Lookalikes: Gama Healthcare Ltd v PAL International Ltd

In  Gama Healthcare Ltd v PAL International Ltd [2016] EWHC 75 (IPEC) (20 Jan 2016) the claimant, Gama Healthcare Ltd ("Gama") sued PAL International Ltd. ("PAL") for passing off. Gama complained that the get-up of Pal's Medipal disinfectant and detergent wet wipes was so similar to the packaging of its Clinell wipes that it was likely to lead members of the trade to believe that the defendant's wipes were those of the  claimant or otherwise connected with the claimant. The goodwill claimed  lay in the use of those colours in combination with the colour block design for the front of the packaging described. The proportion of the front of the pack which was to be coloured was not specified, and no part of the packaging was relied upon apart from the front of the package. Gama pleaded that the front of the package was the critical aspect that would most commonly be viewed by the public.

Gama was founded in 2004 by two medical doctors. It developed a universal, disinfectant wipe, so called because it has both disinfectant and detergent properties and may be used as a hand wipe as well as on surfaces and equipment. The wipe was intended for use in the healthcare industry and was first sold to the NHS in 2006. A wider range of wipes was then developed and sold by Gama. The detergent wipes in issue were launched in September 2007. The claim against PAL related only to the disinfectant wipes sold in green and white packaging and detergent wipes sold in yellow and white packaging. By the time these proceedings were launched, over £5.8 million of Gama's disinfectant wipes were being sold annually, primarily to the NHS, and Gama had for some years (possibly since about 2008) been the market leader for the sale of such wipes to the NHS in England. It's evidence was that it had spent over £500,000 in the 3 years immediately before the action on marketing the wipes. The selection of advertising materials and merchandise in evidence showed the range of colours used.   Some but not all of those documents pre-dated September 2013, the relevant date for the assessment of passing off.

PAL is well established in the food sector and manufactured hygiene work wear. It started selling healthcare wipes in the Middle East in 2000. In 2005 it started manufacturing such wipes on a 'white-label' basis for other brands. In 2011 it decided to expand its business in the healthcare market in the UK by developing its own brand of healthcare wet wipes and chose the name "Medipal" for this new range of products. It looked at the packaging used by the various suppliers at that stage and saw that many of them, including the market leaders, used green for disinfectant wipes and yellow for detergent ones.  It developed several versions of the packaging before choosing the ones that appear in the photos in the right hand column above.

Referring to the speeches of Lord Halsbury LC and Lord Lindley in Schweppes Ltd v Gibbens (1905) 22 RPC 601, Miss Amanda Michaels, sitting as a deputy  enterprise judge, remarked at paragraph [29] of her judgment that it is not easy to establish passing off where the allegedly distinctive indicia consist only of get-up, and the parties' products bear distinctive names.  After reviewing the case law her ladyship directed herself to consider the following issues:

(1)   Does the Claimant have goodwill in its get-up?

(2)   Who is the relevant consumer?

(3)   Did the Defendant deliberately seek to pass off its products as those of the Claimant?

(4)   Was there evidence of actual deception?

(5)   Has there been a misrepresentation to a significant part of the relevant public?

Although the deputy judge discerned five separate issues the last four explored different aspects of the second probandum in Lord Oliver's famous formulation of the law of passing off in Reckitt and Colman Products Ltd v Borden Inc and Others  [1990] 1 WLR 491, [1990] RPC 341, [1990] WLR 491, [1990] 1 All ER 873, [1990] UKHL 12:

"The law of passing off can be summarised in one short general proposition—no man may pass off his goods as those of another. More specifically, it may be expressed in terms of the elements which the plaintiff in such an action has to prove in order to succeed. These are three in number. First, he must establish a goodwill or reputation attached to the goods or services which he supplies in the mind of purchasing public by association with the identifying "get-up" … such that the get-up is recognised by the public as distinctive specifically of the plaintiff's goods or services. Secondly, he must demonstrate a misrepresentation by the defendant … (whether or not intentional) leading or likely to lead the public to believe that goods or services offered by him are the goods and services the plaintiff. … Thirdly, he must demonstrate that he suffers … damage …"

At para [27] of her judgment Miss Michaels noted that she was not required to consider damage as PAL had conceded at the case management conference that damage would follow if Gama succeeded on the first and second probanda.

Her ladyship found at paragraph [48] that Gama had a significant business in which it undoubtedly enjoyed goodwill but that goodwill subsisted in relation to its trade name Clinell but not in its pleaded get-up of its disinfectant or detergent wipes absent that trade name. That finding disposed of the case in the defendant's failure but the learned deputy judge addressed the other issues in the case in case she was wrong on the question of goodwill.

Miss Michaels found that the average customer was not a member of the general public but a hospital procurement department or a GP surgery which would pay attention to the sources and labelling of the products rather than the get-up. They would know the difference between Clinell and Medipal wipes and if they wanted one rather than the other they would make that clear when placing their orders.

As to the third issue Miss Michaels found that PAL intended to follow market trends and more specifically to reference Gama's packaging and products, to show that its products were competing with Gama's.   She characterized that as "a decision to live dangerously" but not to deceive or pass off. "Significantly", in her view, "the trade name chosen was distinctively different from 'Clinell'" and the disinfectant wipes were described as such, not as "universal" wipes like the Claimant's." There were also other noticeable differences between the parties' packaging. She accepted the defendant's evidence that it wanted its goods to be distinguished from the claimant's goods, if only because the defendant had every interest in building up goodwill for its own Medipal brand, in which it was making a significant investment.

On the fourth issue the deputy judge noted that several instances of alleged actual deception were pleaded, but not proved by witnesses with direct knowledge, A number of other instances of alleged confusion were attested to by witnesses who had provided witness statements but these proved to be initial impressions or otherwise discountable when subjected to cross-examination.

At paragraph [77] Miss Michaels concluded:

"I have taken into consideration the nature of the Claimant's case, which rather as in Schweppes (supra) invites this Court to look at only part of each party's Packaging and ignore the most conspicuous difference of the trade name. I have also considered the specialist market in which the great majority of these goods are sold, the manner in which they are sold, the characteristics of the majority of purchasers, the manner of purchase, and the unsatisfactory evidence of alleged confusion adduced by the Claimant. I conclude that most people will not be fooled most of the time, but there is a small risk of deception of some people in atypical circumstances. I do not consider that there is a risk of deception amongst a sufficiently substantial number of the Claimant's customers or potential customers for there to be a real effect on its goodwill. Nor, in all the circumstances, do I consider that the Defendant's products amount to instruments of deception. In my judgment, therefore, the Claimant has not established a case of passing off."

Though she did not say so in terms, it followed that Gama failed on the second probandum of Lord Oliver's formulation of the law of passing off mentioned above.

Surprisingly, the judgment did not refer to Mr Justice Jacob's decision in Hodgkinson Corby Limited and Another v Wards Mobility Services Limited [1995] F.S.R. 169 which suggests that neither party cited it.  This was another case where a defendant was sued for supplying a lookalike product to the NHS. The action failed because of the way in which supplies were procured by the NHS which was essentially the same reason for the claimant's failure in Gama. As his lordship put it at page 180:

"Now all the healthcare professionals I heard struck me particularly as not only caring but also careful people. Not one of them (and I heard from healthcare professionals called by both sides) suggested they would themselves be deceived. The process of ordering itself rules deception out. The main customer is the National Health Service, although, of course, there are also private customers such as charities and private hospitals and nursing homes. There are variations between the ways things are done between regions of the NHS and as to how private purchasers buy. None of this matters. Always it is a healthcare professional who initiates a purchase. Once such a professional decides a particular type of ROHO is needed, he or she puts in a written requisition. That must identify the particular type of ROHO wanted. If it does not, then the ordering department cannot move and must go back to the prescriber. Most orders mention ROHO by name (for instance the Welsh form requires the name of the maker). In some instances no name is used, but simply the model number. Those responsible for ordering (who are, of course, responsible for ordering a vast range of other things too) then process the order."

In those circumstances Mr Justice Jacob concluded at page 181 that the  likelihood of copying was non-existent.

Great play had been made by the claimant of the similarities in appearance between the claimant's product and the defendant's which, the claimant complained, amounted to copying. That did not matter said the judge:

"Some think that copying is unethical; others do not. Often the copyist of today becomes the innovator of tomorrow. Copying is said by some to be part of the lifeblood of competition, the means of breaking de facto market monopolies and keeping down the price of articles not protected by special monopolies such as patents or registered designs. Others say that copyists are parasites on innovators. None of this matters. Certainly it is not the law that copying as such is unlawful: the common law (and I am concerned with the common law) leans against monopolies."

Appeals were also made to such notions as “riding on the back of ROHO”, or “taking Roho's market”. That did not matter for, as the judge said, you can ride, on the back of a competitor by by honest competition.

In Hodgkinson Mr Justice Jacob explained at page 174 what is not the law: 

"There is no tort of copying. There is no tort of taking a man's market or customers. Neither the market nor the customers are the plaintiff's to own. There is no tort of making use of another's goodwill as such. There is no tort of competition."

He added at page [175]:

"At the heart of passing off lies deception or its likelihood, deception of the ultimate consumer in particular. Over the years passing off has developed from the classic case of the defendant selling his goods as and for those of the plaintiff to cover other kinds of deception, e.g.that the defendant's goods are the same as those of the plaintiff when they are not, e.g. Combe International Ltd v. Scholl (UK) Ltd [1980] R.P.C. 1 .; or that the defendant's goods are the same as goods sold by a class of persons of which the plaintiff is a member when they are not, e.g. Warnink (Erven) Besloten Vennootschap v. J. Townend Sons Ltd [1980] R.P.C. 29 . Never has the tort shown even a slight tendency to stray beyond cases of deception. Were it to do so it would enter the field of honest competition, declared unlawful for some reason other than deceptiveness. Why there should be any such reason I cannot imagine. It would serve only to stifle competition."

In assessing whether there has been (or is likely to be) deception the court must take into account not just the similarities between the original and lookalike products but also whether the potential purchaser is likely to be deceived. The get-up of a packet of chocolate business on a supermarket shelf may mislead a busy shopper as in United Biscuits (U.K.) Limited v Asda Stores Limited [1997] R.P.C. 513 but not a healthcare professional.

Should anyone wish to discuss this case, the law of passing off in relation to lookalikes or passing off generally, he or she should call me on 020 7404 5252 during office hours or contact me through my message form.