Passing off

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Contents

Introduction

The action for passing off is a common law action, and the principles are set out in the decisions of judges. It has a long history, but the modern law of passing off received its basic formulation from Lord Diplock in Erven Warninck BV v John Townend and Sons (Hull) Ltd1 - the Advocaat case2. The Advocaat case acknowledges that a misrepresentation may arise when the defendant leads the public to believe that his product was another’s product which had distinctive, recognisable characteristics in the public mind. Before then, the classic action for passing off lay in the case of Reddaway v Banham3 where Lord Halsbury said: ‘Nobody has any right to represent his goods as the goods of somebody else’. This formulation was extended in Spalding v Gamage4 where the plaintiff’s mark was being used on inferior goods (‘Orb’ footballs being sold as ‘New Improved Orb’ footballs). There was no suggestion that the goods were anything but the plaintiff’s, but another wrong was being perpetrated.

General formulation

In the Advocaat case, the House of Lords held that the tort comprises:

a misrepresentation

made by a trader in the course of trade

to prospective customers or ultimate consumers of the defendant’s goods or services

calculated to injure the business or goodwill of another

which causes actual damage to the business or goodwill of the plaintiff or is likely to do so.

Not all cases in which these elements are present will be passing off, although without all these elements no passing off will have taken place: this is the logical fallacy of the undistributed middle identified by Lord Diplock. Advocaat involved the use of a term that described a type of product. It was an extended passing off case. Reckitt and Colman (Products) Ltd v Borden Inc5 - the JIF Lemon case - was a classic case of one manufacturer using the indicia of another (plastic lemon shaped containers for lemon juice). In that case, Lord Oliver of Aylmerton reduced the Advocaat test to three propositions:

the plaintiff must establish a reputation

there must be a misrepresentation by the defendant (not necessarily intentional)

there must be resultant damage or likelihood of damage to the plaintiff’s goodwill or reputation, arising from the erroneous belief caused by the misrepresentation.

The extent of the tort

The tort can cover:

imitating the get-up (including the trade name) of the plaintiff’s goods6, even where there is no competition (giving the victim a remedy against dilution: Eastman v Griffiths Cycle (1898) 15 RPC 105, the Kodak Bicycles case);

claiming to be the manufacturer or supplier of the plaintiff’s goods;

advertising goods in such a way about damage the plaintiff - see McDonalds Hamburgers Ltd v Burger King (UK) Ltd7;

supplying goods or services in such a way about suggest the offer was sanctioned by the plaintiff - for example, in Associated Newspaper Holdings Ltd v Insert Media8 where the defendant arranged for advertising material to be inserted in the plaintiff’s newspapers without permission. Under this head, the tort also protects character merchandising: Mirage Studios v Counter Feat Clothing Ltd9;

misusing a trade description that is distinctive of another’s product, taking advantage of the shared reputation of the producers of that product (the Champagne houses have made extensive use of passing off actions, as have sherry makers, Scotch whisky distillers and Parma ham curers)

Celebrity endorsement: Irvine & Ors v Talksport Ltd. [2003] EWCA Civ 423 (1 April 2003)

The definitions in Advocaat and Jif both make clear that:

both the plaintiff and the defendant must be in trade;

the plaintiff must have an established goodwill or reputation; and

goodwill must be damaged.

Deception and confusion

Neither Lord Diplock nor Lord Oliver make deception an element of the action, yet deception of the public is what is being made actionable, although not at the suit of the person upon whom the deception has been practised. (The deception results from a misrepresentation, which both judges said was needed for an action to lie.) Some cases refer to confusion: like trade mark law, passing off is concerned with the misappropriation of goodwill, and this may result from confusion being sown in the marketplace. However, the courts have tended to insist that deception should be present.

In Jif Lord Oliver said that the plaintiff ‘must demonstrate that he suffers ... damage by reason of the erroneous belief engendered by [the defendant’s] misrepresentation that the source of [the defendant’s] goods is the same as [the plaintiff’s]’.

The Court of Appeal applied this reasoning to extended passing off situations in Consorzio del Prosciutto di Parma v Marks & Spencer10 and Taittinger SA v Albev Ltd11 (the Elderflower champagne case), and in the RoHo case Jacob J took the same approach, rejecting a passing off claim where the appropriation of goodwill was not deceptive. In Harrods Ltd v Harrodian School Ltd12 Millett LJ stated that the elements of a passing off – goodwill, deception and damage, and dealt with the dilution of Harrods’ reputation by the school’s use of the name (it occupied premises that had once been Harrods’ staff sports club), holding that there was no passing off. In the Elderflower champagne case, by contrast, dilution of the designation ‘champagne’ did amount to passing off.

Misrepresentation By Trader In Course Of Trade.

Lord Oliver’s first requirement was that there should be a misrepresentation in the course of trade, and indeed this misrepresentation is precisely what the courts are providing a remedy for (the other conditions being jurisdictional, that is enabling the courts to become involved rather than giving rise to a claim). Such a representation is, however, rarely expressly made. It may take the form of the defendant using indicia identical or similar to the complainants’, as in Jif it may take the form of the defendant substituting another product for the claimant’s, hoping the customer will not notice13. The nature of the product may be misrepresented, as in the drinks cases. The tort has become even wider in its scope in recent years: The tort is no longer anchored, as in its nineteenth-century formulation, to the name or trade mark of a product or business. It is wide enough to encompass other descriptive material, such as slogans or visual images, which radio, television or newspaper advertising can lead the market to associate with a plaintiff’s product, provided always that such descriptive material has become part of the goodwill of the product. And the test is whether the product has derived from the advertising a distinctive character which the market recognises’14.

A representation may amount to passing off even though it is an accurate description of the goods; Reddaway v Banham concerned ‘Camel Hair Belting’, which accurately described the product but which the market understood as meaning the plaintiff’s goods. But the court did not prevent the defendant describing his goods as camel hair - it only stopped him describing them in a confusing manner. Innocent misrepresentation may still be actionable.

The principle extends to traders representing ‘seconds’ as goods of the manufacturer’s usual quality15 and to passing off one’s business as another’s, or as being connected or associated with another’s (Office Cleaning Services Ltd v Westminster Windows and General Cleaners Ltd16). The plaintiff’s reputation and goodwill may also be damaged if prospective customers are shown photographs of the plaintiff’s products by the defendant so about suggest that they are the defendant’s, as form of reverse passing off: Bristol Conservatories Ltd v Conservatories Custom Built Ltd17. The right to sue for passing off has also been extended to charities: see British Diabetic Association v The Diabetic Society18.

The misrepresentation need not be active. It may arise from the defendant’s silence, as in Law Society of England & Wales v Griffiths19.


Licensing and merchandising

At the outer limits of the passing off action lie cases involving licensing arrangements and character merchandising. Where the parties share a common field of activity, it is not a radical step to characterise certain activities as passing off, but if there is no common field it becomes more difficult, though a common field is not a requirement (though in this country it once was): see McCulloch v Lewis A May (Produce Distributors) Ltd (the Uncle Mac case)20. Thus, Harrods Ltd v The Harrodian School Ltd was decided in the plaintiff’s favour: and see Lyngstad v Annabas21 (Abba), Lego v Lego M Lemelstrich Ltd22.

If the parties are in different fields, some connection between them in the public mind must be shown. The courts may consider that the public will infer that there is a licensing arrangement in place, as in Mirage Studios v Counter-Feat Clothing23 (the Ninja Turtles case) but sometimes a licensing arrangement will be such an unlikely possibility that no reasonable person would believe it could exist: Stringfellow v McCain Foods (GB) Ltd24.

A claim based on inferred licensing is more likely to succeed where there is an established licensing business, where the public believes the licensor exercises quality control over the licensees, and the ‘new’ goods represent a plausible extension of the brand or would expect it to be used on a wide range of goods.

This area also covers endorsement and character merchandising. The English courts have been very reluctant to decide that there was an appropriate business in which product endorsement was likely, or that an inference should be drawn that an endorsement was being given. See the Abba case and Tavener Rutledge v Trexspalm Ltd25 (Kojakpops).

In character merchandising situations, the courts will look for four elements:

Public inference of a licensing connection. The courts have been reluctant to find one: Wombles v Wombles Skips26, Abba, Tavener Rutledge. They do recognise that the public understands how brand owners may licence their property: see the Ninja Turtles case, so far the only successful character merchandising claim in English passing off law (and it was only an interlocutory decision). Quality control. The courts have considered that the proprietor of the brand stands behind the goods, and this guarantee of quality persuades the purchaser to buy them. The public must assume that there is some such control.

The misrepresentation must be material to the purchaser. The sign must be used as an indication of origin or quality, not just as a decorative icon.

It must cause damage. In Ninja Turtles the court considered this requirement was satisfied.

Australian cases take the matter much further. Several of them are discussed in Ninja Turtles. See Hogan v Pacific Dunlop27 (Crocodile Dundee), Childrens TV Workshop v Woolworth (Sesame Street)28, Fido Dido v Venture Stores29.

Plaintiff Has Sufficient Goodwill In ‘get Up’.

The basis of all passing off actions is the protection of goodwill – ‘the attractive force that brings in custom’30. There are no property rights in say a trade name or mark to protect by passing off (the Trade Marks Act, of course, offers a way to create property in them). Goodwill ‘has no existence independent of the business to which it relates. It is local in character and divisible; if the business is carried on in several countries a separate goodwill attaches to it in each. So when the business is abandoned in one country in which it has acquired a goodwill, the goodwill in that country perishes with it although the business may continue to be carried on in other countries’. But note Ad Lib v Granville 31 where the goodwill lived on after the demise of the business.

Goodwill is not the same as mere reputation. A reputation is converted into goodwill be a trade presence in a particular jurisdiction, and is limited to that jurisdiction. There must be a business or trading presence in this country - a ‘spill-over’ reputation (from advertising or visitors returning from abroad) is not enough. See Anheuser-Busch Inc. v Budejovicky Budvar NP32 - ‘the Budweiser case’; and Bernadin v Pavilion Properties Limited, the Crazy Horse Saloon case33. Maxim’s v dye. Sheraton – office in this country taking bookings. Crazy Horse had no presence here. Quaere, does online booking make a difference? Goodwill may also be localised within the jurisdiction34.

The reputation must belong to the plaintiff exclusively, or may be shared with a limited number of others: J Bollinger v Costa Brava Wine Co. Limited35 - ‘the Spanish Champagne Case’ - where twelve champagne producers were allowed to prevent the sale of ‘Champagne’. This case has now been followed in cases involving sherry36, scotch whisky, and (most recently) elderflower champagne Tattinger v Albev37. There is no need for the public to associate the goodwill with one particular trader, or specific traders; they only have to identify the product as having a particular source, which may be unnamed38. A detailed knowledge of the names of Champagne houses or sherry producers is unnecessary.

Goodwill may be generated through pre-launch activities, although the courts have only reluctantly accepted this39. How long it might take to reach critical mass depends on the circumstances40.

This is more easily shown with invented words or ‘fancy names’. Traders are well-advised to avoid descriptive names: the British Diabetic Association case turned on the similarity of the words ‘Association’ and ‘Society’. It also allows the shape of containers to be covered: Reckitt & Colman (Products) Ltd v Borden Inc41.

Although it is goodwill that the action protects, it is embodied in some sort of indicia used by the Complainant and which distinguished his goods or services in the public mind. It will normally be a logo, mark or name, or product ‘get-up’, but could arise through public association of the Complainant with a particular character in, say, a TV programme, film or book42. Distinctiveness is of crucial importance, as in trade mark law.

The courts will be slow to intervene to protect a descriptive trade name; Office Cleaning Services v Westminster Windows and General Cleaners Ltd43, and see Antec International Ltd v South Western Chicks Ltd44 (‘Farm Fluid’ was nevertheless sufficiently distinctive to give rise to a possibility of confusion). Geographical names may acquire secondary meanings. In Whitstable Oyster Fishery Co. v Hayling Fisheries Limited45 the defendant was permitted to describe oysters which reached maturity at Whitstable as Whitstable Oysters. In Wotherspoon v Currie46 where the plaintiff had made his Glenfield Starch at Glenfield but moved his factory, he could still prevent the defendant calling his starch which he made in Glenfield by the same name. The same is true of non-geographical names, such as the ‘Camel-Hair Belting’ in Reddaway v Banham. The expression, though an apt description of the plaintiff’s goods, had come in the marketplace to identify such goods originating from the plaintiff only.

Generic use (as in trade mark law) will destroy distinctiveness. Some goods may be so novel – they may even have patent protection – that there may be no other convenient name for them, which is what happened with oven chips. (McCain International v Country Fair Foods47).

Where it is the ‘get-up’ of the product that is claimed as distinctive, the complainant may have problems. The courts will consider the whole of the get up: he cannot pick and choose elements. Many of those elements will be common in the trade – the problem (if problem it is) of ‘look alike’ products in supermarkets. Finally, the fact that however similar the packaging appears, the brand name is different, will often clinch the argument.

The Defendant’s Actions Must Be Likely To And/or Have Actually Caused Deception.

There is no need to prove fraud, meaning intention to pass off; but if there is no fraud, it is not necessary that the parties are competitors - all that is needed is sufficient similarity so traders or members of public think the goods or services are from same source. Derek McCulloch v Lewis A May (Produce Distributions) Limited48: and see Mirage Studios v Counter-Feat Clothing49. The persons deceived if there is to be a passing off must constitute a substantial part of the common consuming public. Who this may be will vary from case to case: it may be children (Lyons Maid v Trebor50), it may be the very nervous (Hoffman-laRoche v DDSA Pharmaceuticals Ltd51), it may be the housewife in a hurry (Jif), or it may be the moron in a hurry (Morning Star v Express Newspapers52).

Damage

The plaintiff must have suffered or be likely to suffer damage or injury to his business or goodwill. Inconvenience or annoyance is not enough.

Once evidence is established of deception or likely deception, injury to reputation or goodwill is readily presumed (but see the Elderflower Champagne case, Taittinger v Albev53 where at first instance the court held that the damages were insufficient to support the action). In classical passing off cases, custom is diverted and injury naturally follows.

Lack of reputation in UK means no damage can be suffered (the Budweiser case).

The type of business with which the plaintiff’s is confused may be material. In Stringfellow v McCain Foods (GB) Limited54 no damage to nightclub (falling attendances, etc) was found to result from sales of Stringfellows chips.

The need for a common field of activity has been stated in several cases: however, practices such as character merchandising may well render this obsolete (Mirage Studios v Counter-Feat Clothing Ltd55, the Ninja Turtles case).

Damage may be measured by direct loss of sales if the parties are in direct competition. If the wrong consists in dilution of the complainant’s mark, direct loss of sales will not be an issue: the complainant is seeking compensation for the loss of value of his goodwill. In the Harrodian School case Millett LJ cast doubt on this head of damage, saying: ... erosion of the distinctiveness of a brand name which occurs by reason of its degeneration into common use as a generic term is not necessarily dependent on confusion at all. The danger that if the defendant’s product was not called champagne then al sparkling wines would eventually come to be called champagne would still exist even if no-one was deceived into thinking that such wine really was champagne. I have an intellectual difficult in accepting the concept that the law insists upon the presence of both confusion and damage and yet recognises as sufficient a head of damage which does not depend on confusion.

Damage may also arise from the inferiority of the defendant’s goods, from injurious association and from the loss of a licensing opportunity (as in Lego).

Enabling Others To Pass Off The Defendant’s Goods

The tort extends to the situation where the defendant supplies goods to someone else, who then passes them off as another’s. When a manufacturer sells to a wholesaler, or a wholesaler supplies a retailer, the chances are that there is no deception because the buyer is familiar with the various goods on the market; passing off occurs when they are sold to inexpert consumers, and the manufacturer who originally applied the misleading get up is liable.

This rule applies even where the actual passing off takes place overseas. In two cases, suppliers of whisky to South America where it was mixed with local spirits and sold as Scotch were successfully sued by Scotch distillers. In one case (John Walker & Sons Limited v Henry Ost & Co Limited56) bottles and labels were also supplied, to complete the deception; but in the other case, though this extra feature was absent, the action still succeeded.

A passing off action may also lie against a defendant who puts into circulation an instrument of fraud such as a fake Rolls-Royce motor car: Rolls-Royce v Dodd57. In Marks & Spencer plc and others v One In A Million Ltd58 the principle was applied to stock-piling of Internet domain names. The defendants did not intend to use the domain names to pass themselves off as the plaintiffs, but they were willing to sell them to others who might do so.

Defence

A person may use their own name (but not a nickname: Biba Group v Biba Boutique59) as a trade name for the business (provided it does no more than confuse) but may not use it as a trade mark if the effect would be to deceive (Parker Knoll v Knoll International60). People must be allowed to trade under their own names, but have no absolute right to use them as brands. What this amounts to is saying that honest use may cause confusion but the person whose name causes the confusion cannot be blamed for that. Honest concurrent use may provide a defence: Waterman v CBS61.


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