Q - My business has traded for a number of years under the same name. We have developed a good reputation amongst customers for the quality of our product and service. People equate our business name and logo with this reputation for quality. How do I protect my business from competitors attempting to take advantage of this by using a similar name or logo?
A - A business such as this has developed a reputation and customer goodwill through a great deal of effort. This goodwill is a valuable asset, and the law will help a business such as this protect that asset through the law of passing off.
Simply put, passing off is where one trader attempts to take advantage of the business reputation of another, to the detriment of that trader. A competitor may attempt to confuse the customer by emulating the appearance, name or get-up of another's business products, the aim being to persuade the customer that the products of this unscrupulous trader are in fact those of a competitor with significant goodwill. "Get-up" can include, for example, the manner in which a product is packaged.
Such a trader may use a similar trading name, or use similar packaging to those of his competitor. In these days of marketing on the Internet, the use of similar business names can have far reaching consequences. Searching the Web for one company may well lead to the web site of another attempting to confuse the public by adopting a similar name. In these circumstances, money spent developing an impressive web site may well be money down the drain!
You may discover that such a competitor is setting himself up in business in such a way that there is real risk of confusion in the minds of your customers.
To successfully prevent passing off it is necessary to show a number of things. Firstly, it is necessary to show that there is, in the minds of the public, a clear idea that a certain trade name etc. is associated with your product or service. Secondly, you must be able to show that because of the reputation of quality, which has been developed over time, goodwill attaches to that trade name. Thirdly, you must show that your competitor is indeed using a name or get-up that can cause confusion in the minds of customers. Fourthly, you must be able to show that your business will suffer loss or damage to its goodwill as a result of your competitor's passing off.
Where it can be proved that there is the potential for actual harm being done to your business it is possible to ask the court to prevent the guilty party from misrepresenting themselves in this way. The court can grant an interdict prohibiting the passing off, and in addition, can award compensation for damage done to your business or loss of profit.
A reputation for quality and customer goodwill is not achieved easily. The law is there to protect you and your business if these are threatened.