#19699 - 11. Passing Off - Intellectual Property Law

WEEK 11

PASSING OFF

Reading - Bently and Sherman 6th edn: pg 871-926

Significant cases:

• Warnick v Townend (1979) AC731

• Arsenal v. Reed (2003) EWCA Civ 96

• Reckett & Coleman Products Ltd v Borden Inc [1990] RPC 340

The oldest of the modern legal regimes for the protection of trade symbols is the action for passing off. The action allows trader A to prevent competitor B from passing their goods off as if they were A’s.

Rationale in Perry v. Truefitt - A man is not to sell his own goods under the pretence that they are the goods of another man; he cannot be permitted to practise such a deception, nor to use the means which contribute to that end.

First recognized in the Elizabethan case of JG v. Samford. Has common law roots (torts of deceit and misrepresentation). In In its classic form, the basis of the action was the existence of a ‘misrepresentation’ - the courts previously believed that it was necessary for the action to be based on a property right. This approach was rejected in the early twentieth century, when it was said that the basis of equitable intervention was the property in ‘goodwill’.

The tort extends beyond the sale of goods to cover services –

• beyond pretences concerning the origin of goods to cover pretences concerning their quality; and

• beyond simple pretences that the goods are those of another trader to cover pretences that the goods have been licensed by another trader

Common law thus plays a central role in legal regulation of trade behaviour, flexibility mechanism for changing business practises. Nevertheless this makes the law unclear and unprecise, it is difficult to state the law of passing off.

• The significant authorities (House of Lords’ decisions in Warnink v. Townend (the ‘Advocaat’ decision), and Reckitt & Colman v. Borden (the ‘Jif’ lemon decision) are in very different terms.

• Not made the law easier.

The claimant must establish that (gathered from Warnink and Reckitt)

1. C has goodwill

2. D made a representation that is likely to deceive the public

3. The misrepresentation damages the goodwill of C

*The three elements must be shown to have existed or occurred at the time when the conduct which the claimant objects to took place (as opposed, e.g., to the time of proceedings)

**The elements are interlinked. The same facts may be important in proving goodwill, deception, and/or damage.

• The courts may dismiss an action for lack of misrepresentation where it might as easily involve a lack of goodwill.

• Developments in one area, such as misrepresentation, may impact on another area, such as damages.

The Goodwill requirement

(intangible property which is difficult to define) “It is that ineffable thing, that magnetism, which leads customers to return to the same business or to buy the same brand”

The mere fact that consumers are confused about the source of product/service is not enough for a trader to bring a successful passing off action against another trader with whom their products are being confused (HFC Bank v. Midland Bank [2000] FSR 176)

Traders must show that they have goodwill in relation to the product or service in question.

[Goodwill] is the benefit and advantage of the good name, reputation, and connection of a business. It is the attractive force that brings in custom. It is the one thing which distinguishes an old-established business from a new business at its first start… Goodwill is composed of a variety of elements. It differs in its composition in different trades and in different businesses in the same trade. One element may preponderate here and another element there (Lord Macnaughten in IRC v. Muller & Co.’s Margarine)

One consequence of this is that just because a trader has started business does not necessarily mean that there will be goodwill - customers must be buying the goods or using the services as a result of the reputation that the business has developed

Manifestations of goodwill - passing off is usually concerned with the signs or badges that are understood as indicating that a product or service emanates from a particular trade source. These badges can take a variety of forms.

• Name, symbol, or logo that has been employed by a trader and thus has come to be associated with the business.

• The misrepresentation then consists of the defendant using sufficiently similar badges, which leads to damage.

• The courts have recognized that goodwill may arise in a number of other situations. These include goodwill associated with the colour, packaging, get-up, or trade dress of products, and advertising style.

In descriptive words – Nike, Gucci, Tesla

• Nevertheless, while it is possible for a descriptive term to become associated with a claimant, the courts are extremely reluctant to allow a person to obtain a monopoly in descriptive words

• Spalding v. Gamage (1915) 32 RPC 273, 284; Cellular Clothing Co. v. Maxton & Murray [1899] AC 326, 339.

• Further, it will be more difficult for a trader to show that the words indicate source, rather than what they ordinarily describe.

• A trader would need to show that the word has become ‘distinctive in fact’ or has taken on a ‘secondary meaning’

  • Reddaway v. Banham – camel hair – which is in fact substantially made from camel hair… acquired a secondary meaning amongst those who purchased it for the use in their machinery.

• The trader needs to demonstrate that the words have acquired a secondary meaning, not only of goods or services of that description, but also specifically of the goods or services of which they are the source

  • The descriptive terms should be demonstrably distinctive of one source.

  • The name should “have to the whole of the trade and to all persons who have any knowledge of the article in question the sole meaning sought to be attached to it by the plaintiffs” (Chivers v. Chivers (1900) 17 RPC 420, 430 (Farwell J))

• C to submit evidence such as the length of use and the amount of money spent on advertising - Market recognition can also be established through social media evidence, in order to demonstrate high levels of interest in a product.

• In these cases, the most important evidence is evidence of the trade or public – a trader may acquire secondary meaning in a descriptive phrase through public adoption rather than their own action (Edge & Sons v. Gallon & Son [1900] RPC 557; Peter Waterman v. CBS [1993] EMLR 27.)

• Very specific categories of (niche) customers have also been recognized (Starbucks (HK) Ltd v. British Sky Broadcasting plc – Chinese speaking community can constitute the ‘mind of the general public’)

• Geographic words and personal names – the adoption of a geographic term or personal name will not prevent another trader from using the same designation (Chivers v. Chivers (1900) 17 RPC 420.)

  • Exception - Montgomery v. Thompson; stone ale

Goodwill associated with packaging, get-up, trade dress and colour

in Reckitt & Colman - the claimant had sold lemon juice in plastic containers that resembled a lemon in size, shape, and colour.

• The House of Lords held that the defendant’s similar plastic lemon containers would be infringing.

• The evidence indicated that C had succeeded in persuading the public that lemon juice sold in plastic lemon-sized containers had been manufactured by them - purchasers did not look closely at the labels.

Particularly important where consumers identify products by their external features rather than by words

• Circumstances:

  • where goods are sold in foreign-language markets where little attention is likely to be paid to the words

  • where the goods are sold to people who are illiterate

• Get-up is also more likely to be an identifying feature in the case of common household goods

C must be able to prove that the public recognizes that the get-up is distinctive of the claimant’s goods or services.

• Consumers may not consider that the get-up indicates any commercial source, especially where it is used alongside an established brand name.

• Consumers may understand a product shape or feature to be merely functional or aesthetically pleasing - since such features may be legitimately copied with an eye to competitive substitutability, it is therefore important to distinguish between situations where the shape of the product is copied and those where product packaging is copied.

  • ‘The authorities show … that it is difficult, although not impossible, for claimants to establish that the shape and/or colour of a product and/or its packaging are distinctive of them.’ Glaxo Wellcome UK Ltd v. Sandoz Ltd [2019] EWHC 2545 (Ch), [2019] RPC (27) 694, [164].

• Evidence indicating that customers recognize a colour or style of trade dress (purple inhalers) and associate it with the claimant is not sufficient to prove it is operating as a badge of goodwill (Glaxo)

• Hodgkinson & Corby v. Wards Mobility Services - C must prove a misrepresentation, which will be hard where there is no manifest badge of trade origin; people tend to buy things for what they are and what they do, rather than out of interest in their origin.

  • D who produced cushions that were used to help alleviate bed sores had not passed them off as the claimant’s eve where C;s cushions were memorable and striking and D’s were similar in appearance.

Advertising Style

Advertising techniques or slogans.

In Cadbury Schweppes v. Pub Squash - Australian marketing campaign, television advertisements featured ‘ruggedly masculine and adventurous men’ drinking their soft-drink SOLO. D promoted its lemon-flavoured soft drink with a similar campaign.

• Lord Scarman said that there was no reason in...