What is Passing off in Trademark Law?
“If a person sells his goods as the goods of another,” the trademark owner has the right to sue because this is a case of passing off.
Passing off is a legal strategy used to protect or safeguard the goodwill associated with an unregistered trademark. When the owner’s trademark is registered and infringement occurs, it becomes a suit for infringement. However, if the owner’s trademark is not registered and infringement occurs, it becomes a case of passing off.
Passing off actions can be filed in a variety of circumstances, including to protect business names and features of “get-up” or “trade dress.”
In the case of Perry v Truefitt, the principle of passing off, i.e., “Nobody has the right to represent his goods as the goods of somebody else,” was decided (1842). The law governing passing off has evolved. Previously, it was limited to representing one person’s goods as those of another. Later, it was expanded to include trade and services. This was later expanded to include both commercial and non-commercial activities. It now applies to many different types of unfair trade and unfair competition in which one person’s actions harm the goodwill associated with the activities of another person or group of people.
It is difficult to prove passing off because claimants must show that at least some of the public is confused between the two businesses. The most important question in Passing off is whether the defendants’ conduct is such that the public is led to believe that the defendants’ business is that of a plaintiff or that there is a cause of confusion between the two. This act of misrepresentation frequently harms a person’s or business’s goodwill, resulting in financial or reputational harm.
Different Types of Passing off
There are two varieties of passing off-
Extended Passing-Off – When a product or service is misrepresented as having a specific quality that harms the harmony or goodwill of another person or business.
Reverse Passing Off – When a trader markets, sells or manufactures another person’s or business’s goods or services.
Elements of Passing-Off
Passing off consists of three basic components. The three elements are also referred to as the Classical Trinity, as restored by the House of Lords in the case of Reckitt & Colman Ltd v Borden Inc., which established the three elements of passing off, namely misrepresentation, goodwill, and damage.
They are as follows:
Misrepresentation- When the defendant takes or attempts to persuade the public that the goods and services, he is providing are those of the plaintiff.
Goodwill- It must be demonstrated that the person or the goods and services have a reputation in the mark that associates the public with that specific goods or services. It is not uncommon for goodwill to be the very lifeblood and sap of a business, without which it would produce very little or no profits. It is the entire advantage, whatever it may be, of the firm’s reputation and connections, which may have been built up over years of honest work or gained through lavish spending.
Damage- Finally, to succeed in stopping the infringing party, the offended party must demonstrate that it has suffered an actual or reasonable loss of business as a result of the alleged misrepresentation. This is generally difficult to prove and necessitates a practical inspection of both parties’ books of account. This is sufficient to demonstrate the risk of loss. It must be demonstrated that the misrepresentation harmed goodwill or caused reputational harm.
What is the distinction between passing off and trademark infringement?
Passing off and trademark infringement are distinct and distinct concepts. Passing Off is the protection of a trader’s goodwill concerning goods and services. A party who owns the rights to a particular trademark may sue others for trademark infringement. The possibility of confusion determines whether a person or business can sue another for trademark infringement.
The main distinction is that trademark infringement involves registered rights, whereas passing off involves unregistered rights of a person, company, entity, etc. In simple terms, if the owner’s trademark is registered and infringement occurs, it becomes a suit for infringement. However, if the owner’s trademark is not registered and infringement occurs, it becomes a case of passing off.
Passing off cases have been won by Spanish sherry producers, French champagne houses, and Parma ham producers, preventing people from outside the relevant areas and/or not using traditional techniques from using terms like “sherry,” “methode champenoise,” and “prosciutto di Parma.”
The same facts can sometimes give rise to claims for both trademark infringement and passing off.
What are the remedies for passing off?
If you are successful in a passing-off claim, there are several remedies available. You can:
apply for an injunction to prevent the business from using your trademark or goodwill
apply to have the infringing goods destroyed
sue for damages or seek account for lost profit
request an inquiry to establish loss
What are the Defences for passing off?
If you file a claim for passing off, you may face a variety of defences. For example, the defendant could claim:
The trademark in question is not distinguishable.
The trademark is generic.
They have used their name carefully and truthfully.
You have no goodwill in the mark.
You have consented to or encouraged the use of the mark.
You are unable to demonstrate damage or loss.
The law governing passing off is complex. Claims can be difficult to prove, and taking action can be costly because the trademark owner bears the sole evidential burden of proof.
The protection of a trademark is necessary both for business purposes and to protect customers from fraud and deception. The passing-off action can be used in the case of unregistered goods and services. When compared to trademark infringement, the scope of passing off is much broader.
Even though the process and remedies for a passing off suit are the same for registered and unregistered marks, the burden of proof increases for unregistered marks because establishing goodwill and reputation is more difficult. To allow unregistered trademarks, the Act provides some relief to several users who would otherwise be unable to seek legal remedy for infringement of their marks.