The tort of passing off

The tort of “passing off” occurs where one trader (Defendant) has wrongly represented that its goods or services are related to those of another (Plaintiff) by imitating the latter’s “get-up”, or look and feel of their product or service.[1]  A passing off action is designed to provide a remedy when this situation results in damage to the Plaintiff’s business reputation.  It is usually pleaded as an alternative cause of action to misleading and deceptive conduct pursuant to the Australian Consumer Law, contained inside schedule 2 of the Competition and Consumer Act 2010 (Cth).

Elements of the tort of passing off

The tort of passing off is long standing legal wrong and dates back to the UK case of Perry v Truefitt (1842) 6 Beav 66 where Lord Langdale MR said:

“A man is not to sell his own goods under the pretence that they are the goods of another man.”

The elements of this tort were elaborated on in the more recent case of Erven Warnink v J Townend & Sons (Hull) Ltd [1979] AC 731, in which Lord Diplock at [671] asserted that there must be:

• a misrepresentation;
• made by a trader in the course of trade; to prospective customers or ultimate consumers of its goods or services;
• calculated to injure the business or goodwill of another trader (in the sense that this is a reasonably foreseeable consequence); and
• which causes actual damage to the business or goodwill of the trader who brings the action.

Another authoritative decision is that of Reckitt and Colman Products Ltd v Borden Inc [1990] UKHL 12 where Lord Oliver of Aylmerton said at [499]:

“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.

Secondly, 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 upon 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.

Thirdly, he must demonstrate that he suffers or 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.”

Summarised, this can be broken down into the following three (3) elements:

• reputation;
• misrepresentation; and
• damage.

Reputation

For a passing off action to be successful, the Plaintiff must show a reputation attached to the goods or services in question.^[2]  The reputation attaches to a business or commercial venture.  The Plaintiff must show that it is the holder of the reputation arising out of distinctive features such as name or ‘get-up’ of the goods or services.  It follows that a reputation cannot apply to a non-business activity.

The standard is strict.  Reputation must be established in a product as supplied by the Plaintiff and nobody else.  Generally this requires that those who were exposed to the Defendant’s conduct have acquired a “distinctive perception of the Plaintiff’s business”.^[3]  Case law has established that the requisite reputation will be more readily found where the get-up is unique or striking, rather than descriptive, mundane, merely functional, or in common use.^[4]

The requirements to establish a reputation were also discussed in by O’Bryan J in Urban Alley Brewery Pty Ltd v La Sire`ne Pty Ltd [2020] FCA 82 (Urban Alley).  It was said that a Plaintiff must establish the extent to which the distinguishing sign or get-up is known to the relevant section of the public.  O’Bryan J states at [238] that:

“Typically, the Plaintiff in a passing off case establishes its reputation by adducing evidence relating to the volume of its sales, the extent and nature of its advertising, marketing and promotional activities and the length of time, and geographical area, in which these activities have taken place”.

Below is a comparison of the “get-up” in the case of Natural Waters of Viti Limited v Dayals (Fiji) Artesian Waters Ltd [2007] FCA 200 (Fiji Waters):

In Fiji Waters the Plaintiff submitted that the Defendant passed off their get-up based on features including the prominent position of the brand name, the use of the blue bottle cap and the display of a beach landscape including a body of water with a green image on the inner side of the label.  However, it was found to be insufficient to constitute passing off because the packaging and get-up were materially different.  The Court found a number of key differences which distinguished the Defendant’s product, including that:

• the brand name bears no literary or textual resemblance of the word ‘Fiji’;
• the brand name is in dark blue writing outlined by white and in lower case script, as opposed to the Plaintiff’s bottle which was in white writing outlined by gold and in capital script;
• the colour of the lid was a darker shade of blue;
• the shape of the Defendant’s bottle is elongated and rectangular vertically, compared to the Plaintiff’s square shape bottle; and
• the inner side of the label depicted a scene predominantly blue and white, by comparison to the Plaintiff’s predominantly green and blue label;

Given the list of immediately apparent differences, the Court decided the Plaintiff’s get-up was not unique and that there was no intention to pass off.  Accordingly, the application was dismissed.

At what point in time will reputation be assessed?

The date on which the reputation will be assessed is the date on which the offending conduct is said to have commenced.^[5] In Optical 88 Ltd v Optical 88 Pty Ltd (No 2), Yates J rejected the contention that, if a Plaintiff strengthens its reputation between the date of commencement of the impugned conduct and the commencement of proceedings, it is entitled to rely on that stronger reputation for the purpose of establishing the contravention.  With respect to this, His Honour said at [333]:

“…If, on the other hand, the applicant cannot establish that, as at the date of commencement of the impugned conduct, it had a sufficient reputation to sustain its claim, I cannot see how any after-acquired reputation can assist it in the face of what would otherwise have been the legitimate commencement and continued conduct of the first respondent’s business.”

Therefore the dates on which the alleged conduct giving rise to the passing off commences are extremely important.  The Plaintiff’s reputation as established before the alleged passing off will be the most important and any reputation that was strengthened after the fact is unlikely to be relevant.

Location or area where the reputation is said to have been acquired

The location where the reputation is said to have been misappropriated also important.  Failure to establish reputation in the area in which consumers are exposed to the Defendant’s conduct will likely lead to an unsuccessful passing off claim.  However, as long as a substantial amount of people know of the Plaintiff’s business it should not matter that the Plaintiff is not trading in the area.^[6]  Additionally, passing off is still possible in cases where the Plaintiff and Defendant are operating in different commercial fields.^[7]

Misrepresentation

Importantly, the passing off tort may only be applied where representations have been made to mislead or deceive the public.  For this to occur, there has to have been significant copying of the whole brand.  Mere uncertainty or confusion in the minds of the public will not be sufficient.^[8]

Originally, representations were confined to those falsely suggesting that goods sold by the Defendant were those of the Plaintiff.  The tort has now developed to the stage where it catches any conduct on the part of a person which is likely to deceive others into identifying that person’s business with that of the Plaintiff.

Evidence may be provided to show that individual consumers have been misled, however, misrepresentation will be largely up to the Court to determine.  Importantly, the misrepresentation must not be a result of the consumer’s own “fanciful assumption” that the Plaintiff alone is entitled to use a particular name and that the Defendant’s use thereof must indicate a connection with the Plaintiff.^[9]

Additionally, the misrepresentation may be actionable as passing off despite whether it had the effect of diverting sales from a Defendant to the Plaintiff.

Intention

The requirement that the Defendant’s conduct be “calculated” to injure the Plaintiff does not mean that the Defendant must have intended that consequence, merely that it would be likely to have that effect.  Proof of such intention may nevertheless be significant, in that a Court will be more ready to infer that the intent is likely to succeed.^[10]

With respect to this, It was said by Wolff CJ in Westinghouse Electric Corporation v Thermopart Pty Ltd [1968] WAR 39 at [48] that:\

“While it is not essential to prove that the Defendant had any intent to deceive, the proof that it persisted in using the mark after attention had been drawn to the fact that it belonged to the Plaintiff may be enough to establish what in equity is regarded as fraud, as distinct from the more rigid concept of the common law.”

Damage

Where the first two (2) elements of misrepresentation and intention have been established, damage will usually be presumed to result from those circumstances.^[11]

A Plaintiff must establish they have suffered, or are likely to suffer, damage flowing from the Defendant’s conduct.  This may be through direct damage to the Plaintiff’s business, either through loss of trade, or through some lessening in the Plaintiff’s reputation or credibility by being linked to the Defendant.  In some cases, loss of opportunity may also constitute damage.

Additionally, in cases of direct damage, the Plaintiff should provide evidence to show their business was damaged due to trade being lost to the Defendant under the mistaken impression that the two businesses share the same features.^[12]  Where damage to reputation is claimed, evidence should be presented to indicate the nature and commercial value of relevant aspects of the Plaintiff’s reputation.

Takeaways

The tort of passing off claim is designed to provide protection to a trader against others from misappropriating a business’ reputation.  However, the elements of a passing off can create a heavy evidentiary burden.  Most importantly, a Defendant’s conduct must be misleading or deceptive.  Passing off will not have occurred where one trader seeks to profit from another’s reputation but without misrepresenting any connection between the two businesses.

Links and further references

Legislation

Competition and Consumer Act 2010 (Cth)

Trade Marks Act 1995 (Cth)

Cases

Cadbury Schweppes Pty Ltd v Pub Squash Co Pty Ltd [1980] 2 NSWLR 851 

Re ConAgra Inc v McCain Foods (Aust) Pty Ltd [1992] FCA 159 

Draper v Trist [1939] 3 All ER 513  

Henderson v Radio Corp Pty Ltd [1960] NSWR 279 

Natural Waters of Viti Limited v Dayals (Fiji) Artesian Waters Ltd [2007] FCA 200 

Optical 88 Ltd v Optical 88 Pty Ltd (No 2) [2010] FCA 1380 

Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 

Reckitt and Colman Products Ltd v Borden Inc [1990] UKHL 12  

Re Taco Company of Australia Inc; Taco Bell v Taco Bell Pty Limited; Denbrad Management Pty Limited; Robert Francis; Eric Baillie Francis [1982] FCA 136 

The Architects (Australia) Pty Ltd t/a Architects Australia v Witty Consultants Pty Ltd [2002] QSC 139  

Urban Alley Brewery Pty Ltd v La Sire`ne Pty Ltd [2020] FCA 82 

Vieright Pty Ltd v Myer Stores Ltd (1995)31 IPR 361 

Further information about the tort of passing off

If you need advice on protecting your business’ reputation, contact us for a confidential and obligation-free and discussion: 

Disclaimer

This article contains general commentary only.  You should not rely on the commentary as legal advice.  Specific legal advice should be obtained to ascertain how the law applies to your particular circumstances.

[1] Vieright Pty Ltd v Myer Stores Ltd (1995) 31 IPR 361.

[2] Reckitt and Colman Products Ltd v Borden Inc [1990] UKHL 12.

[3] Urban Alley Brewery Pty Ltd v La Sire`ne Pty Ltd [2020] FCA 82.

[4] Natural Waters of Viti Limited v Dayals (Fiji) Artesian Waters Ltd [2007] FCA 200 [59].

[5] Optical 88 Ltd v Optical 88 Pty Ltd (No 2) [2010] FCA 1380.

[6] ConAgra Inc v McCain Foods (Aust) Pty Ltd (1992) 33 FCR 302.

[7] Henderson v Radio Corp Pty Ltd [1960] NSWR 279.

[8] Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191.

[9] Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177.

[10] Cadbury Schweppes Pty Ltd v Pub Squash Co Pty Ltd [1980] 2 NSWLR 851 at [861].

[11] Draper v Trist [1939] 3 All ER 513 at [525].

[12] The Architects (Australia) Pty Ltd t/a Architects Australia v Witty Consultants Pty Ltd [2002] QSC 139.

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