passing off

The tort of “Passing Off” in Intellectual Property

It is a cut-throat business world, yes. But it does not give you the right to claim another’s goods or services as your own and conversely.

Britania Allied Industries Limited, through its Legal Counsel issued a Public Legal Notice on Monday, October 31st, 2016 in the New Vision (Uganda) contending the juice of ‘SAFE SIP’ currently sold in the market, passes off as its ‘SUN SIP’. Now, I once drunk ‘SUN SIP’ but I wouldn’t spot the difference easily.

‘Passing Off’

‘Passing Off’ is inducing someone or the public to believe that one’s goods or services are of or are related to those of another.

This common law tort of passing off allows a party to enforce protection for his product identity from a copycat. This means the product owner is protecting the goodwill of his product or service from unfair representation and competition from a similar product owner. In Britania’s case, its drink bottle, package, get-up, layout and colouring and names are strikingly similar to the ‘SAFE SIP’ product made by Rosika Company Limited. Britania’s claim is genuine but Court will decide (Common law jurisdiction).

In intellectual property law, the original producer of a product or service with a trademark has protection from copycat and unauthorised users of his trademark. Protection is without limit. It could be protection against the outlook of a product or service, including marks, symbols, or other insignia used to identity his product or service which in fair regard is similar to that of the original owner’s product.

Whether the marks owned are registered or unregistered, intellectual property law protects them. Although a registered trademark owner can claim infringement of rights, passing off rights exists to prevent any misrepresentation and confusion between the similar products.

In passing off, two products from different producers may coexist in the market. However, both producers are responsible for making the branding different so as not to confuse the public.

Proving Passing Off

In Reckitt & Colman Products Ltd v Borden Inc [1990]1 All ER, Lord Oliver gave three elements that must be proved to show passing off. He said that:

  • The plaintiff (trader) has the burden of proving goodwill he owns in his goods or services;

The goodwill is in the loyalty received from the consumers. Loyalty is subject to the actual product’s branding, or any other sings and suggestion that the trader’s goods and services are unique and identifiable with such insignia.

  • There is misrepresentation because of another trader trading as the plaintiff;

False representation damages goodwill. A different trader cannot lead the public to believe that his goods or services are that of the other trader (plaintiff).

This element is dependent on a likeness between the goods and services. Without proof of likeness, the cause of action does not stand. For example detergent powder ‘OMO’ and detergent powder ‘UMO’ may be confusing to the public with attention to product identity.

If OMO and UMO traded in socks and food, the likeness in products would not necessarily bring up a passing off tort.

  • The plaintiff (trader) has suffered damage to that goodwill.

In trade, customer loyalty is key. When a trader has loyalty for his goods and services, another trader in similar goods and services is banned from holding out as if he were trading with the former.  The confusion is damaging to the plaintiff.

An aggrieved trader (plaintiff) with the right to enforce the protection on his goods and services may lodge a complaint to protect his goodwill against the other trader. He equally has the responsibility to prove such misrepresentation, likelihood or fraud or confusion suffered by the public.

Court will decide whether there is a passing off or not after giving careful consideration to the nature and identity of the goods and services and whether the damage is real and tangible to allow the plaintiff enforce his claim against the defendant.

How you market your product matters. You cannot use it to confuse the public that you are together in business (not competitors). You cannot market your goods or services as another’s, without authorisation and conversely.

Proving ‘Goodwill’

Goodwill is difficult to prove in consumerism unless with the help of traditional goods and services where major brand names have enjoyed some monopoly for a notable duration. Examples include goods like Blueband (margarine), Kiwi (shoe polish), Omo (powder detergent), Kimbo (cooking oil), etc that enjoy exclusivity given to their nature since they have been on the market for long.

Finding out a traditional goods ‘goodwill’ is easier because of the consumer base gained for the long periods. Plus, its loyalty is obvious in its prolonged sales.

Making out the difference between “Passing Off” and ‘Trademarks”

 Usually, when a good or service is unregistered, a trader will claim ‘Passing Off’ because it has satisfactory ‘goodwill’ connected to it. It will be difficult to prove the tort because the three elements (see above) are tedious to make out.

Trademarks, on the other hand, are registered and thus recognised by law. Any violation is clear and easy to prove within the law.

Remedies available in ‘Passing Off’

 Damages. Because there is loss of revenue because of confusion and flooding of fake or similar goods, the plaintiff’s goods and services suffer financial loss and therefore must be remunerated.

  • An order for delivery up or destruction of the infringing goods and services. It is in court’s discretion to put this right once it proves that continued supply of the infringing goods and services will further damage the plaintiff’s goods and services on the market.
  • An injunction to outlaw the infringing goods and services from further production or use of the plaintiff’s marks, insignia and identity. This is because courts do not wish to interfere in the market forces of demand and supply. Often, they are reluctant to offer or encourage monopolies. An injunction restraining the infringing party from its actions will be enough. That party, however, has the freedom to rebrand and stay in the market.

What the defendant may claim against the plaintiff

  • The plaintiff’s mark, insignia, etc is not distinctive enough to accord it uniqueness, loyalty and protection as claimed.
  • The plaintiff may have given consent to the defendant in whichever form.
  • The defendant uses the insignia, mark or name without fraudulent intent (proof must be enough)
  • The name, insignia, mark claimed is a standard name, common and not unique (generic).

When deciding whether to sue for enforcement of a right under ‘Passing Off’ principles, rights holders are encouraged to make thorough research on the ‘goodwill’, ‘confusion to the public’ and ‘damage caused’.

Otherwise, although unregistered goods and services are presumed protected, their protection is less effective unless registered.

BY ATUHAIRWE AGRACE

This article appears in our weekly digital law magazine, The Deuteronomy Vol 8, Issue 1 of October 4th 2016

To receive The Deuteronomy in real time, click HERE

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