How to Resolve a Passing Off Claim in Commercial Disputes

In commercial disputes, passing off is a common law tort in England and Wales that protects a business's reputation, brand identity and goodwill where statutory rights (such as registered trade marks) may not apply. It arises when one company misrepresents its goods or services in a way that causes (or is likely to cause) the public to believe they belong to another, harming that other business. Resolving a passing off claim can involve negotiation, mediation, or formal legal action in the civil courts. This article explains how passing off works, the key elements of a claim, procedural options for resolution, remedies and practical considerations for businesses involved in such disputes.

What Is Passing Off?

Passing off is a common law tort that gives a business rights in its unregistered branding, trade get‑up or reputation. It is not limited to registered trade marks and arises from principles established by case law where one trader is wrongly made to represent their goods or services as those of another.

Lord Oliver of Aylmerton summarised the classic formulation of passing off in the House of Lords decision Reckitt & Colman Products Ltd v Borden Inc, identifying three core elements that a claimant must prove to succeed in a passing off action: goodwill, misrepresentation and damage.

Key Elements of a Passing Off Claim

To build a successful claim, a business must generally establish the following:

1. Goodwill or Reputation

The claimant must show that it has goodwill or reputation in the brand, name, get‑up, packaging or other identifiable aspects of its products or services. Goodwill means that the public associates the relevant sign or branding with that business.

Evidence of goodwill can include:

• Trading history and length of use;
• Sales figures and market share;
• Advertising and promotional activity;
• Customer recognition and testimonials;
• Media coverage and social media engagement.

Goodwill is territorial. A business with predominantly local trading might only have goodwill recognised in its specific geographical area.

2. Misrepresentation

The next requirement is that the defendant has misrepresented their goods or services as being those of the claimant, or has created confusion in the minds of the relevant public. Misrepresentation does not necessarily require fraudulent intent; even unintentional confusion can be sufficient.

Misrepresentation may arise from:

• Use of a similar name, logo or brand design;
• Copying distinctive packaging or “get‑up”;
• Marketing communications implying endorsement or connection;
• Use of domain names or advertising keywords likely to mislead customers.

Whether misrepresentation has occurred is assessed objectively, based on whether a reasonable member of the public is likely to be confused.

3. Damage to Goodwill

Finally, the claimant must show that the misrepresentation has caused or is likely to cause damage to its goodwill. This can include:

• Lost sales or diverted customers;
• Erosion of brand reputation;
• Dilution of distinctiveness through imitation.

Actual damage may be shown by misdirected enquiries, customer complaints, or declines in sales metrics. Likelihood of damage can suffice where harmful confusion is probable.

Practical Steps to Resolve a Passing Off Dispute

Resolving a passing off claim effectively often involves a staged approach, starting with early action to limit harm and progressing to formal dispute resolution if necessary.

1. Assess and Document Your Rights

Prepare a clear record of your brand identity, use and reputation before approaching the other party. This includes:

• Proof of first use and continuity of use;
• Marketing materials and campaign records;
• Customer feedback illustrating brand recognition;
• Evidence of actual confusion or mis‑directed business.

Good documentation strengthens your position in negotiation or litigation.

2. Send a Formal Demand or Cease‑and‑Desist Letter

A common first step in resolving passing off disputes is to instruct your solicitor to send a formal letter before action or cease‑and‑desist letter to the opposing business. This letter:

• Identifies your goodwill and rights;
• Describes the misrepresentation and harm caused;
• Sets out what you expect the other party to do (e.g. stop use, rebrand, amend marketing).

Often, these letters prompt a response and can lead to negotiated solutions without court involvement.

3. Consider Negotiation and Settlement

Many passing off disputes settle through negotiation, often involving practical commercial outcomes such as:

• Rebranding agreements with agreed transition periods;
• Undertakings not to use confusing names or marks;
• Compensation for rebranding costs or market confusion;
• Transfer of digital assets like domain names or social media handles.

Commercial settlements are typically faster and less costly than litigation.

4. Seek Alternative Dispute Resolution

If informal settlement is difficult, you can explore alternative dispute resolution (ADR) such as mediation. ADR is a structured process involving a neutral mediator who helps parties reach a voluntary agreement.

ADR can:

• Reduce time and expense compared to litigation;
• Preserve commercial relationships;
• Allow flexible, tailored outcomes.

ADR options should be considered early, especially where ongoing business relationships are at stake.

5. Initiate Court Action if Needed

Where negotiation and ADR fail, or where harm is significant and ongoing, you may initiate court proceedings in the civil courts of England and Wales. In passing off cases, this is usually done in the High Court or the Intellectual Property Enterprise Court (IPEC) for smaller claims.

In court, you must formally establish:

• Your goodwill and reputation;
• That the defendant's conduct amounts to misrepresentation;
• That damage has resulted or is likely to result.

Courts may also grant interim injunctions to stop harmful conduct while the case continues.

Remedies Available in Passing Off Cases

If a court finds in your favour, a range of remedies may be available:

Injunctions

A final injunction may be granted to restrain the defendant from continuing the offending conduct. Courts can also issue interim injunctions as an urgent measure if damage is imminent or occurring.

Damages or Account of Profits

You may seek damages for losses caused by the passing off. In some cases, an account of profits may be ordered, requiring the defendant to hand over profits made from the misrepresentation.

Delivery Up and Destruction

The court may order the delivery up or destruction of infringing materials, such as packaging, marketing collateral or products bearing the offending branding.

Costs Orders

If you succeed, the court may make a costs order requiring the losing party to pay some or all of your legal costs, although this is at the court's discretion.

Defending a Passing Off Claim

If you are defending against a passing off claim, potential defences include:

• Arguing that the claimant lacks sufficient goodwill;
• Showing no misrepresentation or likelihood of confusion;
• Demonstrating limited or no damage to the claimant's business;
• Establishing that you use your own name or operate outside trade.

Defending a claim effectively also requires robust evidence and expert legal advice.

Time and Practical Considerations

Acting Promptly

Delaying action when you discover a misrepresentation can weaken your position. Courts may regard acquiescence or long delays unfavourably when considering whether to grant remedies such as injunctions.

Costs and Risks

Passing off claims can be costly and complex. Early negotiation and ADR can help manage costs and reduce business disruption. Litigation should be considered where harm is significant and settlement efforts have failed.

Registered Rights Can Support Claims

While passing off protects unregistered goodwill, registering trade marks and other intellectual property rights can provide stronger, more straightforward legal foundations in disputes alongside passing off actions.

Key Takeaways

Resolving a passing off claim in commercial disputes in England and Wales involves proving that your business has goodwill, that a competitor has misrepresented their goods or services in a way likely to confuse the public, and that this has caused or is likely to cause damage to your business. Early steps include evidence gathering, formal demand letters and negotiation. Mediation and ADR offer structured alternatives to litigation, while court proceedings with injunctions, damages and costs orders provide formal legal remedies when necessary. Acting promptly, documenting your brand reputation and seeking specialist legal input improves the chances of resolving passing off disputes effectively.