Trade Mark and Passing Off

Understanding Trademark Infringement (statutory) and Passing Off (tortious)

Would the Average Customer Be Confused?

Most business owners understand that they cannot simply copy a competitor’s logo/brand and services and expect to avoid trouble.

But what is the difference between trademark infringement and passing off? They are the two ways in which English law protects brands.

Trademarks (protect registered rights)

The Trademarks Act 1994 (“the Act”) gives registered trademark owners statutory rights. Section 9(1) of the Act confirms:

“The proprietor of a registered trade mark has exclusive rights in the trade mark which are infringed by use of the trade mark in the United Kingdom without his consent.”

Section 10(2) of the Act goes on to explain that a person infringes a registered trade mark if he uses in the course of trade a sign (logo) that is:

“…identical or similar to the [registered] trade mark and used in relation to [similar] goods or services…”

and

“…there exists a likelihood of confusion on the part of the public…”

Imagine you stop at a roadside burger van called “McDonaldz”. The logo features two large yellow curves/breadsticks. The menu boasts the “Big Quack”, the “McChicken-ish”, and the “VERY Happy Meal”.

The owner proudly explains that it is perfectly legal because he has not copied the name McDonald’s exactly. But that is not the test. The correct question to ask is whether:

“…there exists a likelihood of confusion on the part of the public…”

The wording is important. The law is not limited to exact copies. It is concerned with situations where consumers may believe there is some commercial connection between two businesses, even where the branding is not identical.

The courts assess this through the eyes of the average consumer. This is not a meticulous lawyer comparing two logos side-by-side under a microscope. It is an ordinary customer scrolling on their mobile phone, driving past a shopfront, or making a quick purchasing decision.

This is why attempting to circumvent liability by making small changes does not always solve the problem. Customers may not sit down and conduct a forensic comparison. They may simply assume the businesses are linked.

However, it is important to note that where two logos/brands may be the same/similar, there will not be an infringement if the services differ.

For example, if our friend at “McDonaldz” were in the business of supplying kilts (and not burgers), there would be no likelihood of confusion by the public, so unlikely to constitute an infringement.

However, where two companies are similar, it may be possible for them to keep the logo/branding if they can negotiate a “co-existence agreement”, which is where they agree to limit their respective services so that neither feels there would be any likelihood of confusion by the public.

However, not every business has a registered trade mark. That is where the law of passing off comes into play.

Passing Off (protects established goodwill)

The common law tort of passing off, which protects the goodwill a business has built up over time (applicable where that company has an established logo/brand, but it is not registered). Whilst the legal routes differ, both are ultimately concerned with preventing businesses from gaining an unfair advantage through customer confusion.

Imagine a village pub called The Red Fox, which has become locally famous over twenty years.

A rival publican opens across the road under the name The Red(er) Fox. The signage, menu, and websites are similar. A customer books Sunday lunch at one pub and turns up at the other.

At that point, the original owner may have a passing off claim.

Both, however, are fundamentally concerned with preventing confusion in the marketplace.

A Quick Guide

Remedies

Most commonly, the court may grant an injunction preventing the continued use of the offending name, logo, branding or marketing material. For many businesses, this can be the most damaging remedy because it may require an urgent rebrand, replacement signage, amendments to websites and social media accounts, and the destruction of existing stock and marketing materials.

The court may also award damages to compensate for losses suffered. Alternatively, the claimant may seek an account of profits, requiring the defendant to surrender profits that have been generated through the infringing activity.

In appropriate cases, the court may order the delivery up or destruction of infringing goods, packaging, advertising materials and other items bearing the offending branding.

Conclusion

The lesson is straightforward. Before launching a new business, product or rebrand, ask yourself:

Would the average customer think this is connected with somebody else’s business?

If the answer is anything other than a confident “no“, it may be worth taking advice before investing further in your brand.

Likewise, if you believe a competitor is trading off your reputation, adopting confusingly similar branding, or causing customers to believe there is a connection between your businesses, early legal advice can often prevent a dispute from escalating.

If you think that your business is a victim of trademark infringement or passing off, please contact James Day at james.day@wellerslawgroup.com or on 01732 457575 or another member of the Dispute Resolution team for a no-obligation initial discussion.