If you have not registered your business name with a trade mark, there is the possibility that other businesses may attempt to use it. While registering your business name with the Australian Securities and Investments Commission (ASIC) is a good start, it may not provide the protection you need. Registering with ASIC does not prevent otherbusinesses from registering similar trade marks. This article will explain the different claims that you could bring to court if you believe that another business is using your business name in a trade mark.

Passing Off

If a business is using your business name in a trade mark, you may be able to bring a claim of passing off. Passing off applies where one business claims that their products are their own when, really, they belong to another business.

To be successful in a passing off claim, you will need to demonstrate three key elements:

1. Goodwill

To succeed in establishing that another business has been passing off as your brand, you will first need to prove that your brand has goodwill and reputation in the market. In other words, consumers must be able to distinguish your goods and services from others within the industry. 

For example, if you have a food delivery company and your business is called ‘Food Delivery’, consumers are unlikely to be able to distinguish your business from similar ones. However, if your brand is called ‘FlyingFeeds Delivery’, it is more distinct than other similar businesses in the market.

The more unique your brand is, the more likely you are to be successful in proving you have built a reputation around it. If your brand name is merely descriptive or if other businesses commonly use it, you are less likely to succeed in this threshold. 

Often, owning a registered trade mark is a good indication of having a distinctive brand. Without one, you will need to show your reputation and goodwill by finding evidence of: 

  • a long history of trading;
  • prominent sales in the market; and 
  • a loyal customer base. 

2. Misrepresentation

Secondly, to be able to prove passing off, you need to have evidence that the other business has misrepresented themselves. Here, if a competitor falsely states that their goods or services are associated with your business, misrepresentation has occurred. 

Misrepresentation could be express, where the competitor expressly states that they are associated with your business. Or, misrepresentation could be implicit, where the representation suggests an association or connection with your business.

For example, a misrepresentation is express if the other business makes representations or statements that their products or services are associated with yours.

However, the representation might be implicit if they use the same or a very similar business name and sell the same or very similar products. More often than not, the misrepresentation will be implicit.

 If there is confusion amongst customers regarding the origin of the products in question, this is strong evidence of misrepresentation. The most common example is when customers approach one business, thinking that it associated with the other.

3. Damage 

Lastly, a claim for passing off needs to demonstrate that damage has occurred as a result of the misrepresentation. It could also be enough to prove that damage is likely to occur.

The most persuasive example of damage to a business is a loss in sales or profits that directly resulted from the competitor passing off as your brand. It is also useful to prove that customers are confused.

Make sure you document every instance where a customer approaches you expecting to reach your competitor.

Misleading and Deceptive Conduct

If a competitor is copying your brand, you may also be able to claim that the competitor is engaging in misleading and deceptive conduct. Unlike passing off, which protects businesses, laws surrounding misleading and deceptive conduct aim to protect consumers. 

Covered under the Australian Consumer Law (ACL), the claim of misleading and deceptive conduct prohibits businesses from misleading consumers into believing something untrue about its goods or services. If a competitor is copying your brand, they may be misleading consumers into thinking that their products or services are the same or related to yours.

There is no requirement under the ACL for you to prove that your competitor’s intention was malicious or that your competitor has actually misled consumers. Instead, you must only establish that the average consumer is likely to be misled or deceived as a result of the conduct. 

Surrounding Circumstances

When assessing whether passing off or misleading and deceptive conduct has occurred, the courts must consider the surrounding factors of the issues. 

For example, they must consider the:

  • market that you sell your goods or services in;
  • way that you sell them; and 
  • consumer behaviour or habits regarding those goods or services.

Notably, the courts must consider the knowledge of the average consumer who would purchase the goods and services. This will help determine whether consumers are likely to be confused or if your business is expected to suffer.

How Can the Court Fix This?

If you are successful in a claim for passing off, the court may:

  1. order your competitor to stop passing off as your company (this order is called an injunction);
  2. grant you compensation for the loss of sales and profits; or
  3. issue you a large sum of compensation which covers more than your loss of profits. This is designed to deter both the competitor and the broader community from engaging in similar conduct.

If you can successfully prove that the competitor has engaged in misleading and deceptive conduct, the court may:

  1. order your competitor to stop engaging in such misleading and deceptive conduct; or
  2. grant you compensation for the damage that occurred.

In most situations, the court will only grant compensation when your competitor has engaged in fraudulent behaviour. 

What is My Next Step?

Initiating proceedings in court if another business has copied your business name can be expensive. Normally, you should first send a cease and desist letter to the competitor. This letter will outline what your rights are and the way that your competitor has infringed your rights. The letter should also specify the actions that your competitor must take to rectify the issue and the time frame that they need to do this.

Depending on the severity of the damage to your business, the letter can also require the competitor to immediately: 

  • stop making the relevant representations;
  • destroy all material that includes these representations; and 
  • compensate you any damage they have caused.

A few outcomes of this approach will likely include responses from the:

  • competitor, or their legal representation, confirming their intent to comply with the requests within the specified time period;
  • competitor, or their legal representation, agreeing with the claims that you made, but requesting more time to rectify the issue;
  • legal representative of the competitor denying claims made; or
  • legal representative of the competitor presenting a claim to rebut your letter.

Although sending a cease and desist letter may not achieve what your business needs immediately, it is always a recommended first step to take. Not only is going to court expensive, but you may also not be able to foresee defences or counterclaims that your competitor could bring. With a cease and desist letter, you will be able to gauge your competitor’s motivation behind making the representations. 

Key Takeaways

If you don’t have a registered trade mark, it does not mean that you can’t protect your brand and stop competitors from copying it. You may bring a claim against your competitor for passing off on your brand or for misleading consumers into thinking that your goods or services are related. As a first step, you may wish to send a cease and desist letter to your competitor. If another business is copying your brand and you wish to take action, contact LegalVision’s IP lawyers on 1300 544 755 or fill out the form on this page.

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