By Kayode Omosehin
As businesses strive to distinguish themselves in the marketplace, they face increasing risk of deceptive trade practices by imposters masquerading as competitors. This is why brand protection is crucial for all businesses. Brand protection not only guarantees the integrity of the market but also revenue to business owners. Hence, brand protection in Nigeria should not be seen as a cost center but a profit centre.
One common way of brand infringement in Nigeria by imposters is passing off. Passing off, originally a common law tort, is designed to protect a person’s business reputation and goodwill from unfair trade and sharp practices by imposters. Please note that the Supreme Court in Patkun Industries Ltd v. Niger Shoes Ltd. (1998) 5 NWLR (Pt. 93) 138 held that “passing off” is now a statutory right having been promulgated in section 3 of the Trade Marks Act, 1965.
What the foregoing means is that the Nigerian law recognises the right of a business owner to sue for passing off if any imposter attempts to unlawfully benefit from a brand built on the sweat or labour of the brand owner.
What is passing off?
Passing off is the false representation of one’s brand, product or business as that of another person’s, with a potential to confuse the consumers as to the source of the falsely represented brand, product or business. In Virgin Enterprises Ltd. V Richday Beverages Nig. Ltd (2009) 12 NWLR (Pt. 1151) 136, an action for passing off is for deceit for colourable imitation of a mark adopted by a person in relation to his goods which has acquired a distinctive reputation in the market.
In U.K. Tobacco Co. Ltd v. Carreras Ltd. (1931) 16 N.L.R. 1, an action for passing off was successfully brought by the owner of “Bandmaster cigarette” to restrain a competitor, the importer of “Barrister cigarette,” on the ground that the consumers were likely to be confused and deceived into believing that both products were of the same origin.
What are the forms of passing off?
Passing off occurs in many forms. The two common forms are:
Marketing or trading with another business’ trademark: This form of passing off involves using the name or a name closely resembling the name of another to mislead the public into thinking both brands or trades are the same. In Niger Chemists Limited v Nigeria Chemists (1961) All NLR 180, the plaintiffs had an established chemist business using the name “Niger Chemist” while the Defendants established the same business on the same street using the name “Nigeria Chemist”. The plaintiffs successfully obtained an order of injunction to stop the Defendant from trading as Nigeria chemists.
Packaging the infringer’s goods as though of the real owner’s: This involves marketing of goods using another’s trademark or its imitation. Passing off occurs when a person engages in advertising and selling the goods of another business owner as though the goods are his own, thus wrongfully profits from the goodwill and reputation of that business owner. See the case of Trebor Nigeria Limited v. Associated Industries Ltd. (1972) All NLR 468, in which the plaintiff’s action for ‘passing- off’ succeeded because the defendant packaged and marketed its good in a manner that resembled those of the plaintiff’s.
What are the elements of a passing-off action?
In order to succeed in a passing-off action, a plaintiff must prove the following:
Misrepresentation: False representation can be proved by evidence of actual or potential confusion in the minds of existing or prospective customers. The defendant must have imitated or adopted plaintiff’s name or a feature of the packaging or labelling of its goods which has led or can lead to confusion or potential confusion to the consumers. The mark must have become distinctive of its goods in the eyes of the buying public, and that by the adoption of the distinctive mark by the defendant, the consumer is or likely to be deceived into believing that the goods of the defendant are that of or from the plaintiff.
Goodwill: In British American Tobacco case (supra), the court held that in proving passing off, proof of reputation–goodwill is necessary. A party seeking to sue for passing off must show that his business has acquired some goodwill or reputation that makes his product or service highly recommended, reliable or preferable to the consumers. It is not enough to show that there is a resemblance of goods; the plaintiff has to further prove a reputation of goodwill attached to the goods under the Trade Mark/Name that is sufficient for members of the public to be misled by the defendant’s conduct into thinking that they are purchasing the goods of the plaintiff.
Damages: The plaintiff has suffered actual damage or is likely to suffer damage to its business or goodwill. Loss of potential earnings is an actionable ground for legal action against the infringer. See CPL Industries Ltd v Glaxo Smithkline & Anor (supra).
What remedies are available to a brand owner whose brand is being/has been passed off?
As the general maxim says: where there is a wrong, there exists a remedy.
The remedies available to an aggrieved brand owner are as follows:
Damages/compensation: The amount to be awarded is a question of facts and evidence led on the size of the market, the scale of the false representation, the reputation of the brand and other factors.
Injunction: A brand owner can obtain an order of injunction restraining an infringer from continuing with the infringing acts. The order is available at interim, interlocutory and post judgment stages.
Account: An order compelling the infringer to render account helps in damages or compensation calculation in order to ensure that all profits unlawfully made are fully disgorged.
Destruction of the infringing goods on the order of court.
Which court has jurisdiction in passing off actions or where can a brand owner sue for infringement?
According to Section 251(1)(f) of the Constitution of the Federal Republic of Nigeria, 1999 (as amended), the Federal High Court has exclusive jurisdiction over any Federal enactment relating to copyright, patent, designs, trademarks and passing-off, industrial designs and merchandise marks. See also Section 7 of the Federal High Court Act amended by the Federal High Court (Amendment) Decree No. 60 of 1991 which reaffirms the foregoing.
A combined reading of the above sections establishes that the Federal High Court has jurisdiction over passing off actions whether arising from infringement of a registered trademark or unregistered trademark. See Omnia Nigeria Limited v Dyktrade Limited (2007) 15 NWLR (Pt. 1058) 576, the Supreme Court held that that the Federal High Court has jurisdiction to hear and determine a claim for passing off, whether or not that claim arises from the infringement of a registered or unregistered trade mark.
Is a claim for passing off the same as a trademark infringement claim?
Technically, no. Though closely akin to one another, they are not the same. While the objective of an action for passing off is to protect the goodwill, reputation or business acquired in the use of a trademark, an action for infringement of trademark is to protect the mark itself.. In practice, however, passing off and trade mark infringement are usually joined together as different causes of action in a suit. In Exxon Corporation v. Exxon Nominees Ltd (1989) 2 IPLR 432, Belgore C.J., in explaining the difference between passing off and trademark infringement, stated thus:
“…, the difference between passing-off per se and breach of Trade Mark is that the former is a common law right which has been violated while the latter is a statutory right being breached.”
Though both are now statutory rights in the light of the promulgation of Section 3 of the Trade Marks Act 1965 as interpreted in the decision of the Supreme Court in Patkun Industries Ltd v. Niger Shoes Ltd. (1998) 5 NWLR (Pt. 93) 138 where it was held that “passing off” is now a statutory right.
In Maclver & Co. Ltd v. Compagnie Francaise de L’Afrique Occidentale (1917) 1 IPLR 1, the Appellants registered a trademark to which they associated a cask being rolled along the ground by one man in respect of goods in class No. 47. The Respondents sought to register a mark in the same Class No. 47, in the form of a cask being coopered by three (3) coopers. The Appellants sued the Respondents for infringement of its trademark and passing off of its business. The courts dismissed the Appellants’ action for infringement because of a lack of similarity in the two marks but found for passing off. The Full Court held that the Respondent’s trademark was calculated to deceive considering the illiterate population of the region who could not, even after a minute explanation, pick out the details in both. Consequently, the Court ordered that the Respondent’s application to register his trademark be refused. Webber J. Stated that “Since the essential feature of both marks was cask, the Defendant’s trademark was calculated to deceive and pass off goods”. The decision above shows that where action for infringement of trademark may fail on a set of facts, an action for passing off may succeed on the same set of facts depending on goodwill acquired from the reputation of the goods in the use of the trademark.
What defences are available to an infringer?
Functional design or package: There is no monopoly a product design or package is common in a particular industry. For instance, where a functional design or packaging of a good is common to the trade of a plaintiff, a defendant can rely on a common design or packaging unique to the trade or industry as a defence for passing off. In J.B Williams Co v Bronnley & Co Ltd (1909) 26 RPC 765 CA, the plaintiff brought an action to restrain the defendant from using the normal shape of a shaving stick container to package his brand of shaving stick. The trial court held that the shape and colour of the box was common to the trade and that the plaintiffs had established no monopoly regarding them.
Mere descriptive name of the product: Where the name or mark is a mere descriptive name of a product, a claim for passing off will not succeed. In British Vacuum Cleaner Co v. New Vacuum Cleaner Co (1907) 2 Ch 312, the court held that the word “Vacuum Cleaner” could not be trademarked as it only describes an instrument.
Consent of the Brand Owner: Consent such as a licence or franchise given to the defendant by the plaintiff to produce and or market the product is a defence against an action for passing off. Please note that where there is a dispute between two distributors of a product, the right of action may be in breach of contract rather than the tort of passing off.
Kayode Omosehin, Esq. is the Managing Principal at Koriat & Co. Lagos.
