What is passing off?
The main restriction on the use of a name (for any business whether sole trader,
partnership or company) is that the name used for the business, or a very similar
name, may already be in use by an existing business. The other business (which
could be a sole trader, a partnership, a UK company or a foreign company conducting
business here) may be able to sue for the tort of passing off. This is a common
law action with no statutory basis.
For a successful passing off action the complainant company must show:
- That it is established in business under that name or has some other right to its use;
- That the company being sued is conducting business in such a way as to infringe the complainant's right to the use of the name;
- That this is likely to cause damage to the complainant's business. Unless the plaintiff is a very well-known person or company, the action is only usually available where the two companies are in a broadly similar line of business and the same or overlapping geographical areas. If the complainants action is successful it will obtain an injunction to stop the new company using the name. Damages may be available if infringement persists and there is, of course, the risk of legal costs.
As an alternative to bringing an action for passing off, if the established
business is a UK registered company, it may be able to persuade Companies House
to exercise its powers to order the new company to change its name. Such an
order can be made under CA 1985, sec28 (2) if the new company has been registered
in a name which is 'too like' one which was already on the register. (See related
topic: What name may I use for my company?). If available, this is a much cheaper
and less risky alternative to suing for passing off.
Related topics
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