Name Confusion Puts Trade Mark at Risk

August 7, 2013

Name Confusion Puts Trade Mark at Risk

When a business profits because it gives the appearance of being (or its products appear to be those of) another business, it is effectively taking the goodwill of the other company. This is called ‘passing off’ in legal terminology.

In such circumstances, the business that suffers the loss may seek recompense by claiming damages for passing off. An injunction to stop the other business from continuing the passing off can also be sought.

Recently, a US foodstuffs company that had marketed products under the ‘Ola Ola’ brand for several years was ruled to have a strong case that another company had engaged in passing off after it started marketing products (including some which competed directly with the original marketer’s products) under the same name in 2011, having registered the name as a trade mark in 2010.

The original marketer argued that there had been instances of consumer confusion between the different brands.

The second company argued that ‘Ola Ola’ is an African term for ‘good’ and has no meaning in English, thus goodwill cannot subsist in it. It also claimed that it was unaware of the other company or its brand.

In a preliminary ruling, the court agreed that there was a strong case that passing off had occurred and that the trade mark registration would be ruled to be invalid. The fact that ‘Ola Ola’ has no meaning in English was not relevant.

The argument will now proceed to trial if it cannot be settled otherwise.

The decision shows how important it is to do one’s research into the market before investing in the development of branding and attempting to register trade marks.