In Nepal, not every brand owner registers their trademark immediately. Many businesses operate under unregistered brand names or logos, assuming that registration is the only way to protect their intellectual property. However, the law recognizes a principle called passing off, which allows unregistered brand owners to protect their goodwill against unfair competition.
Understanding what qualifies as passing off, how to enforce rights, and what does not count is critical for entrepreneurs, startups, and established businesses alike. Proper knowledge can prevent loss of market share, protect consumer trust, and safeguard investment in brand identity.
This article provides a comprehensive guide to passing off in Nepal, including legal standards, real-world examples, procedural steps, practical tips, timelines, and enforcement options.
What Is Passing Off in Nepal?
Passing off is a legal action that allows an unregistered brand owner to prevent others from misrepresenting their goods or services as those of the original brand. Unlike registered trademarks, passing off does not require formal registration, but it does require proof of:
Goodwill – reputation associated with the brand or business
Misrepresentation – the defendant’s use misleads the public into believing the goods/services come from the original brand
Damage – actual or likely harm to the brand owner’s business or goodwill
The principle is codified under Nepalese common law principles and is recognized under Section 21D of the Patent, Design and Trade Mark Act, 2022.
For official statutory references, you can consult the Act directly: WIPO Lex – Nepal Legislation
Passing off protects businesses operating without registration but with an established reputation in the marketplace, making it a crucial tool for startups, small businesses, and local brands.
Key Elements That Qualify as Passing Off
For a successful passing off claim, three core elements must be demonstrated:
1. Reputation or Goodwill
The claimant must show that their brand has built recognizable goodwill among consumers in Nepal. This includes:
Established sales and market presence
Consumer recognition and brand association
Advertising, packaging, and social media promotion
Example: A local coffee shop operating in Kathmandu for five years has built customer recognition through consistent branding and quality service. Even without registration, it may claim passing off if another coffee shop starts using a very similar name and logo in the same area.
2. Misrepresentation by the Defendant
The defendant must have misrepresented their goods or services in a way that leads the public to believe they are associated with the claimant. Misrepresentation can occur through:
Similar brand names
Copying logos, packaging, or labels
Using similar marketing language or trade dress
Example: A small clothing brand in Pokhara notices a new competitor using a nearly identical logo and brand name on similar apparel. Customers might assume the two brands are affiliated. This scenario could qualify as passing off.
3. Likely Damage to the Claimant
It is not enough to show misrepresentation; there must be actual or probable damage. Damage can include:
Loss of sales or market share
Tarnished reputation
Confusion in the marketplace
Dilution of brand identity
The court evaluates likelihood of confusion among ordinary consumers, not just the technical similarity between brands.
What Does Not Qualify as Passing Off
Passing off claims are limited. The following typically do not qualify:
Coincidental use: Two unrelated businesses in different classes or geographical markets using the same name without causing consumer confusion
Descriptive or generic terms: Words that describe the goods or services (e.g., “Best Milk”)
Non-commercial use: Private, personal, or educational use of a similar name or logo
Authorized/licensed use: Any use explicitly permitted through licensing or consent
Practical Steps to Protect Your Unregistered Brand
Even without registration, businesses can take several proactive steps to safeguard their brand:
Conduct Market and Brand Searches
Regularly monitor competitors for similar names, logos, and marketing tactics. Early identification reduces risk of infringement and strengthens potential passing off claims.
Maintain Proof of Use and Goodwill
Document sales, customer testimonials, advertisements, invoices, social media engagement, and other evidence showing public recognition of your brand.
Issue Cease-and-Desist Notices
If a competitor misuses your brand, a professional cease-and-desist letter can prevent escalation and may resolve disputes without litigation.
Legal Filing for Passing Off. Trademark Opposition in Nepal
Department of Industry – Nepal (DOI) for advisory action or mediation
Civil courts in Nepal for injunctions, damages, and permanent relief
Timeline and Costs of Passing Off Actions
Unlike registered trademark enforcement, passing off claims are evidence-driven and can take longer due to:
Collection of market and goodwill evidence
Preparation of legal submissions
Court hearings or administrative reviews
Typical costs may include:
Legal fees for drafting and representation
Investigation or evidence collection costs
Filing fees with courts or Department of Industry
Engaging an experienced IP firm like Axcel Law Associates helps businesses navigate this process efficiently, avoiding procedural errors and increasing the chances of success.
How Passing Off Relates to Registered Trademarks
Passing off serves as a safety net for unregistered brands, but registration still provides:
Clearer legal rights
Easier enforcement in disputes
Potentially broader protection across classes
Even businesses relying on passing off are encouraged to consider trademark registration in Nepal for long-term protection and enforceable rights.
Practical Examples in Nepal
Local food brands: A well-known snack sold in Pokhara faced confusion when another company used a nearly identical name and packaging. The original business successfully issued a cease-and-desist and prevented market confusion.
Apparel brands: Kathmandu-based fashion startups often rely on passing off claims when new entrants attempt to capitalize on their established reputation.
These cases demonstrate that even unregistered marks can carry enforceable goodwill, provided the evidence is strong and the market context is clear.
Conclusion
Passing off in Nepal protects unregistered brands by preventing others from misrepresenting their products or services. While registration remains the strongest form of protection, passing off is a practical, legally recognized tool to safeguard brand value, market credibility, and consumer trust.
Businesses should:
Maintain evidence of use and goodwill
Monitor competitors for unauthorized use
Seek professional advice promptly
Consider registration for long-term protection
Firms like Axcel Law Associates assist businesses with passing off claims, trademark registration, licensing, and enforcement, ensuring that unregistered and registered brands alike are fully protected under Nepalese law.
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