Unit 2 – Consolidation IP

C = claimant

D = Defendant

What is protected?	Goodwill, e.g. logo or name, ‘get up’
What benefit does protection provide?	Protects against unfair use of, or damage to, business reputation
How is it obtained?	Arises automatically (no registration)
How long does it last?	Indefinitely

What is passing off?

Misleading customers into believing there is a connection with a product or a product from a different company

A common law tort, not strictly an intellectual property right

Reddaway v Banham
- No one has the right to represent his goods as the goods of somebody else

The presentation of products is protected, known alternatively as a product’s ‘get up’

OUTCOME 1 – identify situations in which the following can be used to protect goodwill:

OUTCOME 3 – Advise on the similarities between rights

Passing off in the UK and other commonwealth jurisdictions

Goodwill is the “attractive force which brings in custom”

Automatically able to bring a passing off action once goodwill built up and protection is indefinite

Reckin & Coleman v Borden – Jiff plastic lemon bottle (3 stage test)

Establish goodwill (sales fig + revenue)
Misrep by D to public as to origin
C suffers or likely to suffer damage by reason or erroneous belief

If the misrep does lead to confusion then a presumption of damage (more misleading = more damaging)

Ciba-Geigy Canada Ltd. v. Apotex Inc

Similar get up for S of hypertension tablets
Followed 3 part test of UK

The USA:

s.43(a) “Palming off”

False or misleading legislation of origin
Likely to cause confusion
Actual/likely damage to goodwill

Europe

All MS must bring in own implement legislation
UK = consumer protection from unfair trading regs 2008/1277
Therefore standard common law +EU reg allowed two attempts at passing off

Reputation + distinguishing marks protected
Where appreciably impairs customer liability to make informed decisions
Includes confusing consumer as to origin

OUTCOME 2 – Advise on conditions that must exist for the rights to apply:

Elements to be established by C

Consorzio del Prosciutto di Parma v Marks and Spencer plc/Reckitt & Coleman v Borden:

That there is goodwill or reputation attached to the goods or services which he supplies
Demonstrate a misrepresentation by D 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 C
Demonstrate that he suffers (or is likely to suffer) damage by reason of the erroneous belief caused by D’s misrep

1. 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 custom”

Goodwill means business rep:

- 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:

- health accounts

- number/diversity of customers

- length of trading history

- geographical spread of goodwill

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)

2. Misrep leading to confusion

There must be a misrep made by D in the course of trade (i.e. a false rep which deceives/confuses C’s customers)

- Usually deliberate, e.g. the Penguin and Puffin case – United Biscuits v Asda1997

- Could be innocent but still actionable

D need not even be aware of C’s products – intention to misrep isn’t an essential element (though likely to severely affect damages)

Must lead to confusion of customers/ potential customers and generally it must be confusion as to trade source

- Customers must be fooled into thinking that D’s products come from or are associated with C

1. Confusion must be at point of sale, or before it (in contract to other jurisdiction which recognise post-sale confusion)

Bostik v Sellotape – injunction failed where similarity of products only revealed after removal of packaging

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

HFC Bank v Midland Bank – similar sounding company names insufficient to amount to passing off
Removal of a distinguishing feature can result in unintentional misrep – Robert McAlpine Ltd v Alfred McAlpine plc 2004

3. Needs to be an overlap between alleged infringer and proprietor in that there is a common field of activity in the following respects:

a) Type of good/services – business in different fields/trades is less likely to cause confusion – e.g. bicycle maker v law firm

b) Geographical area – businesses in different areas less likely to cause confusion

c) 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

Evidence of confusion

The legal test for evidence of confusion – Neutrogena v Golden ltd: on the balance of probabilities, a substantial number of members of the public would be misled into purchasing offending product
Surveys (sample of members of the public)
Individual customer 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
- Usually comes down to judges impression

- Passing off case will not succeed without evidence of confusion, this is a question of fact and it’s difficult to predict the outcome.

Burden on C is heavy, difficult to discharge
- E.g. Julius Samaan – claim failed for lack of evidence of confusion, despite trademark infringement
Even where C’s feature used, doesn’t necessarily create confusion
- E.g. Arsenal Football Club v Reed – unofficial merchandise created no confusion, passing off action failed (trademark infringement succeeded)

If customers recognise product as a cheaper copy of a branded product, passing off action will fail, as no confusion as to trade source

“need to confuse a more alert customer than a moron in a hurry” – Morning star v express newspapers 1979

3. Damage

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 misrep established the court is willing to infer damage

Two main types of damager:

Loss of profits – people buying infringing product instead of C’s
Loss of rep – usually because the infringing product is of inferior quality and customers think the infringing product is made by C

- If infringer in different field of activity then C might now succeed because he cannot show damage:

Stringfellow v McCain foods - Stringfellows nightclub unable to stop Stringfellows chips

Cs able to show damage if unable to expand into a new market
If infringer’s product in a field that brings disrepute to C, this can be a ground for damage

Annabels v Schock – use created false assumption nightclub had started an escort agency

Defences:

C’s mark is not distinctive or is descriptive or generic
C and D have concurrent rights
Careful and honest use of D’s own name, mark or “get-up”
D or C’s use otherwise than in trade
C has no goodwill or goodwill owned by someone else
C’s acquiescence, encouragement or consent
No provable damage/loss to C

Remedies:

An injunction
Damages (nominal, if innocent passing off)
An account of profits
An order to cover up marks or repackage
An order for delivery up or destruction of offending items
Declarations as to rights

Note – remedies b) and c) are normally mutually exclusive

OUTCOME 4 – Be familiar with international agreements relating to unfair competition

International aspects

Other common law countries have passing off laws which have developed differently
Civil law countries (e.g. most European countries) have the sometimes overlapping law of unfair competition which is similar but not identical
US palming off – similar to passing off

Paris Convention for the Protection of Industrial Property of 1883

Signatories must prohibit all acts that can create confusion
Should operate in a similar way to passing off

Main source of international obligations on unfair competition

Signatory countries (currently 171) are bound to assure to nationals effective protection against unfair competition
Any competition contrary to honest practices in industrial/commercial matters constitute unfair competition

Prohibited acts:

All acts of such a nature as to create confusion by any means whatever with the establishment, the goods, or the industrial or commercial activities of a...

#10483 - Unit 2 Passing Off - International Intellectual Property

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