Imitation…flattery or just plain theft?
Passing Off: an old law in a modern world
Popstar Rihanna wasn’t flattered when Top Shop splashed her image over its T-Shirts and sold them to its customers. She sued Top Shop’s owner Arcadia Group Brands Ltd. in the High Court saying it used her photograph without her consent or authorisation. She won. The court found that Rihanna was a fashion style icon, as well as a popstar, and had “…ample goodwill to succeed in a passing off action…” Robyn Fenty (Rihanna’s real name) had several agreements in place with various fashion houses at the time of the breach by Top Shop and the court accepted there was, in reality, an overlap between fashion and music. Some would say a surprisingly insightful conclusion by the High Court. Such cynicism aside, application of an old common law tort principle successfully protected the modern-world entity of Miss Fenty.
The court had no doubt there was damage done to Rhianna’s goodwill and existing merchandise contracts through lost sales and many consumers were likely to buy the rogue T-Shirt believing it to have been authorised by her. She had been wronged and her fashion industry reputation damaged by Top Shop’s actions in passing off the item as endorsed by the popstar.
Using passing off law in the above case ably demonstrates how its scope over the years has expanded to fit modern circumstances and conduct. It’s versatile, relevant and evolving making it attractive as a possible tool for brand owners and businesses who believe they’ve been commercially wronged. So…what is it and what are its constituent parts?
What is passing off?
At its most basic it’s where one business that has distinguishing and easily recognisable features including reputation and goodwill, is mimicked by another to pass off those features as its own. Reputation and goodwill of a business is an intangible asset that can give it an identity and distinguish it from its competitors. As early as 1901 ‘goodwill’ was described by the courts as “…the benefit and advantage of the good name, reputation, and connection of a business. It is the attractive force which brings in custom.” IRC v Muller & Co’s Margarine and, implicitly, a passing-off action can protect it.
What does a claimant have to prove?
There are three underlying principles:
- That you possess or enjoy the reputation or goodwill in question;
- There has been misrepresentation by the infringer that has or is likely to deceive or confuse the public into believing the goods or services offered are yours;
- Damage has been or is likely to be caused to your reputation and goodwill.
There is no definitive legal definition of these three principles but the most troublesome to prove in practice is ‘goodwill’. The problem is its subjectivity. What is it exactly that attracts a customer to a brand? It’s worth remembering that words, colour schemes, names and shapes may all be representative of goodwill but passing-off actions don’t look at these individual features rather the business as a whole.
This too is not straightforward. Helpfully to claimants, the courts do not require direct misrepresentation. Representations that merely suggest a commercial connection between the parties will be good enough for the courts to find a passing-off infringement.
The requirement is for actual damage to goodwill or that such damage is reasonably likely. Examples of damage to goodwill include:
- Loss of sales;
- Diminished reputation;
- By association – supplying inferior quality goods;
- Loss of opportunity;
- Reduction in exclusivity.
I’ve proved passing-off – what can I claim?
A successful claimant can claim any of the following;
- Damages or an account of the infringer’s profits allowing you to calculate your losses;
- Delivery up of infringing items;
- An injunction (restraining order) preventing further damage;
- A search and seizure order to obtain documents and other evidence to prove your losses.
Can I rely on passing-off and avoid registering a trademark?
That would be unwise! Passing-off actions are undoubtedly a useful additional protective power to trademark protection, but they have limits. Proving goodwill is never easy and such litigation is evidence-based and costly. Brand owners should always consider filing strategic basic trademark applications to cover their core brands at the very earliest opportunity. The common law of passing-off, although capable of riding to the rescue on occasion, is no cure-all for gaps in your registerable IP.
Opus Underwriting Ltd.