#13655 - Passing Off - International Intellectual Property

IP RIGHTS AVAILABLE

STEP 1: INTRODUCTION

To establish a cause of action for passing off, three elements must be established, as per Consorzio del Prosciutto di Parma v Marks and Spencer plc/Reckitt & Coleman v Borden:

1. That there is goodwill or reputation attached to the goods or services which he supplies.

2. Demonstrate a misrepresentation by the defendant to the public (whether or not intentional) leading or likely to lead the public to believe that the goods/services offered by him are those of the claimant.

3. Demonstrate that he suffered (or is likely to suffer) damage by reason of the erroneous belief caused by defendant’s misrepresentation.

WHY RIGHTS AVAILABLE

STEP 2: ESTABLISHING GOODWILL

Lord Macnaghten IRC v Muller & Co’s Magazine 1901 - “Very easy to describe but difficult to define. It is the benefit of the good name, rep and connection of a business. It is the attractive force which brings in custom”

Goodwill means business reputation:

• Must be among customers or prospective customers

• Must be in relation to some distinguishing feature

• C must show the customers associate the goods/services with C and also that the customers understand the distinguishing feature as an indication or sign that the goods/services come from C

Proving goodwill:

• Healthy accounts – if business doing well then likely to have goodwill.

• Number/diversity of customers – the more customers and diverse their background = well known

• Length of trading history = more likely to be well known

• Advertising expenditure

• Geographical spread of goodwill

• Evidence from customers

Sources used to prove goodwill:

• Sales figures

• Expenditure on advertising (using distinguishing feature in question)

• Witness evidence

• Survey evidence

• Focus groups (which product would you prefer?)

Types of distinguishing feature:

• Logo, shape, colour or style of packing, get up,

• A name (e.g. Neutrogena Corp v Golden ltd: Neutralia sufficiently similar to Neutrogena to constitute passing off)

• The category of things in which C can have reputation is not closed and cannot be conclusively defined or limited

• The limits of the tort are very wide (because passing off is a common law tort)

STEP 3: MISREPRESENTATION LEADING TO CONFUSION?

There must be a misrepresentation made by the defendant in the course of trade (i.e. a false representation which deceives/confuses C’s customers):

• In most cases, the misrepresentation is deliberate

  • i.e. a deliberate attempt to ‘ride on the back’ of C’s success

• However, an innocent misrepresentation can still be actionable

  • D need not even be aware of C’s products

  • Intention to misrepresent is not an essential element (though likely to severely affect damages)

• Does the misrepresentation lead to confusion of customers/potential customers (generally it must be confusion as to trade source)?

• Is the confusion at point of sale, or before it?

• Confusion between C and D’s products is not enough – customers must believe that D’s products are associated with C

• Is there an overlap between alleged infringer and proprietor in that there is a common field of activity in the following respects:

1. Type of good/services – less likely to be confusion between businesses in different fields/trades

2. Geographical area – less likely to be confusion between businesses in different areas

3. Time – the overlap must be more or less contemporaneous

• Unless there is a common field of activity it will be difficult but not impossible to show confusion and damage to goodwill in many cases.

There must be evidence of confusion:

• Survey evidence

• Individual customers testifying

• Witness evidence (from people employed in the relevant trade)

• Complaints about the passing off product sent to client (customer confusion)

• Comparison of sales in shops where only the real brand sold with shops where both sold

• Often what will be conclusive is what the judge thinks – is he likely to be confused between the two products placed in front of him?

• Although D may used C’s distinctive feature in some way, there might not be confusion if either C or D has clearly distinguished their products in some way

• If customers merely recognise the look-alike as a cheaper copy of a branded product, then this is not going to be enough for passing off – no confusion as to trade source

  • “need to confuse a more alert customer than a moron in a hurry” – Morning star v Express Newspapers

STEP 4: CAN SOME FORM OF DAMAGE BE SHOWN?

• C must show damage or likelihood of damage (actual or potential damage)

• Often because of likelihood of damage, C is seeking an interim injunction

• Often where C and D in same trade, once goodwill and misrepresentation have been established, the court is willing to infer damage

• In essence, damage is the dilution of distinctiveness of the product in the customer’s mind.

• Damage shows itself in two main forms:

1. Loss of profits – people buying infringing product instead of C’s

(Difficult area of damage to prove as it’s difficult to ascertain the level of sales a product would have enjoyed in the absence of the look-alike)

2. Loss of reputation – usually because the infringing product is of inferior quality and customers think the infringing product is made by C. This is likely to tarnish the brand.

• If...