Stealing ideas and passing off

Unprotected Intellectual Property Rights

Part of starting or developing a company is building its identity and reputation. Protecting your Intellectual Property Rights (IPRs) can easily be overlooked, particularly when the business is thriving and you have confidence in the people involved.

What is ‘Passing Off’?

Passing off is a common law claim which can be brought where someone misrepresents their goods, services or business as being connected with another, causing damage to the goodwill of that business.

How can you prove passing off?

If a third party is benefitting from the Intellectual Property, for example by manufacturing or selling goods associated with a brand or using a logo or something very similar to a distinctive brand, without consent, a claim may be brought against them. To succeed in a passing off claim, the claimant will need to satisfy the court that:

• the goods or services or branding which are the subject matter of the alleged passing off have goodwill or a reputation attached to them; and
• the misrepresentation has created a situation where members of the public are likely to be confused between the real thing and the subject matter of the alleged passing off; and
• the person bringing the claim has suffered damage as a result of the misrepresentation.

If the unregistered IPR’s are being infringed, the common law claim of passing off can sometimes allow a court to intervene and stop the third party use, despite a trade mark not legally being in place. Passing off allows a company to protect its goodwill from misrepresentation and unfair use.

Passing Off damages goodwill

Goodwill means the intangible value attached to a business which influences how customers and the public perceive and interact with it. An example of goodwill can be the name of a company, for example, Amazon or Google. Both of these names have a brand behind them, hold prestige and are household names. They can add significant value to the company. Goodwill is essential when dealing with unregistered IP.

A successful passing off claim allows a business to prevent others from unfairly misrepresenting their goods, services or business as being connected with it.

What is Misrepresentation in a passing off claim?

Misrepresentation in the case of passing off relates to conduct which misleads or is likely to confuse customers or the general public. It must be considered whether the unregistered IP and the alleged passing off are similar enough in appearance, names, nature or market sector to deceive a customer into believing that there is a connection with a business when there is not.

Damages for Passing Off

In a passing off claim, it must be sufficiently proved to the court that the person bringing the claim has suffered damage. The loss could relate to loss of money or profit, the poaching of customers, or injury to the reputation attached to the goodwill of the IP, among other losses.

Why is Passing Off difficult to prove?

Although the idea of passing off sounds hopeful to unregistered IPR’s owners, there is a high threshold for successfully establishing a claim. Passing off is difficult to prove because the claimant must establish goodwill, misrepresentation and resulting damage, supported by evidence.

Passing Off vs Trademark Infringement

The difference between a passing off claim and a trademark infringement claim is not simply whether or not the IPRs have been registered. A trademark infringement claim can be brought against a third party who is using a registered trade mark in circumstances that amount to infringement. The trademark itself provides the registered proprietor with defined rights and specified grounds on which infringement can be established. In comparison, passing off protects goodwill where there is no registered trade mark and requires the claimant to establish the necessary elements of the common law claim.

Often passing off and trademark infringement claims are both brought in relation to the same conduct. This allows the claimant to pursue alternative causes of action and remedies. If the trademark infringement claim fails, the passing off claim may still succeed if its separate requirements are established.

Legal advice for passing off

Our team is equipped with legal advisers experienced in handling passing off claims and providing legal support for our clients. Our aim is to always work closely with our client to achieve the best possible outcome. We will always consider the best options including the use of alternative dispute resolution or mediation, to save costs and time

 Please do call us on 020 7438 1060 or email.