In Short
- Passing off protects unregistered trade marks when a business falsely presents its goods or services as another’s.
- To claim passing off, you need to prove reputation, misrepresentation, and damage.
- Remedies include court orders to stop the conduct or compensation if fraud is involved.
Tips for Businesses
To protect an unregistered trade mark, you must show that your business has a strong reputation in the market, that consumers are likely to be deceived by a competitor’s actions, and that this causes damage to your business. Be proactive in gathering evidence to prove these elements if needed.
Registering a trade mark gives you an exclusive right to use your mark and prevent others from using your mark without permission. Although some protection is provided to unregistered marks, preventing others from using your mark may be more complex. This article will discuss what passing off is and what you need to prove to successfully establish a claim of passing off.
What is Passing Off?
Passing off is a common law tort, meaning the legal principle derives from judicial precedent rather than legislation. Passing off occurs when a party presents their goods and services as the goods or services of someone else.
What You Need to Prove to Establish ‘Passing Off’
Generally, you must establish the following three elements to succeed in a claim of passing off.
- Reputation: Have you established a strong reputation for the goods or services in the relevant country or region?
- Misrepresentation: Are consumers likely to be deceived by how the other party presents the goods or services?
- Damage: Has the above misrepresentation caused damage, or is it likely to cause damage to your business or business’ reputation?
Reputation
You must have a reputation in the same region where the other party attempts to sell the goods or services. Whether or not you have established a strong reputation will depend on the circumstances and whether or not you have a presence within the relevant market.
In a case involving the well-known food brand McCain, McCain Foods copied the packaging of a US company’s ‘Healthy Choices’ product. However, the Court decided that the passing off had not occurred because the US company had not established a reputation in Australia through advertising or business activity. Thus, although McCain Foods had copied Healthy Choice’s successful packaging, it had not tried to pass off its goods as Healthy Choices.
In a more recent example, a case between Hashtag Burgers Pty Ltd and IN-N-OUT found that “Down-N-Out Burgers” had committed the tort of passing off in its branding against “IN-N-OUT Burgers”. In particular, the court found that an insignificant number of people will have read about IN-N-OUT in a magazine, newspaper, or online or have heard about it through word of mouth. This suggests that in addition to marketing material that might appear in a particular geographical location, reputation might be established through word of mouth. Thus, while IN-N-OUT had not begun operating in Australia, it would have claims in passing off as it could establish its reputation.
Misrepresentation
You must also clearly demonstrate that how the other party presents their goods or services will likely deceive consumers. Accordingly, significant copying must be done of the whole brand. It is important to note that while passing off does not require evidence of actually misleading customers, it is helpful for you to produce this material at hearings.
In a case involving Cadbury and Darrell Lea, Cadbury claimed that Darrell Lea was ‘passing off’ its goods as those of Cadbury. The Court accepted that using the colour purple was integral to Cadbury’s marketing strategy dating back to 1920. However, Darrell Lea was not guilty of passing off. This was because their use of purple was unlikely to mislead consumers.
The Court explained that for Darrell Lea to pass off their products as Cadbury’s, they would have to use Cadbury’s entire ‘brand architecture’. This would involve using the brand name, not just the colour purple. Also relevant was that the two confectionery companies sold their products through different retailers (Cadbury through supermarkets like Coles and Woolworths, and Darrell Lea through their shopfront).
In the Full Court’s judgement in the IN-N-OUT case, the court noted that the important issue is whether consumers were enticed into the marketing web under the belief that there is some association and that a not insignificant number of people would be misled into thinking there was an association of some kind.
Damage
Finally, the other party’s misrepresentation of their goods and services must cause significant damage to your business or your business’ reputation.
This means that Cadbury would have to show harm to either its reputation or business. For example, if Darrell Lea attached the Cadbury name to a sub-par product, or Darrell Lea’s actions resulted in Cadbury losing sales.
Remedies
Usually, when a trade mark owner successfully claims passing off, the most common remedy is an injunction. This court order requires the offending party to stop engaging in the offending conduct. A court will only grant compensation (damages) if the offending party engages in fraudulent behaviour.
Your business’ brand represents your values, identity and reputation. Learn how to create a successful brand and protect it.
Key Takeaways
Passing off occurs when one party presents their goods or services as the goods or services of another party. Passing off extends to unregistered trade marks, which legislation otherwise would not protect. To successfully claim passing off, you must establish three key elements. These elements are reputation, misrepresentation and damage. If you are successful, the remedy may be an order to stop engaging in the conduct or compensation.
If you need help protecting your unregistered trade mark, our experienced trade mark lawyers can assist as part of our LegalVision membership. You will have unlimited access to lawyers to answer your questions and draft and review your documents for a low monthly fee. Call us today on 1300 544 755 or visit our membership page.
Frequently Asked Questions
Passing off occurs when a party presents their goods and services as the goods or services of someone else.
You must establish that you have established a strong reputation for the goods or services in question in the relevant country or region and that consumers are likely to be deceived by the way the other party has presented the goods or services. Additionally, the misrepresentation must harm or be likely to harm your business or reputation.
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