Case No. IP-2016-000182

14.In a classic passing off case a trader claims that a trading name or a get-up is distinctive of his goods or services. Extended passing off cases have differed in that the name in issue was alleged to be associated with a type of product, as opposed to a single trader or corporate group. Champagne was the first product to be awarded protection by restraining the defendant’s use of that name. There have been further champagne cases and successful claims in relation to sherry, advocaat, whisky, vodka and going beyond the names of alcoholic drinks, Swiss chocolate and Greek yogurt.15.Usually claimants have been the makers of the relevant product. In the champagne cases the claimants were champagne houses (see for example Bollinger and Taittinger SA v Allbev Ltd [1993] F.S.R. 641). In Warnink the claimant was a producer of advocaat, an egg and spirit liqueur. In Chocosuisse Union des Fabricants Suisse de Chocolat v Cadbury Ltd [1999] R.P.C. 826 (CA) the claimants that mattered were Swiss chocolate manufacturers – and so on. A cause of action is not confined to manufacturers though. In John Walker & Sons Ltd v Henry Ost and Company Limited [1970] F.S.R. 63 the plaintiffs were all blenders and exporters of Scotch whisky, not distillers. Foster J rejected an argument that only makers of a product had a cause of action (at p.79). The availability of a cause of action is likely to depend on whether the claimants (or the traders of whom the claimant is one) are collectively responsible for the quality of the product.16.In Warnink Lords Diplock and Fraser each defined the elements of passing off generally, although with an eye to extended passing off. Lord Diplock’s were these (at p.742):“My Lords, A. G. Spalding & Bros. v. A. W. Gamage Ltd ., 84 L.J.Ch. 449 and the later cases make it possible to identify five characteristics which must be present in order to create a valid cause of action for passing off: (1) a misrepresentation (2) made by a trader in the course of trade, (3) to prospective customers of his or ultimate consumers of goods or services supplied by him, (4) which is calculated to injure the business or goodwill of another trader (in the sense that this is a reasonably foreseeable consequence) and (5) which causes actual damage to a business or goodwill of the trader by whom the action is brought or (in a quia timet action) will probably do so.”17.Lord Fraser identified the elements this way (at pp.755-6):“It is essential for the plaintiff in a passing off action to show at least the following facts:- (1) that his business consists of, or includes, selling in England a class of goods to which the particular trade name applies; (2) that the class of goods is clearly defined, and that in the minds of the public, or a section of the public, in England, the trade name distinguishes that class from other similar goods; (3) that because of the reputation of the goods, there is goodwill attached to the name; (4) that he, the plaintiff, as a member of the class of those who sell the goods, is the owner of goodwill in England which is of substantial value; (5) that he has suffered, or is really likely to suffer, substantial damage to his property in the goodwill by reason of the defendants selling goods which are falsely described by the trade name to which the goodwill is attached.”18.Lord Diplock qualified his five elements by saying (at p.742) that although all passing off actions would have those elements, not all factual situations which present those characteristics would give rise to a cause of action for passing off.19.The House of Lords subsequently reasserted the three key elements of classic passing off in Reckitt & Colman Products Ltd v Borden Inc [1990] R.P.C. 341, at 406, namely goodwill, misrepresentation and damage. Since then extended passing off cases have often been analysed by reference to those three elements.20.The law was reviewed more recently in some detail by the Court of Appeal in Diageo North America Inc v Intercontinental Brands (ICB) Ltd [2010] EWCA Civ 920; [2011] R.P.C. 2 and again in Fage UK Ltd v Chobani UK Ltd [2014] EWCA Civ 5; [2014] E.T.M.R. 26.21.In Diageo Patten LJ made the point that a claim of extended passing off must conform with general characteristics of all passing off actions:“[23] The view expressed by the editors of Kerly's Law of Trade Marks and Trade Names (14th edition) is that the classic and extended forms of passing-off are not different torts but are simply convenient labels to describe the two most obvious situations in which the law will intervene to render actionable the misappropriation of established goodwill by a seller based on a misrepresentation by him as to the nature and provenance of his own goods. The question whether this is the correct juristic analysis is probably not critical to the outcome of this appeal. Our task is to apply the law in the form it has now reached rather than to worry about its historical antecedents. But the value of this analysis (which I endorse) is that it confirms what is the essence of the tort of passing-off in all its forms: namely that it is there to protect the goodwill created by the product (whether in conjunction with the claimant's mark or alone) and is not there simply to prevent the misdescription of the goods or the unauthorised use of the claimant's name.” Goodwill 22.In classic passing off the claimant must show that he owns goodwill in his business, which goodwill is associated with a trade name or get-up that distinguishes his goods or services from those of other traders. In extended passing off the claimants must establish that there is goodwill in the collective business in a type of product (all cases to date have concerned products) and that the name (so far get-up has not been central) is distinctive of that type of product among a significant proportion of the public. There is joint ownership of the goodwill, so any one or more of the class of relevant traders has a cause of action.23.The type of product in issue must be susceptible of clear definition and the class of traders who supply that type of product must be sufficiently clear. The two are necessarily related.24.Lord Fraser emphasised adequate definition of the type of goods in the second of his five elements:“(2) that the class of goods is clearly defined, and that in the minds of the public, or a section of the public, in England, the trade name distinguishes that class from other similar goods;”25.Lord Diplock said (at p.747):“Of course it is necessary to be able to identify with reasonable precision the members of the class of traders of whose products a particular word or name has become so distinctive as to make their right to use it truthfully as descriptive of their product a valuable part of the goodwill of each of them; but it is the reputation that that type of product itself has gained in the market by reason of its recognisable and distinctive qualities that has generated the relevant goodwill. So if one can define with reasonable precision the type of product that has acquired the reputation, one can identify the members of the class entitled to share in the goodwill as being all those traders who have supplied and still supply to the English market a product which possesses those recognisable and distinctive qualities.”26.The point is that use of the name in question cannot be the exclusive preserve of a class of traders if it is hard to tell who falls within the class and who does not, and thus who is entitled to use the name and who not. Even if it can be shown that the defendant plainly does not fall within the class, a vague definition of the relevant class of traders is liable to undermine the claim to goodwill. A trade name cannot be said to be exclusively associated with the goods of a class of traders if it is hard to know who forms part of that class.27.A claimant may define the type of product as he pleases and thereby choose his class of traders. But success in establishing goodwill depends on getting this right. First, if his chosen class is too imprecise his case will fail from the start. Secondly, even if his type of product and class of traders are defined with precision, the product type must be recognised by the public. Should the product chosen not be recognised as a distinct type by the public the name in issue cannot be distinctive of that product. Thirdly, even if the product chosen is recognised as a distinct type, the claimant must still show that the name in issue denotes that type of product. Unless these criteria are satisfied there cannot be shared goodwill associated with that name.28.In Fage Lewison LJ said this:“[123] … It seems to me that the reason why it is necessary for the protected class of goods to be clearly defined, or defined with reasonable precision, is because the goodwill that the tort seeks to protect is a species of property. In some intellectual property cases there is too much ‘intellectual’ and not enough ‘property’. The essence of a right of property is that it distinguishes between what is mine and what is not mine. So there needs to be a boundary. Thus the debate about the definition of the class is essentially an intellectual property boundary dispute. The boundaries are needed in order to delineate both what is protected and also who shares in the ownership of the protected subject matter. The action in passing off is directed against those who cross the boundary.”29.One way of defining a type of product with sufficient precision – and thereby also adequately defining the relevant class of traders – is by reference to regulations. Even if the relevant regulations carry no force in England, public perception in England of the product is likely to become aligned with the characteristics required in law since over time their experience of the product will inevitably conform to those characteristics.30.By way of example, at the time of the champagne cases (and presumably still) the laws of France required that the name ‘champagne’ may be used only in relation to wine made by the méthode champenoise, which involves a second fermentation in the bottle, from grapes grown in a strictly delimited part of the Champagne region of north eastern France. Champagne could be defined according to the geographical source of the grapes. By extension the class of traders entitled to call their product ‘champagne’ could be unambiguously identified as those that make their wine from such grapes – the champagne houses.31.It is not essential to rely on legislation. In Warnink there was reference to Dutch regulations governing the way that advocaat was made, but Lord Diplock described this as merely coincidental (at p.748). There the product was defined by the ingredients which gave the drink its recognisable qualities (and which coincided with the requirements of the Dutch regulations).32.Assuming the class of traders is sufficiently clearly defined, it need not be and generally will not be a closed class. A trader who newly makes and/or supplies the product as defined qualifies for a share of the goodwill and with it the right to restrain non-qualifying traders from using the name. Other parties may cease to make or supply the product and fall out of the class. See for example Warnink at p.754.33.Since the name in question denotes a type of product, it will to that extent be descriptive of the product. In some instances, such as the champagne cases, it may also be descriptive of the geographical source of the product. However, the difference from classic passing off is less than at first appears. The name must be associated exclusively with the type of product in question. It must in this sense be distinctive. Where the name started life as purely descriptive, such as being no more than an indication of the geographical source of the product, it must have acquired a secondary meaning so that it is now recognised by the public as denoting a particular type of product.34.Provided the name is distinctive in this sense the collective goodwill in the business of traders who supply the product will be associated with the name, see Diageo at [24]-[27] and Fage at [62]. 35.More than just distinctiveness is required of the name. It must contribute to the essential function of goodwill as “the attractive force which brings in custom”, see the dictum of Lord Macnaghten in Inland Revenue Commissioners v Muller & Co’s Margarine Ltd [1901] A.C. 217, at 223. In Fage Kitchin LJ put it this way (at [68]): for a claimant to succeed in an extended passing off case“… he must show that the name has come to denote a particular kind of product which has recognisable characteristics which distinguish it from other products, and that the public are motivated to buy the product by reason of those characteristics.”36.Laddie J gave two comparative examples in Chocosuisse at first instance ([1998] R.P.C. 117, at p.129), namely ‘French ball bearings’ and ‘Italian pencils’ (approved by the Court of Appeal in Fage at [70]). Both terms could be regarded as clear enough such that their producers are each a class of traders sufficiently well defined. However, on the reasonable assumption that the public in England would not be more drawn to ball bearings because they come from France or to pencils because they come from Italy, there would be no goodwill associated with those terms on which the producers could rely. By contrast, in Chocosuisse, for instance, it was found that the chocolate from Switzerland was perceived by a significant part of the public to be a premium product, which perception encouraged sales. In Fage the court found that a substantial proportion of the relevant public not only thought Greek yogurt comes from Greece, they also believed it to be special by reason of its thick and creamy texture.37.The special quality of the product which attracts customers may take the form of a cachet, an image of prestige associated with the name. But this need not be the case. Even if the special quality carries little glamour and could not accurately be described as imparting prestige, provided it attracts custom that is enough, see Diageo at [49]-[55].38.Nor is it necessary that the relevant public should know why the product is special. For example, those who are attracted to buy Greek yogurt because it is rich and creamy need not be aware that the texture has been achieved through the removal of whey by straining, see Fage at [66].39.There is a final point on goodwill. It was argued in the present case that MML had not traded enough by the relevant date to claim a share in the goodwill. Reference was made to Lord Diplock’s speech in Warnink at p.744 E-F:“…the new entrant must have himself used the descriptive term long enough on the market in connection with his own goods and have traded successfully enough to have built up a goodwill for his business.”40.In Chocosuisse at first instance Laddie J took issue with what Lord Diplock had said (at p.125-6):“The difference in this respect between the proprietor’s rights in marks protectable by classic passing off proceedings and his rights in famous generic terms protectable by the extended form of passing off inevitably has impact on other parts of the action. In Advocaat it was said that mere entry into the market by a new trader who uses the term accurately on his products would not give him any right of action for passing off. Lord Diplock said, although it was not strictly in issue in the Advocaat case, that the new entrant must have himself used the descriptive term long enough on the market in connection with its own goods and have traded successfully enough to have built up a goodwill for his business before he could sue. In this respect the House of Lords was carrying over one of the factors which a plaintiff needed to prove in a classic passing off action. However the reality is somewhat different. Once a trader becomes a legitimate member of the trade using a protected descriptive term, he cannot be sued for passing off by other members of the trade and, if he joins in a passing off action to protect the term, the courts have not inquired too deeply into how extensive his own trade has been.”41.Lord Diplock’s observation was obiter. I must take a view and I respectfully agree with Laddie J. In a classic passing off case goodwill must have been generated by the time the defendant begins his acts complained of. By contrast, when considering whether a new entrant has a cause of action for extended passing off there is no question whether goodwill has been generated – ex hypothesi it has. The point at issue is whether the claimant is entitled to share in that goodwill. Provided he has traded in the relevant type of product to an extent above de minimis I see no reason why he should not share the goodwill and in consequence be entitled to a cause of action.