England: Brands Bulletin - July 2013
Passing-off or not Passing-off? That is the question!
Many of our readers will be aware of the possibility of bringing a 'passing-off' action against a competitor who crosses the line and looks to trade off a brand owner's goodwill and reputation.
A recent Court of Appeal decision provides a timely reminder of what you have to prove in a passing-off action and summarises the evidential burdens that have to be overcome. It also highlights how subjective the answer can be to the question: has the defendant committed passing-off?
What is passing-off?
In summary, three elements have to be proved by a claimant in a passing-off action.
First, the claimant must prove a 'goodwill' attached to the goods/services which the claimant supplies in the mind of the purchasing public by association with some identifying 'get-up' under which the claimant's goods/services are offered to the public. The get-up must be recognised by the public as distinctive specifically of the claimant's goods/services. Such get-up can consist of a brand name (e.g. "Coca-Cola"), or the individual features of labelling (e.g. the distinctive labelling found on a can of Coca-Cola) or packaging of goods/services (e.g. the distinctive shape of the glass bottle in which Coca-Cola is sold).
Second, the claimant has to 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 the goods/services of the claimant, or are associated by way of business with the claimant.
Third, the claimant must demonstrate that he has suffered, or is likely to suffer, 'damage' by reason of the erroneous belief engendered by the defendant's misrepresentation that the source of the defendant's goods/services is the same as the source of those offered by the claimant.
In most passing off actions, proving goodwill is relatively straightforward, albeit not in all cases. The success or failure of many passing off actions hangs on the second element; namely, whether the claimant can demonstrate a misrepresentation by the defendant to the relevant public.
Lumos Skincare Ltd v Sweet Squared Ltd & Anor  EWCA Civ 590
In this case, the Court of Appeal heard an appeal brought by the claimant from a decision of Mr Recorder Douglas Campbell, sitting in the Patents County Court.
In summary, the claimant sells skin care products under the mark LUMOS. The defendants sell nail care products under the same mark. The claimant alleged passing off. At first instance, Mr Recorder Douglas Campbell held that the claimant had proved that it had established a goodwill for its business to which the mark LUMOS related at the date the defendant commenced selling its nail care products under the mark LUMOS. However, he also held that the defendants had not made a misrepresentation and thus dismissed the action.
On appeal, Lord Justice Lloyd handed down the longest judgment and made the following general points, all of which are important to bear in mind when bringing or defending a passing-off action:
A very modest goodwill can be enough to support a passing-off action. The claimant does not have to have a significant market share in the relevant goods/services that it supplies to the relevant public;
It is important to ascertain who the relevant public are, in respect of the claimant's and defendant's goods. It may well be that they are different. For example, a claimant's products may be aimed at and sold only to professional trade customers, whereas a defendant's products may be sold only to the general public, in which case there maybe no overlap in their respective markets and thus no opportunity for a misrepresentation to arise;
Passing-off will only arise where a claimant can show that a substantial number of its actual or potential customers would be misled into purchasing the defendant's goods/services in the belief that they are the claimant's goods/services;
If the claimant has a small number of actual or potential customers, because of the nature or extent of the claimant's business, then the 'substantial number' of the claimant's actual or potential customers that have to be confused (i.e. before a claim in passing-off can succeed) will also be proportionately small;
A claimant does not have to adduce evidence from an individual person who has been deceived. The absence of such evidence is not necessarily determinative. This is particularly so where the opportunity for actual confusion to arise has not yet taken place (e.g. where the defendant's product is not yet on sale in the marketplace). A judge can infer from all the other evidence put before him that misrepresentations will arise; and
- A judge must consider the evidence put before the court, use his own common sense and reach his own opinion as to the likelihood of a misrepresentation arising. It is an overall 'jury' assessment. Ultimately, it is for the court to determine whether a misrepresentation has arisen or will arise, not the witnesses brought before the court.
What is particularly interesting about the Court of Appeal's decision is that it highlights just how difficult it can sometimes be to assess whether or not a passing-off action will succeed, especially in a borderline case where no evidence of actual confusion arising in the marketplace is put before the court. The critical issue on the appeal was the question of whether or not the defendants had made a misrepresentation. Two of the appeal judges thought they had. One did not. Nor did Mr Campbell at first instance. Thus, the Court of Appeal, by a 2-1 majority, allowed the appeal and granted an injunction restraining the acts of passing-off by the defendants.
The overall lesson from this case is clear: the more persuasive the evidence you can present to the court as to the likelihood of a substantial number of the claimant's customers or potential customers being deceived by the defendant's actions, the more likely you are to succeed in a passing-off action. Whilst every case turns on its own facts, certain fundamental principles never change. The better the evidence you have, the better your chances of success.
If you wish to discuss this email, or any other brand or trade mark issue, please contact Carl Steele, Head of Trade Marks, or feel free to contact any of Ashfords' IP Partners.
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