What is a Passing Off?

Unlike other intellectual property rights such as copyright, trade marks and patents which are covered by the statute, the action for passing off arises in common law to protect business goodwill. A trader would have a right of action for passing off against another trader if there was damage caused to the claimant’s goodwill as a result of misrepresentations made by the other trader that his goods and/or services and/or business were closely connected to the claimant or those of the claimant.

The elements of the tort of passing off were succinctly summarised in the landmark Jif Lemon case[1]:

1. The plaintiff must establish a goodwill or reputation (in the country or region) in a business in the supply of goods or services distinguished by a name or a mark under which his particular goods or services are offered to the public.

2. The plaintiff must demonstrate a misrepresentation by the defendant to the public (whether or not intentional) leading or likely to lead the public to believe that goods or services offered by him are the goods or services of the plaintiff.

3. The plaintiff must demonstrate that he suffers or is likely to suffer damage by reason of the defendant’s misrepresentation.

In a nutshell, to be successful in a passing off action, the plaintiff must show that each of these following three elements is present, namely goodwill, misrepresentation and damage.

The Link between Trade Mark and Passing Off

As can be seen from many cases[2], a plaintiff who has acquired substantial reputation and goodwill under its name and the trade mark will often rely on both infringement of trade mark and passing off to seek an injunction against the defendant from misusing its trade mark.

Having said that, the legal action of passing off is not confined to infringement of a trade mark since the underlying property right protected by the action for passing off is the goodwill of the claimant’s business, not the registered marks or get-up or signs or other forms of symbols. Therefore, unregistered trademarks may still be protected by the common law action of passing off.

In Re Ping An Securities Ltd FACV 26/2008, Ping An Securities Limited (平安股票有限公司) (“Appellant”) , trading in securities for over 30 years in Hong Kong, applied for declaration of invalidity of two Hong Kong registered trade marks “PING AN” and “平安” which were granted to the second largest insurance company in mainland China, Ping An Insurance (Group) Company of China Limited (中國平安保險(集團)股份有限公司) (“Respondent”), in respect of the services “financial affairs and monetary affairs” (“Ping An Case”). The Court of Final Appeal declared the registered trade marks of the Respondent invalidin respect of the services “financial affairs and monetary affairs” on the basis that under section 12(5)(a) of the Trade Marks Ordinance (Cap. 559), registration of a trade mark may be refused or declared invalid because of prior use of a conflicting unregistered mark or sign only if its use in Hong Kong is liable to be prevented by virtue of the law of passing off.

Nonetheless, passing off is usually a more difficult action to bring when compared to an action for infringement of a registered trade mark. Whilst a registered trade mark automatically enjoys protection in the jurisdiction within which it is registered, an unregistered trade name or mark possessed by the genuine owner has to prove in a cause of action for passing off the 3 essential elements: goodwill, misrepresentation and damage.

In The Chamber of Hong Kong Computer Industry Company Limited (香港電腦商會有限公司) v Hong Kong Computer Association Limited (香港電腦業協會有限公司) HCA 621/2010 (“Computer Festival Case”), the plaintiff together with Shamshuipo District Council had been organizing a Large Scale Computer Exhibition (“LSCE”) in the Shamshuipo District since 2002 up to 2010 (except 2009) using the name “Hong Kong Computer Festival” (香港電腦節). The plaintiff’s LSCE was also known as “Shamshuipo Computer Festival” (深水埗電腦節) as a result of media reporting. The defendant organized a LSCE in 2010 which was called “Shamshuipo Computer Malls Computer Festival” (深水埗腦場電腦節). The plaintiff claimed that the defendant’s name was passing off the trade name of its LSCE. The Court of First Instance held that the plaintiff had not acquired a goodwill and reputation in the simple name of “Hong Kong Computer Festival” (香港電腦節) to such an extent that anyone in Hong Kong using the words “Computer Festival” (電腦節) in any combination would be passing off the goodwill and reputation of the plaintiff. The plaintiff’s customers, primarily the booth owners participating in its LSCE would not have confused the plaintiff’s services for those of the defendant’s or vice versa. Accordingly there was no misrepresentation by the defendant that its LSCE was the one organized by the plaintiff in the past. The plaintiff would not have suffered any damage as it had no financial benefit to itself in the LSCE jointly organized with the Shumshuipo District Council. The plaintiff failed to establish its case for passing off and the defendant was free to organize its LSCE in the Shamshuipo computer malls.

Conclusion

The plaintiff in the Computer Festival Case could not prove the name “Hong Kong Computer Festival” (香港電腦節) was distinctive of its computer exhibitions while the Appellant in the Ping An Case, having been trading in securities business in Hong Kong for over 30 years, was able to establish goodwill in its securities business distinguished by its name “PING AN” and “PING ON” (“平安”). Therefore it would be of paramount importance in a claim in respect of passing off that the plaintiff should be able to show that the disputed mark or name or get-up has become distinctive of the plaintiff’s goods and/or services.

If a mark or a sign is registrable as a trade mark, it is prudent to register the mark in Hong Kong rather than just relying on the common law action against passing off.

It is perhaps noteworthy to mention in passing that even if a mark or a sign is devoid of any distinctive character, it can still be registered pursuant to section 11(2) of the Trade Marks Ordinance provided that it has in fact before the date of application for registration acquired a distinctive character as a result of the use made of it.