The Menu Store Ltd / fake - deceit and defamation – the menu shop vs the menu store - passing off
CASE STUDY, DEFINITION & REMEDIES
Passing off is a common law. This complaint is an easy-to-read yet authoritative report that covers the modern day disputes around passing off. It looks closely at product simulation and the way to settle disputes between accusers and defendants. This paper uses a case study between two online companies, The Menu Store Ltd, Shrewsbury, Shropshire and The original company The Menu Shop, Warminster, UK, to illustrate the points. The circumstances surrounding - The Menu Store Ltd clearly demonstrates the challenges, and actions mentioned herein. It is the purpose of this review to help the reader understand and identify these common issues, concerns, and potential remedies.
The following account is a case study of two UK businesses. Here you'll see how the original company fall victim to the fake, mock business, The Menu Store Ltd – http://www.themenustore.co.uk Passing off is not an inevitable part of trading in the modern day. There's a huge difference between healthy competition of similar products/services and blatant misrepresentation. As you read through this case, keep the following in mind:
It's NEVER okay to sell your own products or services under the pretense that they're the products or services of another person or company. To do so will have consequences.
Passing off is an Intellectual Property Law that's in place for the most part to protect traders. This protection is there to safeguard personal and commercial reputation. It also protects misleading practices, and subsequent damages caused by any of the above.
The Menu Shop (A) - Vs - The Menu Store (B)
The case study deals primarily with the recent incorporation of company (B) The Menu Store Ltd:
Registered in England and Wales under company number: 10495106.
Registered office address recorded at: Grove House, 8 St. Julian's Friars, Shrewsbury, England, SY1 1XL. Directors recorded at Companies House:
Simon Craig McCloy
of 133 The Mount, Shrewsbury, Shropshire, England, SY3 8PG
Sian Leigh Hemmings
of Grove House, 8 St. Julian's Friars, Shrewsbury, England, SY1 1XL (also given above as the registered trading address)?
This case study highlights a classic situation of a blatant and undeniable case of Passing Off. This is by no means a unique case. But it does draw attention to the flagrant disregard the person or people behind company-B (mock) have over company-A (original). It is therefore a good example to illustrate the problems associated with passing off.
Let' start by looking at Company-A's passing off claim.
The Menu Shop is a well-established online and bricks & mortar business based in Warminster, Wiltshire. The company owners have invested in their concern and grown it over a good many years. It's an enterprise that specializes in the manufacture and supply of unique projects to the hospitality industry.
Company-A has to stay driven so that they can maintain their position as a market leader. They continue to invest time, money, and effort into developing new designs and product ranges. They also commit to producing bespoke items at the customer request.
Over the years, The Menu Shop has enjoyed a healthy—and expanding—customer base. This has been thanks to their commitment to the business, continual innovation, and steady growth. In short, they have earned a reputation for excellence in their product ranges.
Competition is not the issue when it comes to common law tort. Healthy competition is a good thing for both business and consumers alike. It leads to innovation, improved customer service, and shakes off any complacency. It also makes goods or services more competitively priced.
The Problem with The Menu Store Ltd (Company-B)
The Menu Store Ltd indirectly mirrors everything that The Menu Shop has spent years building. Let us look at the three points needed to make a successful Passing Off Claim: Goodwill, Misrepresentation, and Damage(s).
The whole concept of the goodwill aspect, and proving damage of goodwill, is central to a successful claim against the defendant. If the copy site, ‘The Menu Store Ltd’ (company-B) sells inferior products or provides sub-standard services, compared to Company-A, there is harm to the latter's goodwill. It is because the company has built its reputation on the goods and services it provides, therefore, there is goodwill attached to that name. Goodwill is never easy to prove, but it's easier once you can link the good name of a person, a company, or both, to the claim. This will include an association to any advantages, benefits, connections, and overall reputation of the business. In this case, proving becomes easier due to the longstanding good reputation of the business operation and the business owners of The Menu Shop Vs The Menu Store.
In this case the website is not a direct clone. Despite this, ‘The Menu Store’ still attempts to piggyback off the success of company-A through similarity. There is misrepresentation because they have no actual association with company-A, yet try to give the impression they're one and the same. Fact is that they are not! Through their dishonest practice they cause confusion and deception to consumers and as such are legally accountable for such action. This is what has the potential to harm the original company. The Menu Store Ltd have moved a few things around on their website, found here: www.themenustore.co.uk and reworded some of the content and items differently, even so, it's the same message and products—or bogus products—for sale.
The difference is that Company-A, The Menu Shop, is the real deal, original long-standing company, whereas company-B, The Menu Store Ltd is a recent copycat outfit. They've setup business in an unethical manner and in a way to make unsuspecting shoppers think they're the long-established Company-A. Or at least their operation looks so familiar that it's easy for the uninitiated to assume it's the same outfit, of part there of.
People who search for company-A (The Menu Shop) may fall upon Company-B (The Menu Store), either through misleading advertising or via internet search terms, social media or through referral resulting in returning one of the aforementioned search results that confuses the consumer due to the copying of name and brand. If a consumer makes a purchase from The Menu Store, and is letdown by them, either with products, services, or both, it can reflect badly on Company-A. In such cases, there could be accidental damage to reputation, the bottom line, and even health, depending on the extent of the harm.
#4 Less Obvious Differences
Most unsuspecting shoppers would easily overlook any differences between The Menu Shop (Company-A) and The Menu Store (Company-B). Upon closer inspection though, and with a certain amount of basic and readily available due diligence, they would see a plethora or irregularities. It is clear from these observations that The Menu Store Ltd is in violation of passing off as The Menu Shop.
The Challenges of Passing Off
Passing off is a term associated with a common law tort. A tort is any deliberate violation or unlawful act against the rights of an individual, company or organization. These are wrongful acts that often result—or have the potential to result-in a negative outcome for the innocent party. So accountability in the tort of passing off simply boils down to deliberate misrepresentation. The origins of passing off first came about in the 17th century. It began with two cases: Dean vs. Steel and Southern vs. How. The judge back then classified these early torts under deceit and defamation
What Is Passing Off — Exactly — and Why Should You Care?
Passing off occurs when a person or business passes off the products or services of another person or company as their own. In other words, they unfairly piggyback off the success of others, as highlighted above in the case of ‘The Menu Store Ltd’. The steady increase in this practice of dishonest misrepresentation has resulted in some changes in legal rulings. Today's laws of passing off exist to protect the goodwill of private individuals, lone traders, and companies. Civil law governs the act of passing off, the majority of which occurs within the business community. By unfairly taking away business, perpetrators can also cause gross financial and reputational harm.
The Elements to Passing Off
Although passing off is a civil wrongdoing, there's no specific legislation to oversee it. Law makers established the law as a direct outcome of previous cases; a process known as case law. A blatant case of passing off is easy to establish—in theory. However, all cases must satisfy the courts in three essential areas. The claimant, that is, the business or person stating the claim, must prove the following:
- They already possess goodwill and/or reputation in name, product, and/or services
- An obvious misrepresentation from the defendant on any or all the above
- Misrepresentation causes damage to the claimant’s bottom line, goodwill, and reputation
For claimants, the wrongdoing is clear-cut but less so from a legal perspective. The absence of any conclusive legal characterization of the above points makes any case less straightforward. A claimant has to prove or convince the existence of goodwill in their goods or services. Proving goodwill is the toughest task on the part of the plaintiff against the offender. The accuser has to show that some naming or other distinguishing feature(s) about their products/services undeniably attract consumers to their brand. Without these pieces of evidence, it's difficult to claim unique influence and attraction. Legal representatives of defendants often put forward the "subjective" argument.
Trade Marks (®) Vs Passing Off
A trademark can include words, letter, symbols, names, marks, or a combination of the aforementioned. The purpose is to identify and differentiate any products or services between sellers or providers of similar goods or facilities. The trademark signifies the indisputable source of those given products or services. Classic examples of trademarks are Mac OS, Volvo, Adidas, and Herbalife, to name a few. We recognize a trademark by its symbol (®). The company or individual has legally registered whatever precedes the trademark symbol with a national trademark office. The trademark then becomes the unique intellectual property (IP) of a company and its goods or services. Most blatant trade mark infringements are straightforward cases in the eyes of the modern law.
Passing off is common law tort that pertains to any goods or services that have not been registered as a trademark. A company or lone trader may have a well-known logo or slogan associated with their business. In cases where such logos or slogans have goodwill attached, they may seek protection from passing off laws. Compared to trade mark infringements, passing off claims tend to be more complicated and time-consuming to prove, and therefore costlier. For these reasons, it's advisable for business owners to register any effective logo, name, or other defining feature as a trademark.
Companies or individuals who have already registered trademarks can still seek protection from passing off claims. They can do this as well as bringing a case forward for trademark infringement. If for whatever reason(s) a trademark infringement case looks doubtful, there's still the passing off case to fall back on. This is why complainants of trademarks usually make both claims.
Successful Remedies of Passing Off
Complainants who act fast may be able to get an interim injunction on the defendants. This intervening period can restrain the accused of any further dealings pending the main trial. It's a rapid measure to stop any additional damage to the goodwill of their business operations. The successful case of passing off means the claimant has been able to prove beyond all reasonable doubt a loss of profit, damage to reputation, and a lost opportunity to grow their business further.
A successful trial can result in certain entitlements as an award of proven reputational and/or financial damages. Assessing such damages is never straightforward, though. However, there should be some recompense pertaining to the loss of any product or service, sales, and damages to reputation and goodwill. In rare cases, the plaintiff takes a disclosed sum from the defendant’s profits. However, there can be no guarantees of this due to the complexities of proving any proportion of lost profits caused as a direct result of passing off. Complainants rarely pursue this route for the above mentioned.
Delivery or Destruction
In some cases, the court grants an injunction. Other times a defendant may voluntarily agree to cease trading in the offending products or services. A court may also demand the defendant delivers any of their remaining products to the office of the complainant's lawyers. Alternatively, the defendant verifies—on oath—to destroy the offending goods.
Defendants may have a case too. Those who do—or think they do—will most likely defend their corner. Typical arguments are that the claimant’s slogan, mark, symbol, etc., have no distinctive characteristics, or that it/they have become generic. There are also cases of accidental use, or innocence, or ignorance, though the latter won't hold up too well. Examples are that the likeness is coincidental or the offender is simply using their own name, or they didn't know that something was wrong. Defendants may attempt to prove that the claimant gave their consent at some point.
Passing off is a growing concern, caused to a large extent by online anonymity. The virtual world can make claims more difficult but by no means impossible. Anyone who has issues with passing off, or potential passing of claims, will fare much better by seeking the expert advice of intellectual property lawyers.
What to Do About Passing Off
Passing off is a growing problem. It can happen to anyone or any company at any time. The more established and successful a person or business become, the more vulnerable they are to passing off. If you believe someone is trying to pass themselves off as you or your company, it's time to take action.
There's a clear indicator of flagrant passing off. The "competitor" creates confusion or potential confusion that results in your customers mistaking their business for yours as can be observed with the inception of The Menu Store Ltd in this case. This is blatant passing off, and it's illegal.
Passing off takes on a few forms, but the most obvious include:
The near identical cloning of a website, blog, or forum that sells products and/or services
Using a similar, almost indistinguishable-sounding name as yours (highlighted in above case study: Company-A The Menu Shop Vs Company-B The Menu Store)
Use a near identical design, e.g., color schemes, product (size and shape), logos, etc.
Misleading advertising (in all its forms)
Unscrupulous criminals pass off successful businesses as their own because it works—for them. They care little about the financial costs to you, lost custom, lost repeat business, ineffective advertising & marketing campaigns, or damaged reputation.
If you suspect someone is passing off your business as their own, the faster you act the better. Oftentimes, getting exposed is enough to have them stop, though not always.
Law Is on Your Side
Common law can enforce your rights in these cases. To have a case, though, you have to be able to prove the three main points mentioned earlier in this white paper:
- Acquired reputation or goodwill, with well-known characteristic features (name, logo, etc)
- Proof of misrepresentation by the person or company doing the passing off
- Damaged to business and/or reputation caused by misrepresentation
Providing you, as the challenger, can meet these three crucial points, you have a case. You can take the defendant to court and seek compensation for any loss or damage. The key is to act fast, as soon as any incident of passing off becomes evident.
Cases can be complicated and costly for all involved. If in doubt, seek the professional advice of an intellectual property (IP) lawyer in the first instance.
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