Registering a trade mark offers many benefits including an exclusive right to use your mark and prevent others from using your mark without permission. Although there is some protection provided to unregistered marks, it’s difficult and costly to enforce. Businesses who do not own registered trade marks may have to rely on the common law action of passing off.
Passing off occurs when a party represents their goods and services as the goods or services of someone else. For example, if Pepsi were to try and sell their soft drink as Coke by using the same packaging and distributing the product through similar channels this would amount to passing off. Below, we explain what protection passing off provides to those with an unregistered trade mark in greater detail.
Elements of Passing Off
Generally, the plaintiff (i.e. the trade mark owner) must establish the following three elements to succeed in a claim of passing off:
- Reputation: Has the plaintiff established a significant reputation in relation to those goods in the country or region?
- Misrepresentation: Are consumers likely to be deceived by the way that the defendant has presented the goods?
- Damage: Has the misrepresentation caused damage to the plaintiff’s reputation or is it likely to do so?
Trade marks are a matter of national jurisdiction. For a trade mark owner to succeed in a passing off claim, they must have a reputation in the same region that the defendant is attempting to sell goods in.
This is a question of fact and depends on whether or not the plaintiff had a presence within the relevant market.
Importantly, this does not mean that the plaintiff must be a local trader. An international trader can prove their reputation in a particular geographic area by point to marketing materials, including those that appear on television, radio and in print.
In Conagra Inc v McCain Foods (Australia) Pty Ltd  FCA 176, McCain Foods copied the packaging of a US company’s ‘Healthy Choices’ box. The Court decided that passing off had occurred because the US company had not established a reputation in Australia by way of advertising or business activity. This meant that even though McCain Foods had copied Conagra’s striking, successful packaging, it had not tried to pass off its goods as Conagra.
A trade mark owner must also clearly demonstrate that the way the defendant has presented their goods will likely deceive consumers. In order for this to occur there has to be significant copying of the whole brand. It’s important to note that while passing off does not require evidence of actually misleading customers, it is often useful for plaintiffs to produce this material at hearings.
In Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (No. 8)  FCA 470, confectionary heavyweight Cadbury claimed that Darrell Lea was guilty of ‘passing off’. The Court accepted that use of the colour purple had been an integral part of Cadbury’s marketing strategy dating back to 1920. However, it decided that Darrell Lea was not guilty of passing off because their use of the colour purple was unlikely to mislead consumers.
The Court went on to explain that to truly pass off their products as Cadbury’s, Darrell Lea would have had to use not just the colour purple, but Cadbury’s entire ‘brand architecture’ including the brand name. Also relevant was that the two confectionary companies sold their products through different retailers (Cadbury through supermarkets like Coles and Woolworths, and Darrell Lea through their shopfront).
Finally, a trade mark owner must establish that the misrepresentation the defendant made in relation to its goods or services must do significant damage to the plaintiff’s reputation or business. In practical terms, this means that in cases like Cadbury, the company would have had to show damage to either its reputation or business. For example, if Darrell Lea had attached the Cadbury name to a sub-par product or if Darrell Lea had actually been guilty of passing off, and this had resulted in Cadbury losing sales.
Usually, when a trade mark owner successfully makes a claim of passing off, the remedy is an injunction. Although a court can award damages, it will only do so if the defendant has engaged in fraudulent behaviour. Importantly, plaintiffs typically bring claims for passing off and misleading and deceptive conduct together. If successful, the plaintiff’s remedy will be an injunction and/or damages.
Passing off occurs when one party represents their goods as the goods of another party. The Trade Marks Act 1995 (Cth) protects registered trade marks, but passing off is a common law action. This means that passing off extends to unregistered trade marks which the Act otherwise would not protect. A trade mark owner must establish three key elements to succeed in an action, namely: reputation, misrepresentation and damage. If a trade mark owner is successful, remedies for passing off include injunctive relief and damages.
If you have any questions or need assistance registering your trade mark, get in touch with our specialist IP lawyers on 1300 544 755.
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