Brand Protection Law in Nigeria: Key Points on Passing Off Unregistered Trademark
AS businesses strive to distinguish themselves in the marketplace, they face increasing risk of deceptive and unfair trade practices (knowingly or unknowingly) by imposters masquerading as competitors. Where business brand is properly protected, the integrity of the market will not only be guaranteed but also more revenue will undoubtedly accrue to its owners. Hence, brand protection in Nigeria is no longer a cost center but a profit centre.
The intellectual property law in Nigeria clearly offers protection to registered trade mark. However, owners of unregistered trade mark are not without some remedies if their brand has acquired some goodwill in the course of doing business. At common law, a brand owner may sue for tort of “passing off” in the event of any infringement even if such brand is not a registered trademark.
Passing off, originally a common law tort, is designed to protect a person’s business reputation and goodwill from unfair trade practices and sharp practices by imposters or impersonators. 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 (and not just a common law 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 with a potential to confuse the consumers as to the source of the falsely represented brand, product or business. According to the court in Virgin Enterprises Ltd. V Richday Beverages Nig. Ltd (2009) 12 NWLR (Pt. 1151) 136, an action for passing off is an action 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 as referring to the goods belonging to or produced by that person only.
In the case of 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 common forms are: Marketing products with another business’ trademark: This form of passing off involves using the name or a name closely resembling the name of another. This could 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 with the plaintiff using the name “Nigeria Chemist”. The plaintiffs successfully obtained an order of injunction to stop the Defendant from trading as Nigeria Chemists. Palmer J, quoting Lord Cozens Hardy MR in Ewing v. Buttercup (1917) 2 Ch 1 held:
“I know of no authority, and I can see no principle, which withholds us from preventing injury to the plaintiff in his business as a trader by a confusion which will lead people to conclude that the defendants are really connected in some way with the plaintiff or are carrying on a branch of the plaintiff’s business” and thereafter held: ‘That is the danger which can reasonably be foreseen in the present case, namely that people will be misled into thinking that Nigeria Chemists are a branch of, or in some way connected with, Niger Chemists. It is a confusion which leads to deception.”
Packaging, marketing or trading the infringer’s goods as though of the real owner’s: This form of passing off involves the 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 British American Tobacco & v Int’l Tobacco & 2 ors (2006) 5 IPLR 290. In the case of Trebor Nigeria Limited v. Associated Industries Ltd. (1972) All NLR 468, 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.
What are the elements of a passing-off action?
The necessary elements in a passing-off action, which a plaintiff must prove, are as follows:
Misrepresentation: The plaintiff must prove a false representation by a defendant of another’s brand in the course of trade. This is established by evidence of actual or potential confusion in the minds of existing or prospective customers. A trademark distinguishes its class of goods from other similar goods in the market. The defendant must have imitated or adopted plaintiff’s brand name or a feature of the packaging or labelling of its goods which has led to confusion or can lead to 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 infringer (i.e. the defendant), the buying public is deceived or is likely to be deceived into believing that the goods of the defendant are that of or from the plaintiff. See CPL Industries Ltd v Glaxo Smithkline & Anor (2011) 6 IPLR 243 and Boots Company Ltd v United Niger Imports & Anor (1977) 2 IPLR 56.
Goodwill: 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. The false representation is calculated to injure (including to benefit from) the goodwill of a business reputation. As a result of the reputation of the goods or services, there is goodwill attached to the trademark. In British American Tobacco & v Int’l Tobacco & 2 Ors. (supra), the court held that in proving passing off, proof of reputation–goodwill is necessary. 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 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: A brand owner can sue for damages. 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.
Seek an account for profit; or for loss of sales. An order compelling the infringer to render account is an essential remedy that helps in damages or compensation calculation in order to ensure that all profits unlawfully made from the unlawful trade practices 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?
The Federal High Court has exclusive jurisdiction over actions for passing off. 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.
Section 3 of the Trademarks Act
Kayode Omosehin, Esq. is the Managing Principal at Koriat & Co. Lagos.
provides thus: “No person shall be entitled to institute any proceeding to prevent, or to recover damages for the infringement of an unregistered trademark; but nothing in this Act shall be taken to affect rights of action against any person for passing off goods as the goods of another person or the remedies in respect thereof.”
Also, Section 7 of the Federal High Court Act amended by the Federal High Court (Amendment) Decree No. 60 of 1991 reaffirms the jurisdiction of the Federal High Court in respect of any “civil causes and matters, arising from any enactment relating to copyright, patents, designs, trademarks and passing-off, industrial designs…”
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.
In 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.
Please note that for an unregistered trademark, a plaintiff must prove that though the trademark is unregistered, it has acquired a degree of market reputation in the use of the mark in relation to its goods or business. To establish this market reputation, a plaintiff may need to show its sales or track records, business associates, and marketing and advertisement agencies that it deals with and for how long. See also Soul Publications Limited v Sweet Hearts Publications & A nor (1997) 4 IPLR 42.
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.