1. Introduction

Not every valuable brand identity is, or can be, captured in a registered trademark. A business that has built up goodwill under a name, get-up, or other identifier may have no registered rights and yet still be entitled to protection against a competitor who seeks to exploit that goodwill through deception.

In Trademark Infringement in Cyprus: A Practical Guide we discussed the registration and protection of trademarks in Cyprus. In this guide we focus on rights that may be unregistered yet still attract protection under the tort of passing off.

2. The Elements of Passing Off

The elements of a passing off claim, as restated by the House of Lords in Reckitt & Colman Products Ltd v. Borden Inc [1990] 1 WLR 491 and consistently applied by the Cypriot courts, are three in number. First, the claimant's goods or services must have acquired goodwill in the market, known by some distinguishing name, mark, or other indicium. Second, the defendant must have made a misrepresentation, whether intentional or not, leading or likely to lead the public to believe that the defendant's goods or services are those of the claimant. Third, the claimant has suffered, or is likely to suffer, damage as a result of the false belief generated by that misrepresentation.

These elements are applied in Cyprus both under section 35 of Cap. 268, which reproduces the English tort, and through a body of Cypriot appellate authority.

1. Goodwill

   Goodwill is the whole advantage of the reputation and connection formed with customers, together with circumstances that tend to make that connection permanent. It is a species of personal property that may be bought, sold, or charged. For goodwill to be established, there must be customers or prospective customers who recognise the name, mark, or other indicium as distinctive of the claimant's goods or services. The claimant need not be a large operator; a small trader with a limited but established clientele may maintain a claim in passing off, provided the goodwill is real and the likely damage substantial. Critically, goodwill must be established as at the date the defendant commenced the activities complained of.

2. Misrepresentation

   The misrepresentation need not be fraudulent; it is the effect on the public, not the defendant's intent, that determines liability. The misrepresentation typically takes the form of a false suggestion that the defendant's goods are those of the claimant, or that there is some commercial connection between them. It may be effected directly or indirectly, including by placing goods into circulation that are calculated to deceive ultimate purchasers, even where no direct misrepresentation is made to immediate customers.

3. Damage

   Damage to goodwill need not be precisely quantified for liability to arise. In Cyprus, the courts have recognised that in passing off cases it is usually difficult or impossible to calculate the harm caused to a claimant's reputation and goodwill; this very difficulty supports the grant of injunctive relief and, where liability is established, at minimum nominal damages. The claimant may elect between compensatory damages and an account of the defendant's profits.

3. Passing Off and Registered Marks Compared

The action in passing off is in many respects wider and more flexible than infringement of a registered mark. It extends to all the means by which a claimant's trade or goods may be identified, not only those that have been successfully registered. It is also more demanding: the claimant must affirmatively prove goodwill and the damaging nature of the defendant's misrepresentation, whereas the holder of a registered mark need only demonstrate use within the registration's scope. The two causes of action are frequently pleaded together.

4. How Trademark Infringement and Passing Off Interact

Proceedings for trademark infringement and passing off are frequently brought together in the same action. This reflects both the similarity of the underlying conduct and the complementary scope of the two causes of action. A claimant with a registered mark who also has established goodwill under that mark will typically plead both; the registered mark claim benefits from statutory presumptions, while the passing off claim may be wider in its reach and may capture conduct that falls outside the registration's literal scope.

It is worth noting that a defendant in trademark infringement proceedings may have available certain statutory defences, such as honest use of a descriptive term, that would not necessarily defeat a passing off claim. Conversely, a passing off claim requires proof of goodwill and misrepresentation that may be more demanding than a registered mark claim. The interaction between the two causes of action requires careful strategic consideration at the outset of any dispute.

5. Remedies

Where passing off is established, the claimant has access to both injunctive and monetary relief. Interim measures, which allow a rights holder to act before trial to prevent ongoing harm to goodwill, are addressed separately in our guide Interim Relief in Cyprus Trademark and Passing Off Disputes.

1. Final injunction

   The primary remedy in a passing off action is a final injunction prohibiting the defendant from continuing the conduct that constitutes the misrepresentation. Given that damage to goodwill is by its nature difficult to quantify and often irreversible, injunctive relief is typically the most important remedy a claimant will seek.

2. Pecuniary relief

   A successful claimant may elect between two alternative monetary remedies: an inquiry as to damages, which seeks to compensate for losses suffered, or an account of profits, which strips the defendant of the gains made from the wrongful conduct. The courts have recognised that in passing off cases actual damage need not be precisely proved for liability to arise; where confusion and harm to goodwill are established, at minimum nominal damages will be awarded.

3. Delivery up

   Courts may also order the delivery up or destruction of articles, labels, packaging, or other materials that embody or perpetuate the misrepresentation.

6. Our Firm's Assistance

At Economou & Co LLC, we advise businesses across a range of industries on the protection and enforcement of their trademarks and other intellectual property rights in Cyprus and in cross-border disputes involving Cyprus-registered entities. Our litigation practice covers trademark infringement, passing off, and related claims, from the initial assessment of a dispute through to trial and, where necessary, enforcement of judgments.