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WHY THE UNITED KINGDOM SHOULD HAVE A LAW AGAINST MISAPPROPRIATION

Published online by Cambridge University Press:  12 November 2010

Jennifer Davis
Jennifer Davis
Affiliation:
Herchel Smith College Lecturer in Intellectual Property Law, University of Cambridge, and Fellow, Wolfson College, Cambridge.
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The Cambridge Law Journal , Volume 69 , Issue 3 , November 2010 , pp. 561 - 581
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Copyright © Cambridge Law Journal and Contributors 2010

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References

1 Thus recently, in his judgement in L'Oreal S.A. v. Bellure N.V. [2007] EWCA Civ 968 at para. 142, Jacob L.J. stated: “I would reject Mr. Carr's [counsel for the claimant] invitation to invent a tort of unfair competition, even if were open to us to do it – which I do not think it is.” Similarly, in Diageo North America Inc. & Anor v. Intercontinental Brands (ICB) Ltd. and Ors [2010] EWCA Civ 920, Patten L.J. said (at para. 24): “There is no general law against unfair competition. The law rapidly rejected the notion that a manufacturer could sue to protect a right of property in his mark and instead concentrated on the goodwill which his business has established.”

2 See H. Carty, An Analysis of the Economic Torts (Oxford 2001).

3 Most notably, the Consumer Protection from Unfair Trading Regulations 2008 implements the Unfair Commercial Practices Directive (2005/29/EC) and the Business Protection from Misleading Marketing Regulations 2008 which implements the Comparative Advertising Directive (2006/114/EC).

4 See for example, H. Carty, An Analysis of the Economic Torts, p. 180.

5 The authority for this is of course the two leading cases, Erven Warnink B.V. v. J Townend & Sons (Hull) Ltd. [1979] AC 73 (the “Advocaat” case) and Reckitt & Colman Products Ltd. v. Borden Inc. (No 3) [1990] 1 WLR 491 (the “Jif Lemon” case).

6 F. Henning-Bodewig, Unfair Competition Law: European Union and Member States (Hague 2006), p. 123. Henning-Bodewig, F., “A new Act against unfair competition in Germany” (2005) IIC 421 at 428–29Google Scholar.

7 Mills, B., “Own label products and the “lookalike' phenomenon: a lack of trade dress and unfair competition protection?” (1995) |EIPR 116 at 129Google Scholar.

8 This can be dealt with under the general clause of Sec. 3 of the UWG. There is no need to show confusion, although a higher standard of proof is required. Henning-Bodewig, Unfair Competition Law, p. 136.

9 L'Oreal SA v. Bellure NV (Case 04/18300) [2006] E.C.D.R. 16 at para. 53.

10 L'Oreal v. Bellure (CA) at para. 135.

11 L'Oreal v. Bellure at para. 7.

12 L'Oreal v. Bellure at para. 160.

13 L'Oreal v. Bellure at para. 160–161.

14 This point is made by Michael Spence in “Passing Off and the Misappropriation of Valuable Intangibles,” (1996) 112 L.Q.R. at 474.

15 Hodgkinson & Corby Ltd. v. Wards Mobility Services Ltd. (No.1) [1994] 1 WLR 1564, quoted in L'Oreal v. Bellure (CA) at para. 137.

16 See for example, Lord Fraser, Warnink v. Townend at 105.

17 Intel Corp Inc. v. CPM United Kingdom Ltd. (Case C-252/07) [2009] ETMR 13 L'Oreal SA v. Bellure NV (Case-487/07) [2009] ETMR 55.

18 First Council Directive 89/104/EEC on the approximation of the laws of Member States relating to trade marks.

19 The need for a “link” in the minds of the relevant consumers for s5(2) to operate was made clear in the ECJ decision, Adidas-Salomon AG v. Fitnessworld Trading Ltd. (C-408/01) [2004] ETMR 10.

20 Intel Corp Inc. v. CPM United Kingdom Ltd. [2007] EWCA Civ 431 at para. 35. Here, presumably, Jacob L.J. was not asking that there be a confusion as to origin, since the necessity for origin confusion in finding infringement under art. 5(2) appeared to have been ruled out by the ECJ a number of years ago in the case of Sabel BV v. Puma AG and Rudolf Dassler Sport (C-251/95) [1997] E.C.R. 1-6191. This was confirmed in Adidas v. Fitnessworld and the ECJ judgement in Intel at para. 24. But by asking for the assumption of a “connection” in the minds of the average consumer, which would of course not exist, it is submitted Jacob L.J. was asking for a deception. Indeed, he specifically stated (at para. 29) that the “link” must be more than a “tenuous association.” For a discussion of this point, see B. Trimmer, “The power of attraction: do trade marks have an “image” problem in the English courts?” [2009] E.I.P.R.195.

21 Ibid at para. 37.

22 L'Oreal v. Bellure at para. 94.

23 Intel v. CPM at para. 57.

24 Intel v. CPM at para. 63. Although, it was also true that ‘the more immediately and strongly the earlier mark is brought to mind by the later mark, the greater the likelihood that the current or future use of the later mark is taking unfair advantage of, or is detrimental to, the distinctive character or the repute of the earlier mark.” (para. 67).

25 Intel v. CPM at para. 80.

26 Intel v. CPM at para. 71.

27 L'Oreal v. Bellure at para. 50.

28 L'Oreal v. Bellure at para. 44.

29 L'Oreal v. Bellure at para. 42.

30 They were Warnink v. Townend Ltd.; Irvine v. Talksport Ltd. [2000] F.S.R. 60; British Telecommunications plc v. One in a Million Ltd. [1998] 4 All E.R. 476; and Arsenal Football Club plc v. Reed [2003] R.P.C. 39.

31 L'Oreal v. Bellure at para. 155.

32 Warnink v. Townend at 739. In the High Court, Goulding J. had held that: “It has not been proved that any purchaser or consumer of the [respondents’] Old English Advocaat ever supposed it, or is ever likely to suppose it, to be the goods supplied by the [appellants], … or to be Dutch advocaat of any make. There is, however, no doubt that members of the public believe, and have been deliberately induced by the [respondents] to believe, that in buying their Old English Advocaat they are in fact buying advocaat.” (quoted by Lord Diplock at 739).

33 Ibid. at 740.

34 Ibid. at 754.

35 Taittinger SA and others v. Allbev Ltd. and another [1993] F.S.R. 641.

36 Ibid. at 669.

37 Ibid. at 667.

38 Ibid. at 669.

39 Ibid. at 674.

40 Ibid. at 677–678.

41 See F. Russell, “The Elderflower Champagne Case: Is This a Further Expansion of the Tort of Passing Off?” [1993] 10 E.I.P.R. 379.

42 In the later “Harrods” case, Millet L.J. warned, obiter, in relation to the “Elderflower champagne” judgment, that the debasement of the distinctiveness of the name champagne such that it became generic might be “an unacceptable extension of the tort of passing off”, because it need not depend upon customer confusion: Harrods Ltd. v. Harrovian School Ltd. [1996] R.P.C. 697 at 716. However, it can be argued that the dilution of the distinctiveness of a name does not mean that it will become generic; simply that it may no longer carry the same added advertising value. See also, M. Spence, Intellectual Property (Oxford 2007), pp. 235–6.

43 Chocosuisse Union des Fabricants Suisse de Chocolat and Others v. Cadbury Ltd. [1998] R.P.C. 117 (HC); Chocosuisse Union des Fabricants Suisses de Chocolat v. Cadbury Ltd. R.P.C. 826 (CA).

44 Chocosuisse v. Cadbury at 143 (HC).

45 A misrepresentation about the country of origin of the chocolate would not in itself be an actionable one, since the use of Swiss in this context would be descriptive. The claimant's would need to show that Swiss chocolate had acquired goodwill for other attributes: Chocosuisse v. Cadbury at 832 (CA).

46 Chocosuisse v. Cadbury at 133 (HC). Although earlier he had opined that it had a reputation for “quality, expense and exclusivity” (at 130).

47 Chocosuisse v. Cadbury at 839–840 (CA).

48 L. Ranoo, “Cadbury's sweet brand success despite apology”, Food and Drink Europe.com, 12 June 2008 (/www.foodanddrinkeurope.com/Consumer-Trends/Cadbury-s-sweet-brand-success-despite-apology). Shortly before the survey, Cadbury had been fined £1 million “for allowing the sale of salmonella-contaminated chocolates”.

49 Chocosuisse v. Cadbury at 148 (HC).

50 In Diageo v. ICB, the claimants produced vodka and the defendants were found liable under the extended form of passing off for selling a drink “Vodkat” which was not “pure” vodka. It would appear that to Rix L.J. the decision might be seen to encompass a remedy against misappropriation, when he stated (at para. 77): “There ought … to be room for its manufacturer to market what might be called a vodka-type product in such a way that the consumer (barring the ignorant or foolish) knows what he or she is and is not getting, and yet the association with vodka is legitimately and not deceptively made.”

51 Bristol Conservatories Ltd. v. Conservatories Custom Built Ltd. [1989] R.P.C. 455.

52 Ibid. at 465.

53 Carty, H., “Inverse Passing Off: A Suitable Addition to Passing Off?” [1993] E.I.P.R. 370Google Scholar disagrees, arguing that “inverse” passing off fits within the “classic” definition of passing off, in that there is a misrepresentation. This misrepresenation is to quality, as in the “Advocaat” case, which might lead to loss of sales (at p. 373). However, it is submitted that it is difficult to predict such damage if, unlike in “Advocaat” the consumer is unaware of the claimant's goods.

54 Jonathan Griffiths argues that “inverse” passing off might serve as an avenue for protecting creative artists against misattribution of their works, in the absence of a “paternity right”. Interestingly, he argues that this would not expand the tort into one of misappropriation as cases of “inverse” passing off still require an actionable misrepresentation. It is suggested that this is a difficult argument to make since it begs the question of whether the Court of Appeal in Bristol Conservatories was right to find an actionable misrepresentation the first place in the absence of damage. Griffiths, J., “Misattribution and misrepresentation – the claim for reverse passing off as “paternity' right” [2006] I.P.Q. 34 at 49–52Google Scholar.

55 See fn 26 above.

56 Irvine v. Talksport at para. 38.

57 In this early case, there was held to be no passing off because there was no common field of activity between the claimant, a radio presenter, and the defendant company which produced breakfast cereals.

58 C. Wadlow, The Law of Passing Off: Unfair Competition by Misrepresentation (London 2004), p. 480.

59 Irvine v. Talksport at para. 9; Wadlow, The Law of Passing Off, at p. 480. For the reluctance of courts to find a remedy in passing off for cases of false merchandising see, for example, J. Klink, “50 years of publicity rights in the United States and the never ending hassle with intellectual property and publicity rights in Europe” [2003] IPQ 363.

60 This has led one commentator to argue that the justification for finding a relevant misrepresentation is that in cases of “false endorsement” there might be some suggestion of quality control although he also admits this is a “fiction” which the public would be unlikely to believe. Learmonth, A., “Eddie, are you okay? Product endorsement and passing off” [2002] I.P.Q. 306 at 311Google Scholar. Spence has described such a division as “artificial” (Spence, Intellectual Property, p. 237).

61 According to Hazel Carty, in Irvine, “there is a real sense that misappropriation rather than misrepresentation was at the heart of liability”: Carty, H., “The common law and the quest for the IP effect” [2007] I.P.Q. 237 at 257Google Scholar.

62 Irvine v. Talksport Ltd. (Damages) [2003] E.M.L.R. 6 (HC).

63 Irvine v. Talksport Ltd. (Damages) [2003] E.M.L.R. 26 (CA).

64 See also, H. Carty, “The common law” at 251.

65 See above, fn. 29.

66 H. Carty, An Analysis of the Economic Torts, p. 211.

67 Wadlow, The Law of Passing Off, p. 243. Wadlow writes, “If confusion with the claimant is slight and tangible damage speculative then there is no liability for passing off” (p. 255).

68 Wadlow, The Law of Passing Off, p. 269. Thus, he suggests that damage which results in loss of exclusivity to the mark or insignia, alone, “should be treated with caution” (p. 269) and describes “dilution” as a form of “parasitic” damage, which essentially rides on the coattails of other forms of damage (p. 272). Carty also notes that “dilution” is often found as a “supplement” to other more orthodox heads of damage. (Carty, The Economic Torts, p. 219).

69 Wadlow, The Law of Passing Off, p. 271.

70 Harrods v. Harrodian at 717; see also, Spence, Intellectual Property, p. 243.

71 Carty, The Economic Torts, p. 222.

72 Warnink v. Townend, per Lord Diplock at 405.

73 Wadlow, The Law of Passing Off, pp. 245–46.

74 The situation is similar in other jurisdictions. In France, for example, a symbolic one franc is often granted for damages in unfair competition actions because “of the difficulty of estimation of the actual damage.” An injunction will be granted “if there is a threat of immediate damages and the violation of the law is obvious.” In Germany too, the injunction is the most important remedy, and most often in preliminary proceedings. Henning-Bodewig, Unfair Competition Law, pp. 124, 137.

75 Chocosuisse v. Cadbury at 143.

76 Taittinger v. Albev at 669.

77 Bristol Conservatories v. Custom Built v. at 465. See also Spence, Intellectual Property (at p. 245), who compares the lack of apparent damage in the Bristol Conservatories case to the “classic” US misappropriation case, International News Service v. Associated Press (1918) 248 U.S. 215.

78 Warnink v. Townend, per Lord Diplock at 410.

79 Warnink v. Townend [1978] F.S.R. 1 at 23.

80 See, for example, Robertson, and Horton, , “Does the UK or the EC need an unfair competition law?” [1995] E.I.P.R., 568–569Google Scholar, at 569. Spence, in “Passing off and the misappropriation of valuable intangibles” argues that a law against misappropriation would be unjustified in principle, but that the courts in the UK tend to take a more pragmatic approach. Elsewhere this author has argued that the UK is unlikely to develop a law of unfair competition which provides a remedy for misappropriation, primarily because of judicial opposition. Clearly, given the recent comments by Jacob L.J. in L'Oreal v. Bellure and Patten L.J. in Diageo v. ICB, this opposition continues. However, the argument here is that the law of passing off has in fact come to encompass a remedy against misappropriation, despite these judicial misgivings. See J. Davis, “Unfair Competition in the United Kingdom” (in R. M. Hilty and F. Henning-Bodewig (eds), Law Against Unfair Competition: Towards a New Paradigm in Europe? (Berlin 2007), pp. 195–196.

81 Cadbury-Schweppes Pty Ltd. v. The Pub Squash Co Pty Ltd. [1981] R.P.C. 429 at 491.

82 DTI, “Operation of General Rules and the Notion of Fairness in English Law”, para. 6. (www.dti.gov.uk/ccp/topics1/unfair.htm)

83 Hodgkinson v. Ward Mobility at 173.

84 Carty, “The Common Law and the Quest for the IP Effect” at 263. Spence recognises arguments for a law against misappropriation, not least because a lack of such a remedy, has led judges to “stretch” or indeed “distort” common law remedies like passing off. But he believes such a remedy would be misplaced because, inter alia, “there is a danger that that any imitation of any intangible asset could be rendered actionable on that basis and thus the careful limitations on the scope of statutory intellectual property rights might become effectively otiose.” (Spence, Intellectual Property, p. 40). However, Spence was of course writing before the ECJ decision L'Oreal v. Bellure which considerably expanded the limits of registered trade mark protection.

85 Carty accepts that there may be a moral argument for protecting traders against misappropriation, but believes that is outweighed by the public interest. (Carty, “The Common Law”, 266). See also, Carty, The Economic Torts, pp. 235–6.

86 L'Oreal v. Bellure at 139.

87 The Gowers Review of Intellectual Property, November 2006 (http://webarchive.nationalarchives.gov.uk/+/http://www.hm-treasury.gov.uk/d/pbr06_gowers_report_755.pdf)

88 Morcom, C., “Gowers: a glimmer of hope for UK compliance with Article 10bis of the Paris Convention” [2007] E.I.P.R. 125Google Scholar. See also, Mills, “Own label products,” 129.

89 Recommendation 37, Gowers Report.

90 L'Oreal v. Bellure at para. 41.

91 L'Oreal v. Bellure at para. 49.

92 Dawson, N., “Famous And Well-Known Trade Marks – “Usurping a Corner of the Giant's Robe” [1998] 4 I.P.Q. 350 at 378Google Scholar; also Landes, W. M. and Posner, R. A., “Trademark Law: An Economic Perspective” [1987] Journal of Law & Economics vol. XXX, 308–09Google Scholar.

93 In Arsenal v. Reed, Aldous L.J. did state obiter that the “cause of action traditionally called passing off, [is] perhaps best referred to as unfair competition” (at para. 70), but it is submitted that this statement goes against the prevailing judicial and academic view. For discussion, see Davis, “Unfair Competition”, pp. 183–84.

94 The “general clause” is set out in Section 3 of the Act. H. Henning-Bodewig, “A new Act against unfair competition”, 426–427. See also, Finger, M. and Schmieder, S., “The New Law Against Unfair Competition: An Assessment” (2005) 6 German Law Journal No. 1, 202 at 206Google Scholar.

95 Perhaps when the misappropriation is intentional; a factor which the ECJ suggested might be taken into account in L'Oreal v. Bellure (at para. 48). Intentionality was also taken as a relevant factor in the passing off case, United Biscuits (UK) Ltd. v. Asda Stores Ltd. [1997] R.P.C. 513, which involved supermarket ‘lookalikes’.