p. 86532. Passing off
- L. Bently, L. BentlyHerchel Smith Professor of Intellectual Property, University of Cambridge
- B. Sherman, B. ShermanProfessor of Law, University of Queensland
- D. GangjeeD. GangjeeAssociate Professor of Intellectual Property Law, University of Oxford
- and P. JohnsonP. JohnsonProfessor of Commercial Law, Cardiff University
Abstract
This chapter focuses on the tort of passing off as a legal regime for the protection of trade marks. It considers three elements that are required in order to succeed in an action for passing off: the claimant has ‘goodwill’; the defendant made a ‘misrepresentation’ that is likely to deceive the public; and the misrepresentation damages the goodwill of the claimant. It also surveys the law in relation to goodwill. This chapter discusses manifestations of goodwill and describes goodwill associated with packaging, get-up, and trade dress as well as advertising style. It concludes by analysing the scope and ownership of goodwill, together with goodwill as a form of property.
1 Introduction
The oldest of the modern legal regimes for the protection of trade symbols is the action for passing off.1 In essence, the action allows trader A to prevent competitor B from passing their goods off as if they were A’s. Lord Langdale MR summed up the rationale for the passing off action in Perry v. Truefitt2 when he said:
A man is not to sell his own goods under the pretence that they are the goods of another man; he cannot be permitted to practise such a deception, nor to use the means which contribute to that end. He cannot therefore be allowed to use names, marks, letters or other indicia, by which he may induce purchasers to believe, that the goods which he is selling are the manufacture of another person.3
While the early history of passing off is unclear,4 it is widely thought that an action of this sort was first recognized in the Elizabethan case of JG v. Samford.5 It is also generally acknowledged that the common law roots of the action are found in the torts of deceit and misrepresentation,6 with the strictures of the common law action being mollified in a number of Chancery cases in the early nineteenth century.7 The modern p. 866↵or classic formulation of the action (usually classified as a tort) emerged in the second half of the nineteenth century. In its classic form, the basis of the action was the existence of a ‘misrepresentation’. Typically, a misrepresentation occurs where a person says or does something that incorrectly suggests that the goods or services they are selling are the goods or services of the claimant. In order to justify injunctive relief, the courts believed that it was necessary for the action to be based on a property right. It was initially suggested that this property right was located in the name or symbol employed.8 This approach was rejected in the early twentieth century, when it was said that the basis of equitable intervention was the property in ‘goodwill’.9 The concept of goodwill, which will be examined in detail later, remains a prerequisite for a successful passing off action today.
It is important to recognize that the modern action, if it can be called a single action,10 has moved beyond the classic case.11 Indeed, as a result of adapting to changes in the commercial environment, the tort now extends beyond the sale of goods to cover services, beyond pretences concerning the origin of goods to cover pretences concerning their quality, and beyond simple pretences that the goods are those of another trader to cover pretences that the goods have been licensed by another trader.12 As a result, the tort continues to play a central role in the legal regulation of trade behaviour.13 The common law nature of the action also gives it a flexibility that makes it attractive in situations that are not covered by the statutory regimes. This is particularly important where business practices change and the legislature is slow to respond.14
With these developments, it has become increasingly difficult to state the law of passing off with any clarity or precision. Indeed, it has been said that the law ‘contains sufficient nooks and crannies to make it difficult to formulate any satisfactory definition in short form’.15 The difficulty in formulating a precise and accurate statement of the law has not been made any easier by the fact that recent authoritative statements of the law, which are found in the House of Lords’ decisions in Warnink v. Townend (the ‘Advocaat’ p. 867↵decision),16 and Reckitt & Colman v. Borden (the ‘Jif’ lemon decision),17 are in very different terms.18 Having said that, it is possible to formulate a general statement regarding the elements of the action. In order to succeed in an action for passing off, a claimant must establish that:
the claimant has ‘goodwill’ (discussed in this chapter);
the defendant made a ‘misrepresentation’ that is likely to deceive the public (Chapter 33); and
the misrepresentation damages the goodwill of the claimant (Chapter 34).
Before turning to examine goodwill in more detail, two caveats are in order. The first is that each of the three elements must be shown to have existed or occurred at the time when the conduct which the claimant objects to took place (as opposed, for example, to the time of proceedings).19 The second point to note is that the three elements are interrelated. As a result, the same facts may be important in proving goodwill, deception, and/or damage. Consequently, the courts may dismiss an action for lack of misrepresentation where it might as easily involve a lack of goodwill.20 The interrelationship is also important because developments in one area, such as misrepresentation, may impact on another area, such as damages. This can be seen, for example, with the recognition of dilution as a form of damage, which has thrown into doubt the need for the defendant’s misrepresentation to cause confusion or deception.21
2 Requirement of goodwill
The first factor that needs to be proved to establish an action for passing off is goodwill.22 The mere fact that consumers are confused about the source of a product or service is not enough for a trader to bring a successful passing off action against another trader with p. 868↵whom their products are being confused.23 Before any such action, traders must show that they have goodwill in relation to the product or service in question.
Goodwill is a form of intangible property that is easy to describe, but difficult to define. It is that ineffable thing, that magnetism, which leads customers to return to the same business or to buy the same brand. In IRC v. Muller & Co.’s Margarine, Lord Macnaghten said that:
[Goodwill] is the benefit and advantage of the good name, reputation, and connection of a business. It is the attractive force that brings in custom. It is the one thing which distinguishes an old-established business from a new business at its first start. The goodwill of a business must emanate from a particular centre or source. However widely or extended or diffused its influence may be, goodwill is worth nothing unless it has power of attraction 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.24
As Lord Macnaghten stressed, for goodwill to exist, there must be some ‘causative’ impact upon customer behaviour. Goodwill is the attractive force that ‘brings in’ custom. The goodwill must have a ‘power of attraction sufficient to bring customers home to the source from which it emanates’.25 One consequence of this is that just because a trader has started business does not necessarily mean that there will be goodwill. This is because consumers might use the business—that is, purchase the goods or services—because it is conveniently located or simply because it is there. For goodwill to exist, customers must be buying the goods or using the services as a result of the reputation that the business has developed.26
2.1 Manifestations of goodwill
The law of passing off is concerned with goodwill when it manifests itself in certain ways. Passing off is usually concerned with the signs or badges that are understood as indicating that a product or service emanates from a particular trade source. These badges can take a variety of forms. Typically, goodwill arises in relation to the name, symbol, or logo that has been employed by a trader and thus has come to be associated with the business. For example, it is clear that there is goodwill associated with the name marks & spencer, and the nike ‘swoosh’ or tick. In these situations, the law is relatively straightforward. However, the courts have recognized that goodwill may arise in a number of other situations. These include goodwill associated with the packaging, get-up, or trade dress of products, and advertising style. In this section, we will limit our discussions to some of the less straightforward situations.
2.1.1 Goodwill in descriptive words
While goodwill is typically developed through the use of words such as nike, gucci, or rolls-royce to distinguish one trader’s goods or services from those of its competitors, p. 869↵in some circumstances goodwill may come to be associated with words that initially were capable of being understood as descriptive of the goods themselves.27 For example, fruit pastilles might be taken to be a description of a product delivered in pastille form, which tastes of or is made from fruit. However, most children (and adults) in the United Kingdom will understand the words as indicating a particular brand of sweet confectionary, in fact made by Rowntree’s, now owned by Nestlé. Consequently, such words have become the manifestation of the goodwill that Rowntree’s owns in the sweets.
While it is possible for a descriptive term to become associated with a claimant, the courts are extremely reluctant to allow a person to obtain a monopoly in descriptive words.28 In part, this is because policy considerations favour allowing other traders to make use of words that are part of the common stock-in-trade. It is also because in relation to descriptive words, it will be more difficult for a trader to show that the words indicate source, rather than what they ordinarily describe. In short, the more descriptive the words of the goods or services that the trader sells, the more difficult it will be to establish the existence of goodwill attaching to those words.
For a trader to show that they have goodwill in a descriptive word, they need to show that the word has become ‘distinctive in fact’ or has taken on a ‘secondary meaning’.29 This can be seen, for example, in Reddaway v. Banham,30 where the House of Lords acknowledged that the claimant’s use of the term camel hair to describe its belting (which was in fact substantially made out of hair from camels) had acquired a secondary meaning amongst those who purchased it for use in their machinery. Other examples of (largely) descriptive words that acquired secondary meaning include: oven chips for potato chips to be cooked in the oven rather than fried;31 flaked oatmeal;32 malted milk;33 and mothercare for clothing for expectant mothers and children.34
For a trader to show that they have goodwill in a descriptive word, the trader needs to demonstrate that the words have acquired a secondary meaning, not only of goods or services of that description, but also specifically of the goods or services of which they are the source.35 The descriptive terms should be demonstrably distinctive of one source.36 Thus where two publishers are competing to launch magazines with a title such as leisure news, it is unlikely that either will be able to bring a passing off action until the magazine p. 870↵has been in the marketplace for a sufficient period of time to build up a public association between the name and a particular source.37 As Farwell J said, the name should:
… have to the whole of the trade and to all persons who have any knowledge of the article in question the sole meaning sought to be attached to it by the plaintiffs—that is to say, the original primary meaning must have been eliminated from the dictionary of persons who deal in this article in the trade and all other persons whom it may concern to know it.38
In proving secondary meaning, it will be common for a claimant to submit evidence such as the length of use and the amount of money spent on advertising.39 It will certainly be easier to find that a name is distinctive and thus protected where a trader has used the name separately rather than in conjunction with another sign that designates source.40 Moreover, distinctiveness will be acquired more readily if the sign is not exclusively descriptive, as was the case with farm fluid for farm disinfectant.41 A trader may acquire secondary meaning in a descriptive phrase through public adoption rather than their own action.42 In these cases, the most important evidence is evidence of the trade or public.
On the whole, the association must be in the mind of the general public, so that it is not normally legitimate ‘to slice the public into parts’.43 However, in Starbucks (HK) Ltd v. British Sky Broadcasting Plc44 Arnold J held that there might be goodwill amongst a distinct segment of the population, such as the Chinese-speaking community. The Court of Appeal saw no problem with such an approach.45
Similar principles apply to geographic words and personal names. In general, the adoption of a geographic term or a personal name will not prevent another trader from using the same designation.46 In certain circumstances, however, secondary meaning can attach to such signs. For example, in Montgomery v. Thompson47 the claimant had operated a brewery in the small town of Stone in Staffordshire for more than 100 years. Over time, its beer had become widely known as stone ale. The defendant, who had recently established a brewery in Stone, was prevented from using the term stone to describe its beer.48 Similarly, it was held by the Court of Appeal that the term swiss chocolate had come to be understood by a significant section of the public to mean, and to mean only, chocolate made in Switzerland and that this was understood as being of a particular quality.49
p. 871↵Words, once distinctive, may later lose their ability to indicate source whereupon a passing off action will no longer be available. A classic example is linoleum, which is the name used for a floor covering made of solidified oil. The floor covering had been the subject of a patent and, during that time, the claimant was its only manufacturer. After expiry of the patent, other manufacturers began to make and sell the floor covering under the name linoleum. Fry J refused to prevent competitors using this term on the basis that it had become generic. That is, the public had begun to use the term to refer to the product generally, without connoting the source of manufacture.50
2.1.2 Goodwill associated with packaging, get-up, and trade dress
A person may acquire goodwill through use of particular packaging or ‘get-up’ for their products.51 For example, in Reckitt & Colman,52 since the 1950s, the claimant had sold lemon juice in plastic containers that resembled a lemon in size, shape, and colour. The House of Lords held that if the defendant went ahead with its plans to use plastic lemons that were very similar to the claimant’s, the defendant would be passing their juice off as the claimant’s. This was because the evidence indicated that the claimant had succeeded in persuading the public that lemon juice sold in plastic lemon-sized containers had been manufactured by them. It made no difference that the claimant’s juice was labelled jif and the defendant’s realemon, because purchasers did not look closely at the labels.
The protection that passing off provides over trade dress, get-up, and the packaging of goods is particularly important where consumers identify products by their external features rather than by words. This will be the case where goods are sold in foreign-language markets where little attention is likely to be paid to the words,53 or where the goods are sold to people who are illiterate.54 Get-up is also more likely to be an identifying feature in the case of common household goods,55 rather than goods that are bought under professional supervision.56
In order to establish that the claimant has goodwill associated with the get-up, including both the shape and/or packaging of a product, a claimant must be able to prove that the public recognizes that the get-up is distinctive of the claimant’s goods or services.57 In practice, a claimant may experience a number of difficulties in establishing such an association, particularly where the claim relates to the shape rather than the packaging of a product. Consumers may not consider that the get-up indicates any commercial source, especially where it is used alongside an established brand name.58 Alternatively p. 872↵consumers may understand a product shape or feature to be merely functional or aesthetically pleasing. Since such features may be legitimately copied with an eye to competitive substitutability, it is therefore important to distinguish between situations where the shape of the product is copied and those where product packaging is copied.
While there is no public policy exception to the passing off action for ‘functional features’ and no requirement that features of get-up be ‘capricious’,59 it will be very difficult for a trader to demonstrate that the public view functional or non-capricious features of an article as indicating source. As Jacob J said in Hodgkinson & Corby v. Wards Mobility Services,60 the claimant must prove a misrepresentation, which will be hard where there is no manifest badge of trade origin. This is because people tend to buy things for what they are and what they do, rather than out of interest in their origin. Accordingly, Jacob J found that a defendant who produced cushions that were used to help alleviate bed sores had not passed them off as the claimant’s. This was the case even though the claimant’s cushions were memorable and striking, and the defendant’s cushions were similar in appearance.
2.1.3 Advertising style
A trader may also attempt to establish that they have goodwill associated with particular advertising techniques or slogans, and thus that a defendant is liable for passing off where they use techniques or slogans that are similar to those used by the claimant. In Cadbury Schweppes v. Pub Squash,61 the claimant produced a lemon-flavoured soft drink called solo. As a part of its Australian marketing campaign, television advertisements featured ‘ruggedly masculine and adventurous men’ drinking solo. The defendant promoted its lemon-flavoured soft drink with a similar campaign. While the Privy Council rejected the passing off claim, Lord Scarman said that there was no reason in principle why the claimant could not have acquired goodwill associated with a particular advertising style. The reason for this was that:62
[T]he tort is no longer anchored as in the early nineteenth-century formulation to the name or trade mark of a product or business. It is wide enough to encompass other descriptive material, such as slogans or visual images, which radio, television or newspaper advertising campaigns can lead the market to associate with the plaintiff’s product, provided always that such descriptive material has become part of the goodwill of the product.63
While the Privy Council recognized that passing off may protect a claimant’s advertising campaign, it seems that claimants will have difficulties in demonstrating that the public associates a specific style of advertising with a particular source.64
2.1.4 Use of image, likeness, or voice
Finally, it is worth observing that in principle there is no reason why goodwill might not also arise through the use of a celebrity’s image,65 likeness, or voice.66 Whether this is the p. 873↵case will always be a question of fact. In particular, it will depend on whether the public believe that there is a relevant connection between the celebrity and the goods or services in issue. It should be noted that, unlike the position in many continental jurisdictions67 and in several US states,68 British law does not recognize a general right of publicity or personality.69
2.2 ‘Trader operating in trade’
As we indicated earlier, in order to demonstrate goodwill, a claimant must be a trader and operate in trade. We will look at each of these in turn.
2.2.1 The claimant must be a ‘trader’
For a claimant to be in a position to show that they have the goodwill necessary to sustain a passing off action, they must show that they are engaged in a very general sense in a business or commercial activity. The upshot of this is that the action is not available where one person changes their name to that of another, or calls their cat, boat, or house by the same name as that of their neighbour (however inconvenient or confusing that may be).
For the most part, the requirement that the claimant be in a trade has presented few problems. This is because the courts have been quite generous when deciding whether someone is engaged in business.70 For example, the courts have recognized authors,71 performers,72 unincorporated associations,73 and charities74 as businesses that potentially give rise to goodwill.
The courts have only occasionally rejected a claimant’s claim to passing off because of a lack of business status. One instance where a passing off action was denied was in Kean v. McGivan,75 where the claimant claimed the exclusive right to the name social democratic party. The Court of Appeal refused relief on the basis that the claimant was involved in a non-commercial activity. This was because the claimant was a small northern-based political party, whose commercial activities were limited to the hiring of halls for meetings. If the claimant had been one of the major political parties, which received and spent large sums of money, the answer may have been different. It should be noted that the decision in Kean v. McGivan has been distinguished by the Court of Appeal in Burge v. Haycock,76 where a lobbying organization known as the ‘Countryside Alliance’ (best known for campaigning in support of fox hunting) was granted injunctive relief to prevent the defendant, a former member of the right-wing British National Party, from p. 874↵standing in a parish council election under the banner of the Countryside Alliance. Distinguishing Kean on the basis that it was ‘a decision on its particular facts’,77 the Court of Appeal said that the right to protect goodwill did not depend on the precise legal status of an entity (such as whether it was a charity or a political party); instead, all that mattered was they had established goodwill.78
Another potentially problematic situation relates to professionals: do they merely have a professional reputation as opposed to protectable goodwill? The authorities were reviewed in Bhayani,79 which addressed the issue of whether a law firm or an individual partner owns the goodwill generated in the course of her professional duties and whether the partnership could be prevented from using her name when she left. In the usual course, the goodwill generated by a partner’s acts will vest in the partnership, as was the case here. However in certain circumstances an employee or partner may generate goodwill of their own, such as where they conduct activities outside the scope of employment or partnership duties or where the employee was a writer for a newspaper and the public assumed they bore sole responsibility for the quality of their work.
A further situation where the requirement that the claimant be a trader has been problematic is where an action for passing off is brought by a trade association. If the trade association does not manufacture or sell any particular product, it will be unable to bring a passing off action against a defendant who has merely passed off their products as those of the members of the trade association.80 However, where a trade association organized exhibitions, it could own goodwill through its members, which would form the basis for an action in passing off. In such a case, the action would have to be commenced by a member of the association acting in a representative capacity.81
2.2.2 The claimant must be trading
Once it has been shown that a claimant is engaged in a trade activity, there will usually be few problems in establishing that they have the goodwill necessary to sustain a passing off action. Traders, however, have experienced problems in establishing goodwill in three situations: (i) before they have started trading; (ii) after trading has ended; and (iii) where the trader is situated overseas. We will deal with each in turn.
(i) Pre-trading goodwill
Given that goodwill ‘has no independent existence apart from the business to which it is attached’,82 difficult questions arise when a person is setting up a business. In these circumstances, the question may arise: at what point can a person claim to have goodwill? Is there any way in which a trader who is about to launch their business, and who has spent time and money on advertising and marketing, can prevent a competitor from taking advantage of their pre-launch publicity?
p. 875↵The traditional position is that before a passing off action can be brought, trading must actually have commenced.83 This can be seen, for example, in Maxwell v. Hogg.84 Maxwell proposed to launch a magazine called belgravia in October 1866. As a part of the pre-launch publicity, in August and September of 1866 Maxwell advertised the forthcoming launch of belgravia in a magazine run by Hogg. On 25 September 1866, Hogg issued a magazine also called belgravia. Despite noting that this was hardly fair and candid dealing, the court held that Maxwell could not restrain Hogg from using the same name. This was because a declaration of intention to use a name did not secure any protection.
In contrast, where there has been substantial pre-launch publicity, claimants have occasionally succeeded in gaining interim relief prior to the launch of their products. In Allen v. Brown Watson,85 the publisher of a book entitled My Life and Loves by Frank Harris, which had been widely advertised prior to publication, was granted an interim injunction against the defendant, who proposed to publish an abridged version also called My Life and Loves by Frank Harris.86 Similarly, in BBC v. Talbot Motor Co. Ltd,87 the BBC had publicized its forthcoming traffic information service named carfax, which required motorists to have special car radios fitted or conventional ones adapted. The BBC was granted an interim injunction preventing the defendant from selling spare parts for vehicles under the name carfax. Sir Robert Megarry V-C noted that, ‘[a]lthough that scheme has not yet been launched, that does not prevent the BBC from having built up goodwill in it which is entitled to protection’.88 While these authorities represent individual victories based on pre-launch publicity, they have not established conclusively that the courts will recognize goodwill prior to trading. In part, this is because the cases were interim,89 aspects of the reasoning are unconvincing,90 and neither really turned on a demonstration of goodwill.91
Other cases exhibit a more hard-line approach, holding that while pre-launch advertising and publicity assists in the acquisition of goodwill, it is necessary for a trader to have customers for them to demonstrate that they have goodwill. This can be seen, for example, in My Kinda Bones v. Dr Pepper’s Stove Co.92 where the claim to goodwill was based exclusively on pre-launch publicity. While the court refused to strike out the claimants’ action on the ground that their case was not ‘manifestly unarguable’, nonetheless Slade J said that he thought that the claimants’ prospects of success were very doubtful. The reason for this was that there was a requirement that ‘a substantial number of customers or potential customers must at least have had the opportunity to assess the merits of those goods or services for themselves’.93 Slade J added that customers ‘will not have sufficient opportunity to do this until the goods or services are actually on the market’.94
p. 876↵While it might be inappropriate to protect a trader who has only made preparations to launch a product, fewer objections can be made about a trader being able to rely on passing off where they have engaged in widespread pre-launch advertising. This is because in these circumstances, competitors are likely to be aware of the claimant’s intention to use the name in a business context. Consumers are also more likely to expect a product with specific associations.
While the law in this area is unclear, it is important to note that even if there is no pre-launch goodwill, if goods or services are placed on the market after extensive preparatory publicity, goodwill may well be generated after a very short time.95 It is also important to recognize that different businesses have different relationships with their customers. For example, the launch of a radio programme requires very little, if any, active involvement by the public. Indeed, the Court of Appeal has argued that even before a service is launched, a business may generate goodwill through publicity and advertising. In Starbucks v. BSB,96 the claimant sought to prevent the defendant from using the sign now tv for its Internet broadcast service. Rejecting the claim, the Court of Appeal said:
It was insufficient for a passing off action for Now tv simply to be planned. It was necessary either to have or promote and publicise or advertise a customer base here in order to establish a goodwill protectable by law. The preparations did not establish a goodwill in the sense of acquiring a protectable exclusive right created by the attraction of custom in this country.97
While the reasoning implies that goodwill could arise even before a service is accessible, it was not necessary to decide whether this was the case on the facts.
Although other jurisdictions have been more flexible in recognizing the rights of traders based upon pre-launch publicity than has been the case in the United Kingdom,98 in Starbucks, the Supreme Court declined to develop the law in this way, Lord Neuberger stating that it was ‘better to decide the point in a case where it arises.’99
(ii) Goodwill after trading ends
Given that goodwill is directly linked to the existence of a business, it follows that once a business ceases to trade that goodwill starts to wither away.100 As Lord Macnaghten said in Commissioners of Inland Revenue v. Muller & Co.’s Margarine,101 goodwill ‘cannot subsist by itself. It must be attached to a business. Destroy the business and the goodwill perishes with it.’ Nevertheless, in recognition of the commercial reality that businesses may recede, change hands, or close temporarily, the courts have held that goodwill is an asset that does not dissipate immediately after a business ceases to operate. As a result, when trading stops, ‘elements remain which may perhaps be gathered up and revived again’.102 Whether goodwill continues to exist depends on two matters: first, whether the public retains relevant associations between the sign and a particular trader; and second, whether there is evidence of an intent to resume the business.
In contrast with the law relating to registered marks, which adopts a rule that the mark is revocable after five years,103 the continued survival of repute (without the support of a p. 877↵business) will simply depend on the facts. Relevant factors include the extent of the original reputation, the existence of continuing promotion or other activities, the nature of the goods, and the nature of the mark.104 If the extent of the goodwill is small, it will likely wither quickly;105 if there is nationwide familiarity with a trade mark, the reputation may remain for many decades.106 Moreover, it may be that some goods remain in the public eye, for example where films or television programmes are re-run, music tracks played,107 or vintage cars are repaired and restored.
The trader must intend to resume business. If a trader assigns their goodwill to a third party, that is taken to be an indication that they did not intend to resume business.108 Intention to resume business may be evident from the trader’s acts or may be inferred from the fact that trading was brought to an end by outside forces.109 In Ad-Lib Club v. Granville,110 for example, the claimant was forced to shut its nightclub (‘The Ad-Lib Club’) because of noise problems. Pennycuick V-C granted an interlocutory injunction against the defendant who, four years later, announced that they were going to open a disco under the same name. This was because the public still associated the name with the club and, because the claimant had been seeking an alternative venue since the club had closed, there was no reason to think that they had abandoned the business. In the ‘World Cup Willie’ case,111 Deputy Judge Roger Wyand QC held that even though the Football Association had not used the ‘World Cup Willie’ device for 40 years and had allowed its trade mark registrations to lapse, the circumstances did not indicate that the Association had no intention to resume use of the sign. This was because since the sign related to the World Cup, the Football Association was not able to contemplate reusing it until it became a realistic prospect that England would host the event again.
(iii) Foreign traders
The next situation where questions about the existence of goodwill arise is in relation to foreign traders. Where a business located in a foreign country acquires an international reputation, this may lead the foreign trader to set up business in the United Kingdom. In this case, the UK-based business will normally have goodwill. In many situations, however, something short of this may occur. For example, the foreign business may merely have an agent in the United Kingdom, or only respond to orders taken directly from customers in the United Kingdom. Alternatively, a trader may only have a reputation that connects them with England and Wales, but no place of business or customers to speak of in those countries. In these circumstances, the question arises: can a foreign trader rely on passing off to protect their interests in the United Kingdom? The case law, which is by p. 878↵no means conclusive, appears to distinguish between three situations. We will deal with each in turn.
(a) Evidence of business activity If the claimant can demonstrate a trading link with the United Kingdom, they will normally succeed in establishing goodwill. The courts have been generous when considering whether a foreign trader has a sufficient trade presence and, consequentially, goodwill in the United Kingdom. It is clear that there is no need to have a registered business in the United Kingdom. The generous approach taken by the courts can be seen, for example, in Sheraton.112 In this case, the claimant company, which ran a chain of high-class hotels, but at the time had none in England, was granted an interim injunction to prevent the defendant from using the name, ‘Sheraton Motels’. The court held that although the claimant did not have any hotels in the United Kingdom at that time, the fact that bookings for its hotels abroad were frequently made both through an office that Sheraton maintained in London and through travel agencies was sufficient to entitle it to relief.
(b) No business activity, but customers The second situation where a foreign trader may attempt to claim goodwill is where they have customers in the United Kingdom.113 The law on this point is unclear. In the first instance, there is a line of cases that suggest that, for a foreign trader to establish goodwill in the United Kingdom, they must show both that they have customers and that they carry on business in the United Kingdom. This can be seen in the Crazy Horse decision.114 In this case, the claimant was proprietor of the crazy horse saloon in Paris. The defendant opened a place of the same name in London. Pennycuick J refused to grant an interlocutory injunction to restrain the defendant from using the crazy horse saloon name in London. While the claimant had distributed leaflets in England advertising the saloon, there was no evidence that there were English customers of the Paris saloon (at least in the sense of persons who made bookings in the United Kingdom). The judge explained 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 … I do not think that the mere sending into this country by a foreign trader of advertisements advertising his establishment abroad could fairly be treated as a user in this country.115
The Crazy Horse decision has been criticized by commentators and distinguished by the courts in the so-called ‘soft line’ of cases.116 In this second line of cases, it was held that if a foreign business can demonstrate that it has customers in the United Kingdom (other than foreign customers who have merely moved here),117 it is likely that the court will p. 879↵treat this as sufficient to establish goodwill. That is, it is not necessary for the business to establish that it carries on business in the United Kingdom (in any formal sense). For example, in Athlete’s Foot Marketing Association Inc. v. Cobra Sports,118 an American retailer selling shoes under the name athlete’s foot sought to prevent a UK business from using the same name in the UK. While the American firm had a reputation in the United Kingdom at the relevant time, it had not yet conducted business in the United Kingdom. Moreover, the claimant was unable to demonstrate that a single person in England and Wales had purchased its shoes. In considering whether the claimant had goodwill, Walton J said ‘it does not matter that the plaintiffs are not at present actually carrying on business in this country, provided they have customers here’, the reason being that:
[N]o trader can complain of passing off as against him in any territory … in which he has no customers, nobody who is in a trade relation with him. This will normally … be expressed by saying that he does not carry on any trade in that particular country (obviously, 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.119
Given that the claimant had no customers in the United Kingdom, the court held that they did not have the goodwill necessary to sustain the passing off action.
Perhaps the most formidable critique of the approach adopted in the Crazy Horse decision was offered in Peter Waterman v. CBS.120 In this case, CBS was proposing to refurbish studios in London and call them the hit factory. The claimant, who ran a recording business nicknamed the hit factory, brought an action to stop CBS from using the same name. Based on the running of a recording studio in New York, which was also called the hit factory, CBS responded by arguing that it had goodwill in the United Kingdom that was at the very least concurrent with any goodwill of the claimant. Browne-Wilkinson V-C held that the claimant failed to establish the distinctiveness of the hit factory and that, as such, consideration of the defendant’s position was unnecessary. Nevertheless, Browne-Wilkinson V-C went on to review the authorities on the issue of whether the English courts will protect a foreign trader in the United Kingdom.
Browne-Wilkinson V-C began by noting that the essence of goodwill is the ability to attract customers and potential customers to do business with the owner of the goodwill. Consequently, any interference with the trader’s customers is an interference with their goodwill. Browne-Wilkinson V-C added that prior to the Crazy Horse decision, there was nothing in the authorities inconsistent with that view. For the Vice-Chancellor, that case law merely required the use of the name and the presence of customers in this country. To the extent that the Crazy Horse decision required that the trader had conducted some business (however slight) in England and Wales, Browne-Wilkinson V-C said that the case was wrongly decided.121 The judge took the view that the presence of customers in this country was sufficient to constitute the carrying on of business here. This is the case p. 880↵whether or not there is a place of business in England and Wales, or services are provided there. On this basis, Browne-Wilkinson V-C held that since the defendant’s New York recording studio had a substantial number of customers in England, it would have been entitled to protect its name in the United Kingdom against third parties.
While the Court of Appeal has affirmed that there is goodwill in England where a business has ‘customers’ in England, it has also recognized that determining when this is the case is not altogether straightforward. In the Hotel Cipriani decision,122 the claimant operated a hotel in Venice under the name hotel cipriani. ‘Cipriani’ was the name of the Italian family that ran the hotel. The defendant, another member of the Cipriani family, opened a bar in Grosvenor Square, London, called bar cipriani. On being sued, the defendant denied that the claimant had goodwill in England. At the same time, the defendant also argued that they had goodwill in England as a consequence of the bar that they operated in Venice. At first instance, Arnold J rejected these arguments, finding that the claimant had goodwill because bookings for the hotel were made from England. Arnold J also found that the operation of the bar in Venice did not confer concurrent goodwill on the defendants. While the Court of Appeal affirmed Arnold J’s decision, Lloyd LJ indicated that in light of the development of e-commerce, which meant that hotels could be booked through websites from anywhere in the world, it might be appropriate to review the requirement for direct bookings in relation to the question of goodwill in services.123
In Starbucks (HK) v. British Sky Broadcasting,124 affirming the decision of the Court of Appeal and Arnold J, the Supreme Court confirmed that ‘a claimant in a passing off claim must establish that it has actual goodwill in this jurisdiction, and that such goodwill involves the presence of clients or customers in the jurisdiction for the products or services in question.’125 The Supreme Court therefore agreed that the claimant had no goodwill in the designation now tv in relation to its Internet broadcast service, which originated in Hong Kong. This was so even though the service was accessed by Chinese speakers in the United Kingdom. The Court explained that ‘[i]n order to establish goodwill, the claimant must have customers within the jurisdiction, as opposed to people in the jurisdiction who happen to be customers elsewhere. Thus, where the claimant’s business is carried on abroad, it is not enough for a claimant to show that there are people in this jurisdiction who happen to be its customers when they are abroad.’126 Consequently, the claimant could not rely upon the fact that its service was accessed by residents in England to show the existence of goodwill in England.127
(c) Mere reputation The third situation where the question of whether a foreign trader has goodwill in the United Kingdom arises is where the claimant merely has a reputation, but no customers as such in the United Kingdom. This might be the case where there is ‘spillover’ advertising, or where the product becomes known through films, television, or via the Internet.128 Given that it is necessary for a foreign trader to have customers in the United Kingdom for them to establish goodwill (or, on a more extreme view, customers and business), it would seem reasonable to assume that where a foreign trader merely has a reputation in the United Kingdom, they would not be able to prove that they had the goodwill necessary to sustain a passing off action.
p. 881↵The case law on this point has, however, vacillated. Very occasionally courts—particularly first instance courts—have suggested that a foreign trader who only has a reputation in the United Kingdom may nonetheless still be able to show that they have goodwill. In Maxim’s v. Dye,129 for example, the claimant was the world-famous restaurant in Paris known as maxim’s. In 1970, the defendant opened a restaurant in Norwich also called maxim’s. In considering whether the claimants were entitled to protect their reputation, even though they were not running any business in England, Graham J held that the claimants did have sufficient goodwill to bring a passing off action. After noting that globalization was making the ‘world grow smaller’, Graham J said that the true legal position was that the ‘existence and extent of the claimants’ … goodwill [in their business] in every case is one of fact however it may be proved and whatever it is based on’.130 Graham J added that the claimants’ existing goodwill in the United Kingdom, ‘which is derived from and is based on a foreign business … may be regarded as prospective but none the less real in relation to any future business which may be later set up by the plaintiff in this country’.131
However, the predominant view of the English courts is that where a trader only has reputation in the United Kingdom, they will not have the goodwill necessary to justify an action for passing off.132 This can be seen, for example, in the Budweiser case.133 In this decision, Anheuser-Busch, an American company that manufactured budweiser beer, sued the Czech brewers, Budejovicky Budvar, for passing off. The Czech brewers began selling their boutique beer in England under the name budweiser budvar in 1973.134 While, at this time, the claimant’s sales of budweiser were confined to stores on US Air Force bases, the beer was widely known throughout the United Kingdom. The Court of Appeal rejected the claimant’s claim on the basis that there was no goodwill in the United Kingdom. Because the beer sold on the Air Force bases was not available for general purchase, the Court held that these sales were to be ignored.135 In rejecting the action, the Court supported the view that mere reputation alone would not justify an action for passing off.
The requirement that for a foreign trader to have goodwill they must be able to show that they have customers in the United Kingdom has been criticized by those who consider the geographical division of goodwill to be out of step with the commercial reality of globalized trade.136 Support for this criticism comes from the fact that a number of comparable jurisdictions have recognized the international character of goodwill. The Full Federal Court of Australia in ConAgra v. McCain Foods (Australia),137 has perhaps gone the furthest in this regard. In this case, Lockhart J said that:
[The] real question is whether the owner of the goods has established a sufficient reputation with respect to his goods within the particular country in order to acquire a sufficient level of consumer knowledge of the product and attraction for it to provide custom which, if lost, would likely result in damage to him. This is essentially a question of fact.138
p. 882↵In the Peter Waterman v. CBS case, Browne-Wilkinson V-C commented on the need for passing off to be adapted to modern business environments in this way:
The changes in the second half of the twentieth century are far more fundamental than those in nineteenth-century England. They have produced worldwide marks, worldwide goodwill and brought separate markets into competition with the other. Radio and television with their attendant advertising cross national 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 development 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.139
Despite these comments and his liberal interpretation of the case law, the Vice Chancellor was not prepared to abandon the requirement that to establish goodwill, a foreign trader must have customers in the United Kingdom. This reluctance to allow an action based merely on reputation may have been grounded in a fear that if such a prerequisite was abandoned, it would enable claimants with an international reputation to enforce a worldwide monopoly without any guarantee that they would ever expand into the domestic market.140 In addition, it has been pointed out that too-ready recognition of rights of foreign traders may render it difficult for domestic traders to find marks that can be lawfully used in the United Kingdom.141 Indeed, in Starbucks, Lord Neuberger stated that a ‘claimant who has simply obtained a reputation for its mark in this jurisdiction in respect of his products or services outside this jurisdiction has not done enough to justify granting him an effective monopoly in respect of that mark within the jurisdiction.’142 That decision, it seems, will put an end to attempts to base reputation on ‘spill-over reputation’ for the next few decades.
(d) Well-known marks Despite the fact that mere reputation is an insufficient basis for a passing off action, the Trade Marks Act 1994 provides foreign traders who lack local goodwill with a potential remedy.143 Section 56, which gives effect to Article 6bis of the Paris Convention,144 states that:
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.
p. 883↵Importantly, this provision applies to a proprietor of a ‘well-known’ trade mark ‘whether or not that person carries on business, or has any goodwill, in the United Kingdom’.145 (In fact, if the proprietor is a national of the United Kingdom, they will not benefit from the provision.146) The key limitation in section 56 is not goodwill; rather, it is whether the mark is ‘well known’. It seems that a number of considerations will be taken into account when deciding whether a mark is well known. These include: trade recognition and public recognition in the United Kingdom;147 the inherent distinctiveness of the mark; the duration and extent of any use (whether in the United Kingdom or neighbouring territories), or promotion or advertising (especially in territories covered by the same media); sales made abroad to British residents (such as those on holiday); and the value of the goodwill.148 It seems that this evidence must point to a high level of recognition amongst the relevant consumers in the United Kingdom. In General Motors v. Yplon SA,149 the Advocate-General described the protection afforded to well-known marks under the Paris Convention as ‘exceptional’ and therefore concluded that it ‘would not be surprising … if the requirement of being well-known imposed a relatively high standard for a mark to benefit from such exceptional protection’.
Rather surprisingly, section 56 has rarely been relied upon by foreign traders. One case in which the claimant did succeed was the Hotel Cipriani case, where Arnold J found that the claimant’s hotel was a well-known mark in the United Kingdom.150
3 Scope of goodwill
Once it has been decided that the claimant has goodwill, the next question to consider is its scope. This is an important question, because it may influence whether the defendant’s representation amounts to a passing off.151 While similar inquiries take place with other p. 884↵forms of intellectual property, there is one important difference which relates to the territorial scope of the property. For example, when considering whether a patent has been infringed, the question of the geographical scope of the protection is not an issue. This is because the patent operates throughout the whole of the United Kingdom. This is not the case, however, in relation to an action for passing off where the territorial or geographical scope of the goodwill must first be ascertained. Despite the apparent dominance of nationwide firms and franchises, there are many businesses that only trade in a small and relatively confined area. In these circumstances, the way in which the physical limits of the goodwill are determined may be crucial to the success or otherwise of a passing off action.152
4 Ownership of goodwill
In principle, the owner of goodwill is the business that generates it. While goodwill will normally be owned by a single trader or business, the courts have recognized that a group of traders may share goodwill in a name or feature of a product that they have in common. Where the singularity of a product is shared by a group of traders (normally in a specific region), they may share goodwill in the identifying feature: the name, image, logo, etc. The courts have recognized shared goodwill in relation to champagne,153 sherry,154 scotch whisky,155 advocaat,156 swiss chocolate,157 vodka,158 and greek yoghurt.159
Problems arise, however, where a number of different people, companies, or businesses cooperate in the making and distribution of a product. In these circumstances, the courts are forced to decide whether the goodwill is individually or jointly owned, and if so, by whom.
The difficulties in deciding how the ownership of goodwill is to be ascribed have become all the more problematic with the expansion of international trade, the globalization of markets, and the growth of multinational corporations.160 In such cases, it is common for a firm in one country to expand into another through a subsidiary, distributor, agent, or licensee. In the absence of a carefully formulated contract dealing with the relationships between the parties, difficult questions can arise as to ownership of the goodwill generated by the actions of the local distributor and foreign supplier. This is especially the case when the arrangements between the parties end. This can be seen, for example, in Scandecor Development v. Scandecor Marketing.161 In this case, a Swedish art-poster business founded in the 1960s was rearranged so that a subsidiary, Scandecor Marketing (the defendant), had responsibility for marketing the claimant’s products in the United Kingdom. The claimant supplied poster products for sale. The defendants also sold ancillary products, such as calendars and cards, not supplied by the claimant and p. 885↵over which the claimant had no control. The defendant’s marketing occasionally referred to the fact that it was connected with the world’s largest poster company. In the 1980s, the claimant was taken over. The new owners terminated the agreement with the defendant. After further negotiations failed, the claimant demanded that the defendant stop using the scandecor mark.
At first instance, Lloyd J held that the goodwill was shared between the claimant and defendant, effectively finding two different, yet connected, forms of goodwill: a distributor’s goodwill and a publisher’s goodwill. The Court of Appeal rejected that view, holding instead that the goodwill belonged to the defendant. The Court of Appeal observed that where the goodwill originates from a common source overseas, but then expands and is developed by different companies in different territories, it is necessary to analyse the effect of the changes occurring from time to time in the control and ownership of the businesses that generate the goodwill.162 Reviewing that history, the Court of Appeal noted that the contact with customers had been largely through the defendant. The Court also denied that there was any ‘rule of law or presumption of fact that the goodwill generated by the trading activities of a wholly owned subsidiary company belongs to the parent company’.163 Instead, ‘what matters is who retailers identified as the person carrying out the trading activities in the local territory’.164 In this respect, the Court of Appeal placed less emphasis than Lloyd J had done on the fact that the defendant had occasionally referred to the international scope of its activities. The evidence showed that the customers treated the supplier—that is, the defendant—as being more significant than the publisher.
There have also been considerable problems in determining ownership of goodwill in association with bands. This is particularly problematic when band members leave, form new groups, and reuse or modify the original name, or where disbanded groups regroup (often with a differently configured membership). In these circumstances, the question of who owns the goodwill in the name of a band (or indeed any collective) will depend on the relationship that the members have with each other. As Laddie J said in Byford v. Oliver,165 which was a dispute between former members of the heavy metal band saxon about ownership of the goodwill in the band name, many of the problems that arise in this context could be avoided if the band members were to enter ‘into a partnership agreement which expressly provide[s] for the partnership to continue on the departure of one or more of the members’.166 Laddie J also said that it would be advisable to ensure that the agreement ‘expressly confirmed the rights of the continuing and expressly limit[ed] the rights of departing partners to make use of the partnership name and goodwill’.167 In the absence of such an agreement, ownership will depend on the nature of the relationship between the members. Thus if the band members were partners, but had no agreement about how the rights in the name were to be dealt with, the name (as an asset of the partnership) would be dealt with along with the other assets of the partnership. In this situation, members would not own the name or the goodwill built up under it; they would, however, have an interest in the realized value of the partnership assets (which would include the goodwill in the name). If, however, the band members performed together as p. 886↵independent traders, it is likely that each member would acquire a ‘discreet interest in the name and the reputation which they could use against third parties but not against each other’.168 Where there is no contractual or other arrangement governing the relationship between and among members—where the band is an unincorporated association of individuals—the ‘goodwill and reputation built up and acquired by the group’ belongs ‘to the “last man standing”’.169 In this situation, the key issue will be whether any of the band members have abandoned their rights.
4.1 Goodwill as property
Goodwill is a form of property that is transmissible by assignment, on death, or by operation of law.170 There are no formalities laid down for assignment of goodwill inter vivos. However, it is relatively settled that goodwill cannot be assigned in ‘gross’—that is, separately from the business to which it is attached.171
Notes
1 The pre-modern regimes included guild regulation, heraldry, and cutlers’ marks: see Sherman and Bently, 166–8.
2 (1842) 6 Beav 66, 49 ER 749.
3 Ibid., 752.
4 W. Morison, ‘Unfair Competition and Passing Off’ (1956) 2 Sydney L Rev 50, 53; Henderson v. Radio Corporation Pty (1960) [1969] RPC 218, 236.
5 (1584) reported in J. Baker, Baker and Milsom: Sources of English Law (2nd edn, 2010), 673; first cited as a precedent in Southern v. How (1617) Cro Jac 468, 79 ER 400. See the discussion in F. Schechter, The Historical Foundations of the Law Relating to Trade Marks (1925), 10.
6 For a discussion of the common law in the late eighteenth century, see L. Bently, ‘Singleton v. Bolton: The First Common Law Trade Mark Case?’ (2014) 47 U Cal Davis L Rev 969. The first report of a common law case in which the claimant succeeded seems to be Sykes v. Sykes (1824) 3 B & C 543, 107 ER 834.
7 In particular, Equity judges abandoned the requirement of bad faith in Millington v. Fox (1838) 3 My & Cr 338, 40 ER 956. See L. Bently, ‘Day v Day, Day and Martin (1816)’, in J. Bellido (ed), Landmark Cases in Intellectual Property Law (2017) 87 (exploring the first instances of injunctive relief for misuse of trade marks). Quite what became of the common law action is unclear. There is some authority for the view that it was abolished by the legislature when registration was introduced, because that prohibited any action based on an unregistered mark. Passing off, in contrast, survived because the basis of the action was not the mark itself, but the trader’s goodwill. For arguments that there remains a common law action based on fraud, without a requirement of goodwill, see Gummow J in 10th Cantanae Pty v. Shoshama Pty (1989) 10 IPR 289; ConAgra Inc. v. McCain Foods (Australia) Pty (1992) 23 IPR 193.
8 L. Bently, ‘From Communication to Thing: Historical Aspects of the Conceptualisation of Trade Marks as Property’, in Dinwoodie and Janis (2008).
9 Spalding v. Gamage (1915) 32 RPC 273, 284.
10 Phillips and Coleman have argued that passing off is better seen as a family of actions, each with particular characteristics: J. Phillips and A. Coleman, ‘Passing Off and the Common Field of Activity’ (1985) 101 LQR 242, 244–5. Despite the strength of this argument, the courts have continued to treat passing off as a unitary action, only occasionally distinguishing ‘classic’ passing off, from ‘extended’ passing off. See, e.g., Chocosuisse Union des Fabricants Suisses de Chocolat v. Cadbury [1998] RPC 117, 127 (distinguishing between ‘extended’ and ‘classic’ passing off and describing the question of whether it is the same tort as ‘a matter of semantics’). Note also British Diabetic Association v. Diabetic Society [1996] FSR 1, 11 (Robert Walker J) (warning against the assumption that principles from one set of facts can be applied to very different facts).
11 Arsenal FC plc v. Reed (No. 2) [2003] RPC 39, [70] (Aldous LJ).
12 However, the law of passing off has not expanded into a tort of unfair competition. See Chapter 34, section 3, pp. 924–7.
13 Cadbury Schweppes Pty v. Pub Squash Co. [1981] RPC 429, 490 (Lord Scarman) (the tort ‘is no longer anchored in its early nineteenth-century formulation’); cf. Hogan v. Koala Dundee (1988) 12 IPR 508 (FCA), 517 (Pincus J) (little progress in English law beyond the traditional notion of passing off). See also M. Shúilleabháin, ‘Common Law Protection of Trade Marks: The Continuing Relevance of Passing Off’ (2003) 34(7) IIC 722.
14 Passing off operates as a basis for relief where a trader has failed to register a mark, while also retaining a role within the registered trade mark system. As will be seen at Chapter 38, section 3.1, pp. 1073–4, it is not possible for a person to register a sign as a trade mark if its use would amount to passing off.
15 ConAgra v. McCain Foods (Australia) Pty (1992) 23 IPR 193 (FCA), 247.
16 Erven Warnink BV v. Townend (J.) & Sons [1979] AC 731. The case contains two different formulations of the requirements for the action. Lord Diplock laid down five ‘characteristics’ that must be present to create a valid cause of action in passing off: (i) a misrepresentation, (ii) made by a trader in the course of trade, (iii) to prospective customers of that trader or ultimate consumers of goods or services supplied by that trader, (iv) which is calculated to injure the business or goodwill of another trader (in the sense that this is a reasonably foreseeable consequence), and (v) 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: ibid., 742. Lord Fraser also set out five requirements: (i) that the claimant’s business consists of, or includes, selling in England a class of goods to which the particular trade name applies; (ii) 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; (iii) that, because of the reputation of the goods, there is a goodwill attached to the name; (iv) that the claimant, as a member of the class of those who sell the goods, is the owner of goodwill in England that is of substantial value; and (v) that the claimant has suffered, or is really likely to suffer, substantial damage to their property in the goodwill by reason of the defendant selling goods that are falsely described by the trade name to which the goodwill is attached: ibid., 755–6.
17 [1990] 1 WLR 491.
18 In the latter case, Lord Oliver reduced the elements of the action to three—reputation, deception, and damage: ibid., 499. This formulation was adopted by Lord Neuberger in Starbucks (HK) Ltd v. British Sky Broadcasting Group PLC [2015] UKSC 31, [15].
19 J. C. Penney v. Penneys [1975] FSR 367; Barnsley Brewery Co. v. RBNB [1997] FSR 462, 470; Chocosuisse Union des Fabricants Suisse de Chocolat v. Cadbury [1999] RPC 826, 836, 846; Interlotto (UK) Ltd v. Camelot Group plc (2003) EWHC 1256 (Ch) (Laddie J); (2003) EWCA Civ 1132, [7].
20 See, e.g., Chivers & Sons v. Chivers & Co. (1900) 17 RPC 420.
21 Harrods v. Harrodian School [1996] RPC 697.
22 Star Industrial Co. v. Yap Kwee Kor [1976] FSR 217, 223; Warnink v. Townend [1979] AC 731, 742, 755–6.
23 HFC Bank v. Midland Bank [2000] FSR 176, 182–3; Starbucks (HK) Ltd and ors v. British Sky Broadcasting Group Plc and ors [2012] EWHC 3074 (Ch), [153]–[158].
24 IRC v. Muller & Co.’s Margarine [1901] AC 217, 224 (Lord Macnaghten). Although a tax case, it has been frequently employed in passing off cases and the Court of Appeal has said that ‘no one, judge or jurist, has yet improved’ on it as a description: Scandecor Development AB v. Scandecor Marketing AB [1999] FSR 26, 41.
25 IRC v. Muller & Co.’s Margarine [1901] AC 217, 224 (Lord Macnaghten).
26 HFC Bank v. Midland Bank [2000] FSR 176, 183.
27 In between the category of invented or coined words and descriptive words, are many allusive or quasi-descriptive terms. The courts will be willing to protect these terms soon after they are used in trade: see, e.g., Phones4U Ltd v. Phone4u.co.uk Internet Ltd [2006] EWCA Civ 244, [24]–[25], [30]–[34] (first-instance judge had wrongly held that there was no goodwill in phones4u because it was descriptive, even though turnover was £42 million and it held 19 per cent of the market); Knight v. Beyond Properties Pty Ltd [2007] FSR 34 (goodwill in mythbusters for children’s books as a result of sales numbering in the thousands).
28 Spalding v. Gamage (1915) 32 RPC 273, 284; Cellular Clothing Co. v. Maxton & Murray [1899] AC 326, 339.
29 See Wadlow (2016), [8–076]. See also: The Sofa Workshop Ltd v. Sofaworks Ltd [2015] EWHC 1773 (IPEC) (‘The Sofa Workshop’ acquired sufficient secondary meaning to succeed in passing off against ‘Sofaworks’); The Ukulele Orchestra of Great Britain v. Clausen [2015] EWHC 1772 (IPEC) (‘The Ukulele Orchestra of Great Britain’ acquired sufficient secondary meaning to succeed in passing off against ‘The United Kingdom Ukulele Orchestra’). For acquisition of secondary meaning in the context of registered marks, see Chapter 37, section 3.5, pp. 1005–12.
30 [1896] AC 199 (HL) (reversing the Court of Appeal decision that the defendant should not be liable for telling the simple truth).
31 McCain International v. County Fair Foods [1981] RPC 69.
32 Parsons v. Gillespie [1898] AC 239 (PC).
33 Horlick’s Malted Milk Co. v. Summerskill (1916) 33 RPC 108.
34 Mothercare v. Penguin Books [1988] RPC 113, 115.
35 Secondary meaning is essential not only where the name describes the product, but also where it embodies a reference to quality. For example, the hit factory was descriptive of a quality of the claimant’s recording studio and, in the absence of a demonstration of secondary meaning, could not form the basis of a passing off action: Peter Waterman v. CBS [1993] EMLR 27.
36 Ibid.
37 Marcus Publishing v. Leisure News [1990] RPC 576, 584.
38 Chivers v. Chivers (1900) 17 RPC 420, 430 (Farwell J) (in the context of personal names); Wadlow (2016), [8–73]–[8–88] (reviewing comparative case law on generic and descriptive names).
39 Such factors, of themselves, will not give rise to recognition. Advertisement distinguished from trade is nothing: Chivers v. Chivers (1900) 17 RPC 420, 431 (Farwell J) (describing the act of advertising as an atrocious disfigurement of the fairest landscape in the kingdom); Burberrys v. Cording (1909) 26 RPC 693 (slip-on).
40 McCain v. County Fair [1981] RPC 69 (oven chips used with mccain’s). See more generally in Chapter 37, section 3.5.5 ff, at pp. 1010–12.
41 Antec International v. South Western Chicks (Warren) [1997] FSR 278, [1998] FSR 738, 743–4.
42 Edge & Sons v. Gallon & Son [1900] RPC 557; Peter Waterman v. CBS [1993] EMLR 27.
43 Peter Waterman v. CBS [1993] EMLR 27 (rejecting arguments that it was sufficient that the claimant’s recording studio was known as the hit factory to popular music press and the ‘non-pompous end of market’, when other sectors treated the phrase as referring to others).
44 Starbucks (HK) Ltd v. British Sky Broadcasting Plc [2012] EWHC 3074 (Ch), [130], [134].
45 Starbucks (HK) Ltd v. British Sky Broadcasting Group Plc [2013] EWCA Civ 1465, [59], [63].
46 Chivers v. Chivers (1900) 17 RPC 420.
47 [1891] AC 217.
48 See also My Kinda Town v. Soll [1983] RPC 407 (chicago pizza); CPC (United Kingdom) v. Keenan [1986] FSR 527 (oxford marmalade, oxbridge marmalade).
49 Chocosuisse v. Cadbury [1999] RPC 826, 832.
50 Linoleum Manufacturing Co. v. Nairn (1878) 7 Ch D 834, 836.
51 J. Evans, ‘Passing Off and the Problem of Product Simulation’ (1968) 31 MLR 642; Wadlow (2011), [8.132]–[8.165], 725–49; Edge v. Nicholls [1911] AC 693 (washing soap sold in a calico bag with a stick attached). It should be remembered that design protection exists for product shapes, although there are limits upon such protection (for instance, technical shapes are excluded). See Part III of this book.
52 [1990] RPC 341, 406.
53 Modus Vivendi v. Keen (World Marketing) [1996] EIPR D-82 (sale of butane gas by defendant in similar get-up in China); Johnston v. Orr Ewing (1882) 7 App Cas 219, 225.
54 Edge v. Nicholls [1911] AC 693.
55 United Biscuits (UK) v. Asda Stores [1997] RPC 513.
56 Hodgkinson & Corby v. Wards Mobility Services [1995] FSR 169.
57 However, while it is clear that imitation of get-up or packaging may constitute a misrepresentation, this does not mean that in all cases it will do so: Reckitt & Colman [1990] RPC 341, 406.
58 The London Taxi Corporation Ltd v. Frazer-Nash Research Ltd [2016] EWHC 52 (Ch), [287], [295] (Arnold J) (identifying reliance on the sign as a source indicator as the ‘acid test’ for establishing goodwill in a product shape or feature); George East Housewares Ltd v. Fackelmann GmbH [2016] EWHC 2476 (IPEC), [34]–[40] (reviewing the authorities on this point, in the context of assessing goodwill in various aspects of the get-up of a measuring cup); Gama Healthcare Ltd v. Pal International Ltd [2016] EWHC 75 (IPEC) (get-up not clearly defined).
59 Hodgkinson & Corby v. Wards Mobility Services [1995] FSR 169, 177. However, the House of Lords in Reckitt & Colman [1990] RPC 341 did indicate that such imitation of get-up might not amount to a misrepresentation when it was the only way in which to present the product. Lord Oliver noted that the association of the plastic shape with the claimant arose because ‘there is nothing in the nature of the product sold which inherently requires it to be sold in the particular format’: ibid., 416.
60 [1995] FSR 169.
61 [1981] RPC 429.
62 Ibid., 490.
63 Ibid.
64 For further consideration of advertisements, see the cases discussed by Wadlow (2016), [8–235]–[8–238].
65 Henderson v. Radio Corporation (1960) [1969] RPC 218; Fenty v. Arcadia Group Brands Ltd (t/a Topshop) [2013] EWHC 2310 (Ch).
66 Sim v. H. J. Heinz Co. [1959] 1 WLR 313.
67 H. Beverley-Smith, A. Ohly, and A. Lucas-Schloetter, Privacy, Property and Personality: Civil Law Perspectives on Commercial Appropriation (2005).
68 M. Bartholomew, ‘A Right is Born: Celebrity, Property, and Postmodern Lawmaking’ (2011) 44 Connecticut L Rev 301; J. T. McCarthy, The Rights of Publicity & Privacy (2nd edn, 2017).
69 As recently confirmed in Fenty v. Arcadia Group Brands Ltd [2015] EWCA Civ 3, [29] (Kitchin LJ) (‘There is in English law no “image right” or “character right” which allows a celebrity to control the use of his or her name or image’). For arguments in favour of such control, see D. Tan, The Commercial Appropriation of Fame (2017).
70 ‘The word “trade” is widely interpreted’: Kean v. McGivan [1982] FSR 119, 120 (Ackner LJ).
71 Alan Clark v. Associated Newspapers [1998] RPC 261, 269.
72 Henderson v. Radio Corporation (1960) [1969] RPC 218; cf. Kaye v. Robertson [1991] FSR 62 (Kaye, an actor, not a trader in relation to story about accident).
73 British Legion v. British Legion Club (Street) (1931) 63 RPC 555, 562.
74 British Diabetic Association [1996] FSR 1, 5.
75 [1982] FSR 119. The defendants were a high-profile breakaway group from the Labour Party, known as the ‘Gang of Four’. In due course, the defendants’ Social Democrats merged with the Liberal Party to form the Liberal Democrats.
76 [2001] EWCA Civ 900.
77 Ibid., [69] (Hale LJ).
78 Ibid. The Court cited Holy Apostolic & Catholic Church of the East (Assyrian) Australia New South Wales Parish Association v. Attorney General (New South Wales) [1989] 18 NSWLR 291, 294 (Court of Appeal of New South Wales) (no reason why a religious organization should not have the same protection over the goodwill in its name as is afforded to commercial organizations).
79 Bhayani v. Taylor Bracewell [2016] EWHC 3360 (IPEC).
80 A trade consortium may sue in its own name, but cannot bring a representative action: Consorzio del Prosciutto di Parma v. Marks & Spencer [1991] RPC 351. See also Chocosuisse v. Cadbury [1999] RPC 826, 843–4. The Court of Appeal did acknowledge, however, that it might be convenient if a trade association were able to sue on behalf of its members in such circumstances.
81 Artistic Upholstery v. Art Forma (Furniture) [1999] 4 All ER 277, 286–7.
82 Star Industrial v. Yap Kwee Kor [1976] FSR 217, 223; IRC v. Muller [1901] AC 217, 223.
83 The period of time and the types of activity that are needed to generate goodwill will vary from case to case: Stannard v. Reay [1967] RPC 589 (three weeks’ trade under the name ‘Mr Chippy’ was sufficient to establish goodwill on the Isle of Wight).
84 (1867) LR 2 Ch App 307.
85 [1965] RPC 191.
86 However, the claimant’s book had been published by the time of the hearing.
87 [1981] FSR 228.
88 Ibid., 233.
89 But, in BBC v. Talbot, the court was considering the parties’ prospects of success, not merely whether there was a serious question to be tried.
90 For example, BBC v. Talbot may have misunderstood Allen v. Brown Watson [1965] RPC 191. See Wadlow (2016), [3–070]–[3–071].
91 Wadlow explains that, in ‘reality, neither Allen v. Brown Watson nor BBC v. Talbot actually turned on the existence of goodwill’, because both Allen and the BBC had long-established businesses: Wadlow (2016), [3–071].
92 [1984] FSR 289 (concerning restaurants selling spare ribs, both to be called ‘rib shack’).
93 Ibid., 303. BBC v. Talbot meant that it was not impossible to argue the case.
94 Ibid., 299. See also Marcus Publishing v. Leisure News [1990] RPC 576.
95 My Kinda Bones v. Dr Pepper’s Stove Co. [1984] FSR 289.
96 [2013] EWCA Civ 1465.
97 Ibid., [105].
98 Pontiac Marina Private v. Cdl. Hotels International [1998] FSR 839, 861 (Court of Appeal for Singapore); Turner v. General Motors (1929) 42 CLR 352 (Australia); Windmere Corp. v. Charlescraft Corp. (1989) 23 CPR (3d) 60 (Canada).
99 Starbucks (HK) Ltd v. British Sky Broadcasting Group PLC [2015] UKSC 31, [66].
100 Wadlow (2011), [3–220]–[3–230], 243–8.
101 [1901] AC 217, 224.
102 Ibid.
103 In the context of registered marks, five years’ non-use, without due cause, is treated as a ground for revocation: see Chapter 39, section 2, p. 1078–93.
104 Knight v. Beyond Properties [2007] FSR 34, [68]; Jules Rimet Cup Ltd v. Football Association Ltd [2007] EWHC 2376 (Ch), [2008] FSR 10.
105 Knight v. Beyond Properties [2007] FSR 34 (author of mythbuster books had goodwill in 1996, but by 2003 this was not more than trivial).
106 Jules Rimet Cup Ltd v. Football Association Ltd [2007] EWHC 2376 (Ch), [2008] FSR 10 (Football Association retained goodwill in the mascot device from 1966 World Cup despite 40 years of inactivity).
107 Compare with Knight v. Beyond Properties [2007] FSR 34 (rejecting argument that children’s books ‘remain on the shelves’); Sutherland v. V2 Music Ltd [2002] EMLR 568 (funk band using name ‘Liberty’, which was reasonably well-known in mid-1990s, retained sufficient goodwill, so that pop group formed in 2001 under same name was passing itself off).
108 Star Industrial v. Yap Kwee Kor [1976] FSR 256 (PC).
109 A. Levey v. Henderson Kenton (Holdings) [1974] RPC 617 (closure for two years of claimant’s department store, because of fire, coupled with notices saying that it was reopening, held to maintain goodwill).
110 [1971] FSR 1, [1972] RPC 673.
111 Jules Rimet Cup Ltd v. Football Association Ltd [2007] EWHC 2376 (Ch), [2008] FSR 10.
112 Sheraton Corporation v. Sheraton Motels [1964] RPC 202.
113 There is some authority to the effect that this is insufficient to justify a passing off action, but the preponderance of authority now appears to be to the contrary.
114 Bernadin v. Pavilion [1967] RPC 581.
115 Ibid., 584.
116 The terms ‘hard’ and ‘soft’ were characterizations used in Athlete’s Foot [1980] RPC 343, 349. See also Baskin-Robbins Ice Cream v. Gutman [1976] FSR 545, 548; Maxim’s v. Dye [1978] 2 All ER 55, 59.
117 Customers on US forces bases who bought Budweiser beer from PX stores were excluded from consideration in Anheuser-Busch v. Budejovicky Budvar Narodni Podnik [1984] FSR 413, even though sales numbered 65 million bottles per annum. However, in Jian Tools for Sales v. Roderick Manhattan Group [1995] FSR 924, Knox J treated as relevant customers resident in the United Kingdom who had been influenced by foreign advertising and ordered goods from the US business: these were customers on the open market. But note the Trade Mark Registry’s approach in cases under TMA 1994, s. 5(4): In re Speciality Retail Group’s Application (Suit Express), O/124/00 (5 April 2000), [42] (‘it is doubtful whether an overseas retail outlet that UK residents have used casually whilst on business or holiday abroad can be said to be in business here merely because those customers returned here after doing business with the retailer whilst abroad’).
118 [1980] RPC 343.
119 Ibid., 350. See also SA des Anciens Etablissements Panhard et Levassor v. Panhard Levassor Motor Co. (1901) 18 RPC 405.
120 [1993] EMLR 27.
121 For Browne-Wilkinson V-C, if the foreign trader uses their name for the purposes of trade in the United Kingdom, the piracy of that name is an actionable wrong wherever the goodwill is located. Browne-Wilkinson V-C acknowledged that there is binding authority to the effect that the basis of claim must be a goodwill situated in England.
122 Hotel Cipriani SRL v. Cipriani (Grosvenor Street) [2008] EWHC 3032 (Ch), [2009] FSR (9) 209 (Arnold J); [2010] ECWA Civ 110, [2010] RPC (16) 485.
123 Ibid., [124].
124 Starbucks (HK) Ltd v. British Sky Broadcasting Group PLC [2015] UKSC 31.
125 Ibid., [47].
126 Ibid., [52].
127 Ibid., [103].
128 In re Readmans Ltd’s Application (Luxor), O/39/02 (30 January 2002) (mere existence of Internet site accessible from United Kingdom does not give rise to goodwill).
129 [1978] 2 All ER 55.
130 Ibid., 59, quoting from Baskin-Robbins Ice Cream v. Gutman [1976] FSR 545, 548.
131 Maxim’s v. Dye [1978] 2 All ER 55, 60.
132 Athlete’s Foot [1980] RPC 343; Jian Tools v. Roderick Manhattan Group [1995] FSR 924.
133 Anheuser-Busch v. Budvar [1984] FSR 413.
134 ‘Budweis’ is the old German name of the town in which the Czech beer is brewed.
135 In Anheuser-Busch v. Budvar [1984] FSR 413, 462, Oliver LJ defined the question as follows: ‘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 public on the open market?’
136 A. Coleman, ‘Protection of Foreign Business Names and Marks under the Tort of Passing off’ [1986] LS 70, 76; F. Mostert, ‘Is Goodwill Territorial or International?’ [1989] EIPR 440.
137 (1992) 23 IPR 193, 234.
138 Ibid.
139 Waterman v. CBS [1993] EMLR 27.
140 In Australia, this objection has been met by emphasizing the need for a claimant to show damage, diversion of trade that it is about to commence, or the tarnishment of reputation: ConAgra v. McCain (1992) 23 IPR 193, 235.
141 In re Tara Jarmon’s Application (Tara Jarmon), O/311/99 (7 September 1999), [36].
142 Starbucks (HK) Ltd v. British Sky Broadcasting Group PLC [2015] UKSC 31, [62].
143 This remedy is less attractive than passing off in three obvious respects: (i) TMA 1994, s. 56, is available only if the mark is ‘well known’; (ii) s. 56 results only in injunctive relief rather than compensation or restitution; and (iii) s. 56 does not extend to dissimilar goods, whereas passing off might. Note, however, that many of the limitations on registrability of trade marks (e.g. s. 3(2)), and statutory defences to infringement of registered marks (ss 11–12), do not appear to apply to the s. 56 action.
144 Trademark Law Treaty, Art. 16, and TRIPS, Art. 16(2), require application of Paris, Art. 6bis, to service marks.
145 Starbucks (HK) Ltd v. British Sky Broadcasting Group PLC [2015] UKSC 31, [64] (taking comfort in the existence of section 56 which ‘substantially reduces the likelihood … [of] harsh results’ from the rule on goodwill).
146 See TMA 1994, s. 55(1)(b); Jules Rimet Cup Ltd v. Football Association Ltd [2007] EWHC 2376, [73] (Wyand QC). Nor need the proprietor of a well-known mark have registered the mark in a Convention country: In re Sharif’s Application (Advanced Health Products), O/112/00 (23 March 2000), [52].
147 TRIPS, Art. 16(2), requires that account be taken of the knowledge of the trade mark in the relevant sector of the public, including knowledge that has been obtained as a result of the promotion of the trade mark. WIPO, Joint Recommendation Concerning Provisions on the Protection of Well Known Marks (2000) refers to: (i) the degree of knowledge or recognition of the mark in the relevant sector of the public; (ii) the duration, extent, and geographical area of any use of the mark; (iii) the duration, extent, and geographical area of any promotion, advertising, and publicity; (iv) the duration and geographical area of any registrations; (v) previous recognition by authorities of the well-known status of the mark; and (vi) the value associated with the mark. These factors were cited and applied by Arnold J in Hotel Cipriani v. Cipriani [2008] EWHC 3032, [2009] FSR (9) 209, [237]–[239].
148 For an example of such an assessment at the EUIPO, see Maurice Emram v. Guccio Gucci SpA, Case R 620/2006–2 (3 September 2007) (OHIM, Second BoA).
149 Case C-375/97 1999] ECR I–5421, [33] (AG Jacobs). A mark is only well known in a member state if it is well known in a substantial part of that state, as opposed to only in a city or its surrounding area: Alfredo Nieto Nuño v. Leonci Monlleó Franquet, Case C-328/06 (22 November 2007) (ECJ, Second Chamber).
150 Hotel Cipriani v. Cipriani [2008] EWHC 3032, [239].
151 Associated Newspapers Ltd v. Express Newspapers [2003] FSR 51, [23] (considering whether repute of the Mail was limited to papers that were sold or whether it extended to free papers); Boxing Brands v. Sports Direct International [2013] EWHC 2220 (Ch) (use of queensberry as name of a boxing club in Bedford gave rise to goodwill, but that goodwill would not support a passing off claim against a person selling clothing under the mark queensberry).
152 Evans v. Eradicure [1972] RPC 808; Levey v. Henderson-Kenton [1974] RPC 617; Associated Newspapers [2003] FSR 51, [29] (a trader’s reputation in Birmingham might be different from that in London).
153 Bollinger v. Costa Brava Wine Co. [1960] Ch 262; Taittinger v. Allbev [1994] 4 All ER 75 (champagne companies able to prevent use of elderflower champagne).
154 Vine Products v. Mackenzie [1969] RPC 1.
155 John Walker & Sons v. Henry Ost [1970] 2 All ER 106.
156 Erven Warnink BV v. Townend (J.) & Sons [1979] AC 731.
157 Chocosuisse v. Cadbury [1998] RPC 117.
158 Diageo North America Inc. and anor v. Intercontinental Brands (ICB) [2010] EWCA Civ 920.
159 Fage UK Ltd v. Chobani UK [2013] EWHC 630 (Ch).
160 Scandecor Development v. Scandecor Marketing [1999] FSR 26 (CA), 38–9.
161 [1998] FSR 500, [1999] FSR 26 (CA); not considered by the House of Lords.
162 The Court of Appeal in Scandecor Development v. Scandecor Marketing [1999] FSR 26, 42, accepted that, in an appropriate case, it is legally and factually possible for a business based overseas to acquire goodwill in this country by the supply of its products or services through a subsidiary, agent, or licensee. Whether or not that occurs must depend on the facts of the particular case. Cf. Habib Bank v. Habib Bank AG Zurich [1981] 2 All ER 650 (international parent may retain international goodwill); Gromax Plasticulture v. Don & Low Nonwovens [1999] RPC 367.
163 Scandecor Development v. Scandecor Marketing [1999] FSR 26, 43.
164 Ibid., 45.
165 [2003] EWHC 295, [2003] FSR 39 (Ch).
166 Ibid., [26].
167 Ibid., [26].
168 Ibid., [19]. See also Gill v. Frankie Goes to Hollywood Ltd [2008] ETMR 4.
169 Eric Burdon v. John Steel (9 September 2013) SRIS O-369–13, [8]–[9] (in relation to the band name the animals); Powell v. Turner [2013] EWHC 3242 (IPEC) (wishbone ash).
170 Artistic Upholstery v. Art Forma (Furniture) [1999] 4 All ER 277, 286 (goodwill is property in context of assignment, nationalization, bankruptcy, and can be owned by unincorporated association through its members). In circumstances in which the relationship is purely personal, as with a barrister or conductor, goodwill will be regarded as inalienable: see Newman v. Adlem [2006] FSR 16, [26] (Jacob LJ) (holding the rule inapplicable to the goodwill of a funeral director).
171 Barnsley Brewery Co. v. RBNB [1997] FSR 462, 469.
