There are two main legal mechanisms by which the law provides legal protection to traders in respect of the marks and other indicia they use to distinguish their G&S from other traders
- The first is the tort of passing off, as supplemented by provisions of consumer protection legislation – these prohibit parties from engaging in misrepresentations or misleading and deceptive conduct by adopting other traders signs/indicia
- The second is the system of registered trade mark protection under the Trade Marks Act 1995

Origins of Passing off

The tort of passing off has its origins in the British common law action for deceit – courts providing a remedy for traders whose name or symbol was adopted by another with the intention of inducing customers to believe its goods were in fact those of the first
- The rationale behind this being a ‘fraud on the public’
- This came to be called the tort of passing off, underpinned by the fundamental element of fraudulent misrepresentation (Perry v Truefitt)
By the early 19^th century the Courts of Chancery also heard similar actions and were able to grant injunctions, but only where a legal right existed. The basis of this action was fraudulent conduct until in Millington v Fox the LC granted an injunction without fraud. Over time the Chancery courts came to articulate the view that equity’ intervention in cases of this type were based on the plaintiff’s property rights in the mark itself

Modern form of the tort of passing off

The idea that a mark constituted a form of legal property was important historically. But in the context of passing off it had very little impact because the CL courts had a different idea of what was protected by the tort of passing off and it was only at that time did the modern action take its form.

Erven Warnink BV v J Townsend & Sons (Hull) Ltd [1979] AC 731

Lord Diplock noted the judgment of Reddaway v Banham which denied that an action for passing off protected a proprietary right in the mark and that this expanded the actions to misrepresentations as to thinks like trade names and other indicia – this case was a classic case of misrepresenting one’s own goods as the goods of someone else.

It was only in AG Spalding & Bros v AW Gamage that Lord Parker identified the right which is protected by an action of passing off is the ‘property in the business or goodwill likely to be injured by the misrepresentation’. Goodwill being defined as ‘the benefit and advantage of the good name, reputation and connection of a business. It is the attractive force which brings in custom’

The goodwill of a manufacturer’s business could be injured by someone else who sells goods who are correctly described as being made by that manufacturer but being of an inferior class of quality – in AG Spalding this was held to be actionable and the extension to the nature of the misrepresentation which gives rise to a right of action in passing off which this involves was regarded by Lord Parker as a natural corollary of recognizing that what the law protects by a passing off action is a trader’s property in their business/goodwill.

The significance of this was that passing off lay in the recognition that misrepresenting someone’s goods as someone else’s was not a separate genus of wrong but a particular species of wrong included in a wider genus.

Fraud still has a continuing role to play in the action of passing off in Australian law

At the same time that Chancery courts viewed that the action of passing off protected a form of property in the mark itself, the UK parliament was taking steps to provide further protection for trade marks
- The Merchandise Marks Act did so and defined ‘trade mark’ broadly
- This was followed by pressure to adopt a system of registered trade marks as one had exist in France and eventually this occurred
Even though analogies were drawn to property rights, trade marks didn’t have all the characteristics of forms of property
- The Act contained an express restriction on TMs being assigned separately from the goodwill of the business in which it was used (as did the CL)
- Explicit recognition of rights in the mark itself as a form of property meant that the action for trade mark infringement differed from passing off since it didn’t require a plaintiff to demonstrate any trading goodwill or reputation – proprietorship in the TM was enough
- Also a registered TM was infringed just by its use irt specified goods – one didn’t have to show that the defendant’s use conveyed a misrepresentation. However, rights were interpreted strictly (e.g. Hargreaves v Freeman – RTM for tobacco not enough to cover the mark on cigars)
The AU Act which followed was slightly broader, allowed more marks to be registered and made it clear that it was an infringement so long as the used mark was ‘substantially identical with the TM or so nearly resembling it as to be likely to decieve’
Following some new Acts in the UK and AU, the immediate predecessor of the current regime was in force and TM law in AU developed such that:
- Both a mark and a trade mark were defined
- The register was divided into different parts to categorize marks capable of becoming distinctive
- Applicants could register their marks in respect of services as well as goods
- Registration only lasted seven years, but could be renewed
- Provisions were in place to allow a registered TM to be removed on the basis of non-use; and
- The exploitation of registered TMs was more straightforward as marks could be assigned separately from the goodwill of the underlying business and could also be licensed
The CB writers note:
- That though the TM system was not a statutory re-enactment of ‘passing off’ – they share a close relationship. Initially the registration system made it easier to enforce rights. The tort of passing off expanded to provide broader protection too and these fed into further expansion of TM law and continued to loop as such
- Further, care has to be taken when considering claims that ‘preventing consumer confusion’ is what underpins the action of passing off – the true essence of it is that the defendant engaged in conduct misleading consumers
  - The HCA in Compomar v Nike recognized that AU RTM statutes have always tolerated a bit of consumer confusion and are best seen as involving a balance between conflicting interests in regulating the conduct of competing traders as well as safeguarding consumers of goods and services

These are different to things like patents which are justified as promoting creativity etc.

TMs and indicia as sources of information

The principal justification for legal protection of TMs and trade indicia is that they serve to communicate valuable information allowing consumers to make informed choices about purchases. They operate as an indication of origin.
They also fulfil other functions dependant on their origin function. One is a product differentiation function – consumers...

#16041 - Laws3248 Summary Notes Trade Marks - Intellectual Property 2 (Trade Marks)

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