06 July 2011

Trade Marks and Passing Off: Schütz (UK) Ltd v Delta Containers Ltd

In my case note on Schütz (UK) Ltd v Werit (UK) Ltd [2011] EWCA Civ 303 (29 March 2011) of 2 April 2011 in this blog and in my note on Schutz (UK) Ltd and Another v Delta Containers Ltd and Another [2011] EWHC 1173 (Pat) (5 May 2011) in IP North West I referred to the practice of cross-bottling. That practice has already given rise to a patent infringement claim againstWerit (UK) Ltd. ("Werit") which Werit won at first instance but lost on appeal.

What is "Cross Bottling"
The bottles in question are 1,000 litre plastic bottles which are fitted into metal cages and mounted on pallets. The whole assembly is known as an IBC (intermediate bulk carrier) so called because it is smaller than a tanker but larger than a keg. The evolution of this technology was discussed in some detail by Mr. Justice Floyd in paragraphs 7 to 11 of his judgment in the Weritclaim. A photo of the assembly appears below.


For a time the whole assembly was made by the same manufacturer but as bottles and cages have lifespans a practice developed of encasing a bottle by one manufacturer in the cage of another. In short, the practice of "cross bottling".

The Litigation
The claimant Schütz complained that "cross bottling" infringed not only its two of its European patents but also its registered trade mark and that the practice also amounted to practice off. It sued Delta Containers Ltd. ("Delta") which makes cages and Werit which makes bottles. Delta agreed to abide by the decision against Werit in respect of patent infringement but resisted the claim for trade mark infringement and passing off. The case that is discussed in this note, Schütz (UK) Ltd and Another v Delta Containers Ltd and Another [2011] EWHC 1712 (Ch) (5 July 2011) was the trial before Mr. Justice Briggs of the trade mark infringement and passing off claim.

The Issue
As the manufacturer of that component Delta inserted its trade mark on the frame. Schütz placed its trade mark on the bottle but that was much less noticeable than the Delta's mark. Despite the use of disclaimers Schütz complained that Delta's mark gave the impression that it had made the whole assembly and not just the frame.

The Decision
Schütz had registered Community and British trade marks covered both the bottle and the whole IBC assembly. Directing himself to consider how the average consumer would regard the marking, the judge directed himself that:
"the application of the average consumer test to the question whether Delta used Schütz' trade marks in relation to the bottles of the IBCs as a whole does not depend upon a vain attempt to find a notional average consumer with perceptions somewhere between those of the fillers on the one hand and the end-users on the other. The search for a statistical average is neither warranted by European jurisprudence, nor sensible in the present context. In my judgment the test requires the court to identify the relevant perception of consumers within any relevant class who are neither deficient in the requisite characteristics of being well informed, observant and circumspect, nor top performers in the demonstration of those characteristics. That is in substance what "average" means."
Rejecting Delta's contention that end-users are not consumers, he propounded the following "what if" test:
"For as long as an IBC performs its functions effectively, that role of the trade marks may be of little consequence to the end-user. But if the IBC were to fail, then it is to the proprietor of the trade mark displayed on it that the end-user is likely to attribute blame for the failure, even if the end-user has no legal recourse against the manufacturer, and has to pursue a complaint through its (filler) supplier. In my judgment end-users of IBCs are consumers in the relevant sense, for that reason."
He concluded at paragraph [100]:
"It follows that, since I have concluded that the average or typical end-user of a Delta rebottled IBC in a Schütz cage is likely to perceive that the Schütz trade marks on the cage are being used in relation to the IBC as a whole, including the bottle, the claimants' case of trade mark infringement by Delta is made out, under Article 9.1(a). It is made out both in relation to the bottles, where the use of Schütz' trade marks is protected by its Community trade mark registrations, and in relation to the IBCs as a whole, where its marks are protected by its UK trade mark registrations, albeit that they were filed after the commencement of these proceedings."
The disclaimers in Mr. Justice Briggs's judgment made no difference but, in any event, the evidence of the practical effect on consumers was inconclusive.

In the judge's view, the facts that gave rise to a finding of trade mark infringement necessitated a finding of passing off also.

Comment
The most interesting aspect of this case is the "what if" test for determining whether an average consumer would associate the mark on the frame with the IBC as a whole. As the judge conceded, the mark "Pirelli" on a tyre does not suggest that the car or even the wheel was made by Pirelli. I suppose the answer must be that a claim arsing from an accident caused by a burst tyre would be directed to the tyre manufacturer and not the manufacturer of the car. It will be interesting to see whether any other judge, or more importantly, the Court of Justice of the European Union would follow that line.

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