VI. Passing Off (misleading business reputation/goodwill)
Passing off is concerned with the right of a trader to bring a legal action for protecting business goodwill. This right is not conferred by any ordinance but is based on common law. An action of passing off occurs when a trader unlawfully misrepresents (acts misleadingly) that his goods or services are those of another trader. Such misrepresentation made by a trader is typically by way of imitating, among other things, the following:
- the trade mark or brand name of another trader;
- the trade name or personal name of another trader;
- the packaging, label or get-up of goods of another trader;
- a fictional character created by another trader.
Other common forms of misrepresentation which can also give rise to legal action for passing off include the following:
- a trader supplying his own goods in response to an order for goods of another trader;
- a trader falsely pretending to be an agent or dealer of another trader;
- a trader falsely stating that his goods or services are endorsed by a third party (usually a celebrity);
- a trader pretending that goods or services of another trader are his goods or services (often referred to as "inverse passing off").
The above list is not exhaustive. The law of passing off is constantly evolving to combat new forms of misrepresentation. It is clear that a legal action against passing off is not confined to the imitation of a trade mark. And even where the action is based on the imitation of a trade mark, there is no requirement that the trade mark must be registered. Thus although an unregistered trade mark is not protected under the Trade Marks Ordinance, it may still be protected under common law against passing off. On the other hand, a registered trade mark is protected both under the Trade Marks Ordinance and under common law against passing off.
To succeed in a legal action against passing off, the plaintiff must establish three things:
- the plaintiff has goodwill or reputation in his goods or services (e.g. the relevant goods/services are well-known to the public);
- the defendant has made a misrepresentation leading or likely to lead the public to believe that his goods or services are those of the plaintiff; and
- the plaintiff has suffered or is likely to suffer damage (usually business loss) as a result.
An action for passing off is a civil litigation. The relief (in the form of various kinds of court order) available to the victim includes:
- damages (compensation);
- injunction (a court order forbidding the infringer to continue selling the infringing goods);
- surrender the infringing goods; and
- surrender the profits derived by the infringer in respect of the infringing goods.
Legal action relating to passing off involves complex legal arguments. You are advised not to attempt to sue others for passing off without having proper legal advice.