ECONOMIC TORTS

As the name implies, Economic Torts are mainly economic losses that inflict

financial losses or injury on the Plaintiff. This tort occurs mainly in the economic,

commercial or business sector of life and it includes the torts of Passing Off; Breach

of Intellectual Property Rights; Injurious Falsehood; Interference with Contracts;

Conspiracy to Interfere (Civil Conspiracy); and so on.

Passing Off could also be said to take place when the Defendant pretends that his

goods or business are those of the Plaintiff so as to capture the patronage of the

Plaintiff’s customers and thereby enjoy the goodwill the Plaintiff’s business has

gained over time or over the years.

THE TORT OF PASSING OFF

The tort of Passing Off occurs when the Defendant carries on his business or sells

his goods under a name, trademark, description or imitation of the Plaintiff’s

product in order to deceive the public into patronizing such goods or products,

thereby unfairly enjoying the Plaintiff’s reputation and goodwill which has been

built over years as if it were his own; that is, the Defendant’s. See Niger Chemists v.

Nigeria Chemists (1961) All NLR 171; Bolinger v. Costa Brava Wine Co. (1960) Ch.

262.

In the words of Lord Kingsdown in Leather Cloth Co. v. American Leather Cloth

Co.(1865) 11 HL Cas. 523 at 538; (1865) 11 ER 1435, “The fundamental rule is that

one man has no right to put off his goods for sale as the goods of a rival trader.”

This tort usually involves one form of deceit, misrepresentation or the other which

thereby makes or induces the public to patronize such goods, products or business

and it is very common in competitive business community or economy. An action

lies in Passing Off for Damages, An Account for Profits made, Seizure of the

Products and even Injunction to Restrain the Defendant from Continuing the act in

the future.

The Purpose of this tort is to protect business interests, reputation and goodwill

that has been built over the years by the Plaintiff from the unfair trade and sharp

practices of the Defendant. See Leather Cloth Co. v. American Leather Cloth Co.

(Supra); Perry v. Truefitt (1842) 49 ER 749 at 725; Draper v. Trist (1939) 3 All ER 513.

Take Notice that the tort of Passing Off is actionable per se on its occurrence and

the Plaintiff need not prove damages in order to succeed in an action as an action

lies against the Defendant even though no damage has been suffered nor proved;

the probability of damage occurring is enough proof for the Plaintiff to get remedy.

Some common forms includes of Passing Off :

1. Trading with a name resembling that of the Plaintiff;

2. Marketing a fake product as that of the Plaintiff by using the Plaintiff’s label or

design;

3. Marketing a product with a name resembling that of the Plaintiff;

4. Marketing products with the Plaintiff’s trademark or its imitation;

5. Imitating the appearance of the Plaintiff’s product;

6. Selling inferior or expired goods of the Plaintiff as current stock; and

7. False advertisement by copying the Plaintiff’s advertisement.

To determine whether Passing Off has occurred or not, notice the following Five (5)

characteristics :

1. There must be a misrepresentation;

2. The misrepresentation must be made by the Defendant in the course of trade;

3. The misrepresentation is made to the prospective buyer(s);

4. The misrepresentation is calculated to injure the business and goodwill of the

Plaintiff; and

5. The misrepresentation causes damage to that person’s business and goodwill

or will likely do so.

The Elements a Plaintiff must prove to succeed are basically two :

1. That the Defendant’s activity is calculated to deceive the public; and

2. The deceit of the Defendant or the likelihood of the public being deceived.

Take Notice that where there is no likelihood of the public being confused or

deceived, Passing Off will not lie.

AVAILABLE REMEDIES1. Damages;

2. Account for Profit or Loss of Sales;

3. Injunction; and

4. Intervention by the relevant government or regulatory bodies or agencies e.g.

SON, Intellectual Property Commission, NAFDAC, etc.

AVAILABLE DEFENCES1. Functional Design or Package;

2. The use of mere Descriptive Name of the Product;

3. Consent; and

4. Innocent Passing Off : Although the Defendant will still be held liable for

Passing Off, the Plaintiff will only get nominal or reduced award of damages if

the Court agrees with the Defendant; as the plea, in absence of aggravating

circumstances, has a mitigating effect on the amount of damages that may be

awarded by the Court.

THE TORT OF INJURIOUS/MALICIOUS FALSEHOOD

This is any oral or written statement of falsehood maliciously published or act by

the Defendant which discredits the product, service or business of the Plaintiff

causing customers to stop or not to patronize the business; thereby occasioning

financial loss to the Plaintiff. It is a commercial defamation which involves a slander

or libel of the Plaintiff’s tittle, goods, services or business thereby disparaging him

and causing him damage. This tort is not actionable per se.

The falsehood may be aimed at or consist of the following :

1. Slander of Title;

2. Slander of Goods; and

3. Slander of Title and Goods.

The Purpose of this tort is to protect the goodwill and reputation of the Plaintiff’s

business, products or services and offer remedy where loss has been suffered due

to disparagement of the business. See Ratcliffe v. Evans (1892) 2 QB 524; Wren v.

Nield (1869) LR 4 QB 730; Western Counties Manure Co. v. Lawes Chemical Manure

Co. (1874) LR 9 Exch. 218; Shapiro v. La Morta (1923) 130 LT 622 CA; Balden v.

Shorter (1933) All ER 249; Joyce v. Motor Surveys Ltd. (1948) Ch. 252.

The Elements a Plaintiff must prove to succeed are :

1. That the Defendant’s statement was discrediting/disparaging/damaging;

2. That the Defendant’s statement was false;

3. That the Defendant’s statement was published; and

4. That the Plaintiff suffered damage.

Take Notice that Mere Advertisement or Sales Boast do not amount to Injurious?

Malicious Falsehood. See White v. Mellin (1895) AC 154 HL.

AVAILABLE REMEDIES

1. Damages;

2. Account for Profit or Loss of Sales;

3. Injunction; and

4. Intervention by the relevant government or regulatory bodies or agencies e.g.

SON, Intellectual Property Commission, NAFDAC, etc.

AVAILABLE DEFENCES

1. Justification or Truth;

2. Legislative Immunity (Applicable in Parliamentary Proceedings); and

3. Absolute Privilege (Applicable to persons taking part in a Judicial proceedings).

Take Further Notice that same defences applies to the Tort of Defamation;

however, once malice is established it destroys the plea of qualified privilege.

DIFFERENCES BETWEEN INJURIOUS FALSEHOOD AND DEFAMATION

1. Main concern of Injurious Falsehood is to protect the goodwill and reputation

of a business while the aim of Defamation is to protect a person’s good name

and reputation.

2. Injurious Falsehood is not usually actionable per se while it is in Defamation.

3. Actions for Injurious Falsehood is a right in property (a right in rem or a right in

business) which survives both the Plaintiff and the Defendant while Defamation

is extinct upon the demise of either of the parties as the right is personal.

4. In Injurious Falsehood, the Plaintiff must prove or claim that the statement

made by the Defendant is not true.