You should be aware that when your business becomes successful, others may try to pass themselves off as your company. If a competitor has created potential confusion – intentionally or not – and your customers could mistake another business for yours, this is passing off. Passing off is illegal. This article looks at the various forms of passing off, the problems it causes and what you can do about it.
The most common form of passing off is a using a similar sounding name. You may have built up a terrific reputation and some unscrupulous business could trade using a name similar to yours, perhaps with the slightest altered spelling or change that most customers might not notice. Not only could you lose business but your reputation could plummet. It does not have to be intentional for you to go to court.
Another common passing off trick is the use of designs – perhaps a logo, product shape or style that are very similar to yours. If a rivals’ colours on its website, leaflets, or brochures are too similar to yours (or yours are too similar to another business!), this can also count as passing off.
Advertising is another consideration. Whether it is online advertising, including website keywords and search engine adverts, billboards, or similar sounding voice overs on local radio, if a businesses is too similar to yours, and could be confusing customers and redirecting business elsewhere it might be seen as passing off.
Passing off should not be treated lightly as it can cause number of problems. You may miss out on customers who have been led to believe another business is actually you. Of course you may never even know about it.
Financial costs can be huge. You do not just lose the initial customer, plus any repeat business (not to mention the cost of bad publicity if they are unscrupulous), but your overall advertising and marketing strategies are immediately less effective. You may have paid for leaflets, ‘pay per click’ listings and other advertising simply to see your efforts rewarding the passing off company. You may never be able to quantify how much business is lost.
What can you do about passing off?
Your rights can be enforced under common law. There are three main points to consider.
- Your businesses, services or product needs to have acquired a reputation or goodwill in the market place, and be known by distinguishing features. This could include a name, logo, website or colour scheme. You do not need to have trade marked your name or product, but it does need to be known in your marketplace. (If you have a trade mark, though, your court case will be more straightforward.)
- Misrepresentation. There needs to have been a misrepresentation by the business that is accused of passing off which could lead customers to believe they are buying from you. It may be that customers are confused by the logo or business name, or simply that there are too many similarities. Even if the representation is not intentional it could still be construed as passing off.
- Your businesses need to have suffered damage because of the misrepresentation. Lost customers, future custom, damaged reputation or reduced effectiveness of marketing and promotion because of the passing off, intentional or not.
If you meet the three points you can take the company to court and gain compensation. But you must act as soon as you are aware of the problem and of course court cases cost time and money, and the outcome is uncertain. The burden of proof is on you to convince a court that “real” harm or “confusion” has been caused to your business or name.
What does not constitute ‘passing off’
If any of the following are involved it will not constitute passing off:
- if you are involved in a partnership dispute
- if you have copied an existing trademark
- if you are involved in a contractual dispute, or matters where a contract is in force
- if you are involved in a conflict with previous business partners, employees or employers or any other business related conflict
- if you are involved in a conflict between relatives
- domain name disputes.
How can I prove my business has a good reputation?
Goodwill and reputation must be backed up with evidence:
- start with Companies House and accumulate registered company information
- collect evidence of any online presence
- collect letters from customers/suppliers/local companies that prove your business standing and reputation. Get written statements from both existing and prospective customers/suppliers, stating that the misrepresentation made by the other user has prompted them into purchasing goods or services that they believed were from your business
- collate relevant advertising statements/packaging to indicate that a misrepresentation is being made and that confusion is occurring
- photographic evidence of the usage of the existing business name from the other user, and physical evidence regarding goods is also helpful
- a letter to a solicitor which discusses the name of your business, your products etc. and other aspects of your business can again be used as evidence.
If you think someone is passing off as your company, take action straight away. Many businesses will back down immediately once confronted and you may not need to go much further. If they don’t, and your business is affected you may have to take the appropriate legal steps.
