Damages for Passing-off - Duadata Ltd v Tian Cha Le Ltd

Tapioca Pearls

Author Lars Plougmann Licence CC BY-SA 2.0 Source Wikimedia

 

Jane Lambert

Intellectual Property Enterprise Court (HH Judge Hacon) Duadata Ltd v Tian Cha Le Ltd. [2026] EWHC 1055 (IPEC) (8 May 2026)

This was an inquiry as to damages for passing off.  The claimant operated a nationwide chain of bubble tea shops and franchises under the Mooboo brand. Bubble tea is a beverage that contains small chewy tapioca balls and various flavourings of different kinds.  A company owned and operated by one Qin Lin held a Mooboo franchise for Gateshead between 8 April 2021 and 23 Jan 2024.  On 22 Aug 2023, Ms Lin incorporated the defendant which began to operate a bubble tea outlet in Gateshead adopting a similar menu design, products, drinks, recipes and prices to the claimant's.  The claimant sued the defendant for passing off on 24 May 2024.

The Order

The defendant did not defend the claim and the claimant obtained a default judgment on 2 July 2024. It was granted an injunction restraining the defendant from passing off and an inquiry as to damages.  The claimant was directed to serve points of claim and the defendant points of defence.

The Inquiry

The claimant duly served its points of claim but the defendant failed to serve points of defence.  However, Ms Lin filed a witness statement in response to the claimant's points of claim.   The inquiry came before His Honour Judge Hacon.   Both parties asked the court to proceed to judgment on the basis of the points of claim, Ms Lin's witness statement and the exhibits to those documents.

Claimant's Contentions

The claimant contended that it could not grant a franchise in the vicinity of the defendant because of the latter's misrepresentations.  It claimed the lost revenue from the date of the defendant's incorporation to the date of the injunction:

(1) An initial fee of £8,000
(2) A management services fee of £3,935.34, being the fee due for 315 days.
(3) A fee to support marketing of £2,413.77 calculated by reference to the gross revenue of the franchise store, here assumed to have been the same as the gross revenue of the MOOBOO Gateshead store over a similar period.
(4) VAT on (1) to (3).
Grand total £14,349.11 + £2869.82 VAT = £17,218.93.

Defendant's Response

Ms Lin argued:

1. The similarity in menu design was limited in duration.
2. The defendant acted promptly to replace the menu complained of.
3. The defendant's business was small and not profitable.
4. There was no evidence of loss suffered by the claimant.
5. There was no evidence of a causal link between the defendant's conduct and the loss claimed.
6. There was no contractual relationship between the parties and so the claimant was relying on a hypothetical agreement which did not exist.

The Judgment

The judge awarded the rounded-up sum of £14,350 by way of damages to the claimant, but not the VAT as that would not normally be recoverable from HM Revenue and Customs. 

In his view, Ms Lin's first and second points amounted to the same thing.  Her third point was irrelevant.  As to her fourth, it was true that there had been no evidence as such from the claimant, but the court could rely on its points of claim. In answer to Ms Lin's fifth point, His Honour observed that claims to damages are frequently based on assumptions. The issue tends to be whether those assumptions are reasonable. Ms Lin had not suggested that it was unreasonable for potential franchisees to have been reluctant to sign up because of the defendant's activities, and Judge Hacon had no reason to doubt that that had been the case.  As to her sixth point, claimants were entitled to raise hypothetical points to quantify loss. 

On the available evidence and submissions, the claimant had done its best to assess the loss resulting from the defendant's passing off.  Except for the claim to VAT, the sum claimed was reasonable.

Comment

Although this is a very short judgment decided on the papers, it is nevertheless a potentially useful one, particularly in business format franchising cases.  Anyone wishing to discuss this case may call me on 020 7404 5252 during UK office hours or send me a message at any time through my contact form.