An Overview On Passing Off And Trademark
AN OVERVIEW ON PASSING OFF AND TRADEMARK
By Muhammad Ayub, LL.B., LL.M., Advocate High Court
"Pass off" in relation to trademarks indicates to offer, sell, or put into circulation (an imitation) of goods as genuine. The Principle of passing off prevents one trader from misrepresenting goods or services as being the goods and services of another, and also prevents a trader from holding out his goods or services as having some association or connection with another when this is not true. Passing off and the registered trademarks deal with overlapping factual situations in different ways. Passing off does not confer monopoly rights to any names, marks, get-up or other indicia. It does not recognize them as property in its own right.
Instead, the law of passing off is designed to prevent misrepresentation in the course of trade to the public, for example, that there is some sort of association between the businesses of two traders. Apropos passing off, there are three elements: Misrepresentation, Goodwill owned by a trader, and Damage to goodwill.
The plaintiff has the burden of proof to show false representation (intentional or otherwise) to the public to have them believe that goods/services of the defendant are that of the plaintiff. There must be some connection between the plaintiffs and defendant's goods, services or trade. They must show likelihood or actual deception or confusion by the public.
The plaintiff has also the burden of proving goodwill in its goods or services, get-up of goods, brand, mark or the thing standing for itself. It is the duty of appropriate Forum to decide similarity or identity of the marks, goods or services. The criteria are often: aural, visual and conceptual similarity.
For the third element "damage to goodwill", there may be a loss or diversion of trade or dilution of goodwill. This damage should however be reasonably foreseeable. It is not enough just to show likelihood or actual deception or confusion. The plaintiff need not prove actual damage - real and tangible probability of damage is sufficient. Ultimately, the Forum must use common sense in determining the case based on evidence mtd judicial discretion.
Passing off, at the simplest, occurs whan a business misleads customers into believing their goods were actually those of another supplier so as to benefit from the reputation that other supplier enjoys. On diverse occasions, the apex Court held that nobody has any right to represent his goods as those of someone else. In effect, it can be seen as preventing a form of unfair competition where customers are deceived as to origin of the goods they are purchasing. It is described as being: closely connected to and dependent upon what is happening in the marketplace. It is a judge-made law which tries to ensure a degree of honesty and fairness in trade is conducted.
Because the right has been developed by judges rather than via statute, the requirements of the tort are contained in the case law. There are a number of key cases, which we need to briefly consider. Let's take a look at each of these in a little more detail.
The test is to demonstrate that a misrepresentation has taken place which leads or is likely to lead the public to believe that goods or services it is offering are actually the goods or services of the claimant. It is not sufficient for a business to establish that it owns goodwill. For the purposes of passing off, the misrepresentation can take any number of forms, each of which is known as a different 'form' of passing off; provided that damage has been suffered as a result of the misrepresentation, it is likely to be possible to establish an arguable passing off case.
Before we consider the different forms of passing off established over the years, there are number of general points which apply to all of the forms of misrepresentation.
First, it is a key that the misrepresentation must deceive consumers as to the identity of the goods, not simply confuse them. Mere confusion which does not lead to sale is not sufficient.
In order to establish passing off, consumers must assume that consumers believe the goods to be those of the claimant or made by it, as opposed to merely wondering whether this is the case. Therefore, if a customer asks for a type of product without specifying the brand he may be confused as to the origins of the product, but he has not been deceived into getting it. In those circumstances misrepresentation has played no part in his purchase and there can be no passing off. On the other hand, if the customer asks for a specific branded product but is sold something else without realizing it. he has been deceived.
It is significant that the distinction between deception and confusion is another reason why trade mark rights can be more helpful than passing off, because the test for passing off only requires the claimant to establish confusion, rather than deception, as to the origins of the goods or services and arguably, easier to establish.
The second point is the number of people who need to be deceived to establish a claim for passing off. The cases are clear that it does not have to be everyone - passing off can be established even though most people are not deceived. The correct approach appears to be to consider the evidence of deception in the light of size and nature of the market in question, channels of sale, and then assess whether it is likely that sufficient individuals have made or will make the false assumption such as to cause material damage to the goodwill of the claimant.
Generally, the deception does not need to be intentional. Nor does it matter if intermediaries are not deceived, provided the ultimate consumer of the goods or services is. All that is needed is an actionable misrepresentation and damage.
In regard to types of misrepresentation leading to passing off, the first type is the classical misrepresentation i.e the public are deceived into believing that the defendant's goods or services are those of the claimant when they are not.
A related form of misrepresentation is as "reverse or "inverse" passing off. Rather than making the public believe that its goods are those of the claimant, reverse passing off occurs where the defendant makes the public believe that the claimant's goods are actually its own.
Another form of misrepresentation is known as 'extended' passing off. This occurs where there is goodwill in a general class of goods, rather than in a specific brand, and the defendant seeks to pass off their goods as belonging to that class.
At the same time, as the principle-basis of the tort is identical to conventional passing off, in order to establish extended passing off a claimant will also need to show that it belongs to a class of traders whose products are known by a distinctive name and that the class can be defined with reasonable accuracy. It must also show that the name by which the products are known has come to denote a particular kind of product which has recognizable characteristics which distinguish it from other products, and that the public are motivated to buy the product by reason of those characteristics.
The another form of misrepresentation to consider is that of misrepresentation by false endorsement. Two points in particular which one needs to be careful of in false endorsement cases is that not all uses of a person's name or image will be an endorsement, and that endorsement is not the same as merchandising where the products may bear the image of a certain person but have no connection with them - simply using the image is unlikely to be passing off.
As to the first question, goodwill is described in the case law as "the attractive force that brings in the custom". It is in practice the ability of a particular brand to persuade customers to purchase goods or services by identifying them as originating from a particular business.
The question as to what exactly goodwill is, and how one demonstrates that the 'get up' associated with the goods or services is recognized as being distinctive of them so as to establish sufficient goodwill in those goods and services.
The fact that consumers know that a particular brand identifies certain goods or services as originating from a particular business, is not sufficient unless there has actually been appreciable trade in those goods and services.
This is particularly important for foreign businesses who want to establish a claim in passing off because they need to be able to establish trade abroad in the goods and services in question, over and above a reputation. A business which is conducted completely outside the home country will struggle to establish goodwill in the country, even if there are people in the home country who are aware of the business, and even if they are customers when they go abroad. In these circumstances, a business would be better advised to rely on trade mark rights as part of a wider IP-strategy because for an initial period of five years, there is no requirement for the owner of a trade mark to show any trade in relation to the goods or services.
The 'get up' of goods or services often means how the goods or services are branded. ft is also possible to establish goodwill in the shape of goods themselves, although it is more difficult to do so. The principal function of a brand name is to denote origin, the shape and get up of a product are not normally chosen for such a purpose. A member of the public seeing a product which looks identical to another does not necessarily, or even normally, conclude that they come from the same source.
In order to be able to establish goodwill in the shape of a product, the claimant must prove that the shape of its goods has come to denote a particular source to the relevant public and that the public rely on the appearance of the goods as indicating that the origin of the goods is the claimant. This reliance on the shape of the goods, or get up, by the consumer as identifying the origin of specific goods is the paramount.
So how can a business provide that it has established goodwill in particular goods or services which are sufficient to establish passing off? The circumstances of each case will be different, but often the necessary goodwill can be established by adducing evidence of sales figures, advertising spent for the products, press coverage, awards, web pages or social media references. If this material is not sufficient then survey or witness evidence as to the link made by consumers between the 'get up' of the products and the identity of the claimant will also be useful.
The second element, one of trichotomy, which a claimant needs to establish to prove passing off is to show that the claimant has suffered damage, or is likely to suffer damage to his goodwill. This damage must arise from the reliance of the defendant's misrepresentation and can arise in a number of ways. The first and most obvious instance is where the claimant has lost sales as a result of the Defendant's misrepresentation. However damage can also occur as a result of dilution to the claimant's goodwill; for example, due to the inferior nature of the Defendant's goods or their reputation.
To some extent that completes our overview of the principle of passing off. In summary, it is a very flexible right which can be used to protect goodwill in a wide-range of situations. It also can be advantageous in relation to trademark to bring passing off claims alongside infringement claims. Although there have been instances where trade mark claims have failed but passing off claims became successful, this is not common and passing off should form part of a wider IP enforcement strategy. This is because it is primarily an 'offensive' trade mark right and does not have the same deterrent effect as other registered IP rights. In a nutshell, there should be a provision on "passing off' in the present law. In the game-play of passing-off, it is not only essential to prove presumption of misrepresentation among the general public, but also to show deception of the public and damage / injury to goodwill.