Key differences between passing off & trade mark rights & the interrelation between the two

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Passing off and trade mark(s) are both important to businesses. Passing off is a common law tort, which helps businesses protect goodwill that they have generated in their business and which is accrued to them, which is generally done by the provision of goods or services to consumers.  Goodwill is said to be the attractive force which brings in customers and helps return them and passing off protects against misrepresentation, whether intentional or not, by third parties which could damage that goodwill.

In contrast, a registered trade mark is a property right that is granted by statute upon application in respect of certain indicia for certain goods or services and its purpose is to distinguish the goods or services of one undertaking from another undertaking.  The right that is granted is not a positive right to use that trade mark on the market.  Instead, it is what is termed a negative right – being a right to prevent others trespassing within the scope of that registration.

Why are they important for businesses?

The reason that trade mark rights and the ability to sue for passing off are important for businesses is it relates back to what drives revenue to a business.  Every business will supply goods and/or services to customers to make money and generally they will be supplied to customers under a distinctive name, typically a brand, so the customers can recognise them when they see them on the market and repeat that experience.  Therefore, being able to protect the revenue stream by preventing competitors trespassing within your market space not only helps to maintain market share but can help the business grow.

Another reason why they are important is that, if your business is looking to raise investment or even sell the business, they can be very valuable, saleable assets.  As such, if you are doing due diligence on a business, one of the things that gets asked quite a lot by investors or buyers is the position with the intellectual property – for example: do you have registrations and are things protected?  Generally, the more complete that portfolio, the better the investment or price will be.

How are they different from each other?

The key differences between passing off and trade mark infringement relate to the constituent elements to what a claimant has to prove and what the court will look at. 

In passing off, a claimant will have to demonstrate that it has protectable goodwill and that might also include the geographical scope of that goodwill and the type of scope that that goodwill relates to in terms of the type of product or service that is being provided.  It will then need to demonstrate that the defendant has made a misrepresentation, again whether intentionally or not intentionally, and that it has then suffered damage as a result of that.

With registered trade mark infringement, you start off with the claimant’s trade mark.  You then take the claimant’s trade mark and the defendant’s sign and compare them.  You then compare the claimant’s goods and services covered by the specification with what the defendant’s good and services are.  From there you move on to see whether it fits into one of the types of infringement listed below: 

Why is having a registered trade mark preferable?

The advantages of having a registered trade mark as opposed to only relying on passing off are that a registered trade mark automatically covers the full territorial scope, so for example if you have a United Kingdom trade mark it will cover all of the United Kingdom, whereas at the moment you may only be trading in a limited area of the territory.  Whereas in respect of passing off, if you are only trading in a limited area, it is possible that your rights, the goodwill you have accrued, might be limited to that area.

The next reason is that the evidence in passing off matters can be quite onerous in that you have to have cogent evidence of goodwill and a misrepresentation.  Generally, the courts will be looking for clear evidence that people have actually been deceived by the misrepresentation.  Whereas with trade marks, the court is really looking as to whether in its mind there could be a likelihood of confusion.

The other advantage of a registered trade mark is that for trade marks which have gained a reputation, so they have been used for a certain period of time and people recognise them, they can rely on not only people who are selling similar or identical goods and services but also potentially dissimilar ones, in a way that their use by the third party takes unfair advantage of its reputation or is detrimental to it.

The interrelation between the two

The way that passing off and registered trade marks interrelate is that quite often claimants will plead both causes of action, so a claimant may have a protectable goodwill through its trade but it may also have a trade mark registration.  So it is quite common to see both being pleaded.

Where they further interrelate is that generally with registered trade marks it is a first-to-file system.  So if you are the first on the file, registered, you own the trade mark.  However, that trade mark can be attacked as to its validity through passing off.  The way that works is that someone else can file for a declaration of invalidity of the registered trade mark on the basis that at the filing date of the mark they had a protectable goodwill and notional and fair use of that trade mark would amount to passing off.  So passing off can often be used to attack a registered trade mark.

Contact Us

If you require legal assistance regarding any intellectual property matters, please do not hesitate to contact Christopher Buck, Associate Partner in our Business Services Team, on 01908 660966 / 01604 828282 or by email at christopher.buck@franklins-sols.co.uk who will be happy to assist.