#3610 - Passing Off - Intellectual Property Law

PASSING OFF

Passing Off

• Involves one person passing off his goods for that of another.

• Passing off can be deliberate or accidental.

• Three elements required to show passing off.

• the ‘classic trinity’

• Reckitt and Coleman v Borden [1990]

• ‘Classic trinity’ is:

1. Goodwill or reputation attached to goods and services of C

2. Misrepresentation by D to public

• Such as is likely to lead public to believe goods or service of D are in fact those of C; and

3. Damage suffered by C due to this belief

1. GOODWILL OR REPUTATION

• Passing off protects C’s goodwill.

• Goodwill is the “benefit and advantage of a good name, reputation and connection of a business”

• i.e. any value that is added to business by these factors

• Lord Macnaghten in IRC v Muller & Co’s Margarine [1901]

1. Goodwill v Reputation

• Is distinction between goodwill and reputation

1. Passing off will always protect C’s goodwill.

2. However will not always protect C’s reputation

• Harrods v Harrodian School [1996]

• Two examples of where passing off will not protect ‘mere reputation’:

1. If public only associate C’s reputation with a limited field of commercial activity.

• i.e. even if C is well known, no damage to goodwill if public would not mistakenly believe that C was engaged in the type of business in question

  • Harrods Ltd v Harrodian Schools [1996]

  • Contrast Lego Systems v Lemelstrich [1983]

2. Mere reputation insufficient if C has no goodwill in the UK (see below)

2. ‘Trader’

• Goodwill must attach to a business.

• No need for C to be actively engaged in making profit.

• Suffices that there is some commercial value in C’s reputation

• Thus has been held that ‘trader’ includes non-profit organisations such as:

1. Charities

• British Legion v British Legion Club [1931]

2. Professional institutions

• e.g. the Law Society

• Law Society of England and Wales v Society of Lawyers [1996]

3. Location of Goodwill

• C’s goodwill must exist in the UK.

1. Foreign Goodwill

• C has goodwill in UK if he has customers from the UK.

• Even if C’s business is situated in another country

• Pete Waterman v CBS United Kingdom [1993]

• NO NEED for C to provide his services in the UK

• i.e. they can be provided from a foreign country to UK customers who are in that country

• Pete Waterman v CBS United Kingdom [1993]

• Thus For C to have goodwill in the UK, no need for C to either:

1. Carry on a business in the UK

2. Or even provide any products or services within the UK itself

• this can be done for UK customers who have travelled abroad (services)

• or for UK customers who have ordered things from abroad (products)

‘Customers’

• ‘Customers’ includes people to whom services are provided for free

• Plentyoffish Media v Plenty More LLP [2011]

• If UK internet users merely visit a foreign website, does not make them customers of that website

• to be customers, must be case that they actually obtain some service or product provided by operator of website

• Insufficient that their visits generate advertising revenue for C

• Plentyoffish Media v Plenty more LLP [2011]

• Services

• old case suggested provider of services abroad only has UK goodwill where direct bookings for those services are made from the UK

• e.g. via phone/internet

• Sheraton [1964]

• however later case has suggested no need for direct bookings from UK

• Hotel Cipriani [2010]

Restrictions

• Two recent cases in which UK courts declined to further broaden the test for UK goodwill.

1. Mere fact that C has a large reputation in England does not suffice

• to have goodwill C must always have customers amongst general UK public

• Hotel Cipriani v Cipriani (Grosvenor Street) [2010]

2. Mere ‘trade connection’ to UK does not suffice

• fact that C’s business is connected to UK market does not mean C has goodwill there

• Pete Waterman v CBS United Kingdom [1993]

• Plentyoffish Media v Plenty more LLP [2011]

2. Local Goodwill

• Goodwill may be local rather than national.

• Associated Newspapers v Express Newspapers [2003]

• Thus possible for courts to grant injunction preventing D operating only in a limited geographical area.

4. Timing of Goodwill

• Is no infringement if at the time of alleged passing off C had not managed to generate any more than negligible goodwill.

1. Establishing Goodwill

• Length of time C has run business is irrelevant to whether C has goodwill; i.e.:

• if C has gathered enough goodwill, does not matter that business is inchoate.

• if C has not gathered enough goodwill, does not matter that business is long-established.

• Thus pre-launch advertising may allow C to acquire sufficient goodwill.

• even if C’s business itself has not yet opened.

• My Kinda Bones v Dr Pepper Store Ltd [1984]

2. Date of Assessment

• level of goodwill assessed from date when infringing activities started.

• thus even if C enjoys large goodwill at date of bringing action, might not be passing off.

• e.g. if D’s infringement started at a time both when C had no goodwill, and D had already acquired goodwill in the mark

3. End of Goodwill

• If C’s business closes, normally case that C’s goodwill dissipates.

• However may survive without use if it gives an advantage to C’s future business plans.

1. If C has plans to reopen closed business to which the goodwill attached

   • Ad-Lib Club v Granville [1967]

2. If D is confident of extracting commercial value from the residual goodwill

   • Jules Rimet Cup v Football Association [2007]

• Even if C has no plans to re-use goodwill for future business, may still have right to stop D using name

• this may be case even if hardly any members of public still know of C

• Sutherland v V2 Music [2002]

5. Distinguishing Criteria

• Passing off protects goodwill attached to C’s product/service by association to mark or get-up

• And NOT the content of mark or get-up itself (i.e. this is what trademark law is for)

• Thus to be protected, mark/get-up must acquire some secondary meaning in eyes of public

• i.e. public must associate that mark/get-up exclusively with C’s business

• Reckitt & Coleman v Borden [1990]

1. Descriptive/Common Insignia

• Marks/get-ups are difficult to protect if they are merely:

1. Descriptive (i.e. describe the object being sold)

2. Common to the trade

• Such marks/get-ups can only be protected if the manner in which they are used makes them distinctive of C’s goodwill.

• Reckitt & Coleman v Borden [1990]

• Is probably case that only words can be descriptive.

• Reckitt & Coleman v Borden [1990] (object resembling its contents)

2. Generic Marks

• Where C introduces new product onto market, is distinction between:

1. ‘Fancy names’

   • Indicate that a product is derived from one particular supplier

2. Descriptive names

   • Indicate the nature of a product

   • Can be copied

• Name has no secondary meaning if it simply informs customers what the nature of the product is

• McCain International v Country Fair Foods [1981] (generic name)

3. Monopoly

• If mark or get-up has acquired sufficiently strong secondary meaning, may be possible for C to have a virtual monopoly in a particular mark or get-up

• i.e. if use of mark/get-up by anyone other than C would be deception

• e.g. Reckitt & Coleman v Borden [1990] (jif lemons)

2. MISREPRESENTATION

• Must be some use of C’s indicia as result of which D’s goods are ‘associated’ in minds of public with those of C.

• Bollinger [1960]

• Must be case that a substantial number of C’s customers have been misled.

• however this need not even be a majority of C’s customers

• Chocosuisse v Cadbury [1998]

• Suffices that public suppose or guess that C is in some way responsible for D’s products.

• i.e. no need for public to think that D’s product is actually the same as C’s

• United Biscuits v Asda [1997]

• No need for public to even know the identity of manufacturer creating the products to which goodwill attaches (i.e. C)

• suffices that public know there is a particular manufacturer

• United Biscuits v Asda [1997]

• Intention

• Misrepresentation can be either intentional or accidental.

• Deliberate imitation

• reasons why D chose to adopt particular indicia are usually highly relevant.

  • i.e. if D deliberately sought to mimic C’s product without actually deceiving public, courts will consider D to be ‘living dangerously’

  • United Biscuits v Asda [1997]

• is a thin line between deliberate ‘matching’ of C’s goods, and deception

  • United Biscuits v Asda [1997]

1. Confusion v Misrepresentation

• Is distinction between:

1. Mere confusion

2. Deception

• D’s acts are deceptive if they are actually likely to be damaging to C’s goodwill or to divert business from him.

• i.e. confusion which does not lead to D harming goodwill or diverting sales does not constitute misrepresentation

• Phones4U v Phone4u.co.uk [2006]

• If D seeks to take advantage of an initial deception to divert sales from C, is misrepresentation

• Phones4U v Phone4u.co.uk [2006]

• Where D would not believe D’s goods were associated with those of D at all, no misrepresentation

• Mothercare v Penguin Books [1988] (book called ‘Mothercare’ not a misrep.)

2. Common Field

• For passing off, no need for D and C to operate in the same field of business

• Harrods v Harrodian School [1996]

• However if C and D operate in a common field will be easier to show passing off

• i.e. common field is a highly relevant factor

• Harrods v Harrodian School [1996]

3. Nature of Customers

1. Intelligence of Customers

• Is no defence that public would not be deceived if they were more careful, literate or perspicacious

• i.e. even if a more careful shopper would not have been deceived, is...