TM2 - Passing Off

Certificate in
Intellectual Property Law

The Tort of Passing Off
Dr. Apostolos Chronopoulos
a.chronopoulos@qmul.ac.uk
The Tort of Passing Off: General
Principles
 An “economic tort”: protecting plaintiff’s interests against the
infliction of economic harm in a market context
 Economic torts constitute a narrow exception to the principle of free
competition
 Passing off: “nobody has the right to represent his goods as the
goods of another”
 If A passes his goods as those of B then:
o B loses a customer
o B loses control of his own reputation
The Tort of Passing Off: General
Principles
 Origins: an offspring the common law tort of deceit
 Elements of the cause of action:
o Goodwill
o Misrepresentation
o Damage
 Rationales
o Protecting traders’ economic expectations
o Consumer protection: informed choices and trader incentives to
maintain good product quality
o Effectiveness of competition
Goodwill: 1st element of the passing of tort
 CIR v Muller & Co's Margarine Ltd, [1901] AC 217
o “[Goodwill] is the benefit and advantage of the good name,
reputation and connection of a business. It is the attractive force
that brings in business”
o Must emanate from a particular centre or source
 Star Industrial Co. Ltd. v. Yap Kwee Kor [1976] F.S.R. 256 (Lord Diplock)
o “Goodwill, as the subject of proprietary rights, is incapable of
subsisting by itself. It has no independent existence apart from the
business to which it is attached. It is local in character and divisible;
if the business is carried on in several countries a separate goodwill
attaches to it in each.”
Goodwill:
Reputation
Customers
Commercial source
Commercial
Source
 Goodwill is exploited through symbols
o Reckitt and Colman Products v Borden [1990] RPC 341 (the Jif
Lemon case)
 Goodwill must attach to a badge of origin
o Imperial Group plc & Another v Philip Morris Limited & Another,
[1984] R.P.C. 293
Goodwill:
Reputation
Customers
Commercial source
Commercial
Source
 Meeting the Requirement of Goodwill
o Need to show a connection between a business and its customers
o Requirement is met when the plaintiff is trading within the UK
 Hard Cases
o Pre-trading goodwill
o Foreign traders?
o Foreign traders doing business online?
o Does goodwill remain a protectable intangible value after business
cessation?
 Pre-trading goodwill: Is Pre-trade Advertising Sufficient?
o Maxwell v Hogg (1867) L.R. 2 Ch. 307
• “Advertisement, distinguished from trade, is nothing” (Belgravia
magazine)
o Allen v Brown Watson [1965] RPC 191
• Plaintiffs advertised the publication of an unexpurgated version of
the autobiography of Frank Harris (originally published as “My Life
and Adventures”) under the title “My Life and Loves”
• Defendant obtained the publishing rights for the expurgated version
and advertised its publication as “My Life and Loves”
• Plaintiff prevailed
 Pre-trading goodwill: Is Pre-trade Advertising Sufficient?
o BBC v Talbot Motor Company [1981] FSR 228
• “Carfax” for traffic information service and equipment v “Carfax” for
car spares
• Extensive TV and press advertising ‘educated’ consumers to perceive
the mark “Carfax” as a symbol of BBC’s goodwill in respect to a
service that was about to be launched
o My Kinda Bones v Dr. Pepper's Stove [1984] FSR 289
• “Chicago Rib Schack” v “Dr. Pepper’s Manhattan Rib Shack”
• No goodwill can exist unless consumers have had an opportunity to
taste a meal…
 Foreign Traders
 General Principle: Mere Reputation Is Not Enough!
oHotels, restaurants, retailers etc. situated abroad should provide evidence of:
• business activity in the form of direct bookings (also through agents)
• customers in the jurisdiction (UK)
oSheraton Corp of America v Sheraton Motels [1964] RPC 202
oAlain Bernardin v Pavilion Properties Limited [1967] FSR 341
oPeter Waterman v CBS [1993] EMLR 27
oAthlete's Foot Marketing Associates v Cobra Sports [1980] RPC 343
oHotel Cipriani v Cipriani (Grosvenor Street) [2010] EWCA Civ 110
 Starbucks v British Sky Broadcasting [2015]
UKSC 31
o No set top boxes, no subscriptions, no
license for broadcasting
o Starbuck’s argument: Chinese speakers
residing in the UK were exposed to
plaintiff’s services while in Hong Kong
o Plaintiff’s programmes/trailers accessible
in Chinese through a “youtube channel”
o Videos-on-demand during flights to the UK
• Starbucks v British Sky Broadcasting [2015] UKSC 31
o Traders must have customers in the jurisdiction; not people who
happen to be customers elsewhere
o Foreign traders should not be able to impose restrictions to the
use of ordinary words in the UK market without conducting any
business or having customers in the jurisdiction
o We are now in the age of easy worldwide travel and global
electronic communication, but still, we need to keep a proper
balance between protection of international reputation and
competition within the jurisdiction
• Starbucks v British Sky Broadcasting [2015] UKSC 31
o Parallels to copyright
• Territorial protection v “single international goodwill”
o Equitable considerations
• Might be considered in the future
• Granting protection when substantial steps have been made to
establish a business in the jurisdiction
 Anheuser-Busch v Budejovicky Budvar
[1984] FSR 413
o Foreign traders
o Mere reputation is not enough
o Sporadic and occasional sales not
enough to generate goodwill that is
protectable through the tort of passing
off
 s. 56 Trade Marks Act 1994
 Protection of well-known trade marks: Article 6bis Paris Convention
o “(2) The proprietor of a trade mark which is entitled to protection under the
Paris Convention as a well known trade mark is entitled to restrain by
injunction the use in the United Kingdom of a trade mark which, or the
essential part of which, is identical or similar to his mark, in relation to identical
or similar goods or services, where the use is likely to cause confusion.
o This right is subject to section 48 (effect of acquiescence by proprietor of earlier
trade mark).
o Subsection (1) makes it clear that such protection does not require proof of
goodwill
Joint Recommendation Concerning Provisions on the Protection of Well-Known Marks,
(WIPO 1999)
1.degree of knowledge or recognition of the mark in the relevant sector of the public;
2. duration, extent and geographical area of any use of the mark;
3. duration, extent and geographical area of any promotion of the mark, including
advertising or publicity and the presentation, at fairs or exhibitions, of the goods
and/or services to which the mark applies;
4. duration and geographical area of any registrations, and/or any applications for
registration, of the mark, to the extent that they reflect use or recognition of the mark;
5. record of successful enforcement of rights in the mark, in particular, the extent to
which the mark was recognized as well known by competent authorities;
6. value associated with the mark.
Goodwill:
Reputation
Customers
Commercial source
Commercial
Source
 Residual goodwill: Goodwill that persists after business cessation
o Starting point: Star Industrial Co. Ltd. v. Yap Kwee Kor [1976]
F.S.R. 256 (Lord Diplock)
 Residual goodwill: Goodwill that persists after business cessation
o An example: Ad-Lib Club Ltd v Granville [1972] RPC 673
• Protecting trader interests in reopening or reselling the business
o Legal criteria
• Cessation of business does not necessarily means that goodwill is
destroyed. For this to happen there must be factual circumstances that
are inconsistent with the business ever being resumed again
• Goodwill persists as long as consumers continue to associate a given
name/symbol with a specific business
o Practical significance of passing off as an earlier right in proceedings
concerning the opposition to the registration of a later sign as a trade mark
 Maslyukov v Diageo Distilling [2010] EWHC 443 (Ch) Arnold J (obiter)
o DALLAS DHU, PITTYVAICH, CONVALMORE (distilleries)
 Maslyukov v Diageo Distilling
o Business Cessation
• Recommencement of business not excluded
• Distilleries demolished/one became a museum
• But: underlying businesses not liquidated!
o Consumer perception
• Sales through independent re-bottlers kept
goodwill alive! (even after business cessation)
o Importance of claims based on passing off!
• Prior rights in opposition proceedings
• Protecting non-registered commercial symbols
 Mary Wilson Enterprises Inc's Trade Mark
Application [2003] EMLR 14
oOriginal group formed in 1961 and disbanded in
1977
oIn the meantime, other past members of the
original group, along with other artists, had
begun to perform under the name “THE
SUPREMES” (1985)
oGroup member Mary Wilson sought to register
the mark “THE SUPREMES” (1995)
oOther members of the group opposed on the
grounds of prior passing off rights
 Mary Wilson Enterprises Inc's TM Application [2003] EMLR 14
o No positive finding of abandonment
• Sales by record company (Motown) kept the (“1977”) goodwill
alive
• Actions of third parties kept goodwill alive
 Problem: Is the “1961-1977” goodwill different from the “1985
onwards” goodwill?
o No practical importance here since Mary Wilson sought to register
the mark in 1995
 Mary Wilson Enterprises Inc's TM Application [2003] EMLR 14
o The new activities would in all likelihood attributed to “a single,
continuing business undertaking in the perceptions and
recollections of the average consumer”
o The new members “augmented” the pre-existing goodwill
o As a result, the goodwill attached to the name “THE SUPREMES”
constitutes property of the new members of the group
Goodwill: 1st element of passing of tort
 Goodwill attached to descriptive terms
o Reddaway v George Banham [1896] AC 199 (‘camel hair’)
o McCain v Country Fair Foods (1981) RPC 69
Goodwill: 1st element of passing of tort
 Goodwill ownership in the context of distribution agreements
o Scandecor Development v Scandecor Marketing [1999] FSR 26
• Local distributors may acquire the goodwill of their supplier
• Unless there is some prior regulation by contract, the supplier
might not be able to use his name in the jurisdiction
Misrepresentation: 2nd element of the tort
Overview of the general principles
 The misrepresentation must be operative
o It must cause (likely) consumer deception as to source
o Consumer thinks that the products of B are products of A
 Other Types of Misrepresentation
o capable of causing harm to reputation
o actionable by analogy
 The bottom line is: Misrepresentation is basically a lie
 Types of Actionable Misrepresentation
o Misrepresentations as to quality
• AG Spalding v Gamage [1915] 32 RPC 273
 “IMPROVED SEWN ORB FOOTBALL”/“ORB Specially tested”
Misrepresenting outdated goods as latest models
• Colgate-Palmolive v Markwell Finance [1989] R.P.C. 497
Parallel imports
Types of Actionable Misrepresentation
 Misrepresentation that the Plaintiff Exercises Control Over or Is

Responsible for the Quality of Defendant’s Products
o Harrods v Harrodian School [1996] R.P.C. 697
• “[T]hose who provide financial support to such institutions do
not expect to have any control over or to be held responsible
for the institution or the quality of the teaching”
• N.B. This is a finding of fact dependent on the circumstances of
each particular case!
 Comparative Advertising
o McDonald's Hamburgers v Burgerking [1986] FSR 45
• Reverse passing off

• I pass the goods of another as my own
goods
• Bristol Conservatories v Custom Built,
[1989] RPC 455
• B approached customers with a photo
album depicting his conservatories.
Some of the pics showed competitor’s
products.
• Misrepresentation? Separate tort?
 “Look-alikes”
o United Biscuits (UK) Ltd v Asda Stores Ltd [1997] RPC 513
• Get up as a badge of origin

• “living dangerously”?
Cf. Specsavers v Asda [2014] EWCA Civ1294
Cf. Moroccanoil Israel Limited v Aldi Stores Limited [2014] EWHC 1686.
 Specsavers International Healthcare Ltd v Asda Stores Ltd [2012] EWCA Civ 24
o living dangerously does not necessarily mean that there is intention to
defraud; depends on the circumstances; Intention to defraud is only one
factor; United Biscuits (UK) Ltd v Asda Stores Ltd [1997] RPC 513 can be
distinguished on its facts
 British Telecommunications v One In A Million [1999] FSR 1

o Marks & Spencer names
o Misrepresentation as to the ownership of the goodwill attached to
the name registered as domain name
 Knowingly Providing Others With Means of Deceiving the Public
o Lever v Goodwin (1887) 4 R.P.C. 492
• Defendant sold imitations of plaintiff’s products to a retailer
• No deception of retailer but consumers are likely to be
deceived
 Knowingly Providing Others With Means of Deceiving the Public
o British Telecommunications v One In A Million [1999] FSR 1
• Intention to sell the domain name to third parties that will
eventually use its as an instrument of fraud
o L'Oréal v Bellure [2008] RPC 9: the product itself must “tell a
lie”
 Tavener Rutledge Limited and Another v Trexapalm Limited, [1977]
R.P.C. 275
 Mirage Studios v Counter-Feat Clothing [1991]
FSR 145 (Character Merchandising)
o“Teenage Mutant Ninja Turtles” cartoon
characters applied on t-shirts
oMisrepresentation I: the goods are genuine
emanating from copyright holder
oMisrepresentation II: the defendant is a licensee
oCourt opined that in the specific market context
consumers would expect the product to be
licensed
oOutcome depends on consumer perception
 Personality merchandising (endorsement)
o Irvine v Talksport Ltd [2002] FSR 60
• Goodwill
‘must be trading’ = must be in the “endorsement business”
under the mark
Promotional goodwill: it seems that a celebrity who never gave
endorsements but had a significant, and commercially
exploitable, reputation in some sphere of sporting or artistic
endeavour could sue for passing off.
• Misrepresentation as to ‘endorsement’
 Personality merchandising (endorsement)
o Robyn Rihanna Fenty v Arcadia [2015]
FSR 14
o Consumers were likely to be deceived due
to the particular circumstances of the
case
• Photo associated with previous album
• Rihanna’s prior collaboration with
TOPSHOP
o Endorsement ≠ Character merchandising
 Initial interest confusion?
o Och-Ziff Management Europe Ltd & Anor v Och Capital LLP &
Anor [2010] EWCH 2599 (Ch)
o Legitimate trader interests
• Damage to reputation
• Erosion of the trade mark’s distinctiveness
o Initial interest confusion theory not compatible with CJEU

jurisprudence on AdWords (trade mark law)
o Moroccanoil Israel Ltd v Aldi Stores Ltd [2014] EWHC 1686
o Moroccanoil Israel Ltd v Aldi Stores Ltd [2014] EWHC 1686
• Hacon J: “By contrast, as I have just indicated, it seems to me
that where 'initial interest confusion' as defined by Arnold J is
dispelled before that confusion is acted upon, generally by
making a purchase, in circumstances such that the claimant
suffers no damage, this is not sufficient to give rise to passing
off.”
The Misrepresentation must be operative
 Methodology for Ascertaining the Effect of the Misrepresentation
o What constitutes a substantial part of the public?
• Non-negligible
• Passing off seeks to prevent consumer deception that leads to trade
diversion and damage to goodwill
o Relevant consumer circles (To whom is the Misrepresentation
Directed?)
• Harrods v Harrodian School (“the plaintiffs and the defendants
appeal to a common section of the public – affluent members of the
middle class who live in London, shop at Harrods and wish to send
their children to fee-paying schools”)
o Sophistication of consumers
• Depends on the nature of the relevant goods as well
• Not the moron in a hurry/taking consumers as they are
o Relevant factors:
• Strength of the claimant’s sign; Mark/product similarity;
• Location of the parties’ businesses
• Market characteristics
• Intent to deceive/Disclaimers
o Wagamama v City Centre Restaurants [1995] FSR 713 (Laddie J.)
• Japanese restaurant (Wagamama) v Indian restaurant
(Rajamama)
Imperfect recollection
market conditions
o Lego System Aktieselskab v Lego M. Lemelstrich [1983] FSR 155
• Strength of earlier badge of origin key to a finding of deception
• Consumers likely to believe that Lego offered irrigation systems
o Evidence of confusion: actual findings confusion, surveys, expert testimony
o Surveys: Marks And Spencer Plc v Interflora Inc & Anor [2012] EWCA Civ
1501
• One pilot survey
• Further surveys only with the permission of the Court
If the court deems that a survey would be valuable
If the court deems that the survey would be reliable
Cost/benefit analysis
o Defendant’s state of mind is irrelevant!
Damage: The 3 Element of the tort
rd
 Heads of Damage
o Loss of actual/potential trade/profit
o Damage to reputation
o Loss of licencing/endorsement revenue
• Carfax/Mirage studios/Irvine
o Loss of goodwill exclusivity
• Irvine
o Dilution
• Harrods/Harrodian: danger of term becoming generic
• LJ Millett was critical
Extended Passing Off
Shared Product Goodwill
 Product goodwill attaches to a particular term and is collectively
owned by those who manufacture/sell the product
 Fage UK v Chobani UK [2014] EWCA Civ 5
o “Greek Yoghurt”: i) it is made by the straining method; ii) it does
not contain preservatives and/or additives and; iii) it is produced in
Greece!
 Warnink v J. Townend [1979] AC 731 (the
“advocaat” case)
o Advocaat perceived by consumers as a liquor
containing spirit brandewijn, egg yolks and
sugar
o Defendant’s "Keeling's Old English Advocaat"
was made of dried egg powder mixed with
Cyprus sherry
o Damage: lost sales, damage to reputation
and dilution!
 Warnink v J. Townend [1979] AC 731 (the “advocaat” case)
o [F]ive characteristics […] must be present in order to create a valid
cause of action for passing off:
• (1) a misrepresentation
• (2) made by a trader in the course of trade,
• (3) to prospective customers of his or ultimate consumers of
goods or services supplied by him,
 Warnink v J. Townend [1979] AC 731 (the “advocaat” case)
o [F]ive characteristics […] must be present in order to create a valid
cause of action for passing off:
• (4) which is calculated to injure the business or goodwill of
another trader (in the sense that this is a reasonably
foreseeable consequence) and
• (5) which causes actual damage to a business or goodwill of the
trader by whom the action is brought or (in a quia timet action)
will probably do so.”
Extended Passing off as prior right
Art 8(4) EUTMR
 Tilda Riceland v OHIM, T-136/14, 2015)
o BASMATI v
o Extended passing off as prior right

o Upon opposition by the proprietor of a non-registered trademark or of
another “sign” used in the course of trade of more than mere local
significance […]
 Product goodwill attaches to a particular term and is collectively
owned by those who manufacture/sell the product
 J. Bollinger v Costa Brava Wine (No. 2) [1961] 1 WLR 277
o Wine produced and marketed in Spain as “Perelada” was imported
into the UK as “Spanish Champagne”
o Goodwill: Consumers perceived Champagne as a type of sparkling
wine made from grapes produced in a particular district of France
through the process of double fermentation
 J. Bollinger v Costa Brava Wine (No. 2) [1961] 1 WLR 277
o Misrepresentation: misdescription (dishonest trading)
• Is it operative? => “a trifling minority of ignorant persons” who
do not know what Champagne is would be misled thinking that
they are buying the real thing
o Damage
• Dilution of the term “Champagne”
• The term would end up being synonymous with ‘sparkling wine’
What is the future of passing off?
Passing off v Misappropriation
 Passing off: an action whose boundaries are expanding?
o Different types of misrepresentation
o Damage
• Initially loss of trade and damage to reputation
• Loss of licensing/endorsement revenue
• Loss of goodwill exclusivity
• Dilution
Critical stance of Millett LJ in Harrods v Harrodian School in the context of
the classical trinity
Essential head of damage in extended passing off!!!
o Arguments in L'Oréal v Bellure [2008] RPC 9
 L’Oreal S.A. v Bellure NV, [2007] EWCA Civ
o Misappropriation Argument (rejected by Jacob L.J.)
• Fairness in competition is subjective
• Difficulties in formulating a clear and rational theory of
unfairness
• In the absence of deception comparative advertising is
precompetitive
• Competition by imitation in the absence of IP rights
 Imperial Group plc & Another v Philip Morris Limited & Another,
[1984] R.P.C. 293
 Marks with a reputation
o Davidoff & Cie SA, Zino Davidoff SA and Gofkid Ltd, Case C-
292/00
 Administration of damage requirement as a de facto expansion of
the passing off tort
o Taittinger v Allbev [1993] FSR 641
• “Elderflower Champagne”
 Damage requirement as “misappropriation in disguise”
 Taittinger v Allbev [1993] FSR 641
o (4) “calculated to injure the business or goodwill of another
trader” (in the sense that this is a reasonably foreseeable
consequence)
• Likely that some “simple, unworldly” man having in mind some
family celebration and knowing that champagne is a “drink for
celebrations” would think:
• A great opportunity to get champagne at a very low price!
 Taittinger v Allbev [1993] FSR 641
o (5) which causes actual damage to a business or goodwill of the trader by
whom the action is brought or (in a quia timet action) will probably do so
• No evidence of loss of sales
• Likelihood of dilution if defendant continues to market its product as
“Elderflower Champagne”
(Erosion of the name’s distinctiveness)
o Essentially: defendant seeks to appropriate the likeness of the term
“Champagne”
o Chocosuisse Union des Fabricants Suisses de Chocolat v Cadbury
[1998] RPC 117
• Cadbury sold chocolates branded as “Swiss Chalet”
• Difficulties in determining the characteristics of the type of
goods marketed as “Swiss Chocolate”
• Dilution…
• Essentially: defendant seeks to appropriate the likeness of the
term “Swiss Chocolate”
o Diageo North America, Inc & Anor v Intercontinental Brands (ICB)
Ltd & Ors [2010] EWHC 17 (Ch)
• “It is true that in the champagne cases a number of the judges
said that champagne had a "high reputation", but as I read the
judgments that was not a critical factor in their reasoning. In the
advocaat case Goulding J did not find that advocaat had a
cachet, but that the term denoted a drink of "recognisable
qualities". Neither Lord Diplock nor Lord Fraser said that there
was any requirement that the product or class of products be
perceived as superior.”
o Bristol Conservatories v Custom Built [1989] RPC 455
• Where’s the damage?
• Essentially:
Defendant is trying to appropriate plaintiff’s reputation
o Irvine v Talksport Ltd [2000] FSR 60
• Misrepresentation as to endorsement
• Damage: “endorsement price”
• Essentially:
Defendant is trying to appropriate plaintiff’s reputation
 Where do we go from here?
o Various theories…
• Sticking to the classical trinity (Carty)
• Accept misappropriation as a head of damage (Wadlow)
• Create a general tort of misrepresentation (Wadlow)
• Create a Law against Misappropriation (Davis)
 L’Oreal S.A. v Bellure NV, [2007] EWCA Civ
o Misappropriation Argument (rejected by Jacob L.J.)
• Fairness in competition is subjective
• Difficulties in formulating a clear and rational theory of
unfairness
• In the absence of deception comparative advertising is
precompetitive
• Competition by imitation in the absence of IP rights
 The Academic Debate
o Hazel Carty, Passing off: Frameworks of Liability Debated, [2012]
Intellectual Property Quarterly, Issue 2, pp. 106-122
o Jennifer Davis, Why the United Kingdom Should Have a Law
Against Misappropriation, Cambridge Law Journal, 69(3),
November 2010, pp. 561–581

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Certificate in

Intellectual Property Law

 Misrepresentation that the Plaintiff Exercises Control Over or Is

• Reverse passing off

• Get up as a badge of origin

 British Telecommunications v One In A Million [1999] FSR 1

o Initial interest confusion theory not compatible with CJEU

o Extended passing off as prior right

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