Can Passing Off Protect an Unregistered Trademark?

A business, who does not own a registered trademark, must rely upon a claim of ‘passing off’ to protect their trademark. Passing off is a common law action for when a business represents another’s name, brand, logo, or other trademark as their own. They do this in order to leverage the other businesses’ reputation for their own gain. An action for passing off follows the principle in Perry v Truefitt (1842) that ‘A man is not to sell his own goods under the pretence that they are the goods of another man’. This article determines whether and how your business can protect an unregistered trademark via arguing that you have been ‘passed off’.

In-N-Out Burgers, Inc v Hashtag Burgers Pty Ltd [2020]

The recent case of In-N-Out Burgers, Inc v Hashtag Burgers Pty Ltd showcases an example of passing off. A Sydney burger restaurant, Down N’ Out, was accused of passing itself off as American burger giant, In-N-Out Burgers, as there were too many similarities in the restaurants’ logos, branding, and signage. Down N’ Out attempted to replace the ‘o’ in their logo with a ‘#’, reading ‘D#wn’, but the court found it was not sufficient to avoid liability for passing off In-N-Out Burgers. 

Passing Off vs. Trademark Infringement

While both passing off and trademark infringement are means of trademark protection for businesses, they protect different kinds of trademarks. Trademark infringement involves trademarks registered under the Trade Marks Act 1995 (Cth). To succeed in a claim of trademark infringement, the business only needs to show their ownership and use of the trademark in question. Their level of reputation does not matter and due to this, trademark infringement claims generally have higher chances of success. 

On the other hand, passing off claims are difficult to prove because they do not involve legislation; they are a common law action for unregistered trademarks. A businesses’ reputation must be proved to have a chance at succeeding in such a claim. Therefore, businesses are strongly advised to register their trademarks to be safeguarded by the Trade Marks Act.

How to Prove ‘Passing Off’

Three elements must be established for a successful claim of passing off. They are:

1. Reputation

You must show that you have a notable reputation in the same region that the other party is selling their goods. Region does not necessarily mean the local area as it includes your presence within a market. Examining the example above, In-N-Out Burgers successfully argued that the Australian restaurant, Down N’ Out passed off their branding although they were an American business. 

2. Misrepresentation

You should also show that the other party has presented their goods in a way likely to deceive consumers. There has to be a significant replication of your brand. In the case of Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (No 8) (2008), the court found that there was no misrepresentation in Darrell Lea’s use of the colour purple to market their products. That was because consumers were unlikely to be misled, drawing a connection between Darrell Lea’s use of purple and that being Cadbury’s signature colour scheme since 1920. To pass off Cadbury, Darrell Lea had to replicate Cadbury’s entire ‘brand architecture’. 

3. Damage

The final element to prove is that the passing off has caused or is likely to cause significant damage to your business. Damage may refer to your businesses’ reputation, sales, or revenue figures. 

Remedies

The remedies available to passing off claims include an injunction and compensation. The court will order the other party to cease passing off your business. Compensation is granted when the court determines that the other party has acted fraudulently. 

Conclusion

Passing off can protect an unregistered trademark as it is a common law action for when a business represents another’s name, brand, logo, or other trademark as their own. Passing off requires you to prove that your business has a notable reputation in the local area, that the other party misrepresented their goods, and that this caused significant damage to your business. Injunctions and compensation are likely remedies for a successful claim in passing off. 

If you require any help on your specific case, please contact an IP lawyer at OpenLegal. Fill in the form on this page or call us at 1300 337 997.