This is the second article in the trade-mark series. Check out the first article in the series: What's a Trade-mark?
"Passing off" is considered a "tort" in intellectual property and in litigation. It helps protect the proprietary right in a trade-mark. Passing off is both a common law action and a statutory action, which means it protects both unregistered and registered trademarks. A registered trademark has access to both the common law and the statutory right of action, but an unregistered trademark only has access to common law protections.
The common law right of passing off is codified in section 7 of the Trade-marks Act. A reproduction of section 7 is below:
7 No person shall
(a) make a false or misleading statement tending to discredit the business, goods or services of a competitor;
(b) direct public attention to his goods, services or business in such a way as to cause or be likely to cause confusion in Canada, at the time he commenced so to direct attention to them, between his goods, services or business and the goods, services or business of another;
(c) pass off other goods or services as and for those ordered or requested; or
(d) make use, in association with goods or services, of any description that is false in a material respect and likely to mislead the public as to
(i) the character, quality, quantity or composition,
(ii) the geographical origin, or
(iii) the mode of the manufacture, production or performance of the goods or services.
7(b) refers to the "classic" conception of passing off. Passing off occurs when a person directs public attention to his goods in such as way as to cause confusion between his goods and another goods. For example, I cannot start a business selling shoes with a logo that bears a striking similarity to the Nike Swoosh because it would certainly lead a consumer to think that my shoes were manufactured by Nike.
7(d) is a statutory enactment of the "extended form" of passing off. It protects against misrepresentations as to the innate qualities of the wares or services. An example of this would be that certain wines or spirits can be only labeled as such (Bordeaux, Scotch Whiskey) if they originated from a specific geographical origin. I cannot market my brand of wine as "Bordeaux wine" if it's manufactured in Calgary.
The common law passing off action has three general elements: the existence of goodwill or proof of reputation, a deception of the public due to the misrepresentation, and damage to the Plaintiff.
The reputation or goodwill must occur within a trade-mark that the public understands as belonging to the business. As a result, the business must have operated long enough in that market, so that it has established some goodwill or reputation. If a start-up develops some type of trade-mark and has not yet developed a reputation within the industry, there may be no goodwill or reputation for that trademark. On the other hand, the Nike Swoosh clearly has goodwill or reputation in its market.
The misrepresentation is a factual question and one must establish that the defendant led the public to believe it had some connection to the plaintiff's goods or services. This factual analysis looks at the market or trade and the type of competition within that market or trade. Intention is not necessary for this element.
The threshold for damages is the plaintiff must establish a likelihood or probability of incurring damage through lost profits or damage to the value of the trade-mark. One does not need to establish actual financial loss.
Passing off is a valuable right of action for both unregistered and registered trademarks, and it must be considered when dealing with trade-mark litigation.
Do you have questions about your unregistered trademark? Has another business used your trade-mark or trade-name without your permission? Contact us today, and we will protect your rights. Andrew Roy Legal offers free 30 minute Zoom consultations. Book with us today.