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Passing Off Notes

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OVERVIEW Common law tort-

Actionable without proof of damage, as long as there is likelihood of future damage o D doesn't need to be at fault NOT a full property right or general right against unfair competition o Must be in the course of trade o Right to bring an action only lasts as long as the underlying business

DEFINITION 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 o Misrepresentation o By a trader in the course of trade o To his prospective customers or ultimate consumers o Calculated to injure the business or goodwill of another (or reasonably foreseeable) o 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

RECKITT & COLMAN V BORDEN [1990] 1 WLR 491 (JIF LEMON)UKHL: "no man might pass his goods as those of another" o NOTE: Extended passing off is no longer limited to this situation Lord Oliver's "classic trinity": 3 basic elements for passing off o C must establish "goodwill or reputation attached to the goods or services"
? Must be distinctive of his goods/services o C must "demonstrate a misrepresentation by the defendant to the public"
? That the goods or services are those of C o C must demonstrate that he suffers or is likely to suffer "damage by reason of the erroneous belief engendered by the defendant's misrepresentation"

ESSAY TOPICS CARTY, PASSING OFF: FRAMEWORKS OF LIABILITY DEBATED (2012)-

4 possible frameworks for the tort of passing off o "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) o 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 o Exploiting goodwill and not just harming goodwill should be part of the trinity o E.g. Asda case Misrepresentation beyond the classic trinity (Wadlow's alternative) o General tort of misrepresentation without the goodwill requirement o E.g. Lego case Misappropriation per se (Davis framework) o Protecting C's "investment, competitive edge or promotional aura" and not just goodwill in the traditional sense o Rejected by Jacob LJ in L'Oreal, but supported by Aldous LJ in Aresenal FC o 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" o Passing off should be a "damage-based and fault-free tort", shouldn't develop into a pure misappropriation action (similar to 'dilution theory') o o-

RELATIONSHIP WITH UNFAIR COMPETITION 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 o This would "run the risk of hampering competition"

Unclear what the relationship is-

Arsenal FC v Reed [2003] 1 All ER 137 o Aldous LJ: Passing off is "perhaps best referred to as unfair competition" L'Oreal v Bellure [2007] EWCA Civ 968 o Ds marketed smell-alike equivalents of C's perfumes and issued comparison lists o 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 o 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'Oreal case)

ARNOLD, ENGLISH UNFAIR COMPETITION LAW (2013)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 o UK claims that it complies by a mix of legal mechanisms (e.g. consumer protection legislation, passing off and breach of confidence" o L'Oreal v Bellure: CA held that UK was not in breach by not having general tort Main acts that constitute unfair competition o 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 o Acts that impede competing supplies
? Covered by economic torts o 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 o 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 o Passing off and malicious falsehood have evolved to offer broad protection o This doesn't mean that there is a line drawn, since there are still areas where English law differs from other EU States o-GOODWILL (TRADER (CLAIMANT) HAS GOODWILL) DEFINITION IRC v Muller & Co [1901] AC 217Lord MacNaghten: "the benefit and advantage of the good name, reputation and connection of a business. It is the attractive force that brings in custom"

NOTE: There is generally no property in the trade name or other indicia-

To get a proprietary right, it must be registered as a trade mark o In passing off it is the goodwill that is being protected, not the name or get-up This view is supported by Millet LJ in the Harrods case

HARRODS LTD V HARRODIAN SCHOOL LTD [1996] RPC 697-

D ran a preparatory school on the site of the former 'Harrodian Club' (sports club run by C up till 1990) o C did not run a school nor did it intend to do so, but brought a claim for passing off CA (Millet LJ): C's claim failed o "The name 'Harrods' may be universally recognized, but the business with which it is associated in the minds of the public is not all embracing" o C had wide reputation in the name "Harrods" but there was no related goodwill being infringed in this case

The law protects not the "value of the brand name as such, but the value of the goodwill which it generates" and requires confusion DISSENT (Kerr LJ): "the reputation of a trader's name may be such that it constitutes part of the goodwill of his trade" and should therefore be protected o Here, the use of the name "Harrods" was unfairly cashing in on C's reputation oGOODWILL CAN BE LOCAL OR NATIONAL REDWOOD TREE SERVICES V REDWOOD TREE SURGEONS [2011] EWPCC 142 small local tree surgery businesses 10 miles apart Court: C's business had goodwill that was localised in 4 particular postcodes

BIGNELL V JUST EMPLOYMENT LAW [2008] FSR 6C ran a law practice in Guildford specialising in employment law D was based in Glasgow and had a small office in London providing legal advice and representation on employment law (but were not lawyers) Court: C could not claim for passing off because his goodwill was local to Guildford

CARTY, PASSING OFF AND THE CONCEPT OF GOODWILL (1995)-

"The concept of goodwill limits the concept of damage in the tort" o Since any relevant damage must be to the integrity of C's goodwill Concept of goodwill is controversial o Traditional view: Requires trading activity in that specific jurisdiction
? E.g. in Star Industrial v Yap Kwee Kor (1976) o Recent attempts to expand this to include reputation International reputations o Advocaat: Must sell the class of goods in England o Issue for international businesses
? They have international reputation but no current business in England
? Pirates using their name could cause confusion, damage to reputation and impede their future expansion into England o Expansive view: If the name is worth hijacking then goodwill exists
? Applied in Maxim's v Dye o Hard view: Goodwill cannot be established by mere reputation, needs market activity in the jurisdiction
? Applied in Crazy Horse, Athletes Foot and Budweiser
? BUT Athletes Foot limits this view by only requiring customers in the UK
? Walton J also went against the traditional view by suggesting that the goods need not be purchased from within the jurisdiction
? The customers need not have direct contractual relations with C, as long as they purchase the goods/services (Panhard Levassor
[1901]) o Both views agree that pure advertising is not sufficient to create goodwill, since customers are definitely required o Wadlow's view: The attractive force must exist as reason for travel

If the customers from UK are travelling as tourists and happen to experience C's goods or services, that isn't enough to create goodwill Prelaunch publicity o Accepted that extensive pre-launch publicity may mean "rapid acquiring of goodwill, once the product is launched" The courts reject the notion of a wide unfair competition tort o For fear of discouraging competition and allowing monopoly o Abandoning the goodwill requirement may result in "stifling of competition, with advertising as the all powerful weapon of big business" o Other jurisdictions focus less on goodwill because of the "inevitable flow of custom" across borders and "the need to provide consumers protection against confusion" o Possible that passing off now has 2 goals: protecting traders AND consumers-DIFFERENT TYPES OF MANIFESTATION OF GOODWILL DESCRIPTIVE WORDS Standard position in law: no goodwill exists in a purely descriptive label
??????Only if the name of product has distinctive features (Antec International - Farm Fluid), or secondary meaning (Montgomery v Thompson) o Just Employment - Too descriptive, non-distinctive o Secondary meaning takes 100 years to acquire (Montgomery), cant be acquired in 18 months (McCain)
? Much narrower scope, the relevant public must be able to attest to it.
? Reddaway v Banham - camel hair belting though descriptive, came to acquire secondary meaning through broad notoriety. o Will be rare that first entrant into market can show descriptive labels have acquired secondary meaning (McCain Oven Chips)
- If the name is purely descriptive without any secondary meaning, it cannot be protected

MCCAIN INTERNATIONAL V COUNTRY FAIR FOODS [1981] RPC 69C introduced a new product: McCain Oven Chips A year later, D introduced 'Country Fair Oven Chips' and 'Birds Eye Oven Chips' CA (Templeman LJ): No passing off o Distinguished passing off involving a "fancy name and a descriptive name"
? Fancy name: can only indicate the supplier, will result in passing off
? Descriptive name: "does not indicate the source ... but the nature" o By using 'McCain oven chips', C is acknowledging that 'oven chips' identifies the product and the name 'McCain' identifies the manufacturer o The "words 'oven chips' simpliciter never have been used in isolation" by C o "There has been neither the opportunity nor the time for people to form the impression that the only makers of oven chips are and will remain McCain" o Since 'oven chips' are descriptive, by using them with their own brand name D does not "represent, and no reasonable person would infer, that the goods sold" are associated with C

-

NOTE: Might be different if C had sold 'Oven Chips' instead of 'McCain Oven Chips'?

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REDDAWAY V BANHAM (1896): CAMEL HAIR BELTINGUKHL (Lord Halsbury): Question of fact whether descriptive words had acquired further meaning or association with C

DESCRIPTIVE INSIGNIA AND GET-UP COMMON TO THE TRADE-Cannot normally be protected via passing off, unless it has acquired a secondary meaning o Where the public associates it exclusively with C's goods or services ISSUE: If such signs/insignia are so general and descriptive, should traders be allowed to monopolise their use?
o This could affect competition between traders with similar goods or services Wotherspoon v Currie (1871-72): Glenfield Starch o 2nd entrant to the market could be prevented from using 'Glenfield Starch' because it had acquired a secondary meaning beyond a description of the place of origins

EDGE V NICCOLLS [1911] AC 693 (DOLLY BLUE) o

o o

C was the leading brand of laundry blue, sold it packed in cylindrical bags with a stick
? Originally sold individually without labels, distinctive because of the stick D changed their product to use a "new and original design" similar to C's except with a name label on it UKHL: There was passing off
? The label would work to inform wholesale and retail traders, but not the public consumers who didn't know C's name and relied on the get-up
? D could only use a similar get-up if it distinguished its product in a more effective manner

The customers must think that the goods come from C as the sourceThey need not know who C is, as long as they think that all goods with the same insignia are from the same source Not enough that they are reminded of C's goods

JIF LEMON CASE (1990)C sold lemon juice in yellow plastic containers with green labels and yellow caps D produced similar containers with green caps and one flat side UKHL (Lord Oliver): There was passing off on the facts o The lemon containers are not a product but part of the get-up

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