Registered Trademark Protection and Passing Off - Research Paper Example

 Introduction The tort of passing off targets trade marks as well as service trades. However, the significance of the tort of passing off arises out of the fact that it is not merely actionable for unauthorized use of marks registered by virtue of the Trade Marks Act 1994.1 Essentially what this means is that a complainant is at liberty to pursue an action for the tort of passing off as well as an action for trademark infringement under the 1994 Act. The complainant also retains the right to bring an action under the tort of passing off in instances where the trade mark is unregistered in certain circumstances.2 This paper will demonstrate the significance of the tort of passing off since the introduction of the registered trademark system. The definition and nature of the tort of passing off as well as the protection accorded the registration of a trademarks will best illustrate the significance of passing off since the introduction of the registered trademark system. This paper is therefore divided into two parts. The first part of this paper is committed to the definition and nature of the tort of passing off. The second part of this paper will examine the trademark registration system and will analyse how it runs parallel to the tort of passing off. I. The Tort of Passing Off A. Definition and Essential Elements of Passing Off Passing off is a common law concept created by judges. Lord Parker’s definition of passing off in Spalding v Gammage (1915) sets out the general significance of an action for passing off. Lord Parker defined passing off as a prohibition against the representation of one’s goods as those of another.3 A more detailed definition of passing off is provided in the Advocaat case in which Lord Diplock’s definition encapsulates the essential elements of passing off. In this regard, passing off is required to be made by virtue of a misrepresentation. This misrepresentation must be made by a business trader operating in the course of his business dealings. The misrepresentation must also be made to consumers with respect to the goods and services provided by the trader. The misrepresentation must be such that it is designed to bring about harm to the goodwill or the business of a comparative business. The misrepresentation must bring about actual damages to the goodwill of business or must be likely to bring about damages.4 The essential elements of passing off which ultimately defines the tort of passing off are more particularly delineated in the House of Lords decision in Reckitt and Colman Ltd. v Borden (1990). In this case, the House of Lords described what has come to be known as the classic trinity. The classic trinity sets out the three essential elements that the claimant relying on the tort of passing off must prove. First the claimant must demonstrate that the claimants services or goods have established a reputation or goodwill that separates those goods or services from comparable goods or services. Secondly, there must be evidence that the defendant misrepresented his/her goods or services with the result that it creates confusion in that the goods or services offered by the defendant are mistaken for those of the claimant. Finally, there must be evidence that the claimant is likely to incur damages as a result of the misrepresentation.5 It therefore follows that that definition and the essential elements of passing off was trimmed down by the House of Lords in the Reckitt case to encapsulate three factors. What can be gleaned from the definition and essential elements of passing off is that it aimed at protecting the reputation attached to a trade mark rather than the mark itself. This aspect of the tort of passing off is demonstrative of its significance since the introduction of the trade mark registration system. Essentially, registration protects the mark whereas a parallel right of action exists in protection of the reputation and goodwill attached to the trademark. Therefore an unregistered trademark remains actionable. Passing off seeks to protect a proprietary entitlement in goodwill.6 At its core, passing off seeks to protect the use of a reputation attached to a trade mark so as to prevent confusion in the market place.7 Each of the elements contained in the classic trinity culminate in a general proposition that takes the protection accorded the tort of passing off beyond the protection provided for under the infringement of a registered trademark. It operates to protect traders with both registered and unregistered trademarks from the threat of unfair competition.8 In fact in Arsenal v Reed (2003) Aldous LJ noted that the: Cause of action traditionally called passing off, is perhaps best referred to as unfair competition.9 The development and the expansion of the definition of passing off reflect its unfair competition basis. Originally passing off was only intended as a safeguard against the misrepresentation of one’s goods as that of another’s. However, during the 19th century and onward, the tort of passing off has developed to encompass a vast number of circumstances relative to the origins of goods.10 B. Passing Off Protection Passing off expands the scope of trademark protection in such a way that it offers a parallel protection alongside the protection accorded registered trade marks. It also offers protection as a separate method of protection the reputation and goodwill of an unregistered trade mark. Passing off will provide protection in cases where the defendant markets the plaintiff’s good and suggest that the goods are superior in quality when they are not and causes damage to the goodwill of the plaintiff.11 Passing off provides protection against the use of the plaintiff’s advertising style in circumstances where it will mislead or confuse consumers as to the goods’ origins.12 Clearly, this form of passing off protection takes the scope of protection beyond mere infringement of a registered trademark. Passing off will also provide protection against the adoption of the plaintiff’s get-up with the result that consumers are deceived with respect to the goods’ origins.13 Advertising techniques known as reverse passing off are also protected. Reverse passing off occurs when a competitor advertises his or her goods and/or services by misrepresenting that the plaintiff’s goods and/or services are the advertiser’s as opposed to conventional passing off in which the goods are misrepresented as those of the plaintiffs.14 Ultimately, the tort of passing off provides a variety of ways in which a trader with an established reputation may protect his/her brand. Even if the defendant misrepresents that his goods or services have some sort of link with the claimant’s goods or services, passing off can be raised.15 Even if the goods or services misrepresented are different from those of the claimant’s, passing off can be established.16 The tort of passing off therefore permits the claimant to go beyond the distinctive markings of the trade mark and offers broader protection so that even those without a registered trademark might protect an established brand. In this regard, goodwill plays an significant role in the passing off action. Goodwill was described in IRC v Muller (1901) as the “attractive force which brings customers in”.17 Goodwill is therefore associated with the name as well as the get-up of the claimant’s goods or services.18 Passing off is intended to protect that goodwill and not the trademark itself, thereby demonstrating the significance of passing off since the introduction of the trademark registration system. If a claimant is unable to establish the existence of goodwill, a passing off action will not succeed.19 Harrods Ltd. v Harrodian School Ltd (1995) further demonstrates the significance of goodwill in the tort of passing off since the introduction of the trade mark registration system. As explained by the court in Harrods, a contravention pursuant to the Trade Marks Act in cases where the mark is registered did not automatically mean that a case for passing off could be established. This is because, if a trade mark is unregistered, there was no monopoly relative to a name or its get-up. Therefore goodwill was entirely important.20 Goodwill is capable of application in a number of ways and as such is demonstrative of the significance of passing off actions despite the introduction of the trade mark registration system. Bolter explains however, that the most frequently used goodwill claims are connected with “the packaging, get-up or name of a product”.21 In circumstances where goodwill is claimed it is important for the plaintiff to prove that his/her get-up is recognized and is “distinctive of the claimant’s goods”.22 Goodwill protection under the tort of passing off is flexible and reflects its role in meeting the changing needs of modern commercial times. In this regard, its flexibility permits extended protection where registered trade marks may not. For instance, goodwill permits the claimant to not only protect an established advertising style, but also domain names.23 The flexibility accorded goodwill protection under the tort of passing off is demonstrated in the case of Numatic International Ltd. v Qualtex UK Ltd (2010­). In this case, the plaintiff was the manufacturer of the Henry hoover which had a distinguished shape with a smile and eyes topped off with a hat and bore the name Henry. The defendant intended to put a hoover on the market that would closely resemble the Henry hoover. The court found however, that the plaintiff had goodwill in the shape and style of the Henry hoover and the defendant’s plan to market a similar hoover would amount to a harmful misrepresentation.24 Misrepresentation under the tort of passing off can also be flexibly applied. As previously noted, misrepresentation can be made as to the origins of the good or that the defendant’s goods or the defendant is somehow linked to the plaintiff and/or the goods and services of the plaintiff. Misrepresentation was thus established in Numatic despite that fact that the defendant did not use the plaintiff’s name. It was enough that shapes and colours of the Henry hoover were used as they were suggestive of some form of connection.25 Thus misrepresentation under the tort of passing off permits an action in circumstances where the specific features of a product are not covered by a registered trade mark. Therefore aside from providing a mechanism for protecting an unregistered trade mark, passing off permits protection of a registered trade mark in ways not always contemplated by the owner of a registered trade mark at the time of registering the trade mark. Misrepresentation in the tort of passing off engages specific elements that are not culled under the protection accorded a registered trade mark. These elements are consideration of the place where the goods and/or services are purchased; the degree to which the public associates the misrepresentation with the plaintiff’s trademark; and the nexus between the plaintiff and the defendant’s trades.26 More importantly perhaps, in order to be actionable, the misrepresentation must be such that it is designed to bring about harm to the plaintiff’s goodwill.27 However, this does not mean that the defendant’s motive is relevant. All that is necessary is evidence that the misrepresentation is likely to bring about harm to the plaintiff’s goodwill. While the plaintiff need not show the misrepresentation is made fraudulently or with a specific intention to create deception and confusion, the existence of fraud and intent would make it significantly easier to establish the misrepresentation element in the tort of passing off.28 What distinguishes the tort of passing off from protection by virtue of trade mark representation is the limitation placed on the timing of a claim based on the concept of misrepresentation. As will be demonstrated, a claim for infringement of a registered trade mark can be made with respect to damages for confusion or deception at the point of sale and after the point of sale.29 However, in the event of misrepresentation under the tort of passing off, it is generally accepted that the confusion or deception is required to occur at the point of sale.30 In Bostik v Sellotape (1994) the plaintiff manufactured a widely known blue putty BLUTAC. The defendant made a blue putty and the plaintiff claimed passing off on the grounds that the consumers would confuse the defendant’s putty with the plaintiff’s putty or would assume there was some form of connection between the two. The plaintiff’s claim failed however as the colour of the defendant’s putty would not be seen until after the consumers had made the purchase.31 Unfortunately, the tort of passing off has not developed to a point where misrepresentations after the point of sale will substantiate a claim in passing off. In this regard the tort of passing off is only significant for permitting a cause of action for unregistered trademarks for misrepresentations that are obvious at the point of sale. The claimant with an unregistered trademark will have no claim beyond this point, whereas the owner of a registered trademark can claim statutory trademark infringement.32 The last leg of the classic trinity ties together the three elements. The last leg of the classic trinity is damages. As previously noted, the claimant must illustrate that their was either actual damages or that there is likely to be damages to the goodwill of his business on account of the defendant’s misrepresentation. Bolter notes that: The most common form of this are that trade will be diverted from the claimant to the defendant, and that there will be damage to the claimant’s reputation.33 As a result the most frequently sought remedies are injunctive relief, damages and profit accounting.34 In summary, the tort of passing off provides protection for both registered and unregistered trademarks. However, in order to successfully claim protection under the tort of passing off the claimant must prove the three elements comprising the classic trinity. These three elements are goodwill, misrepresentation and damage. As demonstrated in the preceding discussion, passing off provides protection for the goodwill in the manner in which the trade mark is used rather than the trade mark itself. Therefore the significance of the tort of passing off since the introduction of the registered trademark system is that it provides for a broader and more flexible degree of protection to the extent that even unregistered trademarks may obtain protection. Misrepresentation can only be sustained if it is found to have occurred at the point of sale. The idea is to prove that the misrepresentation induced or influenced consumer behaviour. Thus misrepresentation offers limited protection to unregistered trade mark owners and additional protection to registered trademark owners. Damages are available to all trade mark owners, whether registered or not. In this regard, damages under the tort of passing off is perhaps the most significant aspect of the tort of passing off since the introduction of the system for registering trade marks. Damages under the tort of passing off ensures that all trademark owners, registered or not, with an established reputation in the market place will obtain a measure of damages for misuse of their respective trade marks. II. Trade Marks Hodkinson defines a trade mark as: A symbol or name or device or any combination of these used by trader to distinguish their goods or services from those of their competitor.35 A trade mark is defined by Section 1 of the Trade Marks Act 1994 as: …any sign, capable of being represented graphically which is capable of distinguishing good or services or one undertaking from those of other undertakings.36 However, the significance of the tort of passing off since the registration system of trade marks was introduced is manifested by the function of the trade mark. The trade mark is much more than a mere description of symbol attached to a business. The trade mark is also a source of information for the consumer. Trade mark protection generally, as well the right to prevent infringement of the trade mark have a clear and undisputed rationale. As Sakulin explains, the underlying rationale is the consumers’ perceptions of the trade mark and its function as a crucial source of information. In this regard, the trade mark, from the perspective of the consumer, offers an identification of the product’s source as well as its inherent quality. Take for instance, the logo etched on a bottle of Coca-Cola. The logo provides identification of the business that manufactures and produces the contents of the bottle and lets those who have previously used the product know that they can anticipate a particular quality and experience. Sakulin goes on to explain that if there was no trade mark protection, others would be free to use that trade mark and consumers would be perpetually confused and information attached to trademarks would serve absolutely no functional purpose.37 Passing off therefore arises to protect the functional use of the trade mark even where the trade mark is not registered. Consumers who have used the product attached to an unregistered trade mark are therefore just as informed as consumers who have previously used the product attached to the registered trade mark. In this regard, the function of a trade mark is kept alive under the tort of passing off even where the trade mark is unregistered. The trade mark laws of the UK are a reflection of and an implementation of the trade mark laws of the EU. EU trade mark laws provides trade mark owners with exclusive rights. These rights include the right to prevent confusion in the market place when unauthorised third parties use similar trade marks for both similar and different goods and/or services. Trade mark protection under the tort of passing off and prohibitions against free riding culminate to prevent damages to the reputation of the trade mark as well as gains from the reputation of the trade mark.38 These trade mark rights have been developed over time and reflect that the registration of a trade mark is not enough to safe guard against damages to the reputation of the trade mark. The development of the tort of passing off also demonstrates that registration of a trademark is not enough to prevent confusion in the market place. After all, trade marks have been capable of registration since 1875.39 All indications are that, the exclusive rights conferred by trade mark registration are insufficient for protecting the functional use of the trade mark. The Trade Marks Act 1994 was implemented to incorporate EC Regulation No. 40/94 on the Community Trade Mark.40 Essentially the EC Regulation No. 40/94 encapsulates the interests of the trademark owner, its rivals and the consumers. 41 The common law of the UK attempts to protect these rights as well, but by protecting the trade mark “which stood outside the market mechanism”.42 There was a tendency in the UK courts that left open the possibility for some trade marks that were not characterised by distinguished markings or style to be open for general use. The EC Regulation No. 40/94 however requires that all marks that are distinctive to be registered.43 EC Regulation No. 40/94, supplemented EC Trademark Directive 89/104/EEC. By virtue of Article 2 of Trademark Directive 89/104/EEC trade mark may not be registered unless it represented its origins.44 Article 3 of the Trademark Directive goes further to list the trade marks that may not be registered. The list includes marks that are not distinctive and also excludes marks that are either generic or descriptive. However, these marks may be registered if prior to registration and after being used they have developed specific traits as a result of use.45 Immediately, the Trademark Directive calls attention to the fact that a trademark which has been used and has established a degree of goodwill and a reputation in the market may not be capable of registration. These restrictions on registration are reflected in Section 3 of the Trade Marks Act 1994. This is important because registration of a trademark brings with it immediate and automatic protection that does not fall to the unregistered trademark. In fact Section 1 of the Trade Marks Act 1994 bears this out. Section 1 provides that a registered trade mark has specific rights and remedies. However Section 1 goes on to provide that: No proceedings lie to prevent or recover damages for infringement of an unregistered trade mark as such; but nothing in this Act affects the law relating to passing off.46 Section 1 of the Trade Marks Act 1994 therefore explicitly lays out the significance of the tort of passing off since the introduction of the registered system for trademark protection. Section 9 of the Trade Marks Act 1994 also underscores the significance of the tort of passing off since the introduction of the trade marks’ registration system. Section 9 provides that: The proprietor of a registered trade mark has exclusive rights in the trade mark which are infringed by use of the trade in the United Kingdom without his consent.47 What amounts to infringement of a registered trademark are provided for in Section 10 of the Trade Marks Act 1994. A common thread throughout Section 10 of the Trade Marks Act 1994 is that the infringement must take place in the “course of trade.”48 A registered trade mark is infringed if it is uses a “sign which is identical with the trade mark” relative to the “goods or services which are identical with those for which it is registered”.49 The protection of goodwill under the law of passing off will therefore accord protection to the registered trademark in a way that is not contemplated by Section 10(1) of the 1994 Act. Essentially, a registered trade mark may suffer harm from imitation that is not identical to its registered description. While Section 10(1) will only protect identical imitation, passing off will go beyond identical replication to actual misrepresentation so as to create confusion about the relationship between the trademark and the replicated goods or services. Section 10(2) and (3) of the Trade Marks Act 1994, however, expand the level of protection accorded the registered trademark so that when goods and services marketed by unauthorised third parties are either identical to or similar to the goods and services attached to a registered trademark which has a reputation in the market, an action for infringement arises.50 Obviously, similar statutory protection is not accorded the unregistered trademark pursuant to Section 1(1) of the Trade Marks Act 1994. Therefore the significance of passing off since the introduction of the system for the registration of trade marks is obvious here. An unregistered trade mark with an established reputation in the UK, can prevent or protect his/her trade mark’s reputation under the auspices of passing off although denied the same right under the Trade Marks Act 1994. Significantly, the protection accorded the registered trademark accomplishes two things that underscores the important functions of the tort of passing off. First, it accords the registered trademark protection that is not provided for under the Trade Marks Act 1994 with respect to trade mark registration. As noted, trademark infringement may not be protected unless the trade mark is subject to identical replication. The tort of passing off is broad and flexible enough to provide for protection of similar replication of a trademark where the trademark owner can demonstrate the existence of the classic trinity. Likewise the unregistered trade mark owner can rely on his or her reputation for the protection of his established trade mark. Conclusion Essentially, the significance of the tort of passing off since the introduction of the system of registered trade mark, as demonstrated by the case law is protection that goes beyond mere trade mark description. Passing off addresses the functional element of trade marks and brands. This is accomplished by providing protection for the reputation and goodwill established by the use of a particular trade name or distinguishing mark. In this regard, whether or not a trade mark is registered, its functional aspects can be protected under the tort of passing off. Unfortunately however, passing off will not provide protection after the point of sale. Even so, it at least provides some form of protection to unregistered trade marks that would otherwise be vulnerable to complete exploitation and damages to the goodwill created by the claimant. Bibliography Textbooks De Very, R. Towards a European Unfair Competition Law. (Koninklijke Brill NV 2006). Dimwoodie, G. and Janis, M. Trademark Law and Theory: A Handbook of Contemporary Research. (Edward Elgar Publishing 2008). Hodkinson, K. Protecting and Exploiting New Technology and Designs. (Taylor and Francis 1987). Sakulin, W. Trademark Protection and Freedom of Expression: An Inquiry into the Conflict Between Trademark Rights and Freedom of Expression Under European Law. (Kluwer Law International 2010). Articles/Journals Allgrove, B. and O’Byrne, P. ‘Pre-Sale Misrepresentations in Passing Off: An Idea Whose Time has Come or Unfair Competition by the Back Door?’ (2006) 1(6) Journal of Intellectual Property Law and Practice 413-422. Bolter, N. ‘Protecting the Attractive Force.’ (December/January 2011) World Trademark Review 94-95. Davis, J. ‘Unfair Competition Law in the United Kingdom.’ (2007) 1 MPI Studies on Intellectual Property, Competition and Tax Law, 183-198. Griffiths, J. ‘Misattribution and Misrepresentation – the Claim for Reverse Passing off as “Paternity” Right’. (2006) 1 Intellectual Property Quarterly 34-53. Table of Cases Arsenal v Reed [2003] ETMR 73. Bostik v Sellotape [1994] RPC 556. Bristol Conservatries Ltd. v Conservatories Custom Built Ltd. [1989] RPC 455. Cadbury-Schweppes Pty. Ltd. v Pub Squash Co. Pty. Ltd. [1981] 1 All ER 213. Dawnay Day and Co. Ltd. v Cantor Fitzgerald International [2000] RPC 669. Erven Warmink BV v J. Townend and Sons (Hall) Ltd. [1979] 2 All ER 927. Harrods Ltd. v Harrodian School Ltd [1995] RPC 697. IRC v Muller [1901] AC 217. Montgomery v Thomspon [1889] 41 Ch. Div. 40. Numatic International Ltd. v Qualtex UK Ltd [2010] EWHC 1237. Reckitt and Colman Ltd. v Borden [1990] 1 All ER 873. Spalding v Gamage [1915] 84 LJ Ch 449. United Biscuits v Asda [1997] RPC 513. Table of Statutes Directive 2008/95/EC. EC Regulation No. 40/94. Trade Marks Act 1994. Trademark Directive 89/104/EEC. Read More