Passing Off: Dealing with Copycats in Business

30 August, 2021 | Bret Gower

There is nothing worse than somebody else benefitting from your business’ success by riding on your coat-tails, infringing your infringing on your intellectual property and confusing customers that their products or services are the same as yours. The legal solution to these copycats is to make a claim against them of passing off and a breach of the Fair Trading Act 1986 (FTA).

A claim of passing off and a breach of the Fair Trading Act are invariably used in conjunction in look-a-like situations where one business tries to pass itself or its products off as the business or product of a rival.

To prove passing off a business needs to show that:

• a distinguishing feature or combination of features of the business’ goods or services has acquired a goodwill or reputation in the market so that its business is known and recognised by that feature or combination of features; and
• the other party has done something (either intentionally or unintentionally) to lead consumers to believe its goods or services are the goods or services of the business. This is called a misrepresentation; and
• that the business has suffered or is likely to suffer damage as a result of the defendant’s misrepresentation.

The misrepresentation doesn’t have to be an express statement made by the defendant. It can be implied from the use of names, marks or product ‘get-up’ that are sufficiently similar to cause confusion in the minds of the public.

The Court’s decision in Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd is an excellent example in terms of explaining the workings of passing off. In 1985 Klissers sold and marketed its (world famous in New Zealand) Vogel’s range in polythene bags with checks of different colour and size or both and with the bags tied at one end to produce ponytail effect (yes, in 1985 the ‘ponytail’ was new). A rival bakery started selling its bread in polythene bags also featuring checks and tied with a ponytail. The Court decided that the rival was indeed trying to pass its ‘milk and honey’ loaf off as Klissers’ by adopting similarly distinctive packaging and issued an interim injunction (an order requiring the rival to cease its actions).

Likewise in Big Blak Saks New Zealand Ltd v D & A Marketing Ltd the plaintiff claimed rights in the packaging and overall presentation of a range of rubbish bags. While Big Blak Saks did not have a registered trade mark for the appearance of the product it was able to persuade the High Court that it had a reputation and goodwill in the overall appearance of the goods and that the appearance of the defendant’s products was a misrepresentation calculated to pass off the defendant’s product as that of Big Blak Saks causing it loss of sales. Those factors were sufficient to enable it to obtain an interim injunction to prevent the competitor marketing and selling look-a-like products.

Compared to passing off, a breach of the FTA is a more agile option for claimants. Under the FTA there is no requirement for your business to prove damage has occurred which means that rival traders can bring an action under the FTA even though they have suffered no loss.

Obviously neither of these claims is to be made lightly, but if you have genuine concerns that your business is suffering at the hands of a copycat who is benefitting from your hard work you should contact a commercial and/or intellectual property lawyer to see about putting a stop to it.

If you believe someone is infringing on your brand, talk to intellectual property law expert, Bret Gower, by email at bret.gower@smithpartners.co.nz or by phone at 09 837 6893 for a quick chat to establish the basis of a claim.