The Tort of Passing-Off

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Published May 25, 2020

In Australia, the tort of passing off involves one party misrepresenting another party’s goods or services as their own.

Elements to Establish a Cause of Action in Passing-Off

In order to successfully bring a claim for passing-off, the plaintiff must establish the following three elements:¹

Reputation or Goodwill

The plaintiff holds goodwill or reputation in a specific trade or business.

Misrepresentation

The defendant has misrepresented, either intentionally or unintentionally, that a connection exists between the defendant or the defendant’s goods, services or business and the plaintiff or the plaintiff’s business.²

Damage

The plaintiff has suffered or is under threat of suffering damage, either by diversion of custom, diminished reputation or some other similar form of damage.³

The element of misrepresentation is considered to be central to the tort, despite the recognition of the proprietary nature of the action.

Reputation and Goodwill

The protection of goodwill attaches to a business or commercial venture.⁴ To attract the protection of goodwill, the plaintiff must prove that it is the holder of goodwill, as embodied in the warmth of public sentiment towards its product, service, name, or other feature unique to its business.⁵ The plaintiff will also need to show that its product bears a distinctive character within the market. Generic and descriptive terms are not protected.

It is enough to prove that the defendant’s actions are likely to deceive the particular public to whom the goods or services are directed to; there is no need for the plaintiff to prove that a particular member of the public was actually deceived.

Whether or not a plaintiff has developed a particular reputation is a question of fact to be determined by the Court. To succeed in an action of passing off, the plaintiff must show that their reputation or goodwill extends to the particular area or location in which the relevant misrepresentation is alleged to be happening/have happened.⁶ If satisfied, it is not necessary that the plaintiff’s goods be sold or intended to be sold within the jurisdiction.

Has there been Misrepresentation?

To determine whether there has been a misrepresentation, the critical question is whether the circumstances are deceptive or are likely to lead to the deception of persons within the market. The defendant’s conduct must have occurred within the plaintiff’s course of trade and have been made to prospective customers or the consuming public in such a way as to deceive a consumer or potential customers into believing that the defendant’s product or service is actually the plaintiff’s product or service.

Whether or not the defendant’s conduct constitutes a misrepresentation will depend on a question of fact which the Court must assess taking all of the circumstances into consideration.⁷ Further, the courts will look at whether the use of the same name or similar name is likely to give rise to a “sufficient degree of public confusion”.⁸

Damage in relation to a claim in passing-off

The plaintiff must show that he or she suffered, or is under threat of suffering, damage, either by diversion of custom, diminished reputation, or some other form of damage. Although damage is a required element of the tort of passing off, it is not necessary to prove that actual damage has been sustained – only that there is a likelihood of damage.⁹

Passing off and the Australian Consumer Law

In Australia, the tort of passing-off has historically operated concurrently with statutory regulation. Previously, a plaintiff who brought an action in passing off would also have made a claim under the Trade Practices Act 1974 (Cth) (“TPA”), and much of the relevant case law deals with the relevant provisions of the TPA.

In 2010, the Competition and Consumer Act 2010 (Cth) replaced the TPA and introduced the Australian Consumer Law (“ACL”). The provisions of the ACL are somewhat analogous to the old provisions in the TPA, and relevant legal commentary is largely applicable.

There are specific overlaps between the cause of action arising under section 18 of the Australian Consumer Law and the tort of passing off.¹⁰

Section 18 of the ACL states that:

“(1) A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.”.

Conduct that amounts to passing off will generally also infringe the provisions in the ACL that deal with misleading and deceptive conduct in trade or commerce. The ACL contains specific provisions for relief against parties who have engaged in misleading or deceptive conduct.

In the case of Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 18 ALR 639, Justice Stephen made the following comments about the relation between the tort of passing off and the former section 52 of the TPA (now the Australian Consumer Law section 18):

“In determining the meaning of ‘misleading or deceptive’ in s 52(1) and in applying it to particular circumstances the law which has developed around the tort of passing off, founded as that tort is upon the protection of the plaintiff’s intangible property rights, may not always provide any safe guide. However, the long experience of the courts in that field should not be disregarded, some principals which have been developed appear equally applicable to s 52(1).”¹¹

Remedies available to a claim in passing off

A successful claim in passing-off will generally entitle a plaintiff to seek certain remedies, such as damages, or an account of profits. A plaintiff may also seek injunctive relief, which will prevent the defendant from continuing certain actions, or an order for ‘delivery up’, which requires the defendant to delivery up, remove or destroy any material which caused the passing-off or misleading or deceptive conduct. Although not as common, cancellation or transfer of domain name registration may also be ordered.¹²

A claim brought under the ACL will generally entitle the plaintiff to seek damages under section 236 of the ACL.

For when you need Assistance

If you are engaged in business and another party has passed-off your goods or services as their own, you may be entitled to seek compensation, and depending on the circumstances of your particular matter, potentially an order that the infringing party cease its actions.

If you have been accused of engaging in conduct amounting to passing off a plaintiff’s goods or services as your own, we can help you defend such allegations or negotiate a satisfactory resolution to the dispute.

Contact Gibbs Wright Litigation Lawyers today for a free and confidential initial consultation to discuss your legal rights and options.

References

[1] The Architects (Australia) Pty Ltd t/a Architects Australia ACN 010 362 937 v Witty Consultants Pty Ltd & Anor [2002] QSC 139 [7].

[2] ConAgra Inv v McCain Foods (Aust) Pty Ltd (1992) 33 FCR (FC).

[3] Cadbury-Schweppes Pty Ltd v Pub Squash Co Pty Ltd [1981] 1 WLR 193.

[4] The Architects (Australia) Pty Ltd t/a Architects Australia ACN 010 362 937 v Witty Consultants Pty Ltd & Anor [2002] QSC 139 [25].

[5] The Architects (Australia) Pty Ltd t/a Architects Australia ACN 010 362 937 v Witty Consultants Pty Ltd & Anor [2002] QSC 139 [26].

[6] Fletcher Challenge Ltd v Fletcher Challenge Pty Ltd [1981] 1 NSWLR 196; Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177; Equity Access Pty Ltd v Westpac Banking Corp (1989) 16 IPR 431.

[7] Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd (2002) 55 IPR 354; Pacific Publications Pty Ltd v IPC Media Pty Ltd (2003) 57 IPR 28.

[8] The Architects (Australia) Pty Ltd t/a Architects Australia ACN 010 362 937 v Witty Consultants Pty Ltd & Anor [2002] QSC 139 [26].

[9] The Architects (Australia) Pty Ltd t/a Architects Australia ACN 010 362 937 v Witty Consultants Pty Ltd & Anor [2002] QSC 139 [55].

[10] Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (2007) 159 FCR 397; Kosciuszko Thredbo Pty Ltd v ThredboNet Marketing Pty Ltd [2013] FCA 563.

[11] Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre ltd (1978 18 ALR 639 at 646.

[12] CSR Ltd v Resource Capital Australia Pty Ltd (2003) 128 FCR 408.

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The content of this publication is intended as general commentary only and may not be suitable or applicable to your personal circumstances. It is not intended to replace independent legal advice. You can contact us at our Brisbane Office for a free consultation on a range of litigation matters on (07) 3088 6364.