Passing Off

Understanding Passing Off

What is Passing Off?

Passing off is a flexible common-law cause of action that allows businesses to prevent competitors from misrepresenting their offerings as those of another trader, or as being affiliated with them. Unlike trademark registration, which confers statutory exclusivity over an approved mark, passing off protects the goodwill that has actually accumulated in the marketplace through use — goodwill that consumers associate with a specific commercial source. It applies to names, packaging, get-up, colour palettes, store or website layout, and any other indicia that consumers rely upon to identify origin.

Origins and Legal Foundations

The Supreme Court of Canada has repeatedly confirmed the basic tripartite test: goodwill, misrepresentation leading to (or likely to lead to) confusion, and damage. The leading Canadian authorities are Ciba-Geigy Canada Ltd. v. Apotex Inc., [1992] 2 S.C.R. 120, which established the foundational framework; Masterpiece Inc. v. Alavida Lifestyles Inc., 2011 SCC 27, which confirmed that confusion analysis is consumer-focused, practical, and driven by real-world evidence; and Veuve Clicquot Ponsardin v. Boutiques Cliquot Ltée, 2006 SCC 23, which refined how courts assess the breadth of goodwill and the likelihood of confusion in the real marketplace.

Key Elements of the Action

The analysis is holistic and fact-specific. While the tests are well-settled, their application adapts to diverse industries — from consumer goods to professional services and digital platforms. The inquiry is always anchored in how consumers in the real marketplace perceive and engage with the parties' offerings.

The Three Elements in Detail

Goodwill: Acquiring Distinctiveness Without Registration

Goodwill refers to the attractive force that brings in custom — the distinct associations consumers make with your name, dress, or overall presentation. Canadian courts have recognized goodwill even for foreign brands without brick-and-mortar operations in Canada, where sufficient reputation exists among Canadian consumers.

Evidence of goodwill typically includes: length and consistency of use; sales volumes and geographic reach; advertising and promotion (including digital metrics); media coverage; customer declarations or survey evidence; and proof that particular get-up, colours, shapes, or taglines point to a single source. Distinctiveness can be inherent (where a name or mark is invented or fanciful) or acquired through use in the marketplace. Where the goodwill is tied to get-up such as a bottle shape, colourway, or website design, provide dated visuals over time to show consistent association — visual documentation and consumer testimony are often decisive.

Misrepresentation Causing or Likely to Cause Confusion

Misrepresentation is assessed from the vantage of the ordinary consumer in the real marketplace — not a meticulous side-by-side inspector. The question is whether the defendant's conduct leads consumers to think the defendant's offering is the plaintiff's, or is affiliated with it. Confusion can be prospective; a plaintiff need not wait for widespread actual confusion if the risk is clear and imminent.

Damage: Lost Sales, Brand Dilution, and Corrective Costs

Damage may be inferred where misrepresentation is direct and the parties compete in the same field. Typical heads of harm include loss of sales, price erosion, deprivation of control over brand reputation, dilution of distinctiveness, and corrective-advertising expense. In direct-competition scenarios, courts can infer likely damage from the confusion risk itself — the plaintiff need not prove precise quantum of lost sales; evidence that confusion diverts consumers or undermines brand positioning can suffice. Where damage is difficult to quantify, courts may prefer an account of profits as a gain-based remedy to strip the defendant's benefit from the misconduct. Keep careful records of remedial spend to support damages or costs claims.

Passing Off in Digital and Online Contexts

Passing off has proven highly adaptable online, where consumers often encounter a brand for the first time through a domain name, search results, or social channels. Canadian courts have considered deceptive domain registrations, keyword advertising, metatags, and overall website presentation under traditional elements of the tort — the principles remain the same; only the evidence and practical remedies must reflect digital realities.

Domain Names and Confusing Online Identifiers

A domain name can be a powerful indicator of source. Courts scrutinize whether a domain suggests affiliation or origin and whether the underlying site reinforces the deception. Canadian decisions have treated misleading domains and typosquatting as fertile ground for passing-off analysis, especially where the domain reproduces the plaintiff's distinctive sign or its well-known initials in the same field.

Search Keywords, Ads, and Initial Interest Confusion

Keyword advertising and search engine optimization are common flashpoints. Courts examine how the ad headline and display URL appear to a hurried consumer on desktop and mobile; whether the copy suggests affiliation ("official," "authorized," "Canada") or uses the plaintiff's core sign; whether organic snippets and page titles replicate the plaintiff's get-up; and whether landing pages continue the façade or meaningfully differentiate source. Keyword bidding on competitors' marks is not automatically unlawful, but the combination with confusing ad creative or domain names can cross into misrepresentation.

Metatags, Page Titles, and Hidden Signals

Cases have treated the use of competitors' marks in metatags and page titles as part of the misrepresentation analysis when they affect how search engines display and consumers perceive source. Courts focus on the practical effect: whether the tags and titles generate misleading search snippets or SERPs that suggest affiliation. The inquiry remains consumer-centred — the question is not whether the defendant used technical means to manipulate search results, but whether ordinary consumers are misled by the overall presentation in search engine results pages.

Online Get-Up and Marketplace Listings

A site's overall "look and feel" can function like offline packaging. Colourways, typography, layout, iconography, and navigational patterns can, in combination, create a distinctive presentation that consumers link to a single source. Copycat product listings on platforms (Amazon, Etsy, app stores), or near-identical storefronts in multi-vendor marketplaces, can support passing-off claims where the overall effect is confusing. Screen captures, Wayback Machine archives, and analytics showing traffic redirection are key evidence — on marketplaces, seller pages and product tiles act as packaging, and passing-off risk increases where thumbnails, titles, and brand fields replicate a rival's indicia.

Evidence: Building and Challenging the Record

Passing-off litigation is evidence-heavy and benefits enormously from early record-preservation. Plaintiffs should capture evolving online presentations and store metadata, ad dashboards, and server logs. Defendants should document independent development, clearance searches, and brand guidelines that avoid confusion. The most persuasive cases show the whole consumer journey — from initial encounter through purchase decision.

Proving Goodwill

For goodwill, assemble: sales data, customer counts, and geographic spread; advertising spend and campaign reach (including digital impressions and engagement); media coverage and awards; consumer declarations and dealer or distributor evidence; survey evidence (where proportionate) that the sign or get-up is recognized as identifying your source; and copies of third-party references using your name to refer to you specifically (not generically). Where the goodwill is tied to get-up, provide dated visuals over time to show consistent association. Distinctiveness can be acquired in a niche market more quickly where competitors are few and the purchasing public is concentrated.

Proving Misrepresentation and Confusion

Misrepresentation and confusion can be shown through: side-by-side visuals illustrating overall similarity (while emphasizing that consumers do not compare with microscopes); evidence of consumer complaints, misdirected calls and emails, and retailer confusion; search data and ad reports (queries, keywords, CTRs, location data); SERP and social-feed captures (desktop and mobile); marketplace reviews indicating origin confusion; and expert evidence or properly designed consumer surveys where proportionate. Courts are pragmatic: a few credible instances of real-world confusion can carry significant weight, particularly when the parties operate in the same channel at similar price points. The confusion need not be widespread — even a material minority of consumers being misled can support the claim.

Proving Damage or Risk of Damage

Damage may consist of lost sales, channel interference (distributors steering to the defendant), price pressure, or reputational harm (negative reviews misattributed to the plaintiff). In direct-competition scenarios, courts can infer likely damage from the confusion risk itself. Keep careful records of remedial spend (corrective ads, rebranding, communications) to support damages or costs. Where apportionment is difficult, an account of profits may be more efficient — evidence of the defendant's sales and margins, particularly where gained through the confusion, becomes critical in accounting claims.

Remedies and Relief

Available remedies reflect the twin aims of halting confusion and neutralizing the unfair benefit. The Trade-marks Act, s. 7(b), provides a statutory framework for passing off and authorizes injunctive relief and other remedies. Courts tailor relief to the market realities of the dispute.

Interlocutory and Permanent Injunctions

Interlocutory injunctions are common where confusion is imminent and the plaintiff shows a strong prima facie case, irreparable harm, and a balance of convenience favouring restraint. In online contexts, courts may accept that consumer confusion spreads quickly via search and social, making damages an inadequate substitute — speed of action therefore matters significantly. Permanent injunctions typically prohibit use of the confusing indicia and require sufficient differentiation in future; the injunction should be tailored to address the specific confusion while allowing the defendant reasonable use of descriptive terms or legitimate comparative references.

Damages vs. Account of Profits

Plaintiffs ordinarily elect between damages (compensatory) and an account of profits (disgorgement of the defendant's gain). Courts consider fairness, complexity, and proportionality: where losses are difficult to prove but the defendant's profits can be calculated, an account may be more appropriate. The plaintiff can also seek reasonable royalty measures, corrective-advertising costs, and — where conduct was egregious — aggravated or punitive damages, used sparingly. An account of profits requires careful proof of the defendant's revenues attributable to the confusing goods or services and deduction of allowable expenses.

Delivery-Up, Destruction, and Corrective Measures

Courts may order delivery-up and destruction of confusing packaging and marketing materials, the takedown of online assets (pages, ads, listings), and corrective messaging to restore clarity in the marketplace. For online disputes, orders can require removal from ad platforms, domain registrars, and marketplaces, with compliance reporting to ensure the confusion is actually cured. Corrective advertising orders are discretionary and typically reserved for cases where substantial confusion has already occurred and passive cessation is insufficient to restore market clarity.

Defences and Limitations

Defences aim to negate one or more elements — most often goodwill or misrepresentation — or to justify the conduct as fair, descriptive use. Courts also consider delay and acquiescence, honest concurrent use in limited circumstances, and statutory defences under the Trade-marks Act framework where relevant.

No Protectable Goodwill or Distinctiveness

If the plaintiff cannot show that consumers associate the alleged sign or get-up with a single source at the relevant time and place, the action fails at the first element. Early-stage brands, highly descriptive names, or crowded markets can make distinctiveness proof more difficult. Functional or purely descriptive features — those that competitors reasonably need for effective competition — typically cannot serve as exclusive indicia.

No Misrepresentation / Adequate Differentiation

Defendants may demonstrate sufficiently distinct get-up, prominent house branding, disclaimers, and channel separation to avert confusion. Courts examine the totality of the presentation, including how consumers actually buy — on shelves, on mobiles, or via marketplaces. Subtle differences may not suffice where consumers purchase quickly or with low involvement (Masterpiece). However, clear and prominent differentiation — distinct house marks, different colour schemes, or explicit disclaimers — can defeat the misrepresentation element even where some similarity exists.

Descriptive or Comparative Fair Use; Honest Practices

Use of common descriptive words to identify the nature or quality of goods or services can be legitimate where done in good faith and not as a "badge of origin." Comparative statements that truthfully differentiate products may be permitted if they do not suggest source affiliation or sponsorship. The line is crossed where the overall effect still points consumers to the plaintiff as the source — defendants relying on this defence must show that their use is truly descriptive or comparative, not an attempt to appropriate the plaintiff's goodwill.

Consent, Licence, or Authorized Reseller Theories

Where the defendant operates under a licence, distributorship, or reseller arrangement, scope and termination become central. A defendant who continues using indicia beyond consent risks passing-off liability; conversely, clear authorization within scope can defeat the claim. Contract evidence, brand guidelines, and termination notices are critical. Even authorized resellers must avoid creating confusion about the nature of their relationship with the brand owner — suggesting they are the manufacturer or exclusive distributor when they are not crosses into misrepresentation.

Delay, Acquiescence, and Limitation Periods

Substantial delay can undermine a plaintiff's request for interim relief and may support equitable defences of acquiescence or laches, though it does not automatically defeat the claim on the merits. Statutory limitation periods under Ontario's Limitations Act, 2002 apply and should be considered early. Evidence that the plaintiff knew of the defendant's conduct but delayed action can weaken claims for urgent relief or suggest implied consent. Prompt action also helps contain digital confusion before it spreads virally through search and social channels.

Strategy and Procedure: Early Moves That Change Outcomes

Preservation, Imaging, and Data Collection

Move quickly to preserve: website versions (using trusted archiving tools and PDF captures with metadata); ad platform data (keywords, spends, ad copies, geo and device breakdowns); analytics (landing pages, source and medium, conversion paths); marketplace listing histories and seller correspondence; and social content and direct messages that show confusion or attempts to rectify it. Early preservation prevents disputes about what the defendant's presentation actually looked like at the material time — the digital record is perishable and opponents may modify their presentation once they anticipate litigation.

Proportional Discovery and Expert Evidence

Discovery should target the elements: goodwill (sales, marketing, recognition); misrepresentation (design process, selection of names and colours, competitor research conducted before launch); and damage (channels, margins, traffic shifts). Consider whether a consumer survey is proportionate — many cases succeed without formal surveys where real-world confusion is credible and well-documented. Expert evidence on marketing, search behaviour, and digital UX can be helpful where the purchasing journey is central. Surveys must be properly designed to avoid leading questions and must sample the relevant consumer demographic.

Interlocutory Relief: Framing Irreparable Harm

Frame harm as loss of control over your reputation and the risk of multiplier effects online. Provide time-stamped captures showing how quickly confusing ads spread across devices and geographic regions. Offer undertakings as to damages and propose a narrowly tailored order — for example, restrained use of specific signs, safe-harbour comparative statements — to address balance-of-convenience concerns. Courts are more willing to grant interim relief where the plaintiff demonstrates a clear prima facie case, shows that monetary damages would be inadequate (reputational harm, ongoing market confusion), and proposes practical compliance mechanisms with definite timelines.

Special Topics: Online Marketplaces, Social Media, and Influencers

Modern disputes often involve distributed channels outside a party's direct control. The principles remain the same, but evidence and practical remedies must reflect platform realities — and relief must be structured to be enforceable against sellers, platforms, and third-party promoters alike.

Marketplaces and Platform Policies

On marketplaces such as Amazon, Etsy, and app stores, seller pages and product tiles act as packaging. Passing-off risk increases where thumbnails, titles, and brand fields replicate a rival's indicia. Preserve listing histories and buyer messages that demonstrate confusion. Platform takedown tools can complement court relief — your proposed injunction should address compliance by sellers and by the platform where feasible. Many platforms have intellectual property complaint procedures that can provide faster, though not always comprehensive, relief while litigation proceeds.

Social Handles, Hashtags, and Bio Fields

Handles and bios often function as source-identifiers in the same way that business names do. Confusingly similar handles, or bios implying affiliation ("official", "Canada", "[Brand] Toronto"), can support misrepresentation. Screenshots and platform analytics documenting reach and engagement provide context. If influencers or affiliates are involved, capture contracts and briefing materials to show who scripted the messaging — evidence that the defendant actively encouraged misleading social media presentations strengthens claims of intentional misrepresentation and may support aggravated relief.

Comparative Advertising and "Brandjacking"

Comparative references that clearly identify both parties and truthfully differentiate features may be permissible. Brandjacking — mimicking the rival's get-up or using their slogans as if they were your own — is not. The same consumer-centric confusion test applies: labelling something a "comparison" will not rescue a misleading overall presentation. Legitimate comparative advertising typically identifies both parties clearly, compares objectively verifiable features, and does not create an impression of affiliation or endorsement. The defendant bears the burden of showing their comparative use is honest and does not mislead the ordinary consumer.

Practical Compliance and Risk Management for Business

Robust brand clearance and go-to-market discipline reduce passing-off risk before it becomes litigation risk. Before launch, screen names, domains, and colourways against competitors in your channel. Testing on mobile matters — space is tight and consumers often make purchasing decisions based on small-screen first impressions. Review how search and social snippets actually render before launch, not after. Maintain brand guidelines that explicitly prohibit look-alike elements and require disclaimers where competitors are referenced.

For enforcement, escalate in measured stages:

1. Collect evidence first: Document the confusing use comprehensively before making any contact — preserve the digital record before the defendant has the opportunity to modify their presentation.
2. Send a targeted notice: Explain the specific indicia that cause confusion and propose clear safe-harbour alternatives that allow the defendant to continue operating without the confusing elements.
3. Seek a time-limited standstill if needed: While you explore interim changes that address the confusion without the cost and delay of immediate court proceedings.
4. Proceed to court with clear evidence and proportionate remedies: If confusion persists or escalates — ensuring proposed orders are practically enforceable against the specific digital assets identified.

Build remedies that work in practice: clear re-labelling timelines, structured takedowns with compliance reporting, and commitments on specific platforms and URLs. The goal is not just to win in court, but to restore marketplace clarity and protect your commercial goodwill effectively. Preventative measures should include regular monitoring of search results, marketplace listings, and social media for confusingly similar uses; maintaining comprehensive records of your brand evolution and market presence; and responding promptly to early signs of confusion before they become entrenched in the marketplace.