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Passing off

This section contains the following:

Introduction


Elements of the passing off action


The Jif Lemon case


Required proof and extent of goodwill

Introduction

The English courts have developed the law of ‘passing off’ to protect a trader’s goodwill in his goods or services from being imitated by another trader in such a way as to deceive the latter’s customers into believing the goods or services are those of the former.

The action for passing off may have been recognised at common law as long ago as during the reign of Elizabeth I. The action seems to have grown out of the action for deceit, and, like the action for deceit, required a false representation made fraudulently, but differed from it in that the persons deceived were the plaintiff's customers rather than the plaintiff himself.

Passing off is a form of unfair competition, but English law does not recognise a general tort of unfair competition.

Comment: the difficulty with the action for passing off is often one of the cost and uncertainty of litigation. More certain legal protection may be obtained by registration of a trade mark.

See also company and business names, and domain names.

The elements of the passing off action

The most recent authoritative statement of the elements of the action for passing off was set out by the House of Lords as follows:

(1) that the claimant's goods or services have acquired a goodwill in the market and are known by some distinguishing name, mark or other indicium;

(2) that there is a misrepresentation by the defendant (whether or not intentional) leading or likely to lead the public to believe that goods or services offered by the defendant are goods or services of the claimant; and

(3) that the claimant has suffered or is likely to suffer damage as a result of the erroneous belief engendered by the defendant's misrepresentation.

The restatement of the elements of passing off in the form of this classical trinity3 has been preferred as providing greater assistance in analysis and decision than the formulation of the elements of the action previously expressed by the House4. This latest statement, like the House's previous statements, should not, however, be treated as akin to a statutory definition or as if the words used by the House constitute an exhaustive, literal definition of 'passing off'5, and in particular should not be used to exclude from the ambit of the tort recognised forms of the action for passing off which were not under consideration on the facts before the House6.

The ‘Jif Lemon’ case

The above statement of the elements of the action for passing off was the core of the judgment of the House of lords in the famous ‘Jif Lemon’ case; see:


Reckitt & Colman Products Ltd v Borden Inc


The gist of the case, and the somewhat surprising decision, is best summed up in the remarks made by one of the Law Lords, Lord Bridge of Harwich:

‘My Lords,

When plastic containers made in the shape, colour and size of natural lemons first appeared on the market in the United Kingdom as squeeze packs containing preserved lemon juice the respondents were astute enough to realise their potential and to buy up the businesses of the two companies who first marketed preserved lemon juice in this way. They thereby acquired a de facto monopoly which, by the periodical threat or institution of passing off actions over the years, they have succeeded in preserving ever since. This is the first such action to come to trial.

The idea of selling preserved lemon juice in a plastic container designed to look as nearly as possible like the real thing is such a simple, obvious and inherently attractive way of marketing the product that it seems to me utterly repugnant to the law's philosophy with respect to commercial monopolies to permit any trader to acquire a de jure monopoly in the container as such. But, as Mr. Robin Jacob Q.C., for the respondents, quite rightly pointed out, the order made by the trial judge in this case does not confer any such de jure monopoly because the injunction restrains the appellants from marketing their product ‘in any container so nearly resembling the plaintiffs' Jif lemon-shaped container as to be likely to deceive without making it clear to the ultimate purchaser that it is not of the goods of the plaintiff." [Emphasis added.]

How then are the appellants, if they wish to sell their product in plastic containers of the shape, colour and size of natural lemons, to ensure that the buyer is not deceived? The answer, one would suppose, is by attaching a suitably distinctive label to the container. Yet here is the paradox: the trial judge found that a buyer reading the labels proposed to be attached to the appellants' Mark I, II or III containers would know at once that they did not contain Jif lemon juice and would not be deceived; but he also enjoined the appellants from selling their product in those containers because he found, to put it shortly, that housewives buying plastic lemons in supermarkets do not read the labels but assume that whatever they buy must be Jif.

The result seems to be to give the respondents a de facto monopoly of the container as such which is just as effective as de jure monopoly. A trader selling plastic lemon juice would never be permitted to register a lemon as his trade mark, but the respondents have achieved the result indirectly that a container designed to look like a real lemon is to be treated, per se, as distinctive of their goods.

If I could find a way of avoiding this result, I would. But the difficulty is that the trial judge's findings of fact, however surprising they may seem, are not open to challenge. Given those findings, I am constrained by the reasoning in the speeches of my noble and learned friends, Lord Oliver of Aylmerton and Lord Jauncey of Tullichettle to accept that the judge's conclusion cannot be faulted in law. With undisguised reluctance I agree with my noble and learned friends that the appeal should be dismissed.’

[Original text of the case report supplied by BAILII gratefully acknowledged. Crown copyright: contains public sector information licensed under the Open Government Licence v2
Legaleze is solely responsible for the above text which is a summary only and the full report should be read.]

Required proof and extent of goodwill etc.

In order to establish that he has a goodwill and reputation under a name, mark or other indicium, a trader must show that there are actual or prospective customers who recognise the name, mark or other indicium as distinctive of the trader’s goods or services.

The most important evidence is to show the court what was actually done to publicise the name or badge relied on; the amount spent on advertising and promotion is not of great significance. Turnover figures are also important. See:


Phones 4U Ltd v Phone4u.co.uk Internet Ltd [2006] EWCA Civ 244

A small trader with a limited customer base may be entitled to bring an action for passing off if he can show that he has built up sufficient goodwill and that he will suffer substantial damage by reason of the misrepresentation complained of. In the case of goodwill limited to a specific locality, the trader’s ability to maintain a claim may be similarly limited. Case law examples include:

* Stannard v Reay [1967] RPC 589 (fish and chip van);

* Chelsea Man Menswear Ltd v Chelsea Girl Ltd [1985] FSR 567 (affd [1987] RPC 189, CA) (small clothing business);

* Sutherland v V2 Music Ltd [2002] EWHC 14 (Ch), [2002] IP & T 904 (band with no recording contract);

* IN Newman Ltd v Adlem [2005] EWCA Civ 741, [2006] FSR 253 (village funeral directors business)

Goodwill too small: the case of Hart v Relentless Records Ltd [2002] EWHC 1984 showed that goodwill may be too small for any likelihood of damage.

A claimant without an established UK business must in general show that he has some customers in the UK and therefore has goodwill to found a passing off claim:

Starbucks (HK) Limited and another (Appellants) v British Sky Broadcasting Group PLC and others (Respondents) [2015] UKSC 31

What’s New items on this topic [go to the What's New page or archive for the full item]:

02/02/2016: IPO succeeds in action against copycat website

Comptroller-General of Patents, Designs and Trade Marks and anor v Intellectual Property Agency Limited and anor [2015] EWHC 3256 (IPEC)

The Intellectual Property Office (IPO) has succeeded in its claim in the High Court (Intellectual Property Enterprise Court or ‘IPEC’) against Intellectual Property Agency Limited (IPAL) which offered a trade mark and patent renewal service at a cost significantly higher than the same service offered by the IPO as the relevant official body.t of profits.

Legaleze comment: this case is interesting from a number of aspects:

* it confirms previous cases that a government body may have a ‘goodwill’ to protect even though it does not carry on business in a commercial sense;

* the judge had no difficulty in finding that the IPO’s trade mark had been infringed even though on the face the mark owned by IPAL was not similar; the judge highlighted the textual similarity in the word “Intellectual Property Office” and “Intellectual Property Agency”;

* the sole director and shareholder was not able to shelter behind his company’s limited liability as he was found to have been a ‘joint tortfeasor’ with his company.

04/06/2015: Supreme Court rejects Starbucks HK appeal in NOW TV in passing off claim

Starbucks (HK) Limited and another (Appellants) v British Sky Broadcasting Group PLC and others (Respondents) [2015] UKSC 31

The Supreme Court has dismissed the appeal from the Court of Appeal brought by Starbucks (HK) Limited and another against British Sky Broadcasting Group PLC and others.

03/02/2014: ‘Greek yoghurt’ has a reputation


FAGE UK Ltd and another v Chobani UK Ltd and another
[2014] EWCA Civ 5  Hearing Date: 8 January 2014


In the High Court case of Fage UK Limited & Another v Chobani UK Limited & Another [2013] EWHC 630 (Ch), the claimants had been granted an injunction preventing the defendants from selling its American-made yoghurt under the label 'Greek yoghurt'

30/08/2012: Fine & Country win trade mark and passing off case


Fine & Country Limited & another v Okotoks Limited (formerly Spicerhaart Limited) & another (published 31/07/2012)


The Claimants, Fine & Country Limited and another company, were in the business of providing services to estate agents, operating under, and licensing to independent local estate agencies the use of, the name "Fine & Country". The Defendants, Okotoks Limited, were companies in a group which operated a number of national estate agencies, some under the name "Fine", others under the name Haart and various other names.
[Note: the logos and marks of the Claimants and the Defendants are reproduced in the judgment]

[Page updated: 02/02/2016]

 

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