Introduction
Now more than ever it is important to protect the interests of your
business and to make sure that these are not prejudiced by the acts
of a competitor. What steps can you take if a competitor represents
his goods or services as being those of your business? This is
known as "passing off" and the law prevents one trader
from passing off his good or services as those of another and
benefiting from the reputation and goodwill built up by that
business. Legal action can be taken to obtain an interdict
(injunction) or compensation, or both, to protect your business
against passing off.
Requirements for an action for passing off
There are three things that a claimant has to establish in
order to be successful in an action for passing off: -
- That there is a reputation/goodwill attached to the goods or services he supplies.
- That there has been a misrepresentation by the other party
(whether intentional or not) leading, or likely to lead, the public
to believe that the goods or services offered are those of the
claimant.
It is irrelevant whether or not the misrepresentation was intended to mislead the public or even whether any members of the public have indeed been misled - the test is simply whether the misrepresentation is likely to mislead the public. - That he has suffered, or is likely to suffer, damage because of the mistaken belief caused by the other party's misrepresentation.
When looking at the likelihood of customers becoming confused, the geography of the market in which the parties operate will be an important factor. Two businesses may have similar names, but if they operate in entirely different areas of the country, it is less likely that confusion will arise.
The services provided by the respective businesses will also be an important consideration. Confusion is unlikely to result if the goods or services provided by the claimant are entirely different from those provided by the other party.
Cases involving for passing off
The issues that the Court will consider when deciding
whether there has been passing off can be seen in a couple of
Scottish Court decisions. In each case, the claimant provided
sufficient information to satisfy the Court that an interim
interdict (injunction) should be granted to protect the
claimant's position until a full hearing could take place.
In a case based on both trademark infringement and passing off, Gleneagles Hotels Ltd were able to prevent another business using the name of "Gleneagles" for a proposed development that included a film studio complex, 5 star hotel and golf course on the basis that the defenders had deliberately tried to attract the attention of the public by borrowing the claimants' name and its associated goodwill. The proposed development was only a few miles from the Gleneagles Hotel and could be classed as a leisure facility. There was no indication that the defenders would have chosen to use the name "Gleneagles" if it had not been for the already established business that the claimants ran under that name. It was also relevant that the claimants' business was long established, whereas the defenders' business was little more than a "vision".
An action was raised to prevent a trader carrying on the business of chauffeur driven car hire using the name "Hollywood Nights" or any other name incorporating the word "Hollywood" on the basis that the claimants already used the name "Hollywood Limousines". They had traded under that name for over 3 years, hiring out chauffeur driven stretch limousines, predominately in west and central Scotland. The claimants argued that they had built up substantial goodwill in those areas. They had spent a considerable amount on advertising and argued they had established a reputation as a reliable and efficient company offering a quality service. The defender had only been trading for a few months as "All American Limousines". This was a very similar business and operated in the same geographical area. The claimants argued that these facts, and the use of the word "Hollywood" for a similar business, was likely to cause confusion in the minds of present and potential customers, who were likely to be misled into supposing that the business activities of the defenders were associated with the claimants. There was no obvious need for the defender to use the word "Hollywood " in his trading name and he had been aware of the claimants' business when he decided to do so.
Conclusion
No one has the right to represent their goods and services as those
of someone else and if you think that a competitor has been acting
in this way to the prejudice of your business, it is worth
considering legal proceedings to prevent this.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
