In Short
- Section 18 of the ACL prohibits misleading and deceptive conduct in trade or commerce.
- Passing off protects traders from misrepresentation by competitors, focusing on business-to-business disputes.
- Section 18 offers broader remedies, while passing off requires proof of damage and provides more limited options.
Tips for Businesses
To protect your brand, monitor the marketplace for trade mark misuse and know the difference between section 18 and passing off. Section 18 offers broader remedies, while passing off targets unfair competition. Consider both options when dealing with misleading behaviour or misrepresentation. Seek legal advice to ensure the best approach for your situation.
If you have registered your trade mark, it is essential to monitor the marketplace to ensure that other traders are not using your trade mark (or a deceptively similar trade mark) for goods or services similar to yours. However, suppose you catch someone using your unregistered trade mark or copying your branding in bad faith for their benefit. Depending on the circumstances, you may rely on the common law tort of ‘passing off’ or section 18 of the Australian Consumer Law (ACL). 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.
Continue reading this article below the formWhat 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.
Your business’ brand represents your values, identity and reputation. Learn how to create a successful brand and protect it.
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.
If you believe you may have a claim against another person or company for passing off or misleading and deceptive conduct, our experienced trade mark lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. 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 another party.
Section 18 of the ACL provides that a person must not, in trade and commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
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