Vicarious Liability in Passing Off Claims?

Vicarious Liability in Passing Off Claims?

Today our UK passing off solicitors look at an employer’s responsibility for the conduct of an employee during the course of employment that amounts to passing off. It is an issue which has developed some clarity in recent years. When dealing with passing off claims, the case of Vertical Leisure Ltd v Poleplus and another [2015] EWHC 841 (IPEC) is of assistance.

Vertical Leisure v Poleplus – the facts

The claimant, Vertical Leisure, was a manufacturer of dancing and exercise poles. Its principal trading name was “X-Pole”. The first defendant Poleplus was in direct competition. Both manufacturers had created silk pole accessories, with Vertcial Leisure launching their product under the name “SILKii”. The second defendant, a director and employee of Poleplus, had then registered a number of domain names using Vertical Leisure’s trade marks, including “SILKii” and “X-Pole”.

Joint liability in passing off by common design

The first issue was whether Poleplus was jointly liable in passing off with its director and employee that had registered the domain names. The Court held that, in order for joint liability in passing off to arise, Vertical Pole had to establish that Poleplus was not only aware of its employee’s conduct, but that it cooperated with its employee. The Court found that even if Poleplus knew, there was nothing it could have done to bring the employee’s conduct to an end. Poleplus did not cause or encourage the employee to register the domain names. The Court therefore held that Poleplus was not jointly liable in passing off.

Vicarious liability

The second issue before the Court was whether Poleplus was vicariously liable for the employee’s conduct (which he maintained was for the benefit of Poleplus). The Court considered whether the employee was carrying out what he had been employed to do for the benefit of the employer. Objectively assessed, the Court found that Poleplus had, or would, benefit from the registering of domain names. It was found that Poleplus had given the employee authority to register the domains and was aware of what the employee had done. The Court did not require subjective evidence about exactly who had benefitted and the extent of the benefit in order to make the finding. Poleplus was held to be vicariously liable for the employee’s passing off conduct.

Vertical Leisure v Poleplus shows us that it may be easier to hold an employer vicariously liable for an employee’s passing off than to establish that the employer and employee are jointly liable. Vicarious liability in passing-off claims requires an objective assessment of the consequences of an employee’s behaviour, whereas a claim for joint liability will more than likely require consideration of subjective matters, such as the employer’s involvement in the conduct.

We hope that you found this article helpful. You can contact us and speak to an expertly qualified passing off solicitor on a confidential basis if you need assistance.