The legal definition of passing off is where a person or business offers goods or services as another business or with the consent of someone else in a way that deceives the consumer into believing that they are buying the goods or services of that person or business that they trust and are familiar with.
The effect of passing off is that the consumer is
- misled into buying goods he/she does not want
- the licensed business loses the revenue on unsold ‘real’ products and services
- the licensed business reputation can be damaged if the products or services were not up to standard
- the business selling the licensed business’s products or services receives unlawful payment
The law on passing-off is complicated and requires strong evidence in order to be successful.
The onus is on the claimant (licensed business) to prove that:
- it has goodwill
- the defendant misrepresented the public which led to confusion
- misrepresentation damaged the goodwill of the claimant
It is time consuming to prove theses elements and the biggest difficulty is in proving that the goodwill exists.
What is passing off ?
Passing off occurs where a person or organisation sells goods and/or services and purports to be another person or organisation when that is not in fact true irrespective of whether there was any intention to do so. Passing off is a fairly broad tort action relating to unregistered trades marks and attracts strict liability, meaning the defendant will be liable even where he was unaware of the fact that he was using trade marks or ‘good will’ (see below) belonging to another business. Passing off been developed over the years by judges
Claims for compensation can be made by the business who’s reputation and potential revenue streams have been damaged by the defendant. Legally, the claimant must show it had good will, that the defendant misled the public such that a distinction between the claimant and defendant could not be made and the goodwill of the claimant was damaged by the misrepresentations of the defendant.
What does misrepresentation mean in the context of passing off ?
The term misrepresentation is used quite widely in the law and can exist in negligent and fraudulent forms within contract law. However, as described before, passing off is a tort which attracts strict liability meaning that the defendant’s intention is irrelevant in defining misrepresentation. A misrepresentation can be an apparent statement of fact or conduct which is untruthful and has mislead other persons into believing that something was in fact truthful. So, if I were to offer legal services using a certain strap line, name or logo which belongs to another firm and the public were lead to believe that I was the firm with ownership of the trademarks, that would be considered a misrepresentation in the context of passing off.
What is goodwill ?
Proving the existence of good will is not an easy task. However, it can be defined as something intangible (such as reputation or unique selling points) which attracts the customers to the claimants particular business and not others. It could also include the marketing and advertising activities used by your business and some specific values or business practices used. For example, my particular business could be renowned for its high level of service and customer satisfaction, which may in itself entice customers to come to me and is thus an aspect of my business’s goodwill.
What remedies are there for passing off ?
There are two main remedies available. You can apply for an injunction to stop the defendant using your trademarks or goodwill and sue for compensation where damage to your reputation or you have lost potential revenue.
If you need advice about a passing off issue or advice on intellectual property rights and law generally, get in touch for a free initial discussion or meeting.
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