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Character merchandising and the limits of passing off

Published online by Cambridge University Press:  02 January 2018

Hazel Catty
Hazel Catty*
Affiliation:
University of Manchester
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Extract

The tort of passing off developed as an offspring of deceit, with the twist that it allows trade rivals, rather than deceived customers, to sue. The classic case is a trader ‘passing off his goods as the goods of somebody else: the defendant is liable for misrepresenting, innocently or otherwise, that his goods are the goods of somebody else. The plaintiff is the trader whose trade is thereby diverted or whose reputation is thereby harmed.

The classic case thus involves a misrepresentation as to the source of the goods. However, case law has shown that this is not the only relevant misrepresentation on which the tort can be founded

Type
Research Article
Information
Legal Studies , Volume 13 , Issue 3 , November 1993 , pp. 289 - 307
Copyright
Copyright © Society of Legal Scholars 1993

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References

Notes

1 For example, by selling the plaintiffs inferior products as his superior lines.

2 The defendant may also be liable, it would now seem, for ‘inverse’ passing off, where he claims the plaintiffs' goods are his own: see the Court of Appeal decision in Bristol Conservatories Ltd v Conservatories Custom Built Ltd [1989] RPC 455.

3 Probability of damage is sufficient: Bulmer (HP) Ltd v J Bollinger SA [1978] RPC 79, CA.

4 Goulding J in Monuy Ltd v Bull d Rogers [1978] FSR 91, at 91.

5 The Law of parsing Off(1990) p 10.

6 Mirage Studios u Counter Feat Clothing Co Ltd (the ‘Turtles’ case) [1991] FSR 145, 150.

7 The character need not be an independent fictional character, subsequently applied to merchandise. In Fido Dido Inc u Venture Stores (Retailers) Pty Ltd (1988) 16 IPR 365 (Fed Court of Australia), protection was afforded to a character, devised simply as a merchandising tool. Compare such activity to where a character is appropriated in order to develop it or to develop goods about it, eg Grundy Television PQ Ltd u Startrain Ltd [1988] FSR 581, Millett J: unofficial famine, held no representation that authorised. On this see Wadlow The Low of parsing off (1990) pp 386—7.

8 Given the case of Rudio Corp Pty Ltd u Disncy (1937) 57 CLR 448 this has been evident for some time, though only recently judicially acknowledged.

9 Franchising (1990, 3rd edn) p 115.

10 It is also worth noting that trade marks may become ‘characters’ in their own right, eg ‘Coca Cola’ emblazoned on a T-shirt.

11 Eg the voice of a well-known actor assume for a television advertisement as in Sim u Heiw [1959] RPC 75 (where, however, no injunction was granted).

12 With fictional characters he is usually also the copyright owner: but on this point see later in the text.

13 All were plaintiffs in Mirage Studios v Counter Feat Clothing Co Ltd [1991] FSR 145.

14 Cornish ‘Unfair Competition: A Progress Report’ (1972) 12 JSPTL 126 at 143. He notes that the decision in Clark v Fremn (1848) Il Beav 112, in which a surgeon failed to get an injunction restraining the association of his name with a bogus medicine ‘has been too often questioned for this reason for it still to be good law’, p 143, n 1.

15 Stringfellow v McCain Foods (CB) Ltd [1984] RPC 501: where the CA held that the defendants advertising campaign might have led to confusion between the plaintiffs nightclub and the defendants' chips. However there was no evidence of damage: the plaintiff was not merchandising his name and there was no fall off in membership of his club. All there was was the ‘prospect’ of damage in future merchandising or franchising and Stephenson LJ had doubts whether such damage was recoverable in a passing off action (p 546).

16 [1977] FSR 62.

17 The position is different where the photograph has been commissioned for private and domestic purposes: s 85 Copyright, Designs and Patents Act 1988.

18 Taunter Rutledge Ltd v Trexapalm [1975] FSR 479 at 483: ‘we do not recognise any copyright or other species of property in any name or words, whether invented or not’. See also Parker J in Burberrys v Cording (1909) 26 RPC 693, 701 and Exxon u Exxon Insurance [1982] RPC 69. However, Browne-Wilkinson VC in Mirage Studios v Counter Feat Clothing Co Ltd [1991] FSR 145: ‘The point seems to me not altogether easy to say whether a descriptive invented name is to be categorised as a name or as a description’, re the name ‘Teenage Mutant Ninja Turtles’.

19 [1941] AC 417, 436.

20 See also Trade Marks (Amendment) Act 1984, re service marks.

21 Contrary to s 29(l)(b) of the Trade Marks Act 1938.

22 [1984] RPC 329.

23 First Trade Mark Directive, to be implemented 31 December 1992. It requires harmonisation but not full scale approximation, ie only those provisions that directly affect the functioning of the internal market. See Gielen [1992] 8 EIPR 262: probably only Denmark, France, Spain and Greece will have achieved this in time. As far as this country is concerned, there is a Bill drafted, awaiting Parliamentary time.

24 Section 29(l)(b) of the Trade Marks Act 1938 is to be repealed.

25 Or be detrimental to it. See art 5(2) of the Directive (above, n 23).

26 ‘Reform of Trade Mark law’ (1990, Cm 1203, para 4.42).

27 Vaver (1978) 911C 541,544.

28 [1991] FSR 145.

29 Other possible areas of protection exist: it may be defamatory, as in Tolley v Fry [1930] 1 KB 467 or arguably a false trade description to imply an endorsement that does not exist see Adams and Jones Franchising (1990, 3rd edn) p 118. Registered design law might be appropriate, but it would have to be registered while new, see rule 26 of the Registered Designs Rules 1989.

30 [1979] AC 731, HL. The classic analysis of the tort involved a consideration of whether there had been a relevant misrepresentation, whether it had or was likely to cause confusion, given the plaintiffs reputation and whether damage was likely.

31 Lord Fraser provided a slightly different test, useful in stressing the need to show that the plaintiffs business/goodwill must be in the jurisdiction.

32 [1991] FSR 145.

33 A form of misrepresentation accepted as relevant to the tort by Lord Diplock in the Advocaat decision: ‘… a false suggestion by the defendant that their businesses were connected with one another would damage the reputation and thus the goodwill of the plaintill's business’. And see earlier, Harrodr Ltd u Harrod (R) Ltd (1924) 41 RPC 74.

34 See Phillips and Coleman, ‘Passing Offand the Common Field of Activity’ (1985) 101 LQR 242 at 242.

35 [1947] 65 RPC 58.

36 Ibid at 67.

37 [1977] R E 99.

38 [1977] RPC 275.

39 See Group Newspapers Ltd v Rocket Record Co Ltd [1981] at FSR 89, Slade J 104: ‘the very diversity of the consumer goods which the plaintiffs already market under the catchword “Page 3” might make some readers of the Sun newspaper to be more inclined to think that a record in this guise was connected with the plaintiffs’. See also Alfred Dunhill Ltd v Sumptic SA [1979] FSR 337.

40 Russell LJ in Annabel's v Schock [1972] RPC 838 states common field of activity is ‘simply a question which is involved in the ultimate decision whether there is likely to be confusion’.

41 [1977] RPC 275.

42 [1977] RPC 275, 280.

43 [1977] FSR 62.

44 Abba intended to set up ‘a comprehensive merchandising arrangement in the UK’ [1977] FSR 62 at 68.

45 In Lorimar Productions Inc v Sterling Cloth Manufacturing P p Ltd [1982] RPC 395 where names from a popular television series were used for items of clothing and as the theme of a restaurant, the court held that character merchandising was not well known in South Africa at that time.

46 [1977] FSR 62 at 67–8.

47 [1983] FSR 348, 352.

48 And see Lord Brightman in the Holly Hobbie case [1984] RPC 329, 356: ‘I am quite prepared to accept that character merchandising, in the sense of the exploitation of the reputation of famous names by making them available to a wide variety of products, has become a widespread trading practice on both sides of the Atlantic’.

49 [1983] FSR 348 at 350.

50 [1991] FSR 145.

51 Cases such as Group Newspapers Ltd v Rocket Record Co Ltd [1981] FSR89 (discussed later in the text) appear to lie somewhere between character development and character merchandising (see n 7, above).

53 Sir Nicholas Browne-Wilkinson VC, [1991] FSR 145.

53 Renamed ‘Hero’ Turtles for the gentler (!) UK market.

54 At least the judge thought this, however, the fourth defendant did in fact market the goods.

55 Breach of copyright was also alleged. The defendants used the concept rather than the drawings of the plaintiffs' turtles. However, it was held to be arguable.

56 [1981] RF'C 187. And see Fido Dido Inc u Venture Stores (Retailers) PQ Ltd 16 IPR 365, also followed.

57 (1986) 64 ALR 330.

58 [1984] RPC 329 at 350.

59 CIR v Muller and Co's Margarine Ltd [1901] AC 217, 222.

60 Lorimar Productions Inc v Sterling Cloth Manufacturing Pty Ltd [1982] RPC 395, SAHC.

61 [1991] FSR 145, at 147. See Chong and Maniatis [1991] EIPR 253.

62 [1981] FSR 89. See also IPC Magazines Ltd v Black and White Music Corporation [1983] FSR 348, supra.

63 Henderson v Radio Corp Pty [1969] RPC 218, where the plaintiff professiona1 ballroom dancers were featured without their permission on the defendants' record.

64 Children's Television Workshop Inc u Woolworth (NSW) Pty Ltd [1981] R E 187.

65 (1988) 83 ALR 187 (Fed Court of Australia), Pinctus J, an action brought by the actor Paul Hogan and the owner of the copyright in the film ‘Crocodile Dundee’ against respondents, the owners of two shops trading under the name ‘Dundee Country’, selling paraphenalia inspired by the film.

66 (1989) 87 ALR 14 (Fed Court of Australia), Beaumont J. Here the plaintiffs complained about an advertisement that spoofed a scene from the film. Note also liable under s 52 of the Australian Trade Practices Act 1974, discussed later in the text.

67 Pinctus J in (1988) 83 ALR 187 at 196:‘… regardless of whether he has ever carried on any business at all, other than the writing or making of the work in which the character appears’ Burley comments in [1991] 7 EIPR 227: ‘goodwill has been replaced by reputation’.

68 [1969] RPC 218, in fact decided in 1960.

69 Sugarman J, in the lower court, had allied the misrepresentation to a prospective goodwill.

70 [1969] RPC 218 at 236.

71 Cornish in (1972) 12 JSF'TL 126, 144 ‘It is not certain whether the court would have required a standard of fame or infame first, or whether the law protects anyone…’. He does note however, that the court laid stress on the misappropriation of the professional or business reputation.

72 Would it really matter to the purchasing parent or the consuming child whether the breakfast cereal had been endorsed?

73 Mere reputation as pop stars would be insufficient to provide the necessary goodwill. If, however, the unauthorised goods were inferior/defective and a connection misrepresentation were arguable, an injunction might now be awarded.

74 And surely this is debatable.

75 On this issue generally see Phillips and Coleman (1985) 101 LQR 242.

76 Lahore [1981] EIPR 54, 55 re the F'C decision in Codbury Schweppes Pty Ltd v Pub Squush Co Ltd [1981] RPC 428 (noted later in text): ‘theft is sanctified, it seems, provided there is no significant deception or confusion’.

77 Lehmann ‘The Theory of Property Rights and the Protection of Intellectual and Industrial Property’ IIC 16 (1985) 53; and see Cornish, Intellectual Property (1989) 2nd edn pp 15–18.

78 (1937) 58 CLR 479, 509.

79 At least not by the tort of passing off.

80 Burley [1991] 7 EIPR 277, at 229.

81 ‘The Protection of Character Merchandising - a survey of some Common Law jurisdictions’ (1978) IIC 541, 545.

82 Article 10 bis. The present text is the Stockholm Act 1967.

83 Though the theories behind continental developments remain unclear. See Beier, The Law of Unfair Competition in the European Community’ (1985) 16 IIC 139 Google Scholar.

84 See Wyman ‘Competition and the Law’ (1902) 15 Har LR 56.

85 Eg Fry LJ's often quoted remark in Mogul Steamship v McGregor (at Curt of Appeal level): ‘to draw a line between fair and unfair competition… passes the power of the courts’ (1889) 28 QBD 598 at 625—6.

86 [1981] RPC 429, PC.

87 Indeed although Lord Scarman asserted that the plaintiffs had dropped their alternative argument based on ‘unfair trading, irrespective of market deception’, Dworkin queries whether this was in fact the case: (1981) 44 MLR 564, 566.

88 Adams [1992] EIPR 259: ‘the general reluctance of common law jurisdictions [re misappropriation/unfair competition] is comprehensible in the light of differences between adversarial and inquisatorial procedures’, p. 260. Presumably, the present review of unfair competition laws, undertaken by WIPO - the preliminary work for which has already revealed significant differences in the signatory states - will have to take this into account.

89 ‘Unfair Competition and the Misappropriation of a competitor's Trade Value’ (1988) 51 MLR 296.

90 Ibid at 545.

91 Eg Libling ‘The Concept of Property in Intangibles’ (1978) 94 LQR 103.

92 Burns [1981] EIPR 311, at 312 terms it thus: ‘all persons are entitled to create or attempt to create or maintain trade relations with others without improper interference from third parties’. However, when he continues: ‘a relationship exists between traders and traders and potential customers, requiring them to respect proper commercial standards in dealing with each other and such customers’ it is apparent that this rationale is closely linked to the rationale of ‘honesty’.

93 A pressure that was withstood during the passage of the Copyright, Designs and Patents Act 1988.

94 Indeed the process may have already been begun with the EC move to have a right to prevent ‘unfair abstractions’ from a database, which as Adams points out ‘is essentially a tort of misappropriation’, [1992] EIPR 259, 261.

95 All Australian states, bar Tasmania, now have complementary legislation which focuses on the conduct of individuals.

96 See J Duxbury [1991] EIPR 426; Booy [1991] EIPR 439 and Blakeney (1984) 58 ALJ 316.

97 As such, therefore, it would not deal with the need some perceive for a general tort of unfair competition to deal with protection of the emerging technologies: see eg Hugh Brett, [1981] EIPR 163.

98 Dworkin (1981) 44 MLR 564, 566.

99 As a result, foreign reputations would be protected, even though there is no business activity within the jurisdiction.

100 See also Lego Australian Pty Ltd v Paul's (Merchants) Pty Ltd (1982) 42 ALR 344.

101 Indeed, it is part of a consumer protection statute. However, it must be acknowledged that the vast majority of actions are brought by competitors rather than consumers.

102 See Eg Terry ‘Unfair Competition and the Misappropriation of a Competitor's Trade Values’ (1988) 51 MLR 296. Note Cornish in ‘Unfair Competition - a Progress Report’ (1972) 12 JSPTL 126, 135 sees this as a justification for expanding tort law ‘I shall distinguish between situations where the unfairness arises from the fact that the purchasing public are likely to be misled [expansion justified] and those where there is some other cause’. Thus misleading advertising in general would be covered by the action, not simply misdescribing a product that the plaintiff also sold, as in the ‘drinks’ cases that culminated in the ‘Advocaat’ decision.

103 For which see Report of the Committee on Privacy (the Calcutt Report) (1990, CM 1102).

104 As well as in European countries, eg France and Germany. See Kruger IIC (1982) 183; (1987) IIC 457; Henning-Bodeing 22 IIC (1991) 194. Re Canada, see Kraus v Chtysler of Canada Ltd (1974) 40 DLR (3d) 15; Athaus v Canadian Adventure Camps (1980) 80 CLR (3d) 583.

105 See Coleman [1982] EIPR 189; Buchanan ‘The need for a right of publicity’ [1988] EIPR 227.

106 See Frazer 'Appropriation of Personality - a new Tort? (1983) 99 LQR 281.

107 [1981] RPC 429, PC. In this case Lord Scarman stated that to cash in on a market opened up by the plaintiffs character or product is not passing off: ‘a defendant… does no wrong by entering a market created by another and there competing with its creator’.