10 Things all businesses should know about Passing Off

  1. The law of passing off and trade mark law have common roots and therefore are, in many respects, similar. Business ‘goodwill’ is protected by the common law tort of passing off and whilst this may be associated with a particular name or mark used in the course of trade, this area of law is wider than trade mark law in terms of the scope of marks, signs, materials and other aspects of a trader’s ‘get-up’ that can be protected. The owner of goodwill has a property right that can be protected by an action in passing off.
  2. Perhaps the most famous judicial definition of the kind of goodwill protected by passing off is that of Lord Macnaughton in IRC v Muller and Co’s Margarine [1901] AC 217 at 223: “What is goodwill? It is a thing very easy to describe, very difficult to define. It is the benefit and advantage of the good name, reputation and connection of a business. It is the attractive force which brings in custom. It is the one thing which distinguishes an old-established business from a new business at its first start. The goodwill of a business must emanate from a particular centre or source. However widely extended or diffused its influence may be, goodwill is worth nothing unless it has power of attraction sufficient to bring customers home to the source from which it emanates.”
  3. There can be an essential geographical aspect to goodwill. Because goodwill is tied to customer connection and reputation, goodwill might have a different ambit for different businesses. For example, the goodwill for a restaurant may be confined to a locality close to where it trades from, whereas goodwill for businesses where people will come from miles around may well extend considerably further.
  4. The leading speech (that of Lord Oliver) in the most recent House of Lords case on the subject of passing off, Reckitt & Colman Products Limited v Borden Inc & Ors (House of Lords 8 February 1990), summarised the law this way: “It has been observed more than once that the questions which arise are, in general, questions of fact. The law of passing off can be summarised in one short general proposition – no man may pass off his goods as those of another. More specifically, it may be expressed in terms of the elements which the plaintiff in such an action has to prove in order to succeed. These are three in number.
    • First, he must establish a goodwill or reputation attached to the goods or services which he supplies in the mind of the purchasing public by association with the identifying ‘get-up’ (whether it consists simply of a brand name or a trade description, or the individual features of labelling or packaging) under which his particular goods or services are offered to the public, such that the get-up is recognised by the public as distinctive specifically of the plaintiff’s goods or services.
    • Second, he must demonstrate a misrepresentation by the defendant to the public (whether or not intentional) leading or likely to lead the public to believe that goods or services offered by him are the goods or services of the plaintiff. Whether the public is aware of the plaintiff ‘s identity as the manufacturer or supplier of the goods or services is immaterial, as long as they are identified with a particular source which is in fact the plaintiff. For example, if the public is accustomed to rely on a particular brand name in purchasing goods of a particular description, it matters not at all that there is little or no public awareness of the identity of the proprietor of the brand name.
    • Third, he must demonstrate that he suffers or, in a quia timet action, that he is likely to suffer damage by reason of the erroneous belief engendered by the defendant’s misrepresentation that the source of the defendant’s goods or services is the same as the source of those offered by the plaintiff”.
  5. Although this statement is still considered to be the classic statement of the law of passing off, one should not confine every cause of action to every detail of such characteristics, as to do so would prevent the common law evolving to meet change in methods of trade and communication e.g. the dealing in internet domain names (see British Telecommunications Plc & Another v. One in a Million Ltd & Others (Court of Appeal 23 July 1998)).
  6. A further development of the law of passing off is disclosed in the case of Irvine v. TalkSport Ltd (Court of Appeal 1 April 2003). Here the court considered a situation where a famous racing driver was depicted in a photograph, used without his consent, which had been doctored to show him holding a radio bearing the words “talkradio”. The court held that a valuable reputation existed in the business of that celebrity’s endorsements and that the action of talkSPORT amounted to a misrepresentation that goods had been endorsed by Irvine, and that the use of that misrepresentation caused damage to Irvine because of the reduction, blurring or diminishment of the exclusivity of his endorsement.
  7. In a recent Court of Appeal decision it was held that an undertaking which seeks to establish goodwill in relation to a trade mark for goods cannot do so, however great may be the reputation of his trade mark in the UK, unless it has customer among the general public in the UK for those products. In the case of undertakings that provide services which are physically performed abroad, it is sufficient for goodwill to exist in the UK that the services are booked by customers from the UK.
  8. The remedies for passing of are similar to those available for the infringement of other intellectual property rights. Injunctions will be available from the courts to prevent damage either on an anticipated basis or where it is actually taking place. In addition, there is an entitlement to damages and/or an account of profits, delivry-up and other relief.
  9. It is worth noting that, unlike in the case of many of the parallel statutory intellectual property rights, no remedy exists in passing off for groundless threats of infringement proceedings.
  10. Passing off has not been entirely eclipsed by the law of registered trade marks, and due to the flexibility of the common law, passing of is able to deal with changes in the way in which business is undertaken, new markets and new realities.