Passing off by the Seller of a Business, the Passing-off Action, and the Right to the Distinctive Mark and the Right to Goodwill: Incledon Cape (Pty) Ltd v DPI Plastics (Pty) Ltd

• Jurisdiction: South Africa
• Author: J Neethling
• Date: 25 May 2019
• Citation: (2010) 22 SA Merc LJ 287
• Published date: 25 May 2019
• Pages: 287-293

Passing off by the Seller of a Business, the

Passing-offAction, and the Right to the

Distinctive Mark and the Right to Goodwill:

Incledon Cape (Pty) Ltd v DPI Plastics (Pty) Ltd

J NEETHLING

University of South Africa

1 Introduction

The facts of Incledon Cape (Pty) Ltd v DPI Plastics (Pty) Ltd ([2010] JOL

24748 (WCC) (Incledon)) were brief‌ly as follows. The respondent sold its

business, Incledon Cape, to the applicant in 2001. It remained a direct

competitor of the applicant under the name DPI Phumela as it was entitled to

do. After f‌ive years the respondent renamed its business Incledon DPI,

intending to trade under a style of business similar to that which was sold. The

applicant sought an interdict restraining the respondent from passing off its

business as that of the applicant, or as being associated with the applicant in

the course of trade by using the trade name, mark and trading style Incledon

or any derivative thereof.

Goliath J granted the interdict. In his view the conduct of the respondent,

by confusing members of public into believing that the business of the

respondent was that of the applicant or that there was some trade connection

between the two businesses, was calculated to attract former customers, to

take advantage of its previous connections in the business and to divert to DPI

Phumela trade that was rightfully intended for the applicant (pars 32–41).

According to the Court, this form of unlawful competition is precisely what

the passing-off action is meant to address. The respondent cannot reposition

itself by using a similar name (or derivative) of the business it has previously

sold. In his judgment Goliath J dealt with several noteworthy theoretical and

practical aspects of the law of passing off, including

• the requirements for passing off and the interests protected by this form of

unlawful competition;

• the nature of, and relationship between, the right to the distinctive mark

and the right to goodwill; and

• the principles applicable to the sale of a business with or without its

goodwill or distinctive marks.

These aspects will be discussed next.

2 Passing off: Requirements and Protected Interests

The two requirements for the success of a passing-off action are trite and

require no citation of authority (see J Neethling Van Heerden-Neethling

287

(2010) 22 SA Merc LJ 287

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