Intellectual Property - Trade Practices - The Law of Passing Off

Date: August 28, 2009

Authors: LAC Lawyers

The principle behind the tort of “passing off” is that a person cannot represent their goods or services as those of another. The action for passing off protects business goodwill and reputation from wrongful appropriation.

An action for passing requires the plaintiff to adduce evidence of the following:

  1. Goodwill or reputation in a specific industry or trade;
  2. A misrepresentation by the defendant of a connection between the defendant or the defendant’s goods or services or business and the plaintiff or the plaintiff’s business; and
  3. Damage or threat of damage.

Goodwill

Goodwill is an intangible property right that does not have an independent existence separate from the business to which it is attached. The plaintiff will not succeed in a passing off action unless he or she can establish distinctiveness of the indicia in question by showing that consumers identify those indicia with its goods, services or business.

In order to succeed in an action in passing off, the plaintiff must establish that there has been a misrepresentation by the defendant, of a connection between the defendant's and plaintiff's business, resulting in consumer deception or confusion.

Misrepresentation

The defendant's misrepresentation may be made by direct statements or by tendering one lot of goods when asked for another,though it is more likely to be made through the use of a mark or name that has become distinctive of the plaintiff.In every case, the crucial question is whether or not the defendant's misrepresentation has resulted, or is likely to result, in confusion or deception and damage to the plaintiff's goodwill. Whether the defendant's conduct has this effect is a question of fact to be determined by reference to the relevant market.

Damage

The kind of damage which gives rise to a cause of action for passing off varies with the kinds of goodwill protected and the types of confusion or deception against which that goodwill needs to be protected. The nature of the damage will thus depend on whether the passing off in question is of the kind involving trading goodwill and rival traders, or whether the passing off is of the extended kind, involving promotional goodwill.

A kind of damage that may result from passing off where the plaintiff's and defendant's goods, services or businesses are very similar, is tarnished goodwill. If the defendant's goods or services with which the plaintiff has been falsely associated are of inferior quality, or if the defendant's manner of carrying on business is unscrupulous or undignified, the association could injure the plaintiff's goodwill.

Remedies

Relief in an action for passing off may take the form of common law damages or an equitable remedy, including account of profits, injunctions, and delivery up, or a combination of both.

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