22 August, 2013

Retrospective - Passing Off

Success often breeds those who wish to follow in your footsteps, or even attempt to utilize it for their own gain. In the world of consumer products, distinguishing one's products is imperative, but what if your competitor uses your characteristics, or attempts to mirror them closely in order to improve their own sales? Such attempts could fall under the tort of passing off, where a competitor will try to imitate the market leader's product by making it look as similar to it as possible, in essence passing it off as it it were the same product or of equal quality. This can be a similar logo, shape or other characteristic that distinguishes the product which is being imitated from other such products. Passing off is used if that mark or characteristic is not registered, therefore not falling under any specific trademark legislation. The tort also applies to services. The defining case for passing off was Erven Warnink BV v J Townend & Sons (Hull) Ltd in England, however a later case distilled the essence of the tort itself; Reckitt and Colman Products Ltd v Borden Inc & Others.

A product that definitely isn't a lemon
Reckitt and Colman v Borden concerned the incredibly well-known product called a Jif Lemon. What this product is is a yellow lemon shaped container with lemon juice inside. For Pancake Day enthusiasts and other lemon lovers, a quintessential product for their purposes. What makes this product so easily distinguishable is its shape and striking resemblance to a real lemon, which has been used since the 1930s. Some decades later, Borden Ltd, who had sold lemon juice under the name ReaLemon, attempted to break the UK market by selling their lemon juice in a lemon shaped container only slightly deviating from the Jif design. In the course of several complaints on Reckitt and Colman's part Borden did change the shape, color of the cap and the size of their container, but still maintained the lemon shape. Reckitt and Colman subsequently sued Borden, and the final decision came from the House of Lords in 1990.

Passing off hinges heavily on one factor which has to be explained, called 'goodwill'. The concept of goodwill is reputation, how well-known the product is and how well consumers identify that particular product among others of a similar type. The less goodwill the product has, the less likely an action in passing off will succeed. This does not necessarily amount to just the longevity of the period in which the product or services is traded in, but can be merely its introduction as the only product of its kind, effectively becoming the only one consumers identify as the defining product of that type.

Lord Oliver provided a summation of the law's position in passing off, containing three requisite elements to prove the tort: "First, he must establish a goodwill or reputation attached to the goods or services which he supplies in the mind of the purchasing public by association with the identifying 'get-up' (whether it consists simply of a brand name or a trade description, or the individual features of labelling or packaging) under which his particular goods or services are offered to the public, such that the get-up is recognised by the public as distinctive specifically of the plaintiff's goods or services. Secondly, he must demonstrate a misrepresentation by the defendant to the public (whether or not intentional) leading or likely to lead the public to believe that goods or services offered by him are the goods or services of the plaintiff. Whether the public is aware of the plaintiff's identity as the manufacturer or supplier of the goods or services is immaterial, as long as they are identified with a particular source which is in fact the plaintiff. … Thirdly, he must demonstrate that he suffers or … that he is likely to suffer, damage by reason of the erroneous belief engendered by the defendant's misrepresentation that the source of the defendant's goods or services is the same as the source of those offered by the plaintiff".

In the court's judgment, delivered by Lord Oliver and Lord Jauncey, the tort of passing off was a matter of answering three questions:
"(i) Have the respondents proved that the get-up under which their lemon juice has been sold since 1956 has become associated in the minds of substantial numbers of the purchasing public specifically and exclusively with the respondents' (or "Jif") lemon juice? 
(ii) If the answer to that question is in the affirmative, does the get-up under which the appellants proposed to market their lemon juice in all or any of the Mark !, Mark II or Mark HI versions amount to a representation by the appellants that the juice which they sell is "Jif" lemon juice? 
(iii) If the answer to that question is in the affirmative, is it, on a balance of probabilities, likely that, if the appellants are not restrained as they have been, a substantial number of members of the public will be misled into purchasing the defendants' lemon juice in the belief that it is the respondents' Jif juice?"
What Lord Oliver is asking is whether the product or service in question has goodwill or reputation; whether there has been a misrepresentation on the other party's part; and where there has been damage or there is a likelihood of such should the other party not be prevented from misrepresenting their product as the other. The assessment of each given factor is a matter of evidence, and there is no steadfast rule as to any hardline indicators proving either goodwill, damage or the likelihood of damage. In the case at hand their Lordships saw that Borden Ltd were liable under the tort of passing off, purely for the reason that the products' similarities would likely cause confusion on the purchaser's part and therefore cause damage to Reckitt and Colman. Borden intention was to not necessarily confuse the purchaser, but to identify their product with the other, causing the purchaser to pick up either product purely on the instinct that it is what they think it is due to its indicative shape. Their Lordships heard arguments over matters relating to a possible monopoly should the shape be kept strictly under Reckitt and Colman's control, and the possibility that the shape was commonly used in the trade (thus making it available for all to use in that trade); however none of these arguments were accepted.

The tort of passing off is incredibly important in the protection of traders' goods through the common law. Should this protection not be offered, distinctive shapes, marks or other characteristics which are not registered could be freely used by others to the detriment of the original trader. Some laws do offer protection through statutory means, such as the Australian Consumer Law (Competition and Consumer Act 2010) in Australia or the Trade-Marks Act in Canada, but the tort still remains an important part of the common law.

No comments:

Post a Comment