Last year, I was wandering around the fields of Glastonbury. It is a slightly different vibe to my day job and it was nice to have a cider in hand, close friends, good music, and great food.
Over the 14-hour days of walking around the festival site, some of the names and logos of the food and drink vendors around the site did bring to mind some established, well-known brands, often in a cheeky way. But I did not bore my friends with the law around potential passing off issues. As interesting as it is, we were there to have fun.
However, it is almost an inevitable fact of life that, while operating your business, others may try and take advantage of the brand and goodwill you have created.
You may find a business is using a similar trading name or branding as you, and that you are losing customers as a result. You may also wish to prevent your brand from being associated with another, which could damage the reputation of your business. Or concerns may arise when you spot a business using a website domain name which is identical or similar to your trading name, service or product.
This is where laws around passing off can become applicable.
What is passing off?
Passing off is a common law action that can be used to protect unregistered trade mark rights in the UK. It is a strict liability tort which means it is irrelevant whether or not the defendant knew what they were doing was breaching the claimant’s rights. Passing off is a complex area of intellectual property law which requires a deep understanding of a client’s business, their customers and their geographical market. It is important to have evidence of the negative impact potential infringers are having on your business.
And, in practice, claimants often run a passing off case alongside a case for trade mark or design right infringement.
What are the requirements for a passing off claim?
The famous “Jiff Lemon” case (Reckitt & Colman Products v Borden) sets out that in order to successfully claim “passing off” against a defendant you will need to show you have:
- Goodwill: Established goodwill or reputation in the UK (i.e., a customer following) in the relevant marketplace in the mind of the purchasing public and are known by some distinguishing feature. For example, this could be via a particular shape, colour or style of packing or “get up” used. The infringing act must have taken place within the geographical limits of the claimant’s goodwill. This means that the infringer must operate within the same trade market or geographical location as the claimant.
- Misrepresentation: The claimant must demonstrate the defendant has misrepresented (intentionally or unintentionally) their products or services as being related to their business, which leads to or is likely to deceive customers into thinking that the goods/ services offered by the defendant are those of the claimant.
- Damage: The misrepresentation causes or is likely to cause the claimant damage (i.e. financial loss) as a result.
The above three elements are referred to as the “classic trinity”. A good example of this test being applied was the finding in United Biscuits v Asda, whereby Asda’s sale of a chocolate PUFFIN biscuit amounted to passing off in respect of United Biscuits’ similar PENGUIN product. The case for trade mark infringement failed on the basis that the trade marks PENGUIN and PUFFIN were dissimilar. However, the overall packaging was held to be sufficiently alike for the passing off case to succeed.
The above PENGUIN/PUFFIN dispute illustrates passing off actions often arise alongside trade mark infringement disputes. But unlike most trade mark disputes, you do not have to have a registered trade mark in order to bring a successful passing off claim.
On the downside, as it is not possible to rely on a register entry in order to prove the existence of the claimant’s rights, it is necessary to provide evidence of goodwill or reputation at the outset, to support the claim, which places a greater burden on the claimant.
How to defend a passing off claim
Recently, companies like Aldi and Lidl have successfully defended passing off claims or achieved “out of court” commercial settlements (think Colin the Caterpillar).
As passing off is a strict liability offence, defending a claim for passing off can be difficult. However, it is equally difficult to prove passing off. A common defence to a passing off claim is that the claimant cannot evidence (on the balance of probabilities) that the “classic trinity” test, above, has been satisfied.
In particular, the defences available to defendants also include:
- Use of defendant’s own name. This defence has limited application in respect of corporate names and will not apply if the defendant has deliberately changed or chosen its name to mislead consumers.
- The Claimant cannot evidence sufficient goodwill in the UK.
- The Claimant’s mark is not distinctive.
- The Claimant’s mark is generic (i.e. just descriptive of the goods/ services provided and the geographical origin, for example “London Hairdressers”).
- The Claimant delayed taking action (the Claimant must issue Court proceedings within 6 years of the date of knowledge of the potential passing off action so it is important to try and obtain independent legal advice as quickly as possible).
- No proof of actual misrepresentation.
- Misrepresentation has not caused damage to the claimant (usually difficult to show once a misrepresentation has been established).
- The Claimant gave consent (express or implied).
- The Claimant encouraged use of the mark by the Defendant.
Remedies for passing off claims
A claimant in a passing off case may claim any of the following remedies:
- An inquiry to establish loss. This will involve a judge considering evidence submitted by the parties over the extent of the alleged losses incurred by the claimant.
- Seek an account of the lost profit.
- An order for the delivery or destruction of the infringing articles or products. Claimants may consider having the infringing goods donated to charity for PR and environmental purposes.
- Injunctive relief (either an interim injunction if you need to act quickly or an injunction to prevent further actions that amount to passing off). There is a high threshold for an injunction, as there needs to be a high risk of significant harm occurring to the claimant.
- Damages for loss of reputation and/or profit. Particular heads of damage include:
- Loss of sales (they need not be substantial)
- Injurious association (a Court has awarded this in the past, for example to a claimant nightclub against a defendant escort agency)
- Loss of exclusivity
- Loss of licencing opportunity (this is typically along the lines of recovering what endorsement fee you would have achieved)
- Erosion of distinctiveness to your goods/ services
- Dilution of your brand
For example, in Irvine v Talksport Ltd, the defendant digitally edited a photograph of Eddie Irvine, the famous F1 racing driver, to make it appear that he was endorsing the defendant’s services. The Court held that the damages payable to the claimant should consist of the standard fee that would be payable following a genuine endorsement.
The practical difficulties with making a successful passing off claim
Making a passing off claim is not particularly simple, and there are several difficulties, including:
- The presence of a different brand name on the defendant’s goods may mean that it is not straightforward to establish passing off even if the overall get-up is very similar.
- Establishing goodwill places a heavy and expensive evidential burden on the claimant. Unlike with registered rights, there is no presumption that any rights exist.
- Good evidence of confusion/deception is difficult and expensive to come by. Survey evidence in particular has been heavily criticised by judges and is useful only as a way of finding witnesses to give statements.
- Goodwill/reputation is difficult to establish in relation to a new brand/product/version of packaging.
The benefits of passing off actions
Benefits of passing off as a cause of action include:
- Passing off can be used to protect the overall look of a product even where there are no registered rights.
- A passing off claim can succeed where a trade mark infringement claim fails if, for example, the trade marks are not similar enough to establish trade mark infringement but the overall get-up is close enough to overcome the differences between the marks.
- There is no financial or administrative burden such as that which arises from filing a trade mark application, prosecuting it and paying renewal fees. However, as IP lawyers we would strongly recommend you consider obtaining registered trade marks in your key territories for your headline brand, sub-brands and any key taglines you may use.
Tips to consider for your business
Generally speaking, it is advisable to:
- Keep documented records of when and where your customers/ potential customers contact you to say they believed/ thought your goods and services were linked to another party (i.e. a potential defendant). The weight given to this sort of evidence by the Court can be relatively little but it’s a good starting point and it raises red flags and cause you to reach out for some initial independent legal advice.
- Avoid generic packaging that cannot be protected – make it as distinctive as possible.
- Use TM (to denote an unregistered trade mark) and ® symbols to deter potential third-party infringers (although note that it is a criminal offence to falsely represent a trade mark as registered by using the ® symbol).
- Monitor competitor’s branding and marketing activities to promptly identify any possible instances of passing off.
- Consider putting in place registered trade mark/design right protection to sit alongside unregistered rights and consider whether unregistered design rights may also be of assistance in protecting packaging.
- Consider registering design rights for novel packaging as another layer of protection.
- Use trade marks and packaging consistently to build up reputation/recognition and goodwill in the UK.
- Keep good records of your historic packaging and designs for your goods and services.
What are the main differences between trade mark infringement and passing off?
Passing off is similar to trade mark infringement, but applies to protect unregistered rights associated with a particular business, its goods or services. Passing off actions can be brought in a wide range of situations, including to protect business names and features of “get-up” or “trade dress”.
Passing off and trade mark infringement can be poles apart. The key difference is that trade mark infringement deals with registered rights, and passing off with unregistered rights.
Passing off protects traders’ goodwill in relation to their goods and services. “Goodwill” is the brand reputation which is built-up in relation to specific goods or services and which attracts customers. It can be held by an individual trader or in some cases shared, such as between all the producers of a specific product in a specific areas.
Summary of key points
In summary, passing off is an unregistered cause of action in the UK. It is a strict liability tort which means it does not matter whether or not the defendant intended to infringe your rights.
As discussed above, a successful claimant will need to establish the following “classic trinity” on the balance of probabilities:
- That they have established goodwill or reputation (i.e., a customer following) in the relevant marketplace in the mind of the purchasing public and are known by some distinguishing feature.
- That the infringing business has misrepresented (intentionally or unintentionally) their products or services as being related to your business, which leads to or is likely to deceive customers into thinking that the goods/ services offered by the defendant are those of the claimant.
- The misrepresentation causes or is likely to cause the claimant damage (i.e., financial loss) as a result.
How we can help
Passing off is a complicated area of intellectual property law. The sooner you have an understanding of your legal position the quicker you can start to help protect your business.
We have experience in advising a broad range of clients as to potential passing off actions. We have acted for both businesses looking to make a passing off claim and in defending passing off claims.
Please feel free to fill in a contact form below to get in touch and see how we can help you – we offer free consultations.
