Passing Off

This tort emerged from deceit. Deceit emerges from tort, however passing off has emerged as an independent tort. It related to economic activities, and therefore protects economic interests.

The law recognizes that there can sometimes be unfair business terms amongst people, and the law tries to protect that. It ensures that in the marketing of goods, the marketer should not affect the goods of another.

Passing off consists of a misrepresentation, when a good or service is marketed as originating from someone else by another. When a misrepresentation is made by words or conduct to customers, and that misrepresentation is calculated to injure the reputation or the goodwill of another trader, and it causes or threatens damage to another, it is passing off.

Elements of passing off

• It is made by words or by conduct.
• It is made to prospective customers.
• It is calculated to injure the business or goodwill of another person.
• It causes or threatens actual damage to that other person.

Passing off is a common law action. When it is registered, it moves to the realm of statutory law under intellectual property. Economic interest is what is protected. The consumer of the goods and services has no cause of action in passing off. It is the other business man who has a cause of action.

In proving passing off, it is enough to show that there was an action calculated to deceive, and it is not necessary to show actual deceit. The average customer is only concerned with the appearance, and does not pay attention to little details. The idea of calculated to deceive may not necessarily connote that you are being fraudulent or intend to deceive, but it only means likely to deceive.

In Bran v Johnson, there was passing off when the defendant alleged that a product was made by someone else.

Engraves v Montack- one was registered as universe life assurance company, while the defendant went to register universal life assurance company. The court held that is there such a scenario whereby in the ordinary course of affairs, persons who have heard of universe are likely to end up in universal? Since it was a possibility, there was likelihood of deceit.

Niger Chemist v Nigerian chemist- they were on the same street and carried on the same business. The court held that there was passing off.

Rockitt & Coleman Products Ltd v Borden Incorporated.

A plaintiff in a passing off action must show that he has goodwill. Goodwill does not have to be large as it is a question of fact. It need not be established that purchases have been made.

Goodwill and locality

Does goodwill have extraterritorial application? I.e. does it extend beyond the boarder of a particular territory? Generally, goodwill does not have extraterritorial application.

Alain Bernardin and Cie v Pavillon Properties Ltd.- the plaintiffs were operating a nightclub in Paris. When the defendants established a similar nightclub in U.K., the court held that the plaintiff had no business in U.K. and there was no likelihood of deception. Thus, the injunction was not granted.

Starbucks Hong Kong Ltd v Sky UK Ltd.- in this case, the plaintiffs were broadcasters in Hong Kong, and they had an internet service called Now TV which was known to people in Hong Kong and some people in the U.K., especially the Chinese community in uk. The defendant attempted to set up Now TV in the U.K. Starbucks sued for infringement of their trademark and also for passing off. The trademark was not validly registered, so they could not rely on that and had to fall back on the common law action of passing off. The question was whether the goodwill that they purportedly enjoyed had extraterritorial application outside Hong Kong. The English court held that to be able to sue for passing off, you must have a goodwill which has a physical presence in the U.K. and that Starbucks Hong Kong did not have that. The court also made a distinction between goodwill and reputation.

The law will restrain a person from using their name in some instances. One case for this is Parkerknoll Ltd v Parkerknoll International Ltd. This will be so if there is the likelihood of deceit. In the case, both parties were manufacturers of furniture. The plaintiff was in U.K. while the defendant was in the U.S. The defendant sought to extend into the U.K., and the plaintiff successfully brought an action to restrain the defendants. The House of Lords states, in giving its decision, that calculated to deceive does not mean fraudulent or intentional deceiving. The court observed the following in the case. “It is the proposition of the law that no man should carry out his business in a way that presents it as the business of another, or that it is connected to the business of another.” The court said that a man is entitled to carry on his business in his own name so long as he does not do anything to connect his business with the business of another and so long as he does it honestly. In the case, the court went ahead to state that there is a difference between deception and confusion. It is not sufficient to say it is confusing, but that it must deceive, even though it should not necessarily be fraudulent deceit. The difference is if it caused a person to wonder, then it is confusion, while if it makes a person assume, it is deceit.