The Tort of Passing Off: Someone has imitated the branding of my business

Say you have been running a business for a few years and have managed to establish a reputation for your business under a particular branding. You then come across a competitor who is trying to get a free ride on your success by imitating your business’ branding: the colours, fonts and imagery used all look highly similar to what you used and consumers may get confused over which is the original deal.

The tort of passing off and trade mark infringement

There are two main legal causes of action that you have: The tort of passing off and trade mark infringement. They are usually pleaded together. This article is concerned with the tort of passing off. See our other article for more information on the registration and infringement of trade marks.

In order for you to sue your competitor for the tort of passing off – for trying to pass his business off as yours, three requirements have to be met. They are namely (1) existence of goodwill; (2) misrepresentation; and (3) damage.

Existence of goodwill

In order to bring an action for passing off, your brand must have acquired goodwill by the date on which the defendant’s business or product was first launched. Goodwill has been defined as “the attractive force arising from the business’ name and reputation which brings in custom”. In other words, it is something that causes customers to be attracted to the business over others. It is territorial in nature. For example, you cannot sue for passing off in Singapore if your business is in Singapore but the business goodwill was not acquired in Singapore. Goodwill is a different concept from reputation as goodwill can only exist when attached to a business, while reputation can exist independently of any business.

Goodwill can exist in the brand name of your business, in logos, product packaging, and so on. Words which ordinarily describe products (eg, “freshly-baked” for cookies) may also attract goodwill if such words have become distinctive of the business rather than just being used to describe it. However,  whether goodwill has in fact been attracted depends on factors such as sales volume and advertising.

Misrepresentation

In an action for passing off, your competitor’s business or product has to have falsely represented itself as yours. Your competitor will be liable so long as there was in fact misrepresentation; he need not have intended such misrepresentation to occur.

Consumers also need not get confused between the two businesses in order for the action to succeed. However, the existence of confusion points strongly towards there being misrepresentation. You and your competitor also do not have to be in the same line of business for misrepresentation to occur, but the presence of a common field of activity is a relevant factor in deciding whether confusion is likely to arise in consumers.

Damage

Finally, the passing off must have resulted in some form of damage. Such damage can take the form of dilution of your goodwill, loss of profits (including future profits), and damage to reputation either for quality or by association.

“Inverse” passing off

An action may also be brought for “inverse” passing off, where rather than trying to pass his business off as yours, your competitor falsely claims that your business is his. The above three requirements will have to be proved in order for the action to succeed.