Protecting your brand against 'passing off'
By Helen Burnett-Nichols, Contributing Editor
Situations where an individual or company attempts to take the goodwill of a famous brand by ‘passing off’ can be harmful to a well-established reputation — but there are a number of ways businesses can protect themselves against this practice, Toronto IP lawyer Taras Kulish tells AdvocateDaily.com.
Kulish, a senior associate with Steinberg Title Hope & Israel LLP, says passing off is a common law tort that refers to one party taking the goodwill of another — for example, by using a brand name or a corporate name similar to that of the established company.
“Businesses will want to prevent another party from using the goodwill that they have worked to create and accumulate over the years,” he says.
Many recent cases of passing off dealt with by Steinberg Title Hope & Israel LLP have involved individuals or companies infringing on famous brands in fields closely related to, or associated with, well-known marks, Kulish says.
For example, in one matter, a company attempted to establish itself in the pet apparel space using the name of a well-known car manufacturer.
“They are clearly playing off of the famousness of the auto brand because it should only be the car manufacturer that can produce branded sunglasses, key fobs, luggage or doggy apparel,” he says.
“One might think that pet apparel has nothing to do with cars, but the brand is so well-known that people would want the name of the sportscar on other items. If someone else takes your intellectual property and uses the name on their products, it causes you harm.”
In a similar case, he says, a client with a famous mark in the entertainment area — a musical venue used by bands for live recording — now wants to use technology to monetize its own brand to create things like guitars, headphones and guitar pedals that reproduce the venue’s distinctive live sound.
“It gets tricky because others have the same idea and may want to use the same name and branding as this venue. But that’s a classic case of stealing the goodwill of our particular client,” Kulish says.
There is a doctrine in trademark law about famous marks that could occupy other fields.
In a previous case, the Federal Court of Appeal found that although a car company had never registered its trademark with respect to bags, a luggage manufacturer was found to be infringing on the auto manufacturer’s trademark. The court found that any car company could create its own brand of luggage and should have protection for doing so.
“I apply that logic to the matter of the music venue that has become synonymous with a particular sound and should be allowed to occupy the other related fields such as musical equipment,” says Kulish.
For businesses seeking to protect themselves against passing off, making use of a mark gives you common law rights — so parties will be able to start by sending a cease and desist letter to the infringer.
“Oftentimes, that works because they’ll see that you are correct and they don’t want to spend time and money on fighting a passing off action.”
Registering a trademark is also advisable, says Kulish.
“Many people think that if they register a trade name or they incorporate a company, that it protects them but it doesn’t. And registering the trademark is not the final answer either, but it serves as a notice to the public,” he says.
A registered trademark will also enable a company to sue in Federal Court rather than provincial court, he adds.
“By having a registered mark, the door opens to Federal Court, which can be a quicker procedure. You have experienced judges who often deal with trademark
matters. They have a great case management system and settlement conference system,” Kulish says.
Holders of a registered trademark that has been infringed are also entitled to additional punitive damages via the Federal Court under the Trademarks Act, he says.
“At the outset, it may seem expensive to protect your trademark via registration. But think of it as an insurance policy,” Kulish says. “It can pay dividends down the road.”