Passing Off, Misleading or Deceptive Conduct and the Use of Stock Images

Passing Off
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If another person has used your image, logo or other property, creating the impression they are associated with you, you might have a claim for misleading or deceptive conduct or passing off.

Blackwattle Legal successfully acted for a large membership organisation by causing a third-party company to cease using an image on its website and in its promotional material following the issue of a cease and desist letter. The membership organisation had a non-exclusive licence from Adobe Stock to use the image, but it was successfully argued that the membership organisation had reputation in the image and the third-party company’s use of the image was likely to mislead or deceive the public in believing the third-party company was associated with the membership organisation. It could also amount to passing off.

The use of an image used by another organisation may give rise to a claim of misleading or deceptive conduct under Schedule 2 of the Competition and Consumer Act 2010 (Cth) (Australian Consumer Law) and or the tort of passing off. Of course, claims for misleading or deceptive conduct and passing off go far beyond just use of an image and may include, for example, conduct such as adopting the same or similar slogan or name of another company.

Misleading or deceptive conduct

Section 18 of the Australian Consumer Law prohibits a person, in trade or commerce, from engaging in conduct that is misleading or deceptive or is likely to mislead or deceive. The Australian Consumer Law does not expand on the meaning of what amounts to misleading or deceptive conduct, and thus this area of law has led to a healthy body of Court cases to determine whether the conduct complained of falls within Section 18. Whether conduct is misleading or deceptive or is likely to mislead or deceive is highly fact specific, and a careful consideration of previous Court determinations in similar fact situations is advisable.

An important point to note is that it is not necessary to prove that the conduct has misled or deceived; it is enough to prove that the conduct is likely to mislead or deceive.

Misleading or deceptive conduct and the use of stock images

Where an organisation buys the right to use an image from an image library, such as Shutterstock, Getty or Adobe Stock, it is important to check whether the purchase was of an exclusive or non-exclusive licence. If the licence was non-exclusive, generally other organisations are free to buy a licence to the image and deploy that image as it chooses (within the terms of the licence).

This said, where a person (individuals and companies) (Person 1) has a reputation in an image, and another person (Person 2) uses that image (or a similar image) and such use conveys the impression that Person 2 is, or is otherwise affiliated with, Person 1, Person 1 might have a claim against Person 2 for misleading or deceptive conduct.

Whether a person has a ‘reputation in an image’ depends on the specific facts and the Court will consider a range of factors. In simple terms, the Court would look at how long the person has used the image and whether the image would be associated with the identity of the person.

Misleading or deceptive conduct under Section 18 of the Australian Consumer Law extends far beyond the use of images. In Twentieth Century Fox Film Corp & Anor v The South Australian Brewing Co Ltd & Anor [1996] FCA 365, South Australian Brewing Co Ltd (SAB) was found liable to a breach of Section 52 of the Trade Practices Act 1974 (Cth) (which has since been repealed and replaced by Section 18 of the Australian Consumer Law). In this case, Twentieth Century Fox Film Corp (TC) used the words ‘Duff Beer’ as a name of a beer in the well-known television series, The Simpsons. SAB subsequently used the words ‘Duff Beer’ as the name for one of its products in its marketing and promotional material. The Court held that SAB was not able to use the name ‘Duff Beer’ as it did not have licensing rights to it, and because it found that use of the name ‘Duff Beer’ amounted to misleading or deceptive conduct. In the Court’s view, SAB’s use of the name ‘Duff Beer’ amounted to conduct which was misleading because the public associated ‘Duff Beer’ with the television show ‘The Simpsons’, and it was likely that the public would conclude that TC and SAB were associated entities.

Remedies under a claim for misleading or deceptive conduct

There are a range of remedies available to a person complaining of misleading or deceptive conduct by another person. These include:

  • An injunction to prevent or restrain the conduct complained of continuing (a prohibitory injunction)
  • Damages (some loss would have to be proved as a result of the conduct complained of)
  • Compensatory orders

Passing off

The common law tort of passing off is designed to protect a person from use of its images (such as a hero image on its website), name, slogan and other intellectual property by another person where the other person is seeking to pass itself off as the former.

As is similar to an action for misleading or deceptive conduct under Section 18 of the Australian Consumer Law, under a claim for passing off, if the conduct complained of misled (or could mislead) the public into forming the view that a commercial relationship (or association) had been established between two separate persons, this conduct may give rise to the common law tort of passing off.

In an older case, Honey v Australian Airlines Ltd and House of Tabor Inc (1989) 14 1PR 264, Australian Airlines (AA) (which was a wholly owned subsidiary of Qantas, until 2006 when Qantas abandoned its operation), used an image of the retired Olympian long jumper, Gary Ronald Honey in one of its poster campaigns. The aim of the poster, which contained AA’s logo, was designed to promote sport. Subsequently, the photograph of Honey which appeared on AA’s poster was replicated, with the permission of AA, in a book published by House of Tabor (a religious organisation). Neither AA nor House of Tabor sought or otherwise obtained Honey’s permission to use the image. Honey brought a passing off claim which failed because he did not establish that a reasonably significant number of persons seeing the image would draw or be likely to draw the conclusion that Honey was giving his endorsement to a particular organisation. A significant factor in the Court’s mind was that Honey did not have a commercial reputation in the image. This case shows that the mere use of another’s image is not necessarily sufficient to establish a claim of passing off – each case will depend on its own facts.

To succeed in a passing off claim, the claimant will need to show that:

  • It has or had a reputation in the property (image, name etc); and
  • People have been or are likely to be misled by another’s use of that property; and
  • Damage has been suffered (or may be suffered) as a result of that use.

The remedies available to a claimant in a passing off claim include damages (assuming loss can be proved) and a Court injunction to prohibit or restrain the defendant from the continued use of the property.

Our views on passing off and misleading or deceptive conduct

It is tempting to create copycat, me too, businesses, especially when they seem to be successful or easy to replicate. It is crucial to carefully consider the legal implications of adopting another person’s logo, name, slogan, image or even corporate colours. Such use could lead to costly legal action, even if the copy is not exact but it is sufficiently similar.

If you believe that your property is being used by another person to mislead the public into thinking that the other person is you, or is otherwise associated with you, taking prompt action is crucial. In the first instance, the most cost-effective route to resolution may be to send a carefully crafted and effective cease and desist letter on your solicitor’s letterhead which may lead to a resolution without Court action.

We are specialists in prosecuting and defending misleading or deceptive conduct and passing off claims, and resolving them at an early stage. Contact us today if you have any concerns.

Further information

For more information about misleading or deceptive conduct and passing off claims, please contact:
Trevor Withane: trevor.withane@blackwattlelegal.com.au, tel +61 (0)418 717 001

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