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Query regarding the tort of 'passing off'

 
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bbloke
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PostPosted: Mon Feb 13, 2012 12:45 pm    Post subject: Query regarding the tort of 'passing off' Reply with quote

I've been researching the passing off tort and I have a query regarding its limitations, specifically with regard to original designs created with relation to an organisation or individual.

I suppose this might be a bit of a 'how long is a piece of string' question, but here goes!

Say, for example, I have an original design in colours red white and black incorporating the word "united".

I'm specifically interested in passing off as opposed to trademark. As far as I can tell, the example above would not infringe on trademark. But would it be considered passing off?

1. Is the example design trading on the goodwill of Manchester United FC?

2. Is the example design, in essence, misrepresentation? Could it cause confusion?

3. Could the example design be successfully contested as passing off by Manchester United FC?

4. Would Manchester United FC's case be significantly strengthened if merchandise using the design was sold in proximity to Old Trafford, Manchester United's home ground?


I've struggled to find case history with regard to this type of passing off - with perhaps the exception of Arsenal FC versus Reed, though I feel this was a rather different case - so any interpretations/thoughts would be very much appreciated!
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AndyJ
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PostPosted: Mon Feb 13, 2012 6:47 pm    Post subject: Reply with quote

Hi bbloke,
As you have already done some research on this subject, it may well be that you are aware of most of what I have to say, so bear with me.

As you know passing-off is a tort which means there is no statute of Parliament which defines what passing-off means and if there are any defences. The common law is judge-made and resides in a series of decisions in specific cases. However there are several princples which can be set down, and from what you have written, I believe you may already be aware of them. There are three elements which need to be proved to a court:
1. Goodwill needs to exist in a business, product or the services of the claimant. Goodwill here means a public perception of the business or product which distinguishes it from another business or product in substantially the same line of business. Normally this would be seen in terms of customers prefering one product or service over that of a rival, but in certain circumstances, even notoriety can even count as goodwill. The distinguishing charateristics (eg the branding) associated with a business or product or service can take many forms: it could be in real words (eg a business name or catchphrase) or a made-up word (eg 'Kit-Kat'), a device such as a logo, crest or symbol, or in the get-up of the product or its packaging. This could include the shape (eg CocaCola bottle) the colour (SilkCut cigarettes and purple) and so on. In most cases these features can and usually are, further protected by being registered as Trade Marks. Goodwill is also established by the length of time the public has been aware of the product or service, and it can continue to exist even after a company has ceased trading. Goodwill is related to the area where it is claimed to exist. In other words a company that had considerable goodwill in say the USA but was virtually unknown in the UK would not be able to claim pre-existing goodwill in a case brought in the UK. Sometimes this public awareness can be very local, such that a small local business which has been trading for many years under a particular name may have a greater claim locally to goodwill than a recently arrives big brand name. So for instance if someone had started a business called Google Cafe in 1980 and built up a good local reputation, the internet search engine business would not be able to claim the cafe was passing-off.

2. The next element is that there must be misrepresentation which causes confusion in the minds of customers. Generally where there is a deliberate attempt at deception this is much easier to prove, but even innocent unintentional misrepresentation which nevertheless confuses the public would also count. This misrepresentation does not need to be overt; it can be implied. so for instance if we take your example, selling your goods immediately outside the Manchester United stadium might imply that the goods were officially authorised by the club. The misrepresention must be by a trader in the course of trade. The biggest difficulty here is for the claimant to find evidence of confusion in the mind of a customer. A customer in this context is a normal sensible person and not 'a moron in a hurry'. And there must be a substantial proportion of customers who are confused, not just a few untypical ones.

3. And finally the claimant must show that he has suffered damage as a result of the pasing-off, either in terms of lost sales or in damage to the reputation of his business.

In court, each of these elements will be closely examined based on the facts in particular case, and an action for passing-off will only succeed if all three elements are present.

There are several defences which undermine one or more of the three elements. If the claimant's goods or services:
a. lack distinctiveness or have become generic (for instance, 'fruit gums'), or
b. the defendant has added features to his product aimed at clearly differentiating them from the claimant's, or
c. the defendant has equal right to the disputed feature (as in the Google cafe example) or
d. the claimant has previously given permission for the defendant to use disputed feature, or
e. the claimant, despite knowing of the existence of the rival's product etc, acquiesced over a considerable period of time and did nothing to stop him trading etc.
then the court may well dismiss the claim.

So turning to your example, the colours are not unique to Manchester United, nor is the word United (Newcastle and Sheffield United for instance) thus there appears to be a lack of distinctiveness, so it would largely depend on the actual goods you were trading in. For instance anything which was a near replica of something MUFC already sells might well be seen as passing-off even without the club's name and logo on it, but if you were proposing to sell something that MUFC did not sell or licence and you make sure to stay well away from any registered trade marks, then the chances of a successful passing-off claim based on just the colours and the word 'United' would not appear to be great.
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Advice or comment provided here is not and does not purport to be legal advice as defined by s.12 of Legal Services Act 2007
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bbloke
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PostPosted: Mon Feb 13, 2012 7:16 pm    Post subject: Reply with quote

Hi AndyJ,

Thank you very much for your thorough answer! Much appreciated. Very Happy

On a further point, if the example "United" product was available to buy online, would the use of the keyword/meta tag "Manchester United" on a web page constitute passing off?

I think this is a really interesting point. In practice it is virtually the same as the trader standing outside Old Trafford. But, as keywords can be hidden from the user, is it misrepresentation or taking a free ride on goodwill?

My gut feeling is that it probably is passing off, but I don't know if case law is up to speed with technology, so to speak.

I'd be interested in your opinion.
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AndyJ
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PostPosted: Tue Feb 14, 2012 6:34 pm    Post subject: Reply with quote

Hi again bboloke,
Yes you are right in your assumption that using a trade mark as a keyword or adword would probably amount to either trade mark infringement or passing-off or both.
In fact the case law is quite up to date on this subject. Three cases come to mind, which you can read up on if you wish.

The first is a series of joined cases known as Google France in which the European Court of Justice ruled that using adwords did infringe trade marks.

Next was a case in the English Courts, Och-Ziff Management Europe Ltd & Anor v Och Capital LLP & Anor [2010] EWHC 2599 (Ch) in which Mr Justice Arnoold applied the Google France judgment to a case involving both trade marks and passing-off.

And lastly there was Interflora v Marks & Spencer in which the European Court of Justice again ruled that such use infringed trade marks. To save you ploughing all the way through the judgment here's the relevant bit:
Quote:
"1. Article 5(1)(a) of ... Council Directive 89/104 ... and Article 9(1)(a) of Council Regulation ... 40/94 ... must be interpreted as meaning that the proprietor of a trade mark is entitled to prevent a competitor from advertising – on the basis of a keyword which is identical with the trade mark and which has been selected in an internet referencing service by the competitor without the proprietor’s consent – goods or services identical with those for which that mark is registered, where that use is liable to have an adverse effect on one of the functions of the trade mark. Such use:

– adversely affects the trade mark’s function of indicating origin where the advertising displayed on the basis of that keyword does not enable reasonably well-informed and reasonably observant internet users, or enables them only with difficulty, to ascertain whether the goods or services concerned by the advertisement originate from the proprietor of the trade mark or an undertaking economically linked to that proprietor or, on the contrary, originate from a third party;

– does not adversely affect, in the context of an internet referencing service having the characteristics of the service at issue in the main proceedings, the trade mark’s advertising function; and

– adversely affects the trade mark’s investment function if it substantially interferes with the proprietor’s use of its trade mark to acquire or preserve a reputation capable of attracting consumers and retaining their loyalty.

2. Article 5(2) of Directive 89/104 and Article 9(1)(c) of Regulation No 40/94 must be interpreted as meaning that the proprietor of a trade mark with a reputation is entitled to prevent a competitor from advertising on the basis of a keyword corresponding to that trade mark, which the competitor has, without the proprietor’s consent, selected in an internet referencing service, where the competitor thereby takes unfair advantage of the distinctive character or repute of the trade mark (free-riding) or where the advertising is detrimental to that distinctive character (dilution) or to that repute (tarnishment)

Advertising on the basis of such a keyword is detrimental to the distinctive character of a trade mark with a reputation (dilution) if, for example, it contributes to turning that trade mark into a generic term.
By contrast, the proprietor of a trade mark with a reputation is not entitled to prevent, inter alia, advertisements displayed by competitors on the basis of keywords corresponding to that trade mark, which put forward – without offering a mere imitation of the goods or services of the proprietor of that trade mark, without causing dilution or tarnishment and without, moreover, adversely affecting the functions of the trade mark with a reputation – an alternative to the goods or services of the proprietor of that mark"

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Advice or comment provided here is not and does not purport to be legal advice as defined by s.12 of Legal Services Act 2007
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bbloke
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PostPosted: Tue Feb 14, 2012 6:51 pm    Post subject: Reply with quote

Fantastic. Thanks again for your help!

I did stumble across the Interflora & M&S case earlier today, but shall read further. Very Happy
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