Claim No: IP-2021-000114 - [2023] EWHC 3153 (IPEC)

The burden is on the Claimant to prove loss and damage to the civil standard to complete the cause of action in passing off, the Defendants having admitted reputation and goodwill.

The Claimant relies on McGregor on Damages 21^st edition at Chapter 48 (Economic Torts and Intellectual Property Wrongs) Part II Section 2 Passing off. At 48-016 the editors set out the ‘modern position’ in respect of damage in passing off cases with reference to Goddard LJ’s judgment for the Court of Appeal in Draper v Trist:

“…in an ordinary action of deceit, the plaintiff’s cause of action is false representation, but he cannot bring the action until the damage has accrued to him by reason of that false representation. In passing off cases, however, the true basis of the action is that the passing off by the defendant of his goods as the goods of the claimant injures the right of property in the plaintiff, that right of property being his right to the goodwill of his business. The law assumes, or presumes, that, if the goodwill of a man’s business has been interfered with by the passing off of goods, damage results therefrom. He need not wait to show that damage has resulted. He can bring his action as soon as he can prove the passing off, because it is one of the class of cases in which the law presumes that the plaintiff has suffered damage… If it be necessary for a plaintiff in this class of case, before he can get more than nominal damages, to show that he has lost this, that, or the other order, one would have to put this class of case, I think, into a third division of law, a case in tort, in which nominal damages can be recovered, although no damage be proved. If, however, a plaintiff wants more than nominal damages, he will have to prove this, that and the other. However, I do not think that is the law.” (my emphasis)

At 48-017 of McGregor on Damages the editors identify Spalding v Gamage (1915) 84 L.J.Ch 449 HL and Draper v Trist [1939] 3 All E.R. 513 CA as “the only cases of general importance” on the question of assessment of damages in passing off cases, noting that “The principal head of damage is the loss of business profits caused by the diversion of the claimant’s customers to the defendant as a result of the defendant’s misrepresentation; beyond this, damages may be awarded for any loss of business goodwill and reputation resulting from the passing off. Damages under both these heads were held to be properly awarded in Spalding v Gamage, a result which has never since been doubted.”

On the facts of the case in Draper v Trist, loss of profits was found not to be a relevant consideration and the Court of Appeal awarded a sum of £2,000 for loss of reputation: see 524E-525A, where Sir Wilfred Greene MR stated:

“this court is entitled, as I think a jury would be entitled, to use ordinary business knowledge and common sense, and to consider that one cannot have deceptive trading of a considerable volume without inflicting, at any rate, some measure of damage on the goodwill. How long that will last, what its extent will be, is a thing which no evidence, except in the most exceptional case, could satisfactorily define, and the matter is reduced, as many of these matters are reduced, to the formation of a rough estimate in a way in which a jury could properly form one.”