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Friday, 17 March 2017

Kat konfusion regarding passing off: likelihood of confusion and the Starbucks (HK) case


Legal tests are omnipresent in our profession, and IP is no exception. Take an action for passing off. To prevail at common law, the plaintiff must prove that it has goodwill in the mark or get-up; there has been a misrepresentation by the defendant that leads the public to think that his goods or services are those of the plaintiff; and the plaintiff has suffered damage by virtue of the representation (Per Lord Oliver of Aylmerton n Reckitt & Colman Products Ltd v Borden Inc.) The ultimate wrong here is that “no man may pass off his goods as those of another”. Goodwill, misrepresentation and damage—this is the classic three-part test for proving passing off. But how exactly do these three elements fit together? How dependent or independent are they, one from the other? The answer is less obvious than one might thank.

As Kat readers may recall, in May 2015, the UK Supreme Court ruled in the case of Starbucks (HK) v. British Sky Broadcasting Group, confirming the common-law rule that, to make out a case for passing off, the plaintiff must establish goodwill by virtue of genuine business activity in the UK; mere reputation is not enough. IPKat has previously commented on the Starbucks(HK) decision (here and here) and it is not this Kat’s intention to revisit those discussions. One point, however, continues to gnaw at this Kat. The Supreme Court (in para. 11) refers to para. 158 of the judgement of the High Court (itself deriving from para. 153 of the High Court decision), which states as follows
“153. In case I am wrong about the absence of a protectable goodwill, however, I should consider whether Sky's use of the name NOW TV would be likely to lead UK viewers who were familiar with PCCM's NOW TV to think that the former was the same as, or connected with, the latter.”

“158. As discussed above, there is no evidence of actual confusion, but that is not conclusive. In my judgment, there is a likelihood that a substantial number of UK viewers who were previously familiar with PCCM's NOW TV will wrongly believe that Sky's NOW TV emanates from the same or a connected source. The names are identical and the services are essentially identical. I am not persuaded that either the visual differences between the respective presentations or the absence of Chinese language content on Sky's service or the fact that it is advertised and promoted as being provided by Sky will suffice to prevent confusion occurring. The visual differences are relatively insignificant. Most of the Chinese-speaking Community in the UK also speak English. Viewers who are familiar with PCCM's NOW TV may well think that it has gone into some kind of joint venture with Sky, and that the joint venture has chosen to focus on English-language programming for the UK market. Furthermore, references to NOW TV in the media sometimes do not mention Sky. “
It is this passage that leaves this Kat a bit flummoxed. Here is my problem. The finding of a likelihood of confusion does not depend upon whether the plaintiff enjoyed goodwill or mere reputation. This is because, whatever the determination of the court regarding the question of goodwill versus reputation, the facts on which the court relies in support of likelihood of confusion are the same. But if this is so, the upshot is that there is a decoupling of the facts that support a finding of goodwill from those that support a likelihood of confusion. This means that there will be instances (such as in the Starbucks (HK) case) in which there is apparently a likelihood of confusion, but no actionable passing off, because no goodwill has been proven.

If so, it seems to mean that the law of passing off is willing to tolerate a degree of likelihood of confusion in the name of maintaining a proper balance between IP protection and competition. In the words of the Supreme Court in theStarbucks (HK) case, if the plaintiff’s position were correct—
“… it would mean that a claimant could shut off the use of a mark in this jurisdiction even though it had no customers or business here, and had not spent any time or money in developing a market here—and did not even intend to so (para. 63).”
All of this is well and good—but what about the likelihood of confusion? Surely, that must count for something.

(Detail from the Cheshire cat vanishing in Lewis Carroll’s Alice in Wonderland drawn by Sir John Tenniel)

5 comments:

Anonymous said...

Similar thoughts occurred to me when reading the recent judgment in Bhayani v Taylor Bracewell [2016] EWHC 3360 (IPEC), HHJ Hacon: http://www.bailii.org/ew/cases/EWHC/IPEC/2016/3360.html

Ben Mooneapillay said...

Confusion ("deception" is probably a more accurate word in the context of passing off) or the likelihood of it counts for nothing if there is nothing to protect; i.e. if there is no goodwill. A "likelihood of confusion" is not itself a thing or a right to be protected. It is part of a test; a test which in EU trade mark terms requires an underlying trade mark registration for the same or a similar mark and for the same or similar goods (unless of course the opponent/claimant is relying on a reputation). No trade mark registration (an essential part of the test) = no infringement. Similarly, no goodwill (an essential part of the test) = no passing off. It's akin to the holder of a US trade mark registration that has a reputation in the UK (but is not registered in the UK) trying to sue for trade mark infringement. No trade mark registration, no infringement. No goodwill, no passing off..

Warwick Rothnie said...

Being the Ipkat, you are of,course,talking about the law of passing off in the UK. It is precisely the conundrum you identify which led the Full Federal Court of Australia to recognise that reputation is enough in ConAgra v McCain, no doubt under the pressure of the statutory remedy against misleading or deceptive conduct in trade or commerce.

Phoebe Chui said...

I have tried to research on this point, whether "likelihood of confusion" is an element to be proven in the claim of 'passing off'. UK cases seem to suggest that having found 'likelihood of confusion' may help establish "misrepresentation" but by no means an equivalent.

Neil Wilkof said...

Re Comment from Warwick Rothnie,

Indeed! The Supreme Court dealt with this case in paragraph 42 of the judgment. I leave it to Kat readers to decide how persuasive they find the discussion.
"42. Support for PCCM’s case may however be found in the decision of the Federal Court of Australia in ConAgra Inc v McCain Foods (Aust) Pty Ltd (1992 (106 ALR 465, given by Lockhart J, with whom Gummow and French JJ agreed (and gave judgments of their own). After a very full review of the common law authorities (including those I have discussed above) on pp 473-501, Lockhart J said at p 504 that it was “no longer valid, if it ever was, to speak of a business having goodwill or reputation only where the business is carried on”, relying on “[m]odern mass advertising … [which] reaches people in many countries of the world”, “[t]he international mobility of the world population” and the fact that “[t]his is an age of enormous commercial enterprises”. He also said at p 505 that, in his view, “the ‘hard line’ cases in England conflict with the needs of contemporary business and international commerce”. He concluded on the next page that “it is not necessary …that a plaintiff, in order to maintain a passing off action, must have a place of business or a business presence in Australia; nor is it necessary that his goods are sold here”, saying that it would be “sufficient if his goods have a reputation in this country among persons here, whether residents or otherwise”. Two points should be noted about this decision. First, the passing off claim nonetheless failed because the plaintiff was held to have an insufficient reputation in Australia. Secondly, the High Court of Australia has not considered this issue".

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