Intellectual Property: Passing Off / Extended Passing Off

Case: The Military Mutual Ltd v Police Mutual Assurance Society Ltd & Ors [2018] EWHC 1575

Full case here: https://www.bailii.org/ew/cases/EWHC/IPEC/2018/1575.html

Issue: Passing off

(In a classic passing off case a trader claims that a trading name or a get-up is distinctive of his goods or services)

Summary:

Military Mutual Ltd (MML) brought a claim against Forces Mutual (FM) for using ‘mutual’ as a trading name which presents a misrepresentation as MML already use ‘mutual’ as its trading name offering financial services to the armed forces. The financial services of FM are also aimed at the armed forces. MML seeks to have the ‘mutual’ in FM’s trading name struck off or amended.

Judgement:

Appeal dismissed:  there is no misrepresentation when FM started to trade in April 2016. Besides, at that point they became joint owners of the goodwill.

Judge Hacon:

In Warnink, Lords Diplock and Fraser each defined the elements of passing off generally, although with an eye to extended passing off.

Lord Diplock’s words were these (at p.742):

“My Lords, A. G. Spalding & Bros. v. A. W. Gamage Ltd., 84 L.J.Ch. 449 and the later cases make it possible to identify five characteristics which must be present in order to create a valid cause of action for passing off:

(1) a misrepresentation

(2) made by a trader in the course of trade,

(3) to prospective customers of his or ultimate consumers of goods or services supplied by him,

(4) which is calculated to injure the business or goodwill of another trader (in the sense that this is a reasonably foreseeable consequence) and

(5) which causes actual damage to a business or goodwill of the trader by whom the action is brought or (in a quia timet action) will probably do so.”

Lord Fraser identified the elements this way (at pp.755-6):

“It is essential for the plaintiff in a passing off action to show at least the following facts:-

(1) that his business consists of, or includes, selling in England a class of goods to which the particular trade name applies;

(2) that the class of goods is clearly defined, and that in the minds of the public, or a section of the public, in England, the trade name distinguishes that class from other similar goods;

(3) that because of the reputation of the goods, there is goodwill attached to the name;

(4) that he, the plaintiff, as a member of the class of those who sell the goods, is the owner of goodwill in England which is of substantial value;

(5) that he has suffered, or is really likely to suffer, substantial damage to his property in the goodwill by reason of the defendants selling goods which are falsely described by the trade name to which the goodwill is attached.”

Extended Passing off

Extended passing off cases have differed in that the name in issue was alleged to be associated with a type of product, as opposed to a single trader or corporate group.

  1. GOODWILL

–      First, if his chosen class is too imprecise his case will fail from the start.

–      Secondly, even if his type of product and class of traders are defined with precision, the product type must be recognised by the public. Should the product chosen not be recognised as a distinct type by the public, the name in issue cannot be distinctive of that product.

The product’s reputation is characterized by how the public treat it. Some may assume a specialty i.e. perceived by a significant part of the public to be a premium product, and this perception encouraged sales

 It must contribute to the essential function of goodwill as “the attractive force which brings in custom”, see Diageo at [49]-[55].

–      Thirdly, even if the product chosen is recognised as a distinct type, the claimant must still show that the name in issue denotes that type of product. Unless these criteria are satisfied there cannot be shared goodwill associated with that name

In Fage Lewison LJ said this:

 “[123] … It seems to me that the reason why it is necessary for the protected class of goods to be clearly defined, or defined with reasonable precision, is because the goodwill that the tort seeks to protect is a species of property. In some intellectual property cases there is too much ‘intellectual’ and not enough ‘property’. The essence of a right of property is that it distinguishes between what is mine and what is not mine. So there needs to be a boundary. Thus the debate about the definition of the class is essentially an intellectual property boundary dispute. The boundaries are needed in order to delineate both what is protected and also who shares in the ownership of the protected subject matter. The action in passing off is directed against those who cross the boundary.

It was mentioned obiter that for a new trader to pass a good will on his product, he must have used the term for a long while… this was not followed.

So far the trader has traded using the descriptive term “to an extent above de minimis, he is entitled to the goodwill therein. (Judge Hacon)

  1. Misrepresentation,

–      The public thought that they were buying the genuine article and they were not.

–      Can genuineness be measured objectively? It is elusive

Objectively: a representation can be both objectively true and misleading. What matters is whether the relevant public are misled by the statement.

–      The misrepresentation must be operative i.e. “specifically… the relevant public [must be] aware of rules limiting the use of the name of a productper Norris LJ Consorzio del Prosciutto di Parma v Marks & Spencer plc [1991] R.P.C. 351

–      There must be a misrepresentation and confusion

the misrepresentation need only be operative in relation to a significant proportion of the public in England and Wales

–      a significant proportion of the public could be less than half, possibly quite a lot less

  1. Damage. Reckitt & Colman Products Ltd v Borden Inc[1990] RPC 341, at 406

–      Lost of sales and will almost certainly include dilution of the collective goodwill, as identified by Cross J in Vine Products

  1. Relevant date

–      the date on which the conduct complained of started

  1. Services and types of organisation

–      name of a product

–      goodwill associated with the name of a type of service

–      goodwill associated with a name given to a type of organisation

Comment:

Judge Hacon has given a detailed judgement. Usually passing off are frowned upon by the Court and offending parties are often put under strict discontinuance of said trade. However, in this case the court was hesitant to immediately strike FM’s trading as passing off as MML’s argument did not support its claim.

MML’s argued that they are a ‘mutual’, a type of organisation made for the benefit of the members. This term differs in several organisations and the general knowledge of the public is that it is a business (fully/partially) owned and controlled by its members (no shareholders) for their mutual benefits e.g. mutual company/society. FM satisfied this criteria.

Acknowledged, FM’s trading is similar to a passing off but MML who started trading in 2015 failed to meet the criteria that the premium it sells is distinctive to a significant sector of the public. Therefore, there can be no mispresentation as no part of the public were left confused when FM started trading in 2016.

“For example, in Chocosuisse Cadbury’s use of the words ‘Swiss Chalet’ in its packaging for chocolate confused a significant proportion of the public into believing that it was made in Switzerland. The finding that this was an actionable misrepresentation was made possible by the premise, also found by the court, that ‘Swiss chocolate’ meant chocolate made in Switzerland to a significant proportion of the public. In Fage there was a belief among the public that the words ‘Greek yogurt’ on a yogurt pot meant that it was made in Greece, so there was a misrepresentation if it was not.”

 

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