What is the Difference Between Section 18 and Passing Off?

Summary

• Under Australian Consumer Law, businesses are prohibited from engaging in conduct that misleads consumers into thinking their goods or services are those of a competitor.
• Passing off protects traders from having their reputation and goodwill misappropriated by others through deceptive conduct.
• Businesses found in breach may face injunctions, damages, or orders to account for profits.
• This article explains passing off and misleading conduct under Australian Consumer Law, with a focus on business owners operating in Australia.
• It is produced by LegalVision, a commercial law firm that specialises in advising clients on intellectual property and consumer law matters.

Tips for Businesses

Conduct regular audits of your branding to ensure it is sufficiently distinct from competitors. Document your trading history and reputation as evidence of goodwill. If a competitor copies your brand, act promptly — delay can weaken your legal position. Review new product names and logos before launch.

Summarise with:

ChatGPT Gemini Perplexity Microsoft Copilot

Open now

---

On this page

• Monitoring the Marketplace for Trade Mark Misuse
• What is Section 18?
• What is Passing Off?
• Differences in Remedies and Burden of Proof
• Key Takeaways 
• Frequently Asked Questions

When competitors copy your branding or misuse your trade mark, two key legal tools can help: the common law tort of passing off and section 18 of the Australian Consumer Law (ACL). Both address misrepresentation, but they protect different parties and operate in different ways. This article will discuss the differences between section 18 of the ACL and passing off.

Monitoring the Marketplace for Trade Mark Misuse

Once you have obtained registration of your trade mark, it is essential to monitor the marketplace for misuse of your trade mark by your competitors.

It can also cause deception about the origin or quality of their goods and services, which can be detrimental to your company and brand.  

What is Section 18?

Section 18(1) of the ACL broadly prevents misleading and deceptive conduct. The provision states that a person must not engage in misleading or deceptive conduct or conduct that is likely to mislead or deceive in trade or commerce.   

A person includes individuals, partnerships and corporations. Importantly, for conduct to be misleading and deceptive, you must establish that:

• the conduct leads or is capable of leading a person into error;
• the error results from the conduct of the individual or corporation; and
• there is a real possibility that a reasonable person would be misled or deceived. 

As such, if you wish to rely on this provision and seek damages based on misleading and deceptive conduct, you must be able to satisfy these elements.

What is Passing Off?

Passing off occurs when a party presents their goods and services as the goods or services of another party.

While section 18 of the ACL is focused on protecting consumers, passing off is in place to protect traders. This means that passing off primarily operates between business-to-business disputes. At the same time, section 18 of the ACL applies in both business-to-consumer and business-to-business conflicts that involve a likelihood of consumer confusion. 

To establish passing off, you must prove that:

• you hold goodwill or reputation in a specific trade or commerce;
• a trader misrepresented (either intentionally or unintentionally) that there was a connection between the businesses and goods and services; and
• you suffered or are likely to suffer damage either through diminished reputation, decreased sales and turnover, bad reviews, or something similar. 

Guide to Protecting Your Brand

Your business’ brand represents your values, identity and reputation. Learn how to create a successful brand and protect it.

Download Now

Differences in Remedies and Burden of Proof

When comparing section 18 of the ACL and passing off, it is important to note the differences in remedies and the burden of proof for each claim. Remedies under section 18 of the ACL can include damages, injunctions, and orders for corrective advertising. This makes it a versatile tool for addressing misleading and deceptive conduct. Additionally, the ACL does not require proof of damage to succeed in a claim, making it easier for plaintiffs to establish a case.

In contrast, a passing off claim requires the plaintiff to demonstrate actual or likely damage to their business. This could include:

• loss of sales;
• damage to goodwill; or 
• harm to their reputation. 

Because passing off is rooted in common law, the remedies are generally more limited than those available under the ACL. However, a successful passing off claim can result in:

• an injunction; 
• damages; and
• in some cases, an account of the infringing party’s profits.

Understanding these differences is crucial when determining the best legal strategy for protecting your brand. While section 18 offers broader consumer protection, passing off specifically targets unfair competition between businesses. You may pursue one or both of these legal avenues to safeguard your trade mark and business reputation.

Key Takeaways 

Section 18 of the ACL deals with misleading and deceptive conduct. Similarly, passing off deals with situations where a company misrepresents their goods to pass off a connection to your business and its goods and services. The two legal actions are closely related. They can also go hand in hand with a trade mark infringement claim, should your trade mark be registered. 

LegalVision provides ongoing legal support for businesses through our fixed-fee legal membership. Our experienced trade mark lawyers help businesses manage contracts, employment law, disputes, intellectual property, and more, with unlimited access to specialist lawyers for a fixed monthly fee. To learn more about LegalVision’s legal membership, call 1300 544 755 or visit our membership page.

Frequently Asked Questions