Passing Off

Passing Off is the misrepresentation by one trader, which damages the goodwill of another. ments: 1. Goodwill 2. Misrepresentation 3. Damage Definitions & Development "A man is not to sell his own goods under the pretence that they are the goods of another man" Perry v Truefitt (1842) 6 Beav 66 Nobody has the right to represent his goods as the goods of somebody else Lord Halsbury in Reddaway v Banham [1896] AC 199 This is not a branch of the law in which reference to other cases is of any real assistance except analogically Lord Oliver in Reckitt & Coleman v Borden [1990] RPC 341 CA "the basis of a passing-off action [is] a false representation by the defendant, it must be proved in each case as a fact that the false representation was made. It may, of course, have been made in express words, but cases of express misrepresentation of this sort are rare. The more common case is where the representation is implied in the use of imitation of a mark, trade name, or get up with which the goods of another are associated in the minds of the public. In such cases the point to be decided is whether, having regard to all the circumstances of the case, the use by the defendant in connection with the goods of the mark name or get-up in question impliedly represents such goods to be the goods of the plaintiff, or the goods of the plaintiff of a particular class or quality, or, as it is sometimes put, whether the defendants use of the mark, name or get-up is calculated to deceive. It would, however, be impossible to enumerate or classify all the possible ways in which a man may make the false representation relied on."Lord Parker in Spalding v Gamage (1915) 32 RPC 273 HL The issue of goodwill was introduced in the cases of Bollinger v Costa Brava [1960] RPC 16; Vine Products v Mackenzie [1969] FSR 402; John Walker v Henry Ost [1970] 1 WLR 917. Spalding v Gamage (1915) 32 RPC 273 HL and the later cases make it possible to identify five characteristics which must be presetn in order to create a valid cause of action for passing off: (1) misrepresentation (2) made by a trader in the course of trade, (3) to prospective customers of his ultimate consumers of goods or services supplied by him, (4) which is calculated to injure the business or goodwill of another trader (in the sense that it is a reasonably foreseeable consequence) and (5) which causes actual damage to a business or goodwill of the trader by whom the action is brought or (in a quia timet action ) will probably do so. Lord Diplock in Warnink v Townen [1980] RPC 31 CA. Quia Timet = an action for an injunction to prevent damage for which money is no remedy. "First the plaintiff must establish a goodwill or reputation attached to the goods or services which supplies in the mind of the purchasing public by which the identifying get-up (whether it consists simply of a brand name or a trade description or the individual features of labelling or packaging) under which his particular goods or services are offered to the public, such that the get-up is recognised by the public as distinctive specifically of the plaintiff's goods or services. Secondly, he must demonstrate a misrepresentation by the defendant to the public (whether or not intentional) leading or likely to lead to the public to believe that goods or services offered by him are the goods or services of the plaintiffThirdly, he must demonstrate that he suffers or, in a quia timet action, is likely to suffer damage by the erroneous belief engendered by the defendant's representation tha the source of the defendant's goods or services is the same as the source of those offered by the plaintiff." Lord Oliver in Reckitt & Coleman v Borden [1990] RPC 341 CA

Passing off protects the goodwill in goods not the brand name or get up itself, that is protected by trade mark registration. In Reckitt & Coleman v Borden RPC 341 CA the plaintiff sold lemon juice in a yellow lemon shaped plastic container with yellow top, embossed with the word Jif and a green label also with the word Jif. The defendant began selling lemon juice in a similar container and the plaintiff obtained an injunction for passing off. The injunction was not to protect the plaintiffs right to sell lemon juice in a lemon shaped container (that would be achieved by trademark registration or registered design). The injunction was to protect the goodwill of the plaintiff by preventing the defendant selling lemon juice in such a way that consumers would think it was the plaintiffs. Lord Oliver stated: "There is not and cannot be any proprietary right in an idea nor can a trader claim a monopoly in the manufacture or sale of non-patented article or in the absence of a registered design in the configurations of shape in which the article is manufactured." And quoted Lord Cranworth LC in Farina v Silverlock (1856) 26 Lj Ch 11 "I apprehend that the law is perfectly clear. That anyone, who has adopted a particular mode of designing his particular manufacture, has a right to say not that other persons shall not sell exactly the same article, better or wore, or an article looking exactly like it, but that they shall not sell it in such a way as to steal (so to call it) his trade mark, and make purchasers believe that it is the manufacture to which the mark was originally applied." Purpose There is no general tort of unfair competition "in its current state of development the common law does not recognise a general right in one trader to complain of damaging dishonest practices committed by his competitors". Passing off has been used to reduce unfair competition but it must not be used to restrict fair competition. In Cadbury Schweppes v The Pub Squash [1981] RPC 429 PC The plaintiffs produced a lemon drink called solo in a yellow can so aas to look like beer and had a campaign designed to appeal to men. The defendants produced a similar soft drink in a yellow can with a similar campaign. It was held that although an advertising campaign could cause confusion between products and amount to passing off it did not do so in this case as the cans were eaily distinguishable. Lord Scarman stated: "..competition must remain free: and competition is safeguarded by the necessity for the plaintiff to prove that he has built up intangible property right in the advertised descriptions of his product, or in other words, that he has succeeded by such methods in giving his product a distinctive character accepted by the market. A defendant, however, has done on wrong by entering a market created by another and then competing with its creator. The line may be difficult to draw; but unless it is drawn, competition will be stifled." Other forms of defence to unfair competition include injurious falsehood where false statements are made about a persons product. Trade marks are similar to passing off in that they seek to maintain the distinctiveness and integrity of a manufacturer and its product but registration of a trade marks gives a property right in the mark and protects against misuse of the mark whereas passing off protects against misrepresentation. Traders A trader includes a wide range of individuals including schools writers and professional associations. I Goodwill Goodwill has been defined as follows: Goodwill regarded as property has no meaning except in connection with some trade business or callingIn the wide sense goodwill is inseparable from the business to which it adds value, and in my opinion, exists where the business is carried on. the benefit and advantage of the good name, reputation and connection of a business. It is the attractive force which brings in custom Lord Macnaghten in IRC v Muller& Cos Margerine [1901] AC 217 HL

I understand the work to include whatever adds value to a business by reason of its situation, name and reputation, connection, introduction to old customers, and agreed customers, and agreed absence from competition, or any of these things. And there may be others that do not occur to me. Lord Lindsey as quoted by Lord Diplock in Star Industrial v Yap Kwee Kar [1976] FSR 256 PC. Goodwill is form of property that can be assigned, licensed gifted etc. but only with the business that generated it. It is also linked to a geographical area or locality In Anheuser-Busch v Budejoicky [1984] FSR 413 CA an American brewing company that sold its beer exclusively on American Air Force bases in the UK could not restrain a Czech company form selling its beer under eth same name. Although the American Company had a substantial reputation as it did not have a business in the UK it did not have any good will. In Clock v Clockhouse Hotel (1936) 53 RPC 269 the plaintiffs obtained an injunction against a hotel with a similar name 5 miles away but it was limited to that area as that was the extent of the goodwill. In Chelsea Man v Chelsea Girl [1987] RPC 189 CA the plaintiff had shops in Leicester Coventry and London named Chelsea Man. The defendant intended opening shops nationwide also under the name Chelsea man. The plaintiff was granted a nationwide injunction. In the past it appeared to be more difficult to show good will for services than goods. In Alain Bernardin v Pavillion Properties [1967] FSR 341 the plaintiffs owned a nightclub in Paris called the Crazy Horse Saloon. They advertised in the UK and drew customers formteh UK. However it was not able to obtain an injunction stop the defendant opening a night club with the same name in London. However it has been recognised that markets for both goods and services are becoming increasingly international. In Peter Waterman v CBS [1993] EMLR 27 the plaintiffs produced records and were known as The Hit Factory although did not trade under that name. The defendants intended opening a recording studio under the same name, as they had traded under that name in America since 1970 and had built up considerable goodwill in the USA and internationally. The plaintiffs wanted to stop the defendants trading under the name and the defendants counter claimed with an action for passing off. It was held that the defendants had a claim for passing off as their good will in the UK was sufficient to found an action. The person claiming goodwill need not necessarily have business in the UK but must carry on business in the UK. This means that the claimant must have a sufficient number of customers in the UK. In Panhard v Levassor [1901] the plaintiffs were car producers who did not have a business in the UK and could not import directly due to patent restrictions nevertheless cars were purchased in France and imported by a business and private individuals. The court held that the UK was one of its markets and that it had the necessary goodwill to found a passing off action. In Athletes Foot Marketing Associates v Cobra Sports Ltd [1980] RPC 343 the plaintiffs carried on business in the USA and planned to expand into the UK. Before they had done so the defendants established a shop called Athletes Foot Bargain Basement. As the plaintiffs had not begun business in the UK they did not have any good will and so could not obtain an injunction under passing off. However under section 56 of the Trade Mark Act 1994 protection is offered to well known trade marks that are not registered in the UK and where the proprietor does not carry no business in the UK Goodwill includes reputation. An act that may affect a businesses reputation would not necessarily affect its goodwill. In Anheuser-Busch v Budejoicky [1984] FSR 413 CA although the American Company had a substantial reputation as it did not have a business in the UK it did not have any good will.

In Harrods Ltd v Harrodian School Ltd [1996] RPC 697 CA the Harrods store tried to prevent a preparatory school set up in a building, which housed the former Harrodian Club for employees, from being called The Harrodian School. It was held that the activities of the school would not affect the stores good will. Millet J stated The name of Harrods may be universally recognised, but the business with which it is associated in the minds of eth public is not all embracing. To be known to everyone is not to be known for everything. In Lego Systems v Lelestrich [1983] FSR 155 the plaintiff manufactured childrens plastic construction toys under the name Lego and the defendant manufactured gardening equipment some of which was made form plastic also under the name Lego. The court granted an injunction against the defendant because it found that the plaintiff had acquired a high reputation for the mark Lego beyond its toys and there was a real risk that the public would believe there was a link between the two companies. Goodwill can be shared it attaches to the product and to all the producers equally even to those who are new to the market place. Chocosuisse v Cadbury [1998] RPC 117 Who owns the good will is a question of fact. The public do not need to recognise who owns the goodwill it is enough for the to know that the goods derive from a particular source. In Edge v Nicchols [1911] ac 693 HL the plaintiffs had sold blue on a stick for many years without a label. The defendants who ha previously sold blue in a different form started to sell it on a stick with a label. It was held that the defendants were passing off. Consumers would think that they were buying the plaintiffs blue if it was on a stick even though they did not know the name of the plaintiff the get up was a sufficient indication to them. How long it takes to acquire goodwill is a question of fact.

II Misrepresentation A misrepresentation must be material i.e. more than momentary or inconsequential. It must be a reasonably foreseeable consequence that as result of the defendants misrepresentation the plaintiffs goodwill will be damaged. A material representation is one that is calculated to mislead the public into thinking hat the good or services of the defendant or the defendants business are or is either a) the good s or services of the plaintiff or b) connected with the plaintiffs business in some way which is likely to damage the plaintiffs goodwill in that business. However confusion alone may not amount to a material misrepresentation. "No one is entitled to be protected against confusion as such. Confusion may result given the collusion of two individual rights or liberties and where that is the case neither party can complain; they must put up with confusion as one of the misfortunes, which occur in life. The protection to which a man is entitled is protection against passing off which is quite a different thing from mere confusion. If all that a trader is doing is to carry on trade in his own name and in disposing of or advertising his goods does no more than make the perfectly true statement that the goods are his goods, no other trade is entitled to complain." Green MR in Marengo v Daily Sketch[1948] 1 All ER 406 HL. "If a customer asks for a tin of black shoe polish without specifying any brand and is offered the product of A which he mistakenly believes to be that of B, he may be confused as to what he has got but he has not been deceived into getting it. Misrepresentation has played no part in his purchase." Lord Oliver in Reckitt & Coleman v Borden [1990] RPC 341 CA. There is no need to prove that the defendant intended to deceive or misrepresent to found an action of passing off but why the defendant chose a particular get up or indicia is a question which "falls to asked and answered" by the court Kerr LJSodastream v Thorn Cascade [1982] RPC 459 CA. An injunction may be awarded on the basis of the threat of misrepresentation even though it may fall short of passing off. BT v One in a Million [1999] 1 WLR 903 CA. A substantial number of customers or potential customers must have been misled. However it does not have to be all the public and there may be many people who are not misled but if a substantial minority of people are misled then is may amount to passing off Alan Kenneth Clark v Associated Newspapers [1998] 1 All ER 959. Customers will not be assumed to be "morons in a hurry" Foster in Morning Star v Express Newspapers [1979] FSR 113. The customer will be assessed depending on the type of good or services, the market and the habits

and characteristics of customers in that market. In Reckitt & Coleman v Borden [1990] RPC 341 CA the customer would only look as far as the distinctive get up of the goods, in HFC Bank v Midland Bank [2000] FSR 176 it was held that customers wishing to borrow quite large sums of money form a bank could reasonably be expected to pay rather more attention to the details of the entity with which they areseeking to do business. In some cases it may the knowledgeable customer who would make the connection between one good and another and be misled Ravenhead Brick v Ruabon Brick (1937) 54 RPC 341. Examples of Misrepresentation The defendant misrepresents the defendants goods as the plaintiffs In MacDonald Hamburger v Burgerking [1987] FSR 112 CA Burgerking advertised a hamburger under the heading as "Its not just Big, Mac" it was held that a significant number of people might think it was an advertisement of a MacDonalds hamburger. In Cadbury Schweppes v The Pub Squash [1981] RPC 429 PC Lord Scarman stated that passing off: "is now wide enough to encompass, not only the name or trade mark of a product or business, but other descriptive material, such as slogans or visual images, which advertising could lead the market to associate wit the plaintiffs product provided that such material has become part of the goodwill of the product. The test is whether the product has derived from the advertising a distinctive character which the market recognises." A major distinguishing feature between passing off and trade mark actions is that to be successful in a trade mark infringement action it is only the trade mark used by the defendant that can be shown to be identical or similar to that registered by the claimant. However to be successful in a passing off action a range of indicia used by the defendant may be claimed to be distinctive of the claimants goods, causing the defendant to mislead the customer. In United Biscuits v Asda [1979] RPC 513 the difference between the trade mark of a penguin was held to be dissimilar from a puffin but taking the packaging as a whole it was held there was sufficient similarity to for there to be a misrepresentation. Descriptive marks may be capable of amounting a misrepresentation. In in Reddaway v Banham [1896] AC 199 the plaintiff manufactured camel hair belts which although descriptive had acquired a secondary meaning of belts made by the plaintiff. "To succeed in such a case [the plaintiff] must demonstrate more than simply the sole use of the descriptive term. He must demonstrate that it has become so closely associated eith his goods as to acquire the secondary meaning not simply of goods of that description but specifically of goods of which he and he alone is the source." Lord Herschell in in Reddaway v Banham [1896] AC 199. In Cellular Clothing v Maxton & Murray [[1899] AC 326 HL the plaintiffs were not able to show the word cellular was descriptive and distinctive of their clothing. "It was for the Appellants to establish, if they could, that an ordinary word in the English language and properly applicable to the subject matter of the sale was one which had so acquired a technical and secondary meaning that it could be excluded for the use of everybody elsethe [plaintiffs] have failed in establishing this fact." If a purely descriptive name is used the courts will recognise that there is a higher risk of confusion with others who may use a similar name and will be reluctant to find a misrepresentation in those circumstances. Office Cleaning Services v Westminster Window and General Cleaners [1946] 1 All ER 320 HL. Names given to new products may become generic of that type of product and so the name will cease to give a distinctiveness, which will enable the producer to claim a misrepresentation. In McCain v Country Fair Foods [1981] RPC 69 CA the plaintiff called their product oven chips. This become a generic word and the plaintiff could not prevent others using the name on the basis that to do so would make people think they were buying the plaintiffs product and not the defendants provided the defendant distinguished his product in some way. The get up of a product may amount to a misrepresentation as in Reckitt & Coleman v Borden [1990] RPC 341 CA Although Any monopoly which a plaintiff may enjoy in get up will only extend to those parts which are capricious and will not embrace ordinary matters which are in common use Lord Jauncey in Reckitt & Coleman v Borden [1990] RPC 341 CA i.e features that make it distinctive. However to prove that a similar get up

amounts to a misrepresentation as in the case of own brands it is necessary to how that the public were deceived into purchasing the supermarkets own brand instead of the plaintiffs brand. A variation on this common type of variation is where the defendant does not misrepresent the defendants own goods as the plaintiffs but represents the plaintiffs as those of the defendant as in Bristol Conservatories v Custom Built [1989] RPC 455 CA and Copydex v Noso (1952) 69 RPC 38. This is known as reverse or inverse passing off. Defendant misrepresents the plaintiffs goods are of a superior quality when in fact they are inferior. In Spalding v Gamage (1915) RPC 273 HL the plaintiff manufactured an inferior quality football, which it sold for waste rubber and began the manufacturer of a superior ball. The defendants in fact sold the inferior ones as the plaintiffs. This was held to be a misrepresentation as to the quality of the plaintiffs standard of product. Defendant misrepresents the defendants goods are of a comparable quality to the plaintiffs but in fact they are not (extended form of passing off) The defendant may not be seeking to misrepresent the goods of a particular trader but of a class or group of traders. In Bollinger v Costa Brava Wine Co Ltd [1960] RPC 16 the defendant described his product as Spanish Champagne. It was held that this was a misrepresentation, as a substantial number of the public would be misled into believing that the product was of a high quality coming from the Champagne area of France. In Warnink v Townen [1980] RPC 31 CA the defendant sold Old English Advocaat which was made of eggs and Cyprus Sherry. The court held that a significant section of the public would be misled into believing that the product was Advocaat that was made in Holland from eggs spirit and sugar. Lord Diplock stated that a person competing in a trade may not attach to his product a name or description with which it has no actual association, so as to make use of the reputation and goodwill which has been gained by a product genuinely indicated by the name or description. Defendant misrepresents a relationship between themselves and the plaintiff In Ewing v Buttercup Margarine [1917] 2 Ch 1 CA Lord Cozens Hardy MR said "I know of no power and can see no principle for holding that a trader may not be injured, in his business as a trader by a confusion which will lead people to conclude that the defendants are really connected to the plaintiffs or a brand of the plaintiffs or in any way mixed up with them." British Legion v British Legion Club [1931] 48 RPC 555 III Damage Damage may result in the loss of business, or as a result of association Annabels v Schok [1972] FSR 261 CA or due to loss of distinctiveness Defences There are three main defences use of the defendants own name Parker-Knoll v Knoll International [1962] RPC 255 CA honest concurrent use, Habib Bank v Habib [1981] RPC 1 CA delay, Bullmer v Bollinger [1972] FSR 405