Passing off, counterfeit goods, and distributing confidential information can all cost the small business owner significant amounts of money.
These are economic torts (civil wrongs). But what exactly is involved and what can be done if you are a victim?
Passing off generally involves the making of a misrepresentation and the meaning or definition of passing off is as follows-
What is passing off?
There are 5 characteristics of passing off:
- A misrepresentation
- Made by a trader in the course of trade
- To prospective customers
- Which is calculated to injure the business or goodwill of another trader
- Which causes actual damage to a business or goodwill of the trader
There must be a false representation by the defendant so that an association with the plaintiff is made in the minds of the public.
2. Made by a trader in the course of trade
The misrepresentation must be made in the course of trade. What is considered to be a trader as far as the law of passing off is concerned is very wide-it has been held to include the BBC for example.
Anyone who makes an income from the provision of goods/services is a trader.
3. To Prospective customers
For passing off to occur, the misrepresentation must be made to prospective customers.
Then the courts have held that they will decide whether the general public is likely to be deceived.
It has been accepted that goodwill can be created in different ways and is not confined to simply trading within a jurisdiction.
The plaintiff must prove that the action of the defendant has or is likely to cause damage to the plaintiff in order to prove passing off.
Passing off is closely connected with counterfeit goods.
A trade mark owner can register his trade mark with the Revenue Commissioners and customs officials can destroy goods, which have been abandoned without or before determining whether an intellectual property right has been infringed.
Each consignment of goods from outside the EU will be inspected to see whether the goods are genuine.
If they are found to be counterfeit, the customs authorities will destroy the consignment.
A trade mark is not infringed by the use of a person of his own name or address, provided it is done honestly.
A trade mark will not be infringed by its use on goods which have been put on the market in the EU by the owner of the trade mark or with his consent. This is known as Exhaustion of Rights of a registered trade mark and stems from EU law.
Courts have the power to grant an injunction and/or the destruction of goods and damages. The District court has the power to request the Garda Siochana to seize goods and ultimately to have them destroyed once satisfied that an infringement has taken place.
A domain name will not necessarily become a trade mark and it is advisable for the owner of a domain name to also register it as a trade mark.
Information such as know how, secret formulae, processes, customer lists are clearly of huge importance to businesses.
The protection of this information can be best protected by a confidentiality agreement with an employee from an employer’s perspective. This can be more effective than registering patents as this involves putting information into the public domain.
Once it is established that an obligation of confidentiality then the person to whom it is given has the duty to act in good faith and only use the information for the purpose for which it was intended.
Generally the law imposes a duty of confidentiality in 2 situations
- The protection of trade secrets/confidential information in non-employment cases
- The protection of trade secrets in the course of employment
Once a contract of employment has ended and the employee has left his position he is still under a duty of confidentiality.
It has traditionally been held that in an employment situation will lead to 3 types of information
- Public information-not protected
- Skill and experience which is not protected although it could be the subject of a restriction of trade clause in the employment
- Trade secrets-protected and can only be used for the benefit of that employer
Breach of confidential information will lead to an injunction or legal action seeking damages or an account of profits or all 3.
Learn more about small business law in Ireland.