What is ‘Passing Off’?
Everything you need to know about the law of passing off.
Passing off is a common law action for when someone is representing their goods and services as your own. Most businesses register for a trademark in order to safeguard themselves from this. Registering a trademark will grant you the legal protections of the Trade Mark Act 1995 (Cth). Section 120 of the Act outlines how a registered trademark can be infringed upon. This ultimately attempts to stop businesses from misleading or deceiving consumers. However, as the provisions of this act only apply when you register a trademark, you will have to rely upon alternative action if you haven’t done so. This is where the tort of passing off can be helpful.
How to Prove Passing Off?
To be successful in a claim of passing off, you will have to satisfy the three key elements. They include the following.
To prove passing off, you must show you have a notable reputation in the area that the person you’re accusing sells their goods. You don’t necessarily have to be a local trader, rather you need a presence in the appropriate market. You can be an overseas company with operations in Australia and still satisfy this element. The case of Cadbury Schweppes v The Pub Squash Co Ltd illustrates this as Cadbury’s reputation in the Australian soft drink market was proven by providing their advertising and sales information to the court.
Misrepresentation occurs when someone presents their good or service in a way that it appears to be yours. There has to be a substantial replication of your brand to the point where it is likely to mislead consumers. Misrepresentation can be as broad as creating an association to your brand in the consumer’s mindset. In Stone & Wood Group Pty Ltd v Intellectual Property Development Corporation Pty Ltd, the court did not find misrepresentation as they did not believe consumers would confuse the two beers as a result of the use of one similar word. Therefore, the distinctiveness of the passing off needs to be fairly significant.
The last element requires you show the misrepresentation has caused actual damage to your business or is likely to do so in the future. This impact can be with regards to the reputation of your business or even on sales and revenue figures. For example, in the case of Stone & Wood, damage would occur had their logo design been copied by their competitor and their sales revenue decreased as a result.
If you satisfy these elements your claim of passing off is likely to be successful. You can receive damages if the conduct was fraudulent, however, the most common remedy is an injunction requiring the offender to remove the misrepresentation. If you believe you have a potential claim of passing off but are unsure about how to act, the advice of a trademark lawyer can be helpful.
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Chris is a member of the content team at Lawpath. He is currently studying a Bachelor of Business and Bachelor of Laws at UTS. He is interested in how marketing communication strategies can influence the future of the legal industry.