputation, (which can be damaged as much by a foreign party operating outside the UK, as a party operating within the UK. 

It is really important, before bringing an action against a foreign party outside the UK, to carefully weigh up the practical and legal 'pros and cons' of doing so:

• suing a foreign defendant is inherently a complicated business.

• suing any party for "Passing Off" is also inherently difficult and expensive.

• proving that a foreign party's activities outside the UK are damaging your sales, is not impossible but it is very difficult; and even if you are successful in your action, will you be able to enforce your judgment outside the UK?

So, you might want to check to see if there is another party in the UK who you could sue instead. 

If you find that your products are being passed off in other countries, it is possible to bring actions in other countries for passing off but all this needs to be done by specialist solicitors.

Defences Against Passing Off Claims

A Passing off Defendant may seek to rely on one or more legal defences to your claim of "passing off". They include that:

• your mark or sign is not distinctive or is descriptive in some way.

• the claimant's product is different.

• your mark or sign is simply a generic mark or sign.

• there doesn't appear to be establish goodwill.

• it is impossible to prove misrepresentation

• no infringing articles have been sold

• there are other identifying feature.

• the Passing off Defendant has, carefully and honestly, only been using their own name. This could be a company name defence.

• you don't actually have/can't prove your alleged goodwill in your mark or sign and there are similar distinguishing marks.

• you have actually given consent to or encouraged the use by the Passing off Defendant of your mark or sign. This could be by way of a license or express statement.

• you can't demonstrate actual or likely damage to the goodwill or reputation claimed in your mark or sign, or actual or foreseeable financial or reputational loss. Sometimes there is no identifying feature.

• You already have registered trademarks and a particular brand.

• The law on passing off is complicated. Claims can be hard to prove and taking action can be expensive, as the evidential burden of proof is solely on the trade mark owner.

Common Legal Defences / Strategies for Defence / Remedies for Passing Off

There are several remedies available under a "Passing Off" action. 

You are entitled to the following remedies:

• apply for a permanent injunction to prevent another party who has been engaging in "passing off" from using your trade mark or goodwill ('Passing off Defendant')

• apply to have the Passing off Defendant's infringing goods destroyed.

• sue for damages or seek account for lost profits from the Passing off Defendant. This can entitle you to the defendant's profits.

• an interim injunction to stop the damage from progressing. This can also help stop the loss of reputation or goodwill.

• request an inquiry to establish your trading loss and damage as a result of the passing off activities of the Passing off Defendant.

• you can claim your legal costs of doing so if you win, although it is very difficult.

• further actions and additional damages may be generally considered

Intellectual Property Considerations / Passing Off and IP Rights / Interplay with Copyright, Designs, and Patents / Practical Guidance

These complex situations need specific guidance and for this you will need direct advice from Virtuoso Legal on best practices for protecting brand identity and highlight the importance of legal support.

How Businesses Can Avoid Passing Off Claims

A key measure that you can take as a business to avoid having to deal with a "passing off action" being made against you is:

• never intentionally or recklessly create a 'look-alike' branding and/or packaging from another business that seems to be doing well. If a defendant falsely represents that he is associated with a particular company then this would be straight passing off.

• when you are creating your own branding elements of image and packaging elements, be sure to engage in a thorough search of the internet and social media sites and networks to determine as best as you can, that your own branding and brand/packaging elements are not (albeit unintentionally) potentially elements which might give rise to a 'look-a-like' claim from a more well-established organisation. Be sure not to create a get up or packaging that looks like the claimant's goods. This could be a potential passing off claim, although it is often a subjective test.

Best Practices for Protecting Brand Identity

Continuous 'due diligence' is key to protecting your Brand's valuable identity.

This can include engaging a specialist registered trade marks 'watching service' and similar watching services available through your specialist solicitor to continually monitor and report back to you on branding which involves a misrepresentation, or is likely to do so, which is or could potentially confuse your target marketplace consumer or purchaser and, result in real loss and damage and/or disruption to your sales.

Use specialist services who will continually monitor, assess and report to your company's senior decision-makers on other Branding which is actually or potentially misrepresenting and misleading to consumers of your Brand products and services.

Accessing Legal Support

With Virtuoso Legal, prompt, effective and knowledgeable legal and trade mark law support is "just a click away" 24 hours a day. 

We are ready, willing and able to engage in an initial discussion with you, to help determine whether you may or may not have rights to take legal and/or commercially astute action(s) to deal with a third party that may be engaged in unlawful "passing off" activity which is damaging your business brand and business. 

When to Seek Legal Advice

Promptly! Don't delay.......do it today! 

Putting off facing the possible fact that another enterprise is engaging in damaging 'copy-cat' activities, which are causing financial and/or reputational damage to your business and its goodwill, is NOT a good strategy.

Much better for you to get onto our Virtuoso Legal website contact page - fill in your details and the factual situation you need help with, and help will be coming your way within 24 hours.

Options for Legal Support and Representation

We can offer trained legal and trade mark attorney support and experience at a range of levels and will be happy to allocate that support to help you and your enterprise solve your entities IP/trade mark problem in the most efficient and cost-effective, value-for-money way.

Summary and Conclusions

Passing off is a special form of common law right of action relating to the actions of parties which misrepresent their Branding as if it was yours.

There are a number of legal elements of proof necessary to bring a passing off action and these involve collecting very specific evidence. This can be difficult and time consuming and expensive. Actions for a Passing Off case are nearly always expensive and disruptive to your business and business goodwill.

So, it is important to try and dissuade would be 'copy cats' from trying to piggy back on your business good will and success, by:

• registering your business Brand/trade mark(s) - to make enforcement against copy cats (intentional or otherwise) a lot simpler and cost-effective.

• maintaining your own in-house or contract an external specialist 'watching service' to continually monitor and report on actual and potential infringements of your mark and/or 'look-and-feel' copy-cat activity. 

Final Thoughts on Protecting Business Interests

When in doubt - seek specialist advice with Virtuoso Legal and receive prompt, value-for-money, professionally competent legal and trade mark advice. 

Frequently Asked Questions (FAQ's)

We've done our best to answer some frequently asked questions about passing Off.

What is meant by passing off?

Passing off is a civil (common law) wrong or tort which is closely related to, but not (technically) a right under trade mark legislation.

What is an example of passing off?

Passing off involves one party/business misrepresenting to consumers that its goods or services are those of another party or entity. If a competitor or business making similar goods 'passes off' its own goods or services as those of your enterprise, it can cause your business substantial brand damage and loss. Reverse passing off claim means claiming that the goods or services you have are those of another enterprise.

Is passing off a criminal offence?

Passing off is NOT a criminal offence. It does, however, give rise to a serious and potentially costly civil right of action and civil remedy primarily in financial damages, and also equitable rights of enforcement (e.g. specific performance or injunction.)

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Conclusion

The role of IP law in international business is critical for protecting a company's innovations, creations, and branding. By understanding and properly managing their IP rights, businesses can secure their competitive advantage and ensure that they benefit from their hard work and investment. When expanding into new markets, it is essential for businesses to conduct thorough research and take steps to protect their IP to avoid potential problems and ensure their long-term success.

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About Virtuoso Legal?

Virtuoso Legal is a team of intellectual property specialists based in Leeds and London - operating worldwide. Virtuoso Legal's team of IP experts have successfully tried cases in the IPEC, High Court, Court of Appeals and United Kingdom Supreme Court. In addition, the team assist companies in creating, commercialising and protecting the big ideas that make their business unique. The firm and its professionals are ranked yearly in legal directories such as the Legal 500 and Chambers and Partners, cementing their status as a Top 2% law firm in the world.

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