Trademarks are vital business tools comprising of any letter, word, name, signature, numeral, brand, label, packaging, shape, colour, sound or scent that are used to distinguish one product from another. Trademarks establish market presence and assist businesses in maintaining a competitive advantage in their target market. It is for these reasons that trademarks may be characterised as business assets and thus naturally, require protection.
A trademark is best protected when registered, as the trademark owner is at liberty to bring multiple actions where an infringement occurs, namely an action under s120 of the Trade Marks Act 1995 (Cth) (“the TMA”), misleading and deceptive conduct pursuant to s18 of the Australian Consumer Law (“ACL”) as well as an action under the tort of passing off.
It may be the case, however, that a business releases a product or service into the market before registering any of its trademarks. This may be due to the fact that they wish to flood the market and release their good or service without delay, or perhaps because they are not aware of their right to do so. Notwithstanding this, trademarks may still be afforded protection.
What is the tort of passing off?
The tort of ‘passing off’ is an action available where a business wrongly suggests a connection, in the course of trade, with another’s goods or services where there is damage, or a threat of damage to the proprietary interests in the reputation or goodwill that the wronged person has built up1.
What are the elements of passing off?
The tort of passing is an old tort, stemming back to Reddaway v Banham  AC 199. It was in this case that Lord Herschell laid down the test for this tort, the elements of which are still used today and include:
- misrepresentation; and
Goodwill or reputation
The plaintiff must be prove that the ‘get-up,’ packaging, shape, brand and so on, must be associated by consumers with the product and therefore the get-up of the good or service must hold a reputation2. As stated by Bennett J inNatural Waters of Viti Limited v Dayals (Fiji) Artesian Waters Ltd “the requisite reputation will be more readily found where the get-up is unique or striking, rather than descriptive, mundane, merely functional, or in common use"3.
Misrepresentation occurs where the defendant misrepresents their good as being that of the plaintiff, whether implied or express. Such misrepresentation may be as loose as the creation of an association in the consumer’s mind.
Damage or likely outcome of damage
The final element required to prove a case of passing off is that actual damage has taken place, or is likely to take place as a result of an incorrect belief resulting from the defendant’s misrepresentation that the source of their goods is the same as the source of the plaintiff’s goods4.
Misleading and deceptive conduct
Whereas passing off is aimed at protecting the reputation of a business, an action under s18 of the ACL was created to protect consumers. Pursuant to this legislation, a person, including a company, is prohibited, in trade or commerce, from engaging in misleading or deceptive conduct. In order to succeed in such a claim, the Plaintiff must prove that a “not insignificant number of persons within the relevant section of the public would be misled, or likely to be misled by reason of the impugned conduct”5.
Surrounding circumstances taken into account
Unlike a claim made pursuant to s120 of the TMA, claims made under s18 of the ACL and passing off take into account a wider range of surrounding circumstances when deciphering whether or not the elements of the claim are satisfied. Examples of circumstances that may be taken into consideration include the market in which the goods or services are sold, the manner in which they are sold, as well as the habits of customers in respect of that good or service6. It may therefore be inferred that the burden of proof is more onerous where a trademark is not registered.
Remedies for unregistered trademarks
A Court may order any of the following relief for a successful plaintiff in a claim for passing off:
- an injunction;
- damages; and
- exemplary damages.
Misleading and deceptive conduct
In the event that the plaintiff is successful in pleading a breach of s18 of the ACL, the Court may order any of the following remedies:
- an injunction; and
- compensatory damages.
Limitations of actions under the tort of passing and s18 of the ACL
Additional elements required to establish passing off
In comparison to passing off, s18 of the Australian Consumer Law provides an overarching and broader protection for unregistered trademarks. In order to make a successful claim for ‘passing off’, the plaintiff must prove two additional elements to those required under the ACL and the TMA, namely that the subject of the claim has a reputation and that their business suffered, or is likely to suffer loss as a result of the passing off7. Consequently, the burden of proof on the Plaintiff is significantly higher in a claim for passing off.
Burden of surrounding circumstances
The requirement of the Court to take into consideration additional circumstances may mean that the Plaintiff will have a more difficult time proving the elements of the action. Therefore, having a registered trademark may save the plaintiff money and time spent in Court, where they are unsuccessful due to an inability to prove these more onerous elements. Limitation of remedies available
Unlike in a claim for passing off and in fact a claim under s120 of the TMA, exemplary damages are not available in a claim for misleading and deceptive conduct. This is because plaintiffs pursuing a claim under s18 of the ACL may only recover the amount of the loss or damage caused by the acts of the defendant8, not additional payments for the purpose of punishing or deterring the defendant. Consequently, having an unregistered trademark limits the total claimable damages available to a plaintiff when an action is brought for a breach of trademark. It may be inferred that if the plaintiff’s claim in passing off does not succeed, due to the onerous elements of proof, yet they succeed in their claim under s18 of the ACL, the plaintiff may not be adequately compensated for their loss.
Is this safety net effective?
In summary, the tort of passing and s18 of the ACL provide a much needed safety net of protection for businesses with unregistered trademarks. Despite this fact, one might infer that the onerous elements required to prove passing off, along with the limited scope of remedies available under s18 of the ACL as well as the burden that comes with the requirement for the Court to consider circumstantial evidence, may place obstacles in the way of the ultimate success of the plaintiff in their trademark claim, which might be less burdensome if the trademark were registered.