What is passing off?
Passing off is a legal concept that protects businesses from false representations that damage their reputation or goodwill. It helps prevent one business from misleading consumers into thinking its products or services are associated with another. Alongside the Australian Consumer Law (‘ACL’) and the Trade Marks Act 1995 (Cth) (‘Act’), passing off promotes fair competition and safeguards businesses from deceptive practices.
Key elements of passing off
To successfully establish a claim of ‘passing off,’ three essential elements must be proven:
- Reputation:
- Businesses must show their goods or services have a distinct market reputation.
- The reputation should be strong enough that the public associates the goods or services with the plaintiff.
- For example, in Peter Bodum A/S v DKSH Australia Pty Ltd (2011),[1] Peter Bodum, a well-known Danish kitchenware brand, successfully demonstrated its reputation in the market, as the public associated its distinctive designs with the brand.
- Misrepresentation:
- The defendant must make a misrepresentation, either intentionally or unintentionally, that is likely to cause the public to believe their goods or services are those of the plaintiff.
- For example, in Stone & Wood Group Pty Ltd v Intellectual Property Development Corp Pty Ltd (2016),[2] the defendant’s use of a logo and name similar to that of Stone & Wood, a well-known brewery, led to confusion among consumers, suggesting that the goods were affiliated with Stone & Wood.
- Damage:
- The plaintiff must show that they have suffered or are likely to suffer damage due to misrepresentation.
- This damage may include loss of sales, harm to reputation, or other commercial detriment.
- For example, if a consumer buys a product thinking it is from a reputable brand (such as a high-quality kitchen appliance), only to find out that it is a cheap knockoff, the brand might suffer from loss of consumer trust or sales.
Key takeaways
The tort of passing off is closely applicable to the ACL and the Act as they collectively safeguard businesses and consumers from unfair practices.
Passing off protects the goodwill of businesses by addressing misrepresentations tied to reputation. The Act complements this by providing legal protection for registered trade marks, ensuring businesses can enforce their exclusive rights against infringement. Meanwhile, the ACL offers a broader consumer-focused framework by prohibiting misleading and deceptive conduct, even in the absence of established reputation or trade marks.
Together, these laws create a comprehensive system to promote fair competition and consumer trust.
Conclusion
It is important for you and your business to be aware of the legal protections available to safeguard your reputation, trade marks, and consumer trust. Understanding how the ACL, the Act, and passing off work together can help you navigate your obligations and mitigate risks.
Should you have any questions about your obligations under these legal frameworks, please reach out to Ersel Akpinar (ersel@morganenglish.com.au) and the experienced IP + Tech + Compliance team at M+E today.
[1] [2011] FCAFC 98.
[2] [2016] FCA 820.
