#5397 - Passing Off - Intellectual Property Law

Passing Off

IP LLM Notes

Notes

Introduction to Passing Off 4

Outline of the Course 4

Introduction 4

What is Passing Off? 4

History of Passing Off 4

Modern Basis – Spalding v Gamage 4

Elements of the Action 4

What is the relationship between Passing Off and Unfair Competition? 5

Relationship to Injurious / Malicious Falsehood 5

Extended Passing Off 6

Goodwill 6

What is Goodwill? 6

Examples of Badges of Goodwill 7

Descriptive Words 7

Name of a Class of Product 7

Get-up and Trade Dress 7

Advertising Style 7

What Activities Generate Goodwill? 7

The claimant is a trader 7

Excluded Categories 8

Trade Associations 8

When do we assess goodwill? 8

How much trade? 8

Pre-Trade Publicity 8

Passing Off Issues 10

Jurisdictional Nature 10

Local Goodwill 10

Ceasing to Trade 10

Misrepresentation 11

Types of misrepresentation 11

Misrepresentation as to origin 11

Quality 11

Control – Business Connection 12

Reverse / Inverse Passing Off 12

Confusion 12

Factors to consider 13

Strength of Sign 13

Similarity of Signs 13

Cumulative Impact of Signs 13

Nature of the Good? 13

Intention to Deceive 13

Consumer Research Evidence 13

Areas of Business 13

Instruments of Fraud 13

Damage 14

Loss of Trade or Profit 14

Loss of Licence Fee Revenue 14

Damage to Reputation 14

Dilution through blurring 14

Defences 14

Own Name 14

Honest Concurrent Use 14

Personality and Character Merchandising 15

The position today 15

Personality Merchandising 15

Character Merchandising 15

Introduction to Passing Off

There are two questions to address:

1. Where does passing off come from?

2. Does it amount to a tort of unfair competition?

Then we will go on to the application of the tort to commercial practice.

Read Cases, Particularly the Essential, Starred Ones

The short answer is that it’s a body of law that has as its core the idea that Trader A is not to sell goods under the pretence that they are the goods of Trader B. As we’ve mentioned, it’s all judge-made law, compared to the law of registered trademarks, which is governed by statute. Developed from the common law action for deceit, but is now significantly different from the law of deceit in that no intention to cause loss is required, and the misrepresentation can be completely innocent.

Passing Off has developed incrementally through time – the oldest case we have is JG v Samford, but we don’t know much about it before then. Some say that its origin is lost in obscurity, and we have no record of it. We actually don’t even know about JG v Samford, all we have is Southern v How, which reports it. The case is about someone impersonating a well-known clothier, but we don’t know if it was brought by the customer, or the by the merchant (only the latter would truly be passing off).

It has its root in the tort of deceit, but the action is brought by the person whose mark was used to deceive, and not by the person who was deceived. The development can be characterised as being piecemeal, and the rationalisation follows later, rather than by driving decisions forward. Thus, reading the cases can be very difficult, and explains why the decisions that we have now are based in the 19^th Century, but their decisions don’t have a theoretical basis.

The remedies for passing off were brought from the Courts of Chancery. This was controversial, but raised some important questions – it didn’t need proof of fraud, so was more likely to be successful, hence why Chancery, and not Common Law.

The tort is about misrepresentation, not fraud, and the right protected is in a property right in the goodwill that the mark represents. This is the attractive force that brings in custom, the benefit of the name, not the mark itself. The mark is a badge of goodwill, and that is how we treat them, they are representations of goodwill.

Warnink v Townend

The Claimants were members of a class of traders that produced a Dutch liqueur called Advocat. The defendants marketed a similar drink marketed under the name of Keeling's Old English Advocate.

Diplock gives five elements to the tort: 1) Misrepresentation, 2) By a Trader, 3) To Customers, 4) Calculated to injure goodwill, 5) Which Causes Damage

Don’t apply them mechanically – we need to look at competition. Maybe it is a tort of unfair competition, and we will look at this later.

Also in the Warnink v Townend case is Lord Fraser, but his criteria are much more fact-specific, so Diplock is better for quoting in exams.

Reckitt & Colman v Borden

Jif Lemon case - Cs sold lemon juice in plastic lemon containers bearing the mark 'Jif'. After 30 years, D also sold lemon juice in plastic lemons, without the Jif mark.

Lord Oliver gives three elements to the tort: 1) Goodwill / Reputation, 2) Misrepresentation that is likely to deceive, 3) Damage to the claimant’s goodwill. The fact that the container was descriptive didn’t matter.

Two leading cases – both authoritative, but they are consistent, so this is okay. Important that we show knowledge in both of them.

International definition – the Paris Convention, to which all WTO countries are signatories, provides for international protection for industrial property, and one of the ways it does this is through preventing unfair competition.

Article 10bis(2), Paris Convention

The national law of many countries, e.g. France, Germany, has provisions against unfair competition. This includes a broad prohibition on unfair acts.

The USA has also adopted a broad approach through misappropriation, stemming from a ruling in the Supreme Court – IMF v [1900s].

We don’t have this system in the UK, instead, we have a number of different economic torts, which lack a unifying principle. There is no general law of unfair competition, so at best, we can argue that Passing Off is a species of unfair competition, as it regulates trading practices that involve a misrepresentation, which “lies at the heart of passing off”.

Elements of the falsehood action stem from Glidewell LJ in Kaye v Robertson:

1. Misrepresentation

2. Damage

3. Malice

This final requirement, of malice, means that injurious falsehood is much less important than passing off, as you have to prove a state of mind on the part of the defendant. In passing off, this is not the case. Further, it must be shown that they were calculated to cause damage – and have knowledge / be reckless as to whether the words are false or not.

The policy of the courts is to ensure that free competition is not stifled.

Hodgkinson v Wards Mobility

Producer of cushions wanted to claim a monopoly over a particular kind of cushions

There is no tort of copying - there needs to be misrepresentation for it to be passing off.

Cadbury-Schweppes v Pub Squash

A soda drink was marketed in a similar way by two marketing campaigns. Was this passing off?

Held not to be passing off - competition must remain free, and is safeguarded by the requirement that there is a property right in the goodwill.

This can be seen in the Warnink v Townend case too. Lord Diplock doesn’t want to stifle competition, which is very useful, and there are practical reasons why we would want to uphold the idea of competition.

Reflecting on this, and asking why, it’s that we are pursuing a policy that reflects are particular economic system. This is why we will not expand beyond misrepresentation.

We are taking an expansive approach to goodwill, misrepresentation and damage, and we can see this through history. This is most apparent in the cases of extended passing off.

This is all about goodwill attaching to a type of product, not a particular trader.

Bollinger v Costa Brava

Cs were a class of traders that made Champagne. Ds marketed a sparkling wine that they called Spanish Champagne. Was this passing off?

This was passing off. There must be a group of traders that all sell a particular product, which has certain defining properties, under a single name, which the public associates with products having those qualities.

The question is whether the rhetoric in expanding it, by referring to it as ‘unfair competition’ should be taken to heart. Probably not – there is real judicial resistance to such development.

Mars v Burgess

Marketing campaign for a new type of cat food that was very similar to Whiskas. Firstly, Cs claimed classic passing off - use of purple, and the advertising slogan 'X out of Y cats prefer…', and they also pleaded extended passing off, saying that there did not need to be misrepresentation.

This was insufficient - there needs to misrepresentation, either that they were related, or that customers would mistake one for the other.

L’Oreal v Bellure – Clearly there will be disputes about what is fair, and there are competing interests here. Traders want to prevent all impersonation, others want to encroach on it. The point is that we need to tie it to misrepresentation and deception, or it becomes too vague and difficult to define.

IRC v Mullers Margarine

Tax Law case.

[Goodwill] is the benefit and advantage of the good name, reputation and connection of a good name, it is the attractive force that brings in custom.

Not just reputation – it is the power of attraction that causes customers to buy a product or use a service – it brings in custom. Sometimes they are used interchangeably in the cases, we should not be sloppy. Goodwill can actually be...