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Passing off - Not applicable

Intellectual Property Law (Multimedia University)

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1. (a) What is passing off and state the essential elements of passing off?

In common law countries, passing off is a common law tort which can be used to
enforce unregistered trade mark rights. The tort of passing off protects the goodwill of
a trader from misrepresentation.Other than that, the law of passing off prevents one
trader from misrepresenting goods or services as being the goods and services of
another, and also prevents a trader from holding out his or her goods or services as
having some association or connection with another when this is not true. The law of
passing off also prevents a trader from passing off his goods as if they had originated
from another trader.

There are 3 elements to be fulfilled under passing off. Firstly, the plaintiff must
establish a goodwill or reputation attached to the goods or services which he supplies
in the mind of the purchasing public by association with the identifying “get-up”
(whether it consists simply of a brand name or a trade description, or the individual
features of labelling or packaging) under which his particular goods or services are
offered to the public, such that the get-up is recognized by the public as distinctive
specifically of the plaintiff’s goods or services.

Secondly, he must demonstrate a misrepresentation by the defendant to the public

(whether or not intentional) leading or likely to lead the public to believe that goods
or services offered by him are the goods or services of the plaintiff. Whether the
public is aware of the plaintiff’s identity as the manufacturer or supplier of the goods
or services is immaterial, as long as they are identified with a particular source which
is in fact the plaintiff.

Thirdly, he must demonstrate a quia timet action that he is likely to suffer, damage
by reason of the erroneous belief endangered by the defendant’s misrepresentation
that the source of the defendant’s goods or services is the same as the source of those
offered by the plaintiff.”

(b) What is the missing element of passing off in the case of Mc Curry Restaurant
(KL) Sdn Bhd v. McDonald’s Corporation [2009] 3 MLJ 774?

The plaintiff is the famous international fast food franchisor, McDonalds

Corporation while the defendant is the owner of a restaurant, offered Indian cuisine
under the trade name “McCurry”. The plaintiff successfully brought an action against
the defendant for passing off due to the ‘loss of the exclusivity’ of using the prefix
“Mc”.However, on appeal to the Court of Appeal, Gopal Sri Ram JCA had overturned
the decision based on several grounds. Firstly,both the appellant and the respondent
have different style and get-up with regards to their logo. The second ground is that
both the appellant and respondent offered different food items. All the respondent’s
food item in their outlets carries the prefix “Mc” which is contrast with the appellant’s
food item in which none of them carries the prefix “Mc”. The types of food items
served were entirely different in nature and the category of customers were also
different.

The judge emphasized that misrepresentation was the essential element of tort of
passing off and thus that element of passing off is missing in the current case.

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2. Camy runs a restaurant in Petaling Jaya. The design and decoration of her
restaurant takes the look and feel of Air Asia. In fact, the restaurant’s name is “Now
Everyone Can Eat.” The waiter and waitress at Camy’s restaurant wear the uniforms
identical to that of the stewards and stewardess working at Air Asia airplanes. Camy
also sells good which look similar to Air Asia souvenirs such as keycains, T-shirts,
caps etc., at her restaurant. Advise AirAsia on its rights, if any, against Camy under
the law of passing off.

The issue is whether Air Asia can commence an action against Camy under the
law of passing off. In order to commence an action under the law of passing off, 3
elements need to be fulfilled. Firstly, according to Erven Warwink v Townend “ The
existence of business goodwill is a prerequisite of all passing off actions. The
principle in Pakai Industries Bhd v Chen Yew Industries Sdn Bhd states that
goodwill must exist at the time the act of passing off takes place. Lord Mcnaghten in
the case of Commissioners of Inland Revenue v Muller & Co’s Margarine Ltd
states goodwill as the benefit and advantage of the good name, reputation and
connection of a business. It is the attractive force which brings in custom. It is the one
thing which distinguishes an old established business from a new business at its first
start. The goodwill of a business must emanate from a particular centre or source.
However widely extended or diffused its influence may be, goodwill is worth nothing
unless it has power of attraction sufficient to bring customers home to the source from
which it emanates.

In the case of Yong Sze Fun & Anor v Syarikat Zamani Hj Tamin Sdn Bhd &
Anor, the Court of Appeal spelt out four features of goodwill, which are as follows.
Firstly, goodwill is the benefit added to the business through extensive trading
operations which attract custom. Secondly, the trade mark or get up used in the
business is the badge and indicia that signifies, indicates and identifies the business
goodwill. Thirdly, goodwill is created through and by means of trading activities and
lastly the more extensive the trading activities are, which must necessarily includes
sales and promotion, the more value that would be attached to the goodwill. In the
current case, Air Asia is a well known Airlines which have been actively and
extensively promoting their goods and services. Air Asia’s trade mark and get-up are
associated in the minds of the purchasing public. Air Asia as the plaintiff has
goodwill in its ‘Now Everyone Can Fly’ slogan and their promotional activities of
selling souvenirs such as keycains, T-shirts, caps etc. Thus, Cany had passed off her
goods and services as the goods and services of Air Asia by selling good which look
similar to Air Asia souvenirs such as keycains, T-shirts, caps etc., at her restaurant. In
addition to that, she had also used the name “Now Everyone Can Eat” for her
restaurant which is confusingly and deceptively similar to the plaintiff’s slogan “Now
Everyone Can Fly”.

Secondly, misrepresentation has to be proved. In, Microsoft Corporation v

Tokyo Micro-Soft (M) Sdn Bhd, the plaintiff submitted that the defendant’s use of
the word ‘Micro-soft’ in its business name had passed off the defendant’s business as
that of plaintiff. The plaintiff contended that the almost identical business name would
create confusion in the minds of customers and cause them to believe that the
defendant’s product were that of the plaintiff. The court found that there was no doubt
that the Plaintiff’s ‘Microsoft’ trade mark was distinctive of the plaintiff worldwide
and had acquired international reputation. The word ‘Micro’ and ‘Soft’ in the

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defendant’s business name which was ‘Tokyo Micro-Soft (M) Sdn Bhd’ were
pronounced in the same way as the plaintiff’s business name and had conveyed to the
public an association with the plaintiff. The defendant was liable to the plaintiff in
passing off. In th same way in the current case, Air Asia’s slogan “Now Eveeryone
Can Fly” is distinctive of the plaintiff worldwide and had acquired international
reputation. Cany carrying on the restaurant with the name “Now Everyone Can Eat”
are pronounced in the same way as the Air Asia’s slogan and may conveyed to the
public that there is an association between Air Asia and Cany’s “Now Everyone Can
Eat” restaurant. Therefore, Cany is liable to Air Aisa in passing off.

Lastly, according to Seet Chuan Seng & Anor v Tee Yih Jia Foods
Manufacturing Pte Ltd “In an action for passing off, damage is also an essential
element of the tort and it is necessary for the plaintiff to establish that he has suffered
damage. However, if the goods in question, as in this case, are in direct competition
with one another, the court will readily infer the likelihood of damage to the plaintiff’s
goodwill through loss of sales and loss of the exclusive use of his name.” In this case,
where the goods sold are in direct competition with one another and the name of the
restaurant similar to that of the Air Asia’s slogan, the court will infer likelihood of
damage to the plaintiff’s goodwill through loss of sale and loss of exclusivity.

In conclusion, Air Asia may commence an action against Cany as all the 3 elements
are fulfilled which is the existence of goodwill, existence of misrepresentation as to
source and likelihood of damage.

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