When the law seems to overlap, it may be difficult for you to identify what area of the law applies to your specific situation. This article will discuss the differences and similarities between s18 of the Australian Consumer Law (ACL) under consumer law and ‘passing off’ under intellectual property law.

What is s18?

Essentially, s18 under the ACL prevents misleading and deceptive conduct. Four circumstances must exist for s18 to apply:

  • A person;
  • In trade or commerce – i.e. parties must be operating for the business;
  • Engaged in conduct;
  • That was Misleading and Deceptive.

The most important factors to note are the last two. The conduct must be more than confusing and must actively mislead or deceive a person. As such, you must identify which sections of the public it is likely to mislead or deceive. For example, if Mr Smith went into a supermarket and saw a packet of chips that read “Bays Chips” and purchased them having mistook this product as the well known “Lays Chips”, this may be misleading and deceptive conduct from the “Bays Chips” company and Lays may be able to sue.

What is Passing Off?

Passing Off comes under Intellectual Property Law. While s18 is focused on protecting consumers, passing off is in place to protect traders. This means that passing off operates between business-to-business disputes while s18 applies in business-to-consumer disputes. For example, “Bays Chips” has used “Lays Chips” (name and packaging) to mislead consumers into thinking that it was “Lays Chips”. Three things need to be proven for passing off to succeed:

  • Goodwill: Goodwill is the benefit of the good name, reputation and connection of a business. It is more than just reputation, it must bring about a commercial reputation that makes it distinctive within the market. Goodwill can be found in the get-up/shape, colour or names in a company. For example, the distinctive colour purple of ‘Cadbury’ may establish goodwill.
  • Misrepresentation: Misrepresentation is similar to misleading and deceptive conduct in s18. Essentially, it means to mislead people into thinking it was a certain product or service.
  • Damage: A claim for damages requires that the misrepresentation cause damage to the consumers that were misled.

Conclusion

As you can see, s18 and passing off share some similar characteristics as they both aim to protect a ‘brand’ image. The two actions are very closely related and in most circumstances both claims are made concurrently, frequently also coupled with a claim of trade mark infringement. Therefore, it is strongly advised that you consult with lawyer to understand which area of law you are dealing with.

If you would like to discuss your situation with one of our specialist Intellectual Property lawyers, please complete the form or give us a call. We will then assess your needs free of charge and provide a fixed-fee quote if relevant. Just give us a call on 1300 544 755.

Adi Snir

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