While registering a trademark is the most secure way to protect your brand identity, many local businesses operate with unregistered marks. If a competitor attempts to open a store under a deceptively similar name to steal your clients, you can sue them under the common law tort of Passing Off.
1. What is Passing Off?
Passing Off is a common-law action based on equity, protecting a business owner's proprietary goodwill from unfair trade misrepresentation. It prevents one trader from passing off their goods or services as the goods or services of another trader. Unlike infringement, registration is not a prerequisite to bring a passing off action.
2. The Classic Trinity Test of Passing Off
To win a passing off lawsuit, the plaintiff must prove three critical elements established by courts:
- Goodwill: You must prove that your unregistered brand has acquired substantial reputation and goodwill in the market, and customers associate the mark exclusively with you.
- Misrepresentation: You must show that the defendant used an identical or deceptively similar mark, misleading the public into believing their goods are associated with yours.
- Damage: You must show that you have suffered (or are highly likely to suffer) loss of business, sales, or damage to your brand reputation.
3. Remedies Available
Courts can grant powerful remedies in passing off actions, including: (1) Temporary or permanent injunctions restraining the defendant from using the mark; (2) Damages or delivery of profits; (3) Seizure of infringing goods by a court commissioner.