Passing Off - Intellectual Property Law

Common law tort

• Actionable without proof of damage, as long as there is likelihood of future damage

  • D doesn’t need to be at fault

• NOT a full property right or general right against unfair competition

  • Must be in the course of trade

  • Right to bring an action only lasts as long as the underlying business

Erven Warnick v Townend [1979] AC 731 (Advocaat)

• UKHL (Lord Diplock): Misrepresentation could be on the origin of the goods or also the class or quality of the goods (even if they are accurately from C)

• Lord Diplock: 5 main elements

  • Misrepresentation

  • By a trader in the course of trade

  • To his prospective customers or ultimate consumers

  • Calculated to injure the business or goodwill of another (or reasonably foreseeable)

  • Causes (or is likely to cause) actual damage to C’s business or goodwill

• Lord Fraser: The business must involve selling a clearly defined class of goods in England which have goodwill attached to the name because of reputation

• UKHL: “no man might pass his goods as those of another”

  • NOTE: Extended passing off is no longer limited to this situation

• Lord Oliver’s “classic trinity”: 3 basic elements for passing off

  • C must establish “goodwill or reputation attached to the goods or services”

    • Must be distinctive of his goods/services

  • C must “demonstrate a misrepresentation by the defendant to the public”

    • That the goods or services are those of C

  • C must demonstrate that he suffers or is likely to suffer “damage by reason of the erroneous belief engendered by the defendant’s misrepresentation”

• 4 possible frameworks for the tort of passing off

  • “though at times a strict adherence to the classic trinity guides the courts, at others there is a manipulation of those same ingredients to achieve a desired result. This has obscured the direction of the tort, undermined coherence and has enboldened claimants”

• Strict classic trinity (Carty framework)

  • Strong focus on the need for goodwill, misrepresentation and damage

• Misappropriation classic trinity (Wadlow framework)

  • This is a tort of misrepresentation

  • 3 important intersections

    • Serving the interests of both producers and consumers

    • Acknowledging both ethical considerations and economic expediency

    • Liability for business misrepresentation and misappropriation

  • Exploiting goodwill and not just harming goodwill should be part of the trinity

  • E.g. Asda case

• Misrepresentation beyond the classic trinity (Wadlow’s alternative)

  • General tort of misrepresentation without the goodwill requirement

  • E.g. Lego case

• Misappropriation per se (Davis framework)

  • Protecting C’s “investment, competitive edge or promotional aura” and not just goodwill in the traditional sense

  • Rejected by Jacob LJ in L’Oréal, but supported by Aldous LJ in Aresenal FC

  • Davis: Since the courts often manipulate the classic trinity requirements “to counter a perceived misappropriation”, passing off “has in fact come to encompass a remedy against misappropriation”

• Carty’s conclusion: While there has been tendency to refocus passing off in terms of misappropriation or unfair competition, we should not “embrace such an action”

  • Passing off should be a “damage-based and fault-free tort”, shouldn’t develop into a pure misappropriation action (similar to ‘dilution theory’)

Advocaat Case (1979)

• Lord Diplock: Action for passing off shouldn’t be available in all cases involving actual damage “in consequence of inaccurate statements” made by rivals

  • This would “run the risk of hampering competition”

Unclear what the relationship is

• Arsenal FC v Reed [2003] 1 All ER 137

  • Aldous LJ: Passing off is “perhaps best referred to as unfair competition”

• L’Oréal v Bellure [2007] EWCA Civ 968

  • Ds marketed smell-alike equivalents of C’s perfumes and issued comparison lists

  • Jacob LJ: “the tort of passing off cannot and should not be extended into some general law of unfair competition”

    • Claim failed because there was no misrepresentation or deception

    • ALTHOUGH the use of C’s trade marks in the comparison lists was infringement

• Aplin/Davis: UK has specific laws preventing anti-competitive practices

  • BUT it has no general law against misappropriation

    • E.g. where there is unjust enrichment by relying on the value created in the product by C (such as by creating similar perfumes in the L’Oréal case)

• The traditional view: there is no tort of unfair competition

  • Swedac v Magnet & Southerns (1989): “unfair competition is not a description of a wrong known to the law”

• BUT Paris Convention Art 10bis requires Union countries to provide “appropriate legal remedies” to repress acts of unfair competition

  • UK claims that it complies by a mix of legal mechanisms (e.g. consumer protection legislation, passing off and breach of confidence”

  • L’Oréal v Bellure: CA held that UK was not in breach by not having general tort

• Main acts that constitute unfair competition

  • Acts calculated to influence demand (e.g. misleading advertising)

    • Covered by consumer protection law and malicious falsehood

    • Usually enforced by public authorities rather than privately by traders

  • Acts that impede competing supplies

    • Covered by economic torts

  • Acts that exploit a competitor’s value

    • Covered by passing off, trade mark and breach of confidence

• Although there is still no general tort of unfair competition, it is NOT true that there is no English law of unfair competition

  • Similar protection is offered in harmonised areas (e.g. consumer protection laws) although it may be less effective than other EU countries since no private action

  • Passing off and malicious falsehood have evolved to offer broad protection

  • This doesn’t mean that there is a line drawn, since there are still areas where English law differs from other EU...