28 rETE WATERMAN LlD & OTHERS v CBS UNITED KINGDOM LTD (19931 EMLR

$500,000. Such bookings had been made direct from the United
Kingdom. In addition $3.5 million of business had been done by the New
York studio with US record companies relating to UK artists, including
bookings placed at the behest of UK companies through their US affili-
ates. All services rendered by the New York studio had been rendered in
New York. The New York studio had no agent or place of business in the
United Kingdom.
The phrase 'The Hit Factory' had previously been applied to various
other record-producing organisations.
The plaintiffs brought proceedings for passing off. The principal issues at
trial were: (1) Was the name 'The Hit Factory' distinctive of the plaintiffs'
services? The plaintiffs contended that even if the name was not distinc-
tive of them to all members of the interested public it was sufficient if it
was distinctive to a substantial section of that public. (2) Did the New
York studio (and hence the defendant) have any right by honest concur-
rent use to the name 'The Hit Factory'? The plaintiffs contended that the
existence of such a right was negated by the fact that the New York stu-
dio's services were provided in New York, which the plaintiffs argued
meant that its goodwill was located there. (3) Would the use by the
defendant of the name 'The Hit Factory' result in any misrepresentation?
(4) Would the use by the defendant of the name 'The Hit Factory' cause
the plaintiffs damage?

Held, dismissing the action:

Distinctiveness
1. The name 'The Hit Factory' was descriptive. It did not describe the
product or service which was being provided but the quality of what was
provided. The question was therefore whether 'The Hit Factory' had
acquired a secondary meaning indicating only the plaintiffs' services.
Reckitt & Colman Products Ltd v Borden Inc. [1990] RPe 341 applied.
2. When one looked at the public engaged in the record industry as a
whole, whether as producers, record companIes, artists, journalists or
buyers, there was no uniform identification of the words 'The Hit Factory'
with the plaintiffs. Accordingly the plaintiffs had not shown that the
phrase was distinctive of them alone.
3. Although there was a very substantial group of people who associated
'The Hit Factory' with the plaintiffs and no other organisation, it was imper-
missible in cases of this kind to split the relevant public so as to define sec-
tions of the public by reference to their state of knowledge. Where the name
in question was a nrckname or accolade used throughout various stages of
making and marketIng records, the relevant section of the public was all
those who at any stage mIght come across the nickname or accolade.
 rETE WATERMAN LTD & OTHERS" CBS UNITED KINGDOM LID 119931 EMLR 29

Location of goodwill
4. Before 1987 the New York studio had had a reputation in the United
Kingdom under the name The Hit Factory' among record companies,
record producers and others concerned with the selection of recording
studios and had customers in the United Kingdom for its services.

5. In order to establish honest concurrent use, the New York studio had
to show that it had as against persons other than the plaintiffs an
enforceable right to the name under English law.
General Electric Co. v General Electric Co. Ltd [1973] APC 297 applied.)

6. The basis of a claim in passing off was goodwill locally situate in

England.
Anheuser-Busch Inc, v Budejovicky Budvar NP [1984] FSA 413 applied.)

7. The presence of customers in England was sufficient to constitute the

carrying on of a business in England to which local goodwill was
attached whether or not there was otherwIse a place of busrness in
England and whether or not the services were provided in England,
Anheuser-Busch Inc. v Budejovicky Budvar NP (above) considered.
Alain Bernadin v Pavilion Properties Lld [1967] APC 581 not followed.

8. Since at all material times the New York studio had had a substantial
number of customers in England it would have been entitled to protect its
name agaInst third parties and was therefore entitled to continue to use
its name in England concurrently with the plaintiffs even if the plaintiffs
had acquired a goodwill in the name.

Misrepresentation
9. It was unnecessary for the court to express a view as to whether it
could be a misrepresentatIon for someone who enjoyed a reputation in a
name in a country to trade under that name.

Damage
10. The court was satisfied that there would be no diversion of business
from the plaintiffs if the defendant's studIo was renamed The Hit
Factory'. There was some rrsk of confusion among journalists, artists,
managers and the record-bUYIng public but not a great one. There was
no risk of the record-buying public being provided with a record from the
defendant's stUdio when they wanted one from the plaintiffs or that an
aspirant pop star looking for the plaintiffs would find the defendant
Instead. Such confusion as would emerge would therefore not cause the
plaintiffs damage. It was unnecessary to decIde whether loss of such
exclusivity as the plaintiffs had was sufficient damage.
30 rETE WATERMAN LTO & OTHERS \' CBS UNITED KINGOOt\lL TO II\N)I EMLR

Per curiam
As a matter of principle, the existence of a severable goodwill locally situ-
ate in England was not the basis of the right to complain of passing off in
England. What was necessary was for the plaintiffs to show that they had
a trade connection in England (which would normally consist of customers)
forming part of their goodwill, wherever that goodwill was situate, which
goodwill was being invaded by the acts of the defendant in England. This
approach was not open to the court on the authorities, however.
The following additional cases are referred to in the decision:
Athletes Foot Marketing Associates Inc, v Cobra Sports Ltd [19BO] RPC 343
Baskin-Robbins Ice Cream Co. v Guiman [1976] FSR 545
C & A Modes Ltd v C&A (Waterlord) Ltd [197B] FSR 126
Colgate-Palmolive Ltd v Markwell Finance Ltd (19B9] RPC 497
Commissioners of the Inland Revenue v Muller & Co. 's Margerine Ltd
(1901] AC 217
Dominion Rent A Car Ltd v Budget Rent A Car Systems [19B7] 2 NZLR 395
Edge & Sons Ltd v Gallon & Son (1900) 17 RPC 557
Erven Warnink BV vJ. Townend & Sons Ltd[1979] AC 731
Lego v Lego M. Lemelstrich [19B3] FSR 155
Maxim's Ltd v Dye [1977]1 WLR 1115
Metric Resources Corp. v Leasemetrix Ltd [1979] FSR 571
T. Oertli AG v EJ. Bowman (London) Ltd (1957] RPC 3B9
Panhard Levassor SA v Panhard-Levassor Motor Co. Ltd [1901]2 Ch. 513
Poiret v Jules Poiret Ltd (1920) 37 RPC 177
R.J. Reuter Co. Ltd v Muhlens (1953) 70 RPC 235
Sheraton Corp. v Sheraton Motels Ltd (1964] RPC 202
Star Industrial Company Ltd v Yap Kwee Kor [1976] FSR 269

Representation
Roger Henderson QC and Henry Carr, Instructed by Taylor Joynson Garrett,
appeared for the plaintiffs. Mark Cran QC and lan Mill, instructed by Russells,
appeared for the defendant.

TEXT OF DECISION
The Vice-Chancellor:
In this case the plaintiit companies (PWU are engaged in the pop music
industry They claim to be entitled to the exclusi\'e use in this country oi the
name or description The Hit Factory'. In February 1990 the deiendant
(CBS) announced that it was proposing to refurbish its recording studios in
Whitiield Street, London, and rename them 'The Hit Factory'. PWL allege
that such use of the name 'The Hit factory' by CBS will constitute passing
oif, and claims an injunction restraining such use of the name bv CBS.
 rETE WATERMAN LTD & OTHERS v CBS UNITED KINGDOM LID (lqq3( EMLR 31

The case is an urgent one. CBS has entered into a joint venture agree-
ment with Mr Ed Germano and one of his New York companies, The Hit
Factory Ine., which is to conduct the Whitfield Street studios under the
name of The Hit Factory'. Under that joint venture agreement CBS is to
spend a sum which I believe is in the region of £2 million in refurbishing
and re-equipping the Whitfield Street studios with a view to them being
run by Mr Germano under the name vvhich he has used with outstand-
ing success in his recording studio in New York called The Hit Factory.
Due to the urgency, although the \'Vrit was only issued on 16 March 1990,
a speedy trial has been held which has lasted for some 13 days during
which some 50 witnesses and Civil Evidence Act statements have been
considered. The case raises difficult questions and I would ordinarily
have resen'ed my judgment and prepared a written judgment. But,
given the urgency of the case and bearing in mind the stage of the term,
I am giving an immediate judgment now.

In the broadest outline, the main issues vvhich arise are these. PWL
claims that due to its outstanding (indeed unsurpassed) record in pro-
ducing hit records, its whole enterprise, including its recording studios,
have since mid-1987 come to be known as The Hit Factory. PWL does
not trade under that name but is widely so referred to. It claims that the
words The Hit Factory' have now become distinctive of PWL and its
organisation including its studios. CBS, on the other side, deny that the
name The Hit Factory' has become distinctive of PWL. Alternatively,
they say that the studios of The Hit Factory Ine. in New York (Hit
Factory New York) have, both before and after 1987, enjoyed a reputa-
tion and goodwill in this country by contracting with United Kingdom
customers for the use of the studios in New York. CBS therefore say that
Ine. and, by reason of the joint venture agreement with CBS, CBS, have
been and are entitled to trade in this country under that name. Therefore,
says CBS, they are entitled, by reason either of prior use or concurrent
use with PWL of the name The Hit Factory in this country, to continue to
call themselves The Hit Factory. In rebuttal of that argument PWL say
that since The Hit Factory Ine. has neither had any place of business in
this country, nor rendered any services as a recording studio here, it has
never had any goodwill of a kind capable of being protected in the
courts of this country.

What I propose to do is to set out my general findings of fact, then iden-

tify the issues which arise in rather more detail and give my detailed
findings of fact and law in relation to each of those issues. Before going
to those facts, it is necessary to set out the general features of the pop
record industry as background against which the detailed facts of this
case have to be viewed.
32 PETE WATERMAN l TD & OTHERS v CBS UNITED KINGDOM llD [1993[ EMlR

I will start by outlining (I fear not with complete accuracy) the normal
process whereby a pop recording comes to be made. One starts with the
aspiring artist who seeks to obtain a recording contract normally with
the record company. That artist has his own manager separate from the
recording company. The song then has to be written and lyrics written,
usually again by somebody separate from the record company. The
record company then engages a producer, who is again an independent
personality, to oversee the making of the recording. The producer corre-
sponds to the director in the world of films. He has overall artistic
responsibility for the product. It is normally the producer who selects
the studio at which the recording is to be made. The studio itself is nor-
malIy an independent business enterprise separate from the recording
company making the record.
The recording is made at recording studios, the original tracks being
recorded with the assistance of what is called a tape op, usualIy provi-
ded by the recording studio. The tape op is responsible for the technical
side of making the original recording but has, I believe, no artistic input.
The result of the recording stage is to produce a number of tracks which
then have to be mixed and reduced to the number of tracks which go out
on the eventual recording. That is the process of mixing. The mysteries
of mixing have happily not been explained to me but it is plainly a
process which involves very considerable skills. The mixing process is
under the overall control of the producer but carried out by the record-
ing engineer. It is obviously a skilful job and is carried out in the record-
ing studios. The recording engineer is himself in the ordinary case
selected by the producer. The evidence shows that the hard and fast line
which may previously have existed between producer on the one hand
and recording engineer on the other is no longer clear. Many recording
engineers, in particular those employed by PWL, have a substantial
artistic input into the end product.
Once the recording has been made and mixed, in the ordinary case the
recording company arranges for the pressing of the record and its distri-
bution. There are the attendant publicity functions, the design of the
sleeve, the promotion in the market both by promoting the sales to retail-
ers and by plugging on radio and television.
Thus, in the ordinary process of recording a pop record, the recording
company, the producer, the recording engineer and the studios are sepa-
rate business organisations not under one umbrella.
That position is to be contrasted with the organisation run by PWL PWL
conducts virtually the whole operation in-house. It makes stringent
efforts to find new artists. An artist seeking a recording contract will sign
a recording agreement with PWL or one of the members of the group.
 PETE WATERMAN LTD & OTHERS v CBS UNITED KINGDOM LTO [1993) EMLR 33

Sometimes PWL will manage the artist it has discovered. PWL then will
take steps to train the artist in the skills necessary. PWL or those in its
organisations will frequently write the song and lyrics or co-operate
with the artist in writing the song and lyrics or re-arranging an existing
song. The artist then records the song in one of the PWL studios. The
recording is under the supervision in the ordinary case of an in-house
PWL producer and the mixing is done with an in-house PWL recording
engineer, the whole process taking place in the PWL studios. PWL, once
the recording is complete, then itself normally releases the record or
sometimes licenses it to another record company for release. The design
of the record slee\'e is done in-house and the organisation of the market-
ing and sales promotion is also frequently done in-house. Therefore
PWL, in contradistinction to the normal form of recording, is a one-stop
shop where everything is done in-house.

In addition, PWL also provides the use of its studios for mixing record-
ings made elsewhere. However, the ability of an independent record
company to use the PWL studios for mixing is, I find, in practice depen-
dent upon using one of the in-house PWL recording engineers to be
responsible for the mixing or remixing.

Recording studios are not of uniform quality. The best recordings are
thought to come from the best equipped and managed recording studios
which are said to be in division one. Both the recording studios of PWL
and the recording studio conducted in New York by The Hit Factory Ine.
fall into that highest class. The studios come up to the standards required
by top artists and producers, and in terms of quality there is little, if any-
thing, to choose between them. Hitherto, the studios conducted by CBS at
Whitfield Street had not come up to that standard. However, CBS's cur-
rent project to re-equip them and to have the studio run by Mr Germano
is, it is thought, likely to produce a result whereby the Whitfield Street
studios themselves will come into the division one category.

It is also essential to appreciate that the business of recording and run-

ning recording studios is an international business. In the normal case
where producers and artists are in the same country, the studio selected
will normally be in that country. However, the pop world is an inter-
national one; producers have international reputations, artists have
international reputations and tour outside their native country. There
are therefore frequent occasions on which it is necessary or desirable to
use for recording purposes a studio in a country other than that in which
the artists live or the producers live. In addition, as I understand it, if one
gets to the top of the tree, one may have personal preferences as to which
studio one would prefer to use to the extent of using a studio outside this
country even if you are an English artist or an English producer. That
34 rETE WATERMAN l TD & OTHERS \' CBS UNITED KINGDl,M l TD (1993( EMLR

factor is one of fundamental importance in this case because, as will

appear, the record companies in this country, producers from this coun-
try and artists from this country have used The Hit Factory studios in
New York for many years past.
I turn to outline the history of the plaintiff group of companies, rWL.
The moving spirit, although not at all the sole cause of success, behind
rWL is Mr rete Waterman. He was first engaged in the pop industry as
a disc jockey, a role which he continued to occupy for a long time.
Between 1974 and 1977 he moved into the position of Artist and
Repertoire director and consultant for a number of record companies. In
1978 he started his own production and management company with
another person. That company, which is not rWL, traded successfully
bet\'veen 1978 and 1984 and produced a series of extremely successful
records. In 1983 Mr Waterman established rete Waterman Ltd, rWL.
Shortly thereafter in 1984 he met Matt Aitken and Mike Stock who were
two excellent musicians working together, with whom he fonned an
extremely successful combined team known widely in the pop world as
Stock Aitken Waterman, or SAW.
To begin with, Stock Aitken Waterman operated primarily in the pro-
duction, mixing and remixing of records. From the start they were
extremely successful. They then developed into writing their own songs.
In February 1986 they acquired a studio called The Borough, close to
London Bridge in south east London. The studio there was usually, I
think, in evidence referred to as The Vineyard rather than The Borough
but it did pass under that name as well. In due course as their success
attended them, they expanded into a second studio called The Bunker
and a third studio and eventually a fourth studio. The success of their
new venture led them to be widely described and known in the press as
Stock Aitken Waterman, or SAW, or rWL.
The success of the organisation has been phenomenal. Records produced
under the aegis of the rWL organisation have been constantly in the top
20 and top 40 charts. The passion for charts in listing the success of indi-
vidual records, I have discovered in the course of this case, extends to
producing charts for successful studios and successful producers as well
as the success of the records themselves. The success of the studios is
clearly set out in the excerpts from Studio Magazine in which, over the
years, they have featured in the studio charts in an astonishing way. In
1986 they appeared only once in the top 10 studios. In 1987 they often
appeared in the top 10: they were four times number one, four times
number two, and only once in the course of the monthly charts out of the
charts altogether. In 1988, out of the 12 months they were top studio for
eight of those months and top producers for se\'en. In 1989 they were top
studio in five out of the nine months of which there is evidence before
 rETE WATERJ\'IAN LTD & OTHERS \' CBS UNITED KINGDOI\I LTD [19'131 EI\ILR 35

me, and also top studio for five out of the nine months. In all they have
appeared as the top studio 18 times and as top producers 17 times. In
1989 with regard to records emanating from the PWL organisation, 33 of
their records were in the top 10. In 1989, 95 out of the 105 records
released by them got into the charts. Stock Aitken Waterman as produc-
ers were in the top -l0 without a break for three years. I was told, and I
am perfectly prepared to accept, that this is an unprecedented and phe-
nomenal record of success in producing records out of one studio.
The music coming from the PWL organisation has a distinctive style or
sound. I understand this to consist of a recognisable type of song pro-
jected by artists of a type and a distinctive recording technique. The
records, which have proved so successful and are produced by PWL,
appeal on the whole to the younger end of the market It emerged that in
the pop record industry, as in every other aspect of society, there is a cer-
tain snobbery. The products of PWL did not receive the approval of all
sections of the pop market. By some PWL were regarded as producers of
records of a kind calculated to sell rather than aesthetically or musically
innovative. As one of the witnesses, Mr Bates, said:
Several years ago people derided Stock Aitken Waterman. It
became a joke in the industry that they were immensely success-
ful. but less than artistically satisfying to the more pompous fans
in the music industry .... Since then they have gained perhaps
more respectability, but [ think there was a tendency to sneer
and to use the phrase [The Hit Factory] in a sneering way.
1\1r Waterman himself accepted that the phrase The Hit Factory' had
elements in it which were derogatory as ,,'ell as praiseworthy, the word
'factory' not being altogether tlattering as a description of the method of
production of the music involved.
It is not altogether surprising that in view of the success attending
rWL's efforts the media started to refer to PWL and Stock Aitken
Waterman as a hit factory or The Hit Factory. There are numerous press
cuttings from the files kept from late 1987 b~' P\VL, recording the use of
the phrases 'a hit factory' or 'The Hit Factory' in relation to PWL or Stock
Aitken Waterman, [ am satisfied on the e\'idence that this naming of
PWL as 'a hit factory' or 'The Hit Factory' pre-dates the collection of
press cuttings and indeed pre-dates the naming of a compilation album,
The Hit Factory, which I will mention in a moment.
However, the press cuttings that have been put in evidence ha\'e to be
kept in proportion, Although the references in the press cuttings are
numerous to 'a hit factory' or The Hit Factory', those in evidence are
merely a small proportion of the total press cuttings kept by PWL in
vvhich there is no reference to PWL as either 'a hit factory' or The Hit
36 rETE WATEIU.IAN l TO & OTHERS v CBS UNITED KINGDOM l TD 119931 EMlR

Factory'. On the whole, until the issue of the album, the press cuttings
are more inclined to talk about PWL as 'a hit factory', although on occa-
sion they are referred to as The Hit Factory'. The references to The Hit
Factory' after the compilation album was issued are more frequent since
that is the name which appears on the album.

The phrase 'a hit factory' or The Hit Factory' is not a newly minted one.
It has in the past been applied to other organisations, in particular to a
Detroit organisation, Tamla Motown. [ will revert later to the application
of the phrase to organisations other than PWL.

[n 1987, a record company, Stylus, approached PWL to make a compila-

tion album consisting of records from PWL's studios which had been
successful records when first issued. That was agreed and a compilation
album was released in late 1987, bearing the title on its face The Hit
Factory'. The evidence shows that the suggestion for the name of the
compilation album as The Hit Factory' was Mr Howells', the Managing
Director of PWL. [n the evidence it is clear that there was a short period
during which the projected name of the compilation album was to be
kept quiet. It was at one time suggested that Mr Howells was deliberate-
[y trying to keep that name from the public. [ find that that was not so.
Though he suggested the name, the desire to keep it secret was the
desire of Stylus Records. That compilation album, 'The Hit Factory', was
released on 12 October 1987 and was a considerable commercial success.
Looking ahead, there were two further compilation albums released by a
different recording company, being albums of the same kind and
released as The Hit Factory 2' and The Hit Factory 3'. They also were a
considerable success. They were released in November 1988 and July
1989. Each of the compilation albums was accompanied by extensi\'e
advertising and promotion on television, radio and in the press. [ am sat-
isfied that as a result of the release of those three albums, the references
to PWL and Stock Aitken Waterman as 'a hit factory' and particularly
'The Hit Factory' increased substantially in the media.

It is of central importance in the case that the naming by some of the

PWL/Stock Aitken Waterman organisation as 'a hit factory' or The Hit
Factory' was a naming done by the public or the media, not by PWL
itself. PWL were not averse to the label being attached to them. The fact
that the parties in this case have fought so long and at such expense for
the right to use the name indicates that in the pop world it is a valuable
commodity. Mr \Vaterman himself was not in any way a\'erse to the wry
humour inherent in the denigrating aspect of the word 'factory' which [
have mentioned. It is plain from the evidence that the PWL organisation
has a welcome sense of humour in its approach to its job.
 rETE WATERMAN LID & OTHERS \' CBS UNITED KINGDOM lID [1'l9JI EMlR 37

But at no time has PWL in any way traded by reference to the trade
name The Hit Factory'. All business has been conducted in the name of
PWL or one of its related companies - allletterheadings, all invoices, all
business bookings, and so on. The studios were known for trading pur-
poses as PWL or sometimes The Vineyard. All publicity issued by PWL,
which was not great, referred to PWL or Stock Aitken Waterman or
SA W. The name The Hit Factory' in relation to PWL \\'as and is a nick-
name or accolade or mantle conferred on PWL by the public, not a name
adopted by PWL under which it traded.

There are only two minor possible exceptions to that. The first is the
adoption of the name The Hit Factory' for the compilation albums.
Secondly, in adopting a catalogue number for albums issued under the
PWL label, the prefix lettering and numbering has been adopted HF1,
HF2, HF3, etc. the letters HF standing for Hit Factory. Though to
extreme experts in the market this may be significant, I am satisfied that
the use of such prefix HF is not of general impact in conferring the trade
name of The Hit Factory' on PWL.

Mr Waterman himself has enJoyed considerable exposure to the media

under the name The Hit Man'. Since October 1987 there has been a
weekly two hour show called The Hit Man' on local radio in Liverpool.
There is a Granada television show, in which Mr Waterman appears
with a female co-presenter, called The Hit Man and Her', which goes
out from 2.00 a.m. to 4.00 a.m. on Sunda~r morning One would have
thought the audience at that stage was limited, but when it was pro-
posed to drop it in one area, there was an outcry. In any event, the name
appears in the TV Times. Since 1988 Mr Waterman has from time to time
taken part in a 'Coca-Cola Road Show' called The Hit Man'. More
directly, in April 1988 BBC Radio 1 put out a two part show about Stock
Aitken Waterman called The Hit Factory' and that name appeared in
two editions of the Radio Times. Following the issue of The Hit Factory
compilation album 2, many local stations broadcast programmes under
the title The Hit Factory' which had been produced by Fanfare Records
for promotional purposes.

To sum up, at the present day the plaintiffs are and have been for three
or four years a phenomenon in the pop record industry. They are not a
normal recording studio but a one-stop shop in which, for the main part,
artists, song, recording, production, mixing, release and promotion are
handled within the one organisation, PWL. They have never themselves
traded under the name The Hit Factory'. The studios of PWL are not
generally available for use by outside record companies unless they are
used in conjunction with an in-house PWL producer or engineer.
38 rETE WATERMAN LTD & OTHERS \' CBS UNITED KINGDOM LTD (1'l93( EMLR

I turn then to the defendant, CBS. The history of CBS itself is of limited
importance. It is a member of a large international group. The defendant,
CBS United Kingdom, carries on business as a record company. It has.
also for many years owned the recording studios at Whitfield Street.
That recording studio has been carried on largely separate from the rest
of the business of CBS, though of course ultimately under the same man-
agement control. As I have said, the existing studio is not in the top class
and, in order to deal with this, in 1989 CBS resolved to try and improve
the rating of the studios. CBS entered into negotiations with Mr Ed
Germano and, through Mr Germano, \·... ith his company, The Hit Factory
Ine.
Those negotiations culminated in an agreement on 19 February 1990
made between Mr Germano personally (defined slightly unusually in
the agreement as 'Company') and CBS. It provided for a jOint venture in
the conduct of the Whitfield Street studios to last for five and a half years
with a possible extension. Substantial expenditure was to be incurred by
CBS on the improvement of the premises and the facilities. The effective
day-ta-day management of the Whitfield Street studios is to rest with Mr
Germano who will be answerable to a special management board on
which representatives of CBS and Mr Germano \vill serve, which man-
agement board will ultimately be responsible to the CBS board.
Clause 2 of the agreement provides as follows: 'Company hereby grants
to CBS (i) the exclusive right in the Territory', that is to say the United
Kingdom, 'during the Term to use the Trademark .. .'. Those terms are
dealt with in Schedule 2, headed 'Servicemark'. Paragraph 1 of Schedule
2 defines the servicemark or trademark as the words ' ... "THE HIT
FACTORY" whether used as a business name, servicemark or trade-
mark, and (when used) its associated logo'. Paragraph 2 provides for
Mr Germano to seek to register the servicemark in the United Kingdom,
a step he has in fact taken. Paragraph 3 contains a warranty by
Mr Germano that 'Company' has the exclusive right to use the service-
mark throughout the territory and will take prompt and appropriate
action to restrain any unauthorised use. Paragraph 4 provides that CBS
may use the servicemark in any form approved by Mr Germano, includ-
ing coupling the servicemark with such other words as Mr Germano
may approve. '(THE HIT FACTORY LONDON is hereby approved ... )'
It should be noted that the form of the agreement provides merely a
right to CBS to use the mark The Hit Factory'; it does not impose on
them any obligation so to do.
To the extent that CBS in defending this action is putting forward a posi-
tive right to use the name 'The Hit Factory' itself (as opposed to contest-
ing PWL's exclusive right to the name) CBS's rights are wholly derived
from the rights enjoyed as licensee under that agreement from
 rETE WATERMAN LTD & OTHERS \' CBS UNITED KINGDOM LID (1993) EMLR 39

Mr Gerrnano. There is a point which I should mention, only to get it out

of the way. It appeared, as the trial continued, that the rights in the mark
were probably not vested in Mr Germano personally but in one of his
companies, The Hit Factory Ine. A suitable document was, on 20 July,
obtained whereby The Hit Factory Ine. joined in the agreement so as to
license the use of the name to CBS. It is common ground that CBS enjoys
such rights as it has by reason of either Mr Ed Germano's or The Hit
Factory Inc.'s rights in New York in the use of the name.
The history of the New York studio is shortly this. A studio under that
name was opened in New York in about 1969 and traded under the
name 'The Hit Factory' from 1970 onwards. In 1975 Mr Germano pur-
chased The Hit Factory Ne,... York and transferred the studios to The Hit
Factory Ine., which is a New York company 100Cl(, owned by him. Hit
Factory Ine. registered the name The Hit Factory' as a service mark in
the United States. That registration lapsed in 1985 but was re-registered
in the name of Hit Factory Ine. on 10 February 1987 and is still valid,
Therefore Hit Factory Ine. is the owner of the US service mark in the
name The Hit Factory'.

As I have said, The Hit Factory New York is a division number one
studio. Both the studio and Mr Germano enjoy a worldwide reputation
providing a service of the highest class. It is run on conventional lines,
that is to say, it is a recording studio generally available to record com-
panies for hiring without producers and carrying on business simply as
a recording studio. Very many famous recording stars have recorded
there and many hits have been made there. In addition to the name of
PWL appearing in the top studio charts in Studio Magazine, Hit Factory
New York under that name has also frequently appeared there, though
nowhere near as often as PWL. All witnesses with professional knowl-
edge speak very highly of both the studios and Mr Germano. Being a
studio with an international reputation as it has, many non-American
artists and record companies and producers have used it. In particular
over the years there have been many customers from the United
Kingdom. Mr Waterman himself on one occasion used The Hit Factory
New York studios.
The evidence before me satisfies me that over the period from 1982 to
1990, United Kingdom record companies have booked and been
invoiced directly in this country for recordings made in the New York
studio. The total cost of that hiring by a number of different record
companies amounts to over $500,000, though it is fair to mention that of
that, something over $150,000 is attributable to the recording in the Ne,...
York studio of the L10yd Webber musical Starlight Express by the
American cast, that recording being made for a UK company.
40 PETE WATERMAN LID & OTHERS v CBS UNITED KINGDOM LTD (1993) EMLR

In addition to that trade, there have been invoiced to UK artists during

the years 1989/1990, bookings amounting to over $50,000. As I under-
stand the evidence, the booking of the New York studios has been made
direct from the UK by the artist or company writing, faxing or telephon-
ing from this country to the office of The Hit Factory New York in New
York. The evidence shows a further $3.5 million worth of business done
in The Hit Factory New York, invoiced to United States resident record-
ing companies but relating to United Kingdom artists. It is difficult to
assess the weight to be given to that evidence. Plainly some of the artists
in question vI/ere not UK resident at the material times and plainly a lot
of it is attributable to the records being made by American producers.
But there was evidence that where, as is often the case, an English
recording company has an affiliate company in the United States, the
booking of the New York studio would have been handled through the
United States affiliate company and not directly by the UK company. I
am satisfied therefore that although the scale of business is nowhere near
as great as 3.5 million, there is in that figure a substantial body of
bookings for UK artists placed with The Hit Factory New York through
the medium of a United States company at the behest of the United
Kingdom company.
In summary, I am satisfied that over the years The Hit Factory New York
has drawn substantial custom from United Kingdom customers as a
result of its reputation in this country, and has acquired and still has a
reputation as a recording studio in Ne\v York of the highest repute.
Unlike PWL, The Hit Factory New York trades under the name 'The Hit
Factory'. Its writing paper, logo and business documents are all headed
'The Hit Factory' in bold lettering. The \\lord 'Inc.' is added in smaller
lighter type when Hit Factory Ine. is the company in question. Other
companies in the group use the name 'The Hit Factory' on their \\lriting
paper and other documents. Although it is not the policy of Mr Germano
to advertise, on the sleeves of albums it is customary to credit in small
type the studios where the individual tracks were made. That credit,
which appears on albums which are freely circulated in this country,
often refers to the studios as 'The Hit Factory Ne,,\' York' but sometimes
simply as 'The Hit Factory'. The record sleeves, as I have said, circulate
in this country. Further, as I have said, The Hit Factory New York
frequently appears in the chart of the top studios.
Turning now to the witnesses, there is a substantial body of evidence
which I accept that to individual United Kingdom witnesses the words
'The Hit Factory' connote The Hit Factory New York. Some of such \vit-
nesses are not aware of the name having been applied to PWL. Others
were aware of the name The Hit Factory having been applied to PWL
but regard that as a mere nickname or generic title.
 rETE WATERMAN LTD & OTHERS" CBS UNITED KINGDOM LTD (19931 EMLR 41

All The Hit Factory New York services to customers have been rendered
in the studios in New York. All bookings have been received by them
there. They have had no agent or place of business at any time in this
country.
To sum up this side of the coin, The Hit Factory New York has for many
years traded under the name 'The Hit Factory' and enjoyed a high inter-
national reputation amongst those directly involved in hiring and using
recording studios under that name. That reputation has at all material
times extended to this country and has led to its trade including a sub-
stantial number of customers from this country who use the studios in
New York. It has never had a place of business or an agent here. Its ser-
vices have been rendered exclusively outside the United Kingdom.
I must shortly deal with certain suggestions of lack of good faith. No
allegation is made by PWL that CBS in adopting the name The Hit
Factory' for its Whitfield Street studios is seeking to acquire any part of
the value of the PWL's goodvvill in that name. On the other side, CBS has
raised an allegation of lack of good faith against PWL. In its defence CBS
say:
... the defendant will rely upon the following facts and matters
as evidence that the said Mr Germano has had and has a suffi-
cient trading reputation in the United Kingdom as pleaded in
paragraph 17 hereinabove, and further that the plaintiffs have at
all material times had knowledge thereof ...
Therefore the body of the pleading is simply a pleading as to knowledge
of Mr Germano's reputation. However, the particulars given under it go
much further. It is alleged that at all material times Mr Waterman well
knew that if he or any of his companies sought to trade as The Hit
Factory' or to represent themselves vvithin the music industry or to rele-
vant persons as being The Hit Factory', he would have attracted adverse
criticism and might have been the subject of legal proceedings by or on
behalf of Mr Germano. It is further alleged that Mr Waterman at all
material times knew and suspected that he could not acquire a material
reputation under and by reference to the name The Hit Factory' by
direct and open use of that name, and that if PWL has acquired material
reputation:
it has been so acquired by the said Mr Waterman causing or
encouraging the development in the popular press of the use of
the epithet or journalist'S tag The Hit Factory' in connection
with his activities in the hope and with the intention that he or
the plaintiffs would acquire, apparently by independent
acclaim, such a reputation in order that he or the plaintiffs could
in due course claim a trading reputation in that name.
42 PETE WATEAAtAN LID & OTHERS \' CBS UNITED KINGDOM LID (1993( EMLR

Therefore it is an allegation of deceitful conduct by Mr Waterman that

though appearing merely to accept a popular accolade he was manufac-
turing it covertly so as to keep it away from Mr Germano's knowledge.
I have grave doubts whether any such case could properly be made on
that pleading since those allegations of near-dishonest conduct are mere
particulars of knowledge. But I am certainly not going to deal with it on
that basis. I am quite satisfied the allegation is ill-founded. Mr Waterman
has at all times accepted that he knew of The Hit Factory New York. He
struck me in the witness box as an honest. good and, I am glad to say,
entertaining witness. His evidence was that he did not seek to use or
encourage the name The Hit Factory'. He was rather superstitious as to
its use, fearing that to encourage its use might bring the end to its apt-
ness.
There are only hvo factors \vhich could conceivably support the plea
made. The first is the evidence of Mr Munns who gave evidence that in
the early days of The Vineyard both Mr Waterman and Mr Howells
referred repeatedly to The Vineyard in terms that it was going to be or
was a hit factory. I did not regard Mr Munns as a very satisfactory
witness since he \vas given in other respects to exaggeration. Even if
Mr Munns were right, that is certainly no evidence of a secret fostering by
Mr Waterman of the name 'The Hit Factory'. According to
Mr Munns, it was the most blatant ouhvard encouragement of the use of
the name. I think it is far more likely that the conversation was of a much
more limited kind and sprang from Mr Waterman's undoubted respect
and admiration for Tamla Motown, whose exploits he was out to emulate
in this country. The only other matter which could have been relied upon
was the suggestion that Mr Howells in some way kept the naming of the
first compilation album secret. I have already said that I reject that case.
I therefore entirely acquit Mr Waterman and Mr Howells and PWL of
any improper or deceitful conduct in this case. The truth of the matter is
that wo bodies each in their different related spheres have acquired
some degree of interest in the name The Hit Faccory'. The question is
whether either or both of them have acquired an absolute right to that
name. There is no question of deceit on either side.
I wiII now turn to try and define the issues. The mere fact that a name or
description which has been applied to PWL in this country is now to be
applied to the Whitfield Street studio, thereby causing confusion, is not
by itself enough to enable PWL to succeed in this action for passing off.
(See Anheuser-Busch [ne. v Budejm·;cky Budvar NP, - the Budweiser case
- [19841 FSR 413, per Oillon L.J. at page 477). The minimum require-
ments for success in a passing off action relating to goods and presum-
ably services have been summarised by Lord Oiplock and Lord Fraser in
 rETE WATERMAN LTD & OTHERS \' CBe; UNITED KINGDOM LTD II'~CJ31 EMLR 43

EYi.'ell Warnink " f. TOiL'llend E:,. SOilS (the Adc'ocaat case) [19791 AC 731, at
742 and 755. These two passages have to be read together since Lord
Fraser concentrates primarily on what conditions have to be satisfied by
the plaintiff, whereas Lord Diplock concentrates on what the defendant
must have done. I will read them in reverse order. Lord Fraser says this:
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 partic-
ular 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 defen-
dants selling goods which are falsely described by the trade
name to which the goodwill is attached.
In Lord Diplock's formulation he identifies five characteristics which
must be present in order to create a valid cause of action for passing off:
a misrepresentation (2) made by a trader in the course of
... (1)
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 goodv,rill 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) \vill prob-
ably do so.
The first issue in this case relates to Lord Fraser's second requirement,
namely, has PWL established by the evidence that in the minds of the
public (or possibly a section of the public) the name 'The Hit Factory'
distinguishes the services and business of PWL from other similar ser-
vices? I will call that 'the distinctiveness issue'. If PWL cannot establish
that, then it has no right to complain of passing off by the use of that
name by other people.
If PWL succeed in establishing that the name is distinctive of PWL, CBS
puts fonvard the case that since The Hit Factory in Ne\'1l York has used
the name 'The Hit Factory' in trading with its customers in this country
from at least 1980 onwards, The Hit Factory New York and, through it,
CBS has acquired a right to use the name 'The Hit Factory' concurrently
with PWL. That is to say that PWL would have no right to stop the
44 rETE WATERMAN LTD & OTHERS ,. CBS UNITED KINGDOM LID [19931 EMLR

continued use by The Hit Factory New York, Mr Gennano and CBS of
the name The Hit Factory' in conjunction with the new studio. There are
cases, for example the Champagne case and the Advocaat case where there
is a class of traders who together are exclusively entitled to use a name.
In such a case any member of that class can stop any outsider from using
the name but no member of the class can restrain any other member of
the class from its use. If that principle applies in the present case, it
would follow that The Hit Factory New York and PWL were both mem-
bers of a class which together could use the name The Hit Factory', nei-
ther could restrain the other from doing so, but both could restrain third
parties from doing so.
How that developed is explained by Lord Diplock in the case where the
General Electric Co. of the USA and General Electric Co. of the UK came
into collision over their trade marks: General Electric Co. <of U.5.A.) L'
General Electric Co. Lld [1972]1 WLR 729, from \,... hich I will read this pas-
sage (at page 743):
But the interest of the public in not being deceived about the ori-
gin of goods had and has to be accommodated \'\'ith the vested
right of property of traders in trade marks which they have hon-
estly adopted and which by public use have attracted a valuable
goodwill. In the early 19th century trade was still largely local;
marks which were identical or which closely resembled one
another might have been innocently adopted by traders in dif-
ferent localities. In these their respective products \vere not sold
in competition with one another and accordingly no question of
deception of the public could then arise. With the rapid
improvement in communications, however, in the first half of
the 19th century markets expanded; products of two traders
who used similar marks upon their goods could thus come to be
on sale to the same potential purchasers with the consequent
risk of their being misled as to the origin of the goods.
Furthennore, it was accepted that as an adjunct of the goodwill
of the business the right to use a trade mark might be acquired
by more than one successor if the goodwill of the business were
divided, as it might be, for instance, where the business had for-
merly been carried on in partnership or from more than one
manufactory or shop. To meet this kind of situation the doctrine
of honest concurrent user was evolved. Under this doctrine a
trade mark remained entitled to protection in cases where the
use of it had not originally been deceptive but a risk of deception
had subsequently arisen as a result of events which did not
involve any dishonesty or other wrongful conduct upon the part
of the proprietor of the mark. If, hO\vever, his own wrongful
 PETE WATERMAN LTD & OTHERS \' CBS UNITED KINGDOM LTD [19'13[ EMLR 45

conduct had played a part in making the use of the mark decep-
tive, the Court of Chancery , ...·ould not grant him an injunction
against infringement. This was but a particular application of
the general equitable doctrine that he who seeks equity must
come with clean hands.
In cases of honest concurrent user, neither of the owners of the
mark could restrict the other from using it, but as against a
usurper who infringed it either owner of the mark could obtain
an injunction: Dent c' TlIrpill ... , and SOlltilOrI1 t' Reyllolds.
So it is said here that even if the name The Hit Factory is distinctive of
rWL, it also was and is distinctive of The Hit Factory New York whose
business is expanding by opening here. Since there is no allegation of
dishonest conduct by The Hit Factory New York or by CBS, CBS and The
Hit Factory Ine. claim that they are at least entitled to use the name con-
currently. To that argument, rWL respond by saying that The Hit
Factory New York has never had any enforceable rights here since it has
no place of business here, nor has it got an agent here, nor has it carried
on business here, and all its services have been provided outside the
United Kingdom. rWL say that in those circumstances, in reliance on the
Crazy Horse case, Alaill Bernardin ,'Pat'ilion Properties Ltd [19671 RrC 581,
The Hit Factory in New York did not have any goodwill in this country
capable of protection. The issue therefore under this head is whether,
assuming that rWL has shown that the name The Hit Factory is distinc-
tive of rWL, CBS's claim to a right of concurrent user is defeated by the
Cra:1/ Horse principle. [ will call that 'the Crazy Horse issue'.
Alternatively, CBS contend that even if The Hit Factory' is distinctive of
rWL, and CBS has itself no concurrent right to use the name, CBS is not
guilty of a misrepresentation (Lord Diplock's first requirement) in
applying the name The Hit Factory' to itself, since The Hit Factory'
accurately and honestly refers to a business which has a reputation in
that name, which has been carried on and is going to be carried on under
that name. It is therefore said that there will be no misrepresentation. I
will call that issue 'the misrepresentation issue'.
Finally, CBS contend that rWL has not proved the probability of any
damage to PWL by CBS carrying on business under the name The Hit
Factory'. I will call that 'the damages issue'. I will consider those issues
in turn.
The distillctii.'elless isslIe.
The name The Hit Factory' is neither a proper name nor a fancy or made
up name. It is, in a way, descriptive. The law is well established that if a
name is merely descriptive no one can claim an exclusive right to it
46 PETE WATERMAN LTD & OTHERS v CBS UNITED KINGDOM LTD [19<l3[ EMLR

unless he can show that in the minds of the public it has become so
closely associated with his goods or services as to have acquired the
secondary meaning not simply of services of that description but
specifically of seryices of which he is the source. (See Reckitt [" Co/mall
Products v Bordell file. - the lif case - [1990)1 AER 873 per Lord O\iver
at pages 885 to 887). Most cases involving descriptive names are
concerned with names which describe the nature of the goods or the
services in question, for example 'office cleaning' or 'cellular clothing', or
'Chicago pizza'. In such cases the name describes the product or the
seryices.
The name The Hit Factory' is rather different. It does not describe the
product which is being provided or the service which is being provided.
Rather it is a reference to the quality of what is being provided. It was
not suggested in argument, and I do not think it would be right, that the
la\,.' as laid down in the passage in Lord Oliver's speech to which I have
referred, does not at least equally apply to a case where the description is
a description of a quality of the object as opposed to its nature.
Accordingly, the question is whether the name The Hit Factory' has
acquired a special meaning indicating only PWL. That is a question of
fact, not law. (See per Lord Jauncey in the lif case at page 896.)
The first matter to be noticed is the impermanence of the name.
Mr Waterman himself accepted that in five years' time (though he
sincerely hoped it would not be the case) the name The Hit Factory'
might no longer be apt to apply to PWL. If the success of PWL in what is,
by any standards, a changing and fashionable field, were to be less
pronounced in five years' time, it might not be an apt description of \..:hat
is going on in PWL. Another witness, when the point was put to him,
said: Well, if they stop making hits, they may well be called The Flop
Factory'. Nobody is suggesting that that is going to happen. But the truth
of the matter is that it is a feature of the name that there is a possibility of
it becoming inapposite and inappropriate and therefore impermanent.
Moreover, one has the factor that PWL has not itself adopted the name
The Hit Factory' as a name under which it trades. It is, as I say, an acco-
lade or mantle conferred on it by the public. Those who give can also
take away. The fact that PWL has not itself adopted the name as its trad-
ing name is not in law in any way fatal to a claim to the name being dis-
tinctive. In the Dolly B/lle case, Edge [" 50ns Ltd l' Gallon [1' 50/1 (1900) 17
RPC 557, it was the \vasherwomen and not the manufacturers who
originally called the manufacturer's product Dolly Blue. But in that case
the product was asked for and sold in the shops under the name Dolly
Blue. Here there is no sufficient evidence that the name The Hit Factory'
is used either by those in the recording industry or the eventual retail
buyer for the purpose either of engaging PWL's services or buying
 rETE WATERMAN LTD & OTHERS \' CBS UNITED KINGDOM LTD (1993( EMLR 47

records. The name is a nickname used as a term of reference, not a trad-

ing name. The highest the evidence goes is that, within certain recording
companies, employees refer to PWL amongst themselves as 'The Hit
Factory'. In the realm of retail sales there \\'as no evidence of current
trading practices. The most I have is the recollections (now, I suspect,
rather dim) of Mr Waterman and Mr Howells as to their days in the
retail trade when the next generation, or the next generation but one,
would come into the record shop and, having seen something on tele-
vision, ask for something by the name of what they had seen in order to
buy it for their child or grandchild. I have no evidence that that is still
the practice. I have no evidence that anybody has ever asked for the lat-
est Hit Factory record. I certainly infer that many thousands of people
have been in to ask for 'The Hit Factory' album but that is because it is
the name of the record not because it is the name of the organisation.

There is no doubt at all in my mind that both in the media and by indi-
viduals PWL has been referred to as 'a' and on occasions The' Hit
Factory. To a substantial number of people in this country the phrase
The Hit Factory' means PWL. But those words have in the past been
applied to other recording enterprises, all of which \'\/ere or are of the
same special type as PWL, that is to say, one-stop recording organisa-
tions producing a house style or sound and which have been labelled 'a
hit factory'. In particular the evidence discloses that Tamla Motown has
been known by a substantial number of people as a hit factory. There
were 11 witnesses who have heard the phrase applied to Motown. In
addition, various other organisations are spoken of by a few witnesses
as having been referred to as 'a hit factory': Stax, Philadelphia
International, Phil Spectre. There is a single press cutting referring to
Zomba, a currently successful organisation, as 'a hit factory'. The appli-
cation of the description 'Hit Factory' to Motown and Stax took place
when they were both currently successful; so with Zomba and PWL, \ve
have two organisations currently successful being referred to, though
Zomba only on a very minor scale, as 'a hit factory'. We therefore have in
this situation the use of a phrase which has in the past been applied to
other organisations, some of which have lost it completely, and for oth-
ers of which there is a sort of residual folk memory of them being
referred to as 'a hit factory'.

Again, there were a number of witnesses (whose evidence I accept) that

to them the words The Hit Factory' connoted not PWL but Ed
Germano's New York studio. I think it is fair to say that those came pri-
marily from what Mr Bates called the more pompous end of the market,
in the sense that they sho\'ved very little lively interest in the Stock
Aitken Waterman product. But the fact is that amongst the record-
48 rETE WATERMAN LID & OTHERS \' CBS UNITED KlNGDOM LTD (1993) EMLR

interested public there are those who do associate the name 'The Hit
Factory' with the New York studio and not with PWL.
For the purposes of exposition only, I would put the witnesses into four
categories:
1. Those who associate The Hit Factory' with PWL and no other organi-
sation. These mainly consist of PWL fans, the young buying public at the
non-pompous end of the market, and journalists in the tabloid and pop
record press who are catering for that market. Those in this group do not
even know of the existence of The Hit Factory in New York. Most are
ignorant of the name having been applied before their birth to Motown
and others. They refer to PWL as The Hit Factory'.
2. Those who now associate the name The Hit Factory' in this country
with PWL. However, they are aware that the name has been applied to
Motown and others in the past and some are aware of The Hit Factory
New York. However, they do not in this country regard a reference to
The Hit Factory' as anything other than a reference to PWL. These wit-
nesses are primarily from the recording industry and the non-tabloid
journalistic witnesses catering for the whole of the pop market.
3. Those whose associate The Hit Factory' primarily with The Hit
Factory New York but are well aware of the fact that PWL is commonly
referred to as 'a hit factory' and in some cases The Hit Factory'. This
group are often aware the name has been applied to Motown in the past
and they regard the name The Hit Factory' as a passing nickname for
organisations of the same type.
4. Those who associate The Hit Factory' with The Hit Factory New York
alone and are not even aware of the name being applied to PWL. This is
probably a small group, usually aware of the application of the phrase to
Motown in the past, though not always. Witnesses of this kind are pri-
marily in the recording industry.
Now though that is not a hard and fast classification, it should be clear
from that that when one looks at the public engaged in the record indus-
try as a whole, whether as producers, record companies, artists, journal-
ists or buyers, there is no uniform identification of the words The Hit
Factory' with PWL. To my mind that is fatal to PWL's claim in this case.
They have not shown that a descriptive phrase has become distinctive of
them and them alone.
There is, however, a further point which Mr Carr in his closing speech
for PWL sought to make. I have no doubt that the first group that I men-
tioned is a very substantial one and that is a group to which the words
currently in this country The Hit Factory' mean PWL. Mr Carr sought,
 rETE WATERMAN LID & OTI-lERS v CBS UNITED KlNGDOM LID (19931 EMLR 49

as I understood him, to say that even if PWL is not distinctive to the

whole of the pop public, there is a substantial section of the public to
which The Hit Factory' means PWL and PWL alone. Therefore it is said
in relation to that sector of the public PWL satisfies Lord Fraser's
requirement. Then, the argument goes, the presence of another Hit
Factory at Whitfield Street will amount to a misrepresentation to those
falling within that group which will produce confusion in their minds
between Whitfield Street and PWL and there will therefore be a mis-
representation.
In my judgment this attempt to carve out a section of the public which
will be misled is not legitimate. It seems to me impermissible in cases of
this kind to split the relevant public so as to define sections of the public
by reference to their state of knowledge. The pop record industry oper-
ates to make, market and sell to the public. If one were discussing a trade
name in the strict sense, for example the name of a specialist piece of
recording equipment, it might be said that the end user, the retail buyer,
was not concerned with the trade name of such recording equipment. In
such a case it might be possible to say that the only relevant section of
the public consisted of those involved in buying and using such special-
ist equipment. But, in my judgment, where the name in question is a
nickname or accolade used throughout the various stages of making and
marketing records, the relevant section of the public must be all those
VI/ho at any of those stages may come across the nickname or accolade. I
do not think it is legitimate to slice the public into parts.
Even if I am wrong in that view, I have made the classification into four
groups which I ha\'e merely for the purposes of exposition. There is in
fact no hard and fast boundary between those groups. People will be on
the borderlines betvl/een one and the other. Their state of knowledge and
their understanding of the meaning of The Hit Factory' will have a
number of gradations inherent in it. It is impossible objectively to define
a section of the public which is the section where PWL has an exclusive
right.
Finally, I do not think this case is open on the pleadings. The claim on
the pleading was that the name The Hit Factory' was distinctive to 'the
interested public'. In particulars given under paragraphs 6 and 17, 'the
interested public' were defined as including 'record companies, produc-
ers, recording artists and their agents; the interested general public: jour-
nalists, radio and TV directors, editors, retail purchasers and fans'. There
was no alternative plea advanced, so far as I can see, that the reputation
might be limited to only some of those members of the public. I certainly
was not aware when the evidence was being given that I had to direct
my mind to the possibility that only certain sectors of the public
50 rETE WATERMAN LID & OTHERS "CBS UNITED KINGDOM LID (1993( EMLR

interested in pop music might exclusively associate the name The Hit
Factory' with PWL.
I therefore hold that PWL has not established that the name The Hit
Factory' is distinctive of PWL. That is enough to dispose of the action but
since the case is an unusual one and may go to the Court of Appeal.
which could take a different view, I must go on to consider (I fear at con-
siderable length), the Crazy Horse issue.
The Crazy Horse issue.
This only arises on the assumption, contrary to my view, that PWL has
established a distinctive goodwill in the name The Hit Factory' and that
The Hit Factory New York had and has a trade reputation under that
name in this country. I find as a fact that before 1987 The Hit Factory Ine.
and its studio The Hit Factory New York had a reputation in this country
under the name The Hit Factory' amongst record companies, record
producers and others concerned vvith the selection of the recording stu-
dios to be used. On that assumption and finding, questions of prior and
concurrent use arise. I hold that, subject to the question whether such
reputation can be asserted in the courts of this country, the prior use by
Hit Factory Ine. of the name The Hit Factory' in dealing with its cus-
tomers in the United Kingdom would prevent PWL from obtaining an
injunction against the continued use of that name by The Hit Factory
New York and its licensee, CBS.
Mr Cran accepts that in order to establish a right to prior or concurrent
use within the principle enunciated by Lord Diplock in the General
Electric case which I have quoted, he has to show that as against anyone
other than PWL he has an enforceable right to the name under English
law. PWL say, in reliance on the Crazy Horse case, that there is no such
enforceable right since although CBS had and has a substantial body of
customers in this country, it has had no place of business or agent here
and has done nothing here; all its services and business have been con-
ducted in New York.
Although the point only arises in a contorted way in the present case, it
is a point of great importance. The issue is whether the English court will
protect the trade connection with the United Kingdom customers of non-
UK traders. In the passage I quoted of Lord Diplock in the Gmeral
Electric case he demonstrated how the principle of honest concurrent use
was developed in 19th century England to meet the problem where two
traders using similar marks in separate areas of the United Kingdom
were brought into the same market within the United Kingdom by
improvements in internal communications. The changes in the second
half of the 20th century are far more fundamental than those in 19th cen-
tury England. They have produced worldwide marks, worldwide
 PETE WA TERMAN LTD & OTHERS v CBS UNITED KINGDOM LTD (1'193( EMLR 51

goodwill and brought separate markets into competition one with the
other. Radio and television with their attendant advertising cross nation-
al frontiers. Electronic communication via satellite produces virtually
instant communication between all markets. In terms of travel time,
New York by air is as close as Aberdeen by rail. This has led to the deve-
lopment of the international reputation in certain names, particularly in
the service fields, for example Sheraton Hotels, Budget Rent A Car.
In my view, the law will fail if it does not try to meet the challenge
thrown up by trading patterns which cross national and jurisdictional
boundaries due to a change in technical achievement.
The problem is particularly acute with service industries. A first division
recording studio is catering to a market which treats crossing the
Atlantic as an everyday incident. Similar problems arise in relation to
professional and other services. For example, an internationally famous
hospital in Paris or Boston, Massachusetts draws its patients from
worldwide. Is it unable to protect its good\'l/ill otherwise than in its home
country?
As a matter of legal principle, I can see no reason why the courts of this
country should not protect the trading relationship between a foreign
trader and his United Kingdom customers by restraining anyone in this
country from passing himself off as the foreign trader. The essence of a
claim in passing off is that the defendant is interfering with the good\'l/ill
of the plaintiff. The essence of the goodwill is the ability to attract cus-
tomers and potential customers to do business with the owner of the
goodwill. Therefore any interference with the trader's customers is an
interference \'I/ith his goodwill. The rules under which for certain pur-
poses a specific local situation is attributed to such goodwill appear to
me to be irrelevant. Even if under such rules the situs of the goodwill is
not in England, any representation made to customers in England is an
interference with that goodwill wherever it may be situate. Only if
English law refuses to recognise the existence of rights locally situate
abroad, should the English courts refuse to protect such rights. But
English la\'I/ in general is not so chauvinistic; it does recognise and pro-
tect rights which are locally situate abroad. The rights of a beneficiary
under a New York trust in assets in England will be protected by an
English court even though the situs of his right is in New York.
Therefore, when a foreign trader has customers here, one would expect
the English courts to protect his goodwill with those customers.
Down to the decision in the Crazy Horse case in 1967 there was nothing in
the authorities inconsistent with that view. In the Pall/zard Levassor case
[1901) 2 Ch. 513, the court restrained the use of the name of the French
car manufacturer in this country by a usurper even though the French
52 PETE WATERMAN LTD & OTHERS" CBS UNITED KINGDOM LTD (1993( EMLR

company had no place of business or agent here and did not sell directly
to customers here. It was sufficient that cars were bought in France and
imported here. In Poiret v lules Poiret Ltd (1920) 37 RPC 177, the plaintiff
obtained an injunction here though he had no place of business here. He
had visited this country to sell and had English customers. In RI Reuter
Co. Ltd v Muhlens (1953) 70 RPC 235, a trader whose goods were not
being imported here was held to have no protectable interest here. In
T. Gertli AG l' EI Bowman (London) Ltd [19571 RPC 389, Jenkins L.J.
stressed that there had to be user of the name in this country which asso-
ciated the name with a foreign trader. In Sheraton Corp. v Sheraton Motels
Ud [19641 RPC 202, Buckley J. granted an interlocutory injunction to the
plaintiff, the well known international hotel chain, which then had no
hotel in England but did have an office which took bookings for the use
of its hotels outside the United Kingdom.
Down to this stage, apart from one passage in the judgment of Romer L.J.
in the Reuter case, there is no reference to the local situation of the good-
will being important. The critical questions have been (a) the use of the
name in this country and (b) the presence of customers here.
In the Crazy Horse case the plaintiffs were the proprietors of the well
known Crazy Horse saloon in Paris. That saloon enjoyed a considerable
international reputation and had been advertised in this country. The
defendants had opened a Crazy Horse saloon in London. Pennycuick J.,
with regret, refused to grant an interlocutory injunction to restrain the
carrying on of the Crazy Horse saloon in London. The judge treated the
plaintiffs as having shown that there were English customers of the Paris
saloon (see page 585, line 5), but there was no evidence that bookings
had been placed in England for the use of the restaurant in Paris (see
page 587, line 33). The judge posed the question that he had to answer as
being vvhether the owner of an establishment carried on abroad can
maintain a passing off action in this country in circumstances in which
he has carried on no activities whatever in this country except sending
advertising material to this country. He then referred to a passage in the
speech of Lord Macnaghten in Commissioners of Inland Revenue l' Muller &
Co.'s Margerine Ud* speaking of goodwill as follows:
It is a thing very easy to describe, very difficult to define. It is the
benefit and advantage of the good name, reputation, and con-
nection of a business. It is the attractive force which brings in
custom. It is the one thing which distinguishes an old-estab-
lished business from a new business at its first start. The good-
will of a business must emanate from a particular centre or

"119011 AC 217
 PETE WATEAA1AN LID & OTHERS v CBS UNITED K1NGOOM LID (1993( EMLR 53

source. However widely or extended or diffused its influence

may be, goodwill is worth nothing unless it has power of attrac-
tion sufficient to bring customers home to the source from which
it emanates. Goodwill is composed of a variety of elements. It
differs in its composition in different trades and in different
businesses in the same trade. One element may preponderate
here and another element there ... For my part, I think that if
there is one attribute common to all cases of goodwill it is the
attribute of locality. For goodwill has no independent existence.
It cannot subsist by itself. It must be attached to a business.
Destroy the business and the goodwill perishes with it, though
elements remain which may perhaps be gathered up and be
revived again.
Reverting now to the Crazy Horse case, Pennycuick J. quoted a passage
from the judgment of Jenkins L.J. in the Oatli case and then at page 534
said this:
The statement in the judgment of Jenkins, L.J. \'\/hich I have just
read unequivocally requires user to be in this country. That it
seems to me is what one would expect: that a trader cannot
acquire goodwill in this country without some sort of user in
this country. His user may take many forms and in certain cases
very slight activities have been held to suffice. On the other
hand, I do not think that the mere sending in to this country by a
foreign trader of advertisements advertising his establishment
abroad could fairly be treated as user in this country.
Pennycuick J. distinguished the Poiret and Sheratoll cases on the basis
that in each there had been some business activity in this country - in
the case of Poiret the sales visits, and in the case of Sheraton the booking
office - which could form the basis of having a local business and good-
will.
The Crazy Horse decision appears to establish that even if the foreign
trader has customers here he cannot protect his reputation unless he has
conducted some business here, even slight evidence of business activity
being sufficient. If so, it is not inconsistent with The Hit Factory Ine. in
this case having a protectable interest here since, in contrast to the Crazy
Horse case, English customers of Hit Factory Ine. placed their business in
this country with Hit Factory Ine. and \'\/ere invoiced in this country.
In my judgment, such narrow distinctions are unsatisfactory and, with
diffidence, suggest that the case was wrongly decided. Pennycuick J.
seems to have held by reference to the Mul/er case that the right to pro-
tection against passing off in this country depends upon the plaintiff
having a goodwill which is locally situate here. The steps in the
54 rETE WATERMAN LTD & OTHERS,' CBS UNlTED KINGDOM LTD 119931 EMLR

argument seem to be: (a) passing off is an interference with goodwill; (b)
goodwill always has a local situs, being the place at which the cus-
tomers' business is received; (c) if there is no business activity here the
situs of the goodwill cannot be here; therefore (d) in the absence of a
local goodwill there is no right to protect. Pennycuick J. therefore shifted
the emphasis in the early authorities from the need to show use of the
name in this country to the need to show a goodwill here, For reasons
which I have already given, in my judgment the local situs of the good-
will which is interfered with is irrelevant. If there is a use by the foreign
trader in this country of his name for the purposes of his trade, the pira-
cy of that name is an actionable wrong wherever the goodwill is situate.
Moreover, although the Muller case provides valuable guidance as to the
nature of goodwill, the attribution of a local situation to goodwill is at
best an artificial concept. In the Muller case the question had to be
answered because the Stamp Act required one to find whether property
was locally situate 'out of the United Kingdom'. The subject matter of
the contract in that case \'vas a German company, the tangible assets of
which were all outside the United Kingdom and all of whose customers
were in Germany. The Revenue claimed that the goodwill had no local
situation and therefore was not shm'\'n to be 'out of the United
Kingdom'. Therefore a decision as to the local situation of the goodwill
was required. But all the members of the House in the majority said that
in other more complex cases the local situation of goodwill might pre-
sent problems and all attached importance to the fact that all the cus-
tomers were in Germany. In the case of Lord Robertson this was the
decisive factor (see page 233l.
However, the Muller case is also treated as relevant in later authorities:
by Lord Diplock in Star IlIdustrial Company Lld i:' Yap Kwee Kor; by both
Oliver L.J. and Dillon L.J. in the Budweiser case; and by L10yd L.J. in
Colgate-Palmolive Lld v Markwcll Fillance Lld [1989) RPC 497 at 531.
The decision in the Crazy Horse case has had a mixed reception. The Irish
Court of Appeal in C [.,. A Modes l' C & A (Waterford) Lld [1978) FSR 126
refused to follow it. In that case the plaintiff, C & A Modes, had a shop in
Northern Ireland but no business in the Republic of Eire. Many of its
customers came from the Republic to shop at C & A's shop in Northern
Ireland. The plaintiff, C & A Modes, was granted an injunction against
the defendant who was seeking to set up a business called C & A in the
Republic. In that case there was no business of any kind carried on by
C & A in the Republic yet the injunction was granted.
In the Star Industrial case [1976) FSR 269, the plaintiff, a Hong Kong com-
pany which had imported toothbrushes into Singapore, ceased doing so
in 1965 and assigned its residual goodwill to another company which
 PETE WATERMAN LTD & OTHERS v CBS UNITED KJNGDOM LID (19931 EMLR 55

was not a party. The Privy Council held that it was not entitled to com-
plain if another started to pass off its toothbrushes in Singapore as the
plaintiff's. Lord Diplock said at page 269:
Whatever doubts there may have previously been as to the legal
nature of the rights which were entitled to protection by an
action for 'passing-off' in courts of law or equity, these were laid
to rest more than 60 years ago by the speech of Lord Parker of
Waddington in A.G. 5palding & Bros v A. W. Gammage Lld ... with
which the other members of the House of Lords agreed. The
passing-off action is a remedy for the invasion of a right of prop-
erty not in the mark, name or get-up improperly used, but in the
business or goodwill likely to be injured by the misrepresenta-
tion made by passing-off one person's goods as the goods of
another. Goodwill, as the subject of proprietary rights, is inca-
pable of subsisting by itself. It has no independent existence
apart from the business to which it is attached. It is local in char-
acter and divisible; if the business is carried on in several coun-
tries a separate goodwill attaches to it in each. So when the
business is abandoned in one country in which it has acquired a
goodwill the goodwill in that country perishes with it although
the business may continue to be carried on in other countries.
(See: Inland Revenue Commissiont7S v Muller & Co.'s Margerine
Lld ... ) Once the Hong Kong Company had abandoned that part
of its former business that consisted in manufacturing tooth-
brushes for export to and sale in Singapore it ceased to have any
proprietary right in Singapore which was entitled to protection
in any action for passing-off brought in the courts of that
country.
Although, as I have indicated, I find the link between the presence of a
local goodwill and the right to complain of the passing off unconvincing,
the actual decision presents no difficulty. In that case, since the Hong
Kong company had neither customers nor residuary goodwill in
Singapore, how could any act done there injure its goodwill wherever it
was situate?
In Baskill-Robbins lee Cream Co. l' GlItman (1976) FSR 545 and Maxim's Lld
v Dye (1977) 1 WLR 1115, Graham J. treated cases of international good-
will as depending not on the situs of the goodwill but on the use of the
name or mark in this country.
In the passages in the Advocaat case which I have read, proposition 4 of
Lord Fraser stresses that the plaintiff must have goodwill in England. In
that case there was no question that the plaintiffs were trading in this
country and the situs of the goodwill was therefore not in issue.
56 rETE WATERMAN LID & OTHERS \' CBS UNITED KINGDOM LID 119931 EMLR

In Metric Resources Corp. v Leasemetrix Lld (1979) FSR 571, Sir Robert
Megarry, Vice-Chancellor, granted an interlocutory injunction on the
grounds that the plaintiff had an arguable case. The plaintiffs had no
place of business here and only one English customer. At page 575 the
judge poured polite scorn on the concept that there had to be a separate
goodwill in each jurisdiction so that if there was no business here, there
could be no protectable reputation here.
In the Athletes Foot Marketing Associates Inc. v Cobra Sports Lld [1980) RPC
343, Walton J. reviewed all the cases and refused the plaintiff company
an injunction because it had no business or customers here. At page 350,
line 12 he said this:
... it would appear to me that, as a matter of principle, no trader
can complain of passing off as against him in any territory -
and it will usually be defined by national boundaries, although
it is well conceivable in the modem world that it will not - in
which he has no customers, nobody who is in a trade relation
with him. This will normally shortly be expressed by saying that
he does not carry on any trade in that particular country (obvi-
ously, for present purposes, England and Wales) but the
inwardness of it will be that he has no customers in that country:
no people who buy his goods or make use of his services (as the
case may be) there.
This is a very important passage for three reasons. First, it shows that the
importance of the plaintiff showing he has a business here is essentially
linked to the presence of customers here. Secondly, it adverts to the pos-
Sibility that in some cases the relevant area may not be limited by nation-
al boundaries. Thirdly, this passage is expressly approved by Oliver L.J.
in the Budweiser case, to which I turn.
In the Budweiser case, the plaintiff was the American manufacturer of the
well known American beer of that name. In 1972 the defendants, a Czech
company, started marketing beer in this country under the name
Budweiser. In 1973 the American beer enjoyed a wide reputation in this
country but was not being sold here, save in United States Services PX
stores, which sales the majority of the Court of Appeal held to be irrele-
vant. The Court of Appeal held that the American company was not
entitled to an injunction since they had no customers here. Oliver L.J.
defined the question at issue in various different ways. At page 462 he
says this:
The question, in its simplest form, may be expressed thus: how
far is it an essential ingredient of a successful claim in passing
off that the plaintiff should have established in this country a
business in which his goods or services are sold to the general
 PETE WATERMAN llD & OTHERS \' CBS UNITED KINGDOM LID (1993( EMLR 57

public on the open market?

At page 464 he formulates the question as being:
The question is whether this reputation associated with a beer
which, for practical purposes, nobody could buy here, constitut-
ed a goodwill in any relevant sense?
At page 465 he poses the question as being:
... what form of activity on the part of the plaintiff is required
before it can be said that he has a 'business' here to which good-
will can attach?
It is, to my mind, clear from those excerpts that he is relying on the busi-
ness and the goodwill as being in this country.
He refers to the Panhard Le"Vassor case without disapproval and describes
it as being a case in which the French company had no business here.
Oliver L.J. treated the Sheraton case as being the high-water mark of the
authorities. At page 465 he quoted the passage from Walton J.'s judg-
ment in the Athletes Foot case which I have read and added:
This is, I think, a helpful statement, but needs, in the light of the
authorities, to be approached with the caveat that 'customers'
must not be read restrictively as confined to persons who are in
a direct contractual relationship with the plaintiff, but includes
persons who buy his goods in the market.
O'Connor L.J. decided the case on different grounds. Dillon L.J. at page
476 said this:
... to succeed in a passing off action against the defendants the
plaintiffs must show that at the relevant time in 1973 they had
already acquired a goodwill in this country from the marketing
of their Budweiser in this country. (I use the word 'marketing'
because on the facts of this case no other activity is relevant.)
To this end, the reputation in this country, however widespread,
of the plaintiffs' Budweiser as the name of a very popular
American beer in the American market does not help the plain-
tiffs. That merely shows a recognition in this country of the
plaintiffs' goodwill in America; it does not show a goodwill in
this country attached to a business in this country.
As I read the decision of the majority in the Budweiser case, they do treat
the presence of a local goodwill as being essential to the right to protec-
tion. However, they treat the presence or absence of customers in this
country as being decisive of the question whether or not the plaintiffs are
carrying on a business here and therefore, it is said, having a local
58 rETE WATERMAN LTO & OTHERS \' CBS UNITED KINGDOM LTD 11'1931 EMLR

goodwill. The approval of the passage from Walton's J.'s judgment in

the Athletes Foot case making the presence of customers the key, is most
important.
Finally, I should notice the decision of the New Zealand Court of Appeal
in Dominion Rent A Car Lld v Budget Relit A Car Systems - the Budget case
- [1987) 2 NZLR 395. At pages 405 to 406 there is an illuminating con-
sideration by Sir Robin Cook of the principles relating to passing off
actions in cases of international goodwill, in which he expresses the view
that in the modern world goodwill is not necessarily split down into sep-
arate local good wills but can transcend national boundaries, a view I
would myself share were I not precluded by authority to the contrary.
The actual decision in that case does not involve any extension of the
existing law since it was held that at the material time the Australian
company was taking business for car hire in Australia through its agents
in New Zealand and was accordingly carrying on business in New
Zealand.
From this over-long review of the authorities, I reach the following con-
clusions:
A. As a matter of principle, the existence of a severable English goodwill
attached to a place of business in this country is not the basis of a right to
complain of passing off in this country. What is necessary is for the
plaintiffs to show they have a trade connection here which wiII normally
consist of customers forming part of their good v"'i 11 , wherever that good-
will is situate, which goodwill is being invaded by the acts of the defen-
dant in this country;
B. The approach which [ have set out at A above is not open to me as
there is binding authority to the effect that the basis of plaintiffs' claim
must be a goodwill locally situate in England; but
C. The presence of customers in this country is sufficient to constitute the
carrying on of business here whether or not there is otherwise a place of
business here and whether or not the sen'ices are provided here. Once it
is found that there are customers, it is open to find that there is a busi-
ness here to which the local goodwill is attached;
D. To the extent that the Crazy Horse case is authority to the contrary, [
prefer not to follow it.
It follows that since at all material times The Hit Factory [ne. has had a
substantial number of customers here, it would have been entitled to
protect its name here against third parties and is therefore entitled to
continue to use its name here concurrently with PWL even if. contrary to
my view, PWL has itself acquired a goodwill in the name.
 rETE WATERMAN LTD & OTHERS \. CBS UNITED KINGDl,M LID (lqq3( EMLR 59

Tile misrepresentation i5511t'.

CBS contend that even if, contrary to my view, they do not have a good-
will giving them a right to concurrent use (and I emphasise the word
'right') which they could enforce against third parties, they cannot be
held to be threatening to misrepresent themselves as The Hit Factory'
since that is a name in relation to which they have a reputation in this
country, albeit unlinked to any goodwill here. This contention reflects
the position that would have arisen in BudweiseY if the Czech brewery's
counterclaim to restrain the American brewery from carrying on busi-
ness here had gone to the Court of Appeal. The question is, can it be a
misrepresentation for someone who in fact enjoys the reputation in a
name in a country to trade under that name? He may not have the power
to bring a case as plaintiff but can he be found liable as a defendant if a
case is brought against him for so doing? It is unnecessary for me to
express a \'ie\'\I on this point and I have made all the findings of fact nec-
essary to resolve it should the Court of Appeal require to do so.
Likelihood of damage.
In his closing speech for PWL, Mr Carr did not persist in the submission
that CBS would, by opening in London under the name The Hit
Factory', divert bookings by outside record companies from the PWL
studios to Whitfield Street. This concession was wise. In the light of the
fact that all bookings are made in the name of PWL, that, in general, pro-
ducers and record companies are well aware of Ed Germano's Hit
Factory and its reputation, and that PWL studios are not available for
hire without either a PWL producer or engineer, I am satisfied that there
would be no diversion of recording business from The Vineyard to
Whitfield Street.
However, I\.1r Carr contends that others are Iikel~' to be confused and
decei\'ed by the presence of two Hit Factories in London. I find that there
is some risk of confusion amongst journalists, aspirant pop stars and
their managers and the record-buying public. In my judgment, the con-
fusion will not be great since that class of interested public treats the
words 'The Hit Factory' as applying primarily to the whole of the PWL,
Stock Aitken Waterman organisation, the one-stop shop, all references to
the actual studios at The Vineyard as The Hit Factory' being only inci-
dental to that wider meaning of the words The Hit Factory' as applying
to PWL as a whole.
I find that The Hit Factory at Whitfield Street will be run on the same
lines as that in New York, that is to say as a recording studio in the strict
sense. There is no risk of it being turned into an organisation similar to
PWL, nor is there any likelihood of its agreeing to the release of compila-
tion albums of records made in Whitfield Street corresponding to those
60 rETE WATElU.1AN LTD & OTHERS v CBS UNITED KINGDOM LTD (1993( EMLR

released in relation to PWL. The amount of publicity The Hit Factory at

Whitfield Street will receive is likely to be small, as is the publicity
attached to The Hit Factory in New York.
I find that there is no risk of the record-buying public being provided
with a record from The Hit Factory in Whitfield Street when they want a
record from PWL's Hit Factory.
I was pressed with the risk that the young aspirant pop star looking for
PWL would come to London with or without an equally ingenue man-
ager and come upon The Hit Factory in Whitfield Street where either he
would be turned away rudely or, marking a change of policy by Ed
Germano under the CBS tutelage, he or she would be taken in, given a
recording contract and become a CBS star instead of a PWL star. I find
this scenario wholly improbable and find that it will not happen.
I find, therefore, that, despite such confusion as will emerge, save in one
respect, it will not cause damage to PWL. l\ly one reservation is that
PWL will lose, to the extent that it has got it, the exclusivity of its reputa-
tion as The Hit Factory'. In the Lego case [19831 FSR 155, this loss of
exclusivity was held to constitute sufficient damage to justify relief. In
the light of my other findings, I find it unnecessary to decide whether
such loss of exclusivity in the present case would constitute sufficient
apprehension of damage. No evidence was led as to the nature of the
damage of this type which the plaintiffs might suffer and therefore I
need make no findings of fact on it.
For those reasons the action is dismissed.
Plaintiffs to pay three-qllarters of defclldallt's (osts.