Passing off - Alyssa Smith Jewellery Ltd v Alisa Goodstone

"What's in a Name?"
By John Massey Wright - Folger Shakespeare Library Digital
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Intellectual Property Enterprise Court (Recorder Amanda Michaels) Alyssa Smith Jewellery Ltd v Alisa Goodstone t/a Alyssa Jewellery Design [2021] EWHC 1482 (IPEC) (9 June 2021)

This was an action for passing off. The claimant is a company that designs, produces and sells jewellery. It is named after its founder and sole director, Ms Alyssa Smith. The defendant is also a jewellery designer.  Her first name is Alisa but she trades as "Alyssa Jewellery Design" (one of "the Defendant's Signs")  As the learned recorder, Amanda Michaels, noted in the first paragraph of her judgment, these proceedings arise out of the defendant's adoption of the trading name 'Alyssa Jewellery Design' for her own jewellery business.

The Issues

According to Miss Michaels, Judge Hacon ordered the following issues to be tried at the case management conference:

"(1) At what date did D commence use of the Defendant's Signs?
(2) As at the date at (1), did C have goodwill in each of the Claimant's Signs?
(3) Has D's use of the Defendant's Signs caused, or is it likely to cause, the mistaken belief amongst members of the relevant public that D's jewellery business is C's jewellery business or that D's jewellery business is authorised or approved by C or in some other way connected in the course of business with C?
(4) Was the misrepresentation intentional?
(5) Has C suffered damage in consequence of D's acts complained of?"

The action came on for trial on 9 April 2021 and Miss Michaels handed down her judgment on 9 June 2021 (see  Alyssa Smith Jewellery Ltd v Goodstone  [2021] EWHC 1482).

The Law

The learned recorder referred to the following paragraphs of Judge Melissa Clarke's judgment in Discount Outlet v Feel Good UK [2017] EWHC 1400 IPEC, [2017] ETMR 34:

"[55] The elements necessary to reach a finding of passing off are the 'classical trinity' of that tort as described by Lord Oliver in the Jif Lemon case (Reckitt & Colman Product v Borden [1990] 1 WLR 491 HL, [1990] RPC 341, HL), namely goodwill or reputation; misrepresentation leading to deception or a likelihood of deception; and damage resulting from the misrepresentation. The burden is on the Claimants to satisfy me of all three limbs.
[56] In relation to deception, the court must assess whether "a substantial number" of the Claimants' customers or potential customers are deceived, but it is not necessary to show that all or even most of them are deceived (per Interflora Inc v Marks and Spencer Plc [2012] EWCA Civ 1501, [2013] FSR 21).
[57] The Defendant relies on The National Guild of Removers and Storers Limited v Bee Moved Limited, Nicholas Anthony Burns and Oliver Christopher Robert Sampson [2016] EWHC 3192 (IPEC) in which Douglas Campbell QC sitting as a deputy Judge of the High Court considered "… the difficulties of distinguishing between mere confusion, which is not enough to establish misrepresentation, and deception, which is" …. He concluded that: "The real distinction between the two lies in their causative effect, but is not a complete statement of the position… The more complete statement focuses on whether the conduct complained of is "really likely" to be damaging to the Claimant's goodwill or divert trade from him. This emphasis on "really likely" echoes Lord Fraser in Advocaat [1980] RPC 31 at p 106 line 3. It is implicit in this test that if the conduct complained of is not "really likely" to be damaging then it will be mere confusion."

She directed herself that the question of whether or not the Defendant's signs were likely to deceive the public (or a substantial portion of the public) was a question of fact which she had to assess in the light of all the surrounding circumstances.

As to the distinction between confusion and deception, the recorder referred to the following paragraphs of Lord Justice Jacob's judgment in Phones 4u Ltd v Phone4u.co.uk. Internet Ltd [2007] RPC 5:

"[16] The next point of passing off law to consider is misrepresentation. Sometimes a distinction is drawn between "mere confusion" which is not enough, and "deception," which is. I described the difference as "elusive" in Reed Executive Plc v Reed Business Information Ltd [2004] RPC 40. I said this, [111]:

"Once the position strays into misleading a substantial number of people (going from 'I wonder if there is a connection' to 'I assume there is a connection') there will be passing off, whether the use is as a business name or a trade mark on goods."

[17] This of course is a question of degree—there will be some mere wonderers and some assumers—there will normally (see below) be passing off if there is a substantial number of the latter even if there is also a substantial number of the former.
[18] The current (2005) edition of Kerly contains a discussion of the distinction at paragraphs 15–043 to 15–045. It is suggested that:

"The real distinction between mere confusion and deception lies in their causative effects. Mere confusion has no causative effect (other than to confuse lawyers and their clients) whereas, if in answer to the question: 'what moves the public to buy?', the insignia complained of is identified, then it is a case of deception."

[19] Although correct as far as it goes, I do not endorse that as a complete statement of the position. Clearly if the public are induced to buy by mistaking the insignia of B for that which they know to be that of A, there is deception. But there are other cases too—for instance those in the Buttercup case. A more complete test would be whether what is said to be deception rather than mere confusion is really likely to be damaging to the claimant's goodwill or divert trade from him. I emphasise the word 'really.'"

At para [19] of her own judgment, Miss Michaels said:

"Intention is not a necessary element of the tort of passing off, so that a claimant need not prove that a Defendant had an intention to deceive. However, if an intent to deceive is found, the Court may find that the Defendant has achieved that aim."

She found authority for that proposition at para 5-57 of Wadlow The Law of Passing Off (5th Ed, 2016):

"There is ample authority that it does not lie in the mouth of a fraudulent defendant to say that his fraudulent purpose has failed. An intention to deceive the public is strong evidence that deception will occur. However, this is not a rule of law but one of common sense: every element of the tort must still be made out.

No court would be astute when they discovered an intention to deceive, in coming to the conclusion that a dishonest defendant had been unsuccessful in his fraudulent design. When once you establish the intent to deceive, it is only a short step to proving that the intent has been successful, but it is still a step, even though it be a short step. To any such charge there must be, however, two conditions. The first is that it ought to be pleaded explicitly so as to give the defendant the opportunity of rebutting the accusation of intent. The second is that it must be proved by evidence." [per Lord Loreburn LC in Ash (Claudius) & Sons Ltd v Invicta Manufacturing Co Ltd (1911) 28 R.P.C. 597, 475 HL.]"

The learned recorder also referred to the judgment of Lord Justice Millett in Harrods Ltd v Harrodian School Ltd [1996] RPC 697:

"Deception is the gist of the tort of passing off, but it is not necessary for a plaintiff to establish that the defendant consciously intended to deceive the public if that is the probable result of his conduct. Nevertheless, the question why the defendant chose to adopt a particular name or get up is always highly relevant. It is "a question which falls to be asked and answered": see Sodastream Ltd. v. Thorn Cascade Co. Ltd. [l9821 R.P.C. 459 at page 466 per Kerr L.J. If it is shown that the defendant deliberately sought to take the benefit of the plaintiff's goodwill for himself, the court will not "be astute to say that he cannot succeed in doing that which he is straining every nerve to do": see Slazenger & Sons v. Feltham & Co. (1889) 6 R.P.C. 531 at page 538 per Lindley LJ"

As to damage, the recorder quoted Lord Fraser in Erven Warnink B.V. v. J. Townend & Sons (Hull) Ltd. [1980] R.P.C. 31 who had referred to the claimant owning "goodwill in England which is of substantial value" and that the claimant had suffered or was really likely to suffer,

"substantial damage to his property in the goodwill by reason of the defendants selling goods which are falsely described by the trade name to which the goodwill is attached."

She also mentioned Lord Justice Millett's dicta at page 715 of Harrods:

"In the classic case of passing off, where the defendant represents his goods or business as the goods or business of the plaintiff, there is an obvious risk of damage to the plaintiff's business by substitution. Customers and potential customers will be lost to the plaintiff if they transfer their custom to the defendant in the belief that they are dealing with the plaintiff."

She concluded at [22] of her judgment that:

"Proof of actual damage is not required. It is clear from the judgment of Jacob LJ in Phones4U at paragraphs 11-14 that there is no requirement for special proof of damage where confusion is likely to occur."

At what date did D commence use of the Defendant's Signs?

Miss Michaels said at [23]:

"Cadbury Schweppes Pty Ltd v Pub Squash Co. Pty. Ltd. [1981] RPC 429 establishes that the question of whether the Claimant can bring a claim in passing off against the Defendant depends on whether the Claimant had goodwill prior to the date when the Defendant started to use the Defendant's Signs. Hence, the first issue identified by HHJ Hacon was the date when the Defendant started trading as "Alyssa Jewellery Design" and the further permutations of that name."

In the absence of any clear testimony from the defendant, the recorder had to rely on documents.   The defendant produced a single advertisement for what appeared to be a pop-up 'boutique' greetings card shop, at which a range of the defendant's jewellery was to be sold under the name Alyssa Jewellery Design, on 23 September 2013. The advertisement showed the name used in the form of the logo and featured a photograph of a multi-strand bead or pearl bracelet with silver charms. As far as the recorder could tell, there were no other documents disclosed showing use of the defendant's signs any earlier than that. Nor were there any documents showing that from September 2013 onwards there was regular use of the name. The recorder found that the defendant started to use the Defendant's Signs during 2013 and by September 2013 at the latest.

As at the end of September 2013, did C have goodwill in each of the Claimant's Signs?

Miss Michaels concluded without hesitation that the claimant did have goodwill in each of the claimant's signs.   She relied on the following facts and matters:
  • The claimant had traded in a modest way using the Claimant's Signs from 2009 to July 2012 and had continued such use after that date. 
  • Turnover was not very high from 2009 to the end of 2012 (£54,574 to the year ending March 2013) but the level of interest in the business was disproportionately high. By late 2012 it early 2013, Ms Smith had managed to generate a high degree of interest in her business and in her designs although her expenditure on advertising and PR was minimal. Her social media presence was substantial, for instance, she had 7,000 followers on Twitter by the start of 2013. She had generated a good deal of press publicity (with numerous examples in evidence from 2012) and celebrity endorsements and had won awards of various kinds.
  • Whether D started trading sometime in 2013, or, as she had claimed, in December 2012, mattered not as C had goodwill before December 2012.
The learned recorder added that whilst the majority of the examples of use of the Claimant's Signs in the trial bundle showed use of the full name Alyssa Smith, a smaller but substantial number of examples showed use of the name (or handle) Alyssa Jewellery or @alyssajewellery. The name Alyssa was plainly the most distinctive element of all of the Claimant's Signs, especially as 'jewellery' in context would have been wholly descriptive. 

Has D's use of the Defendant's Signs caused, or is it likely to cause, the Mistaken Belief amongst Members of the Relevant Public that D's Jewellery Business is C's Jewellery Business or that D's Jewellery Business is authorised or approved by C or in some other way connected in the Course of Business with C?

Miss Michaels reframed that question as "whether use of the Defendant's Signs in relation to the Defendant's business and goods amounted to a misrepresentation that the Defendant's goods were those of the Claimant or were connected to the Claimant at para [30] of her judgment.  D and her husband said that D had chosen a name other than her own name, to maintain her privacy, because she wanted to use a name that was close to her own name. that Alyssa was a known variation of Alisa and that the initials of Alyssa Jewellery Design were the same as their daughter's initials. The recorder found that the evidence of both D and her husband about the choice of name to be unsatisfactory. She thought it more likely than not that C was aware of the Claimant's Signs when she chose to call her new business Alyssa Jewellery Design, or soon after making that choice.

Was the Misrepresentation intentional?

Despite her conclusion that it was more likely than not that D had been aware of the Claimant's Signs, Miss Michaels was not persuaded that D chose that name with the deliberate intention of passing off her business as that of C.  Having seen D in the witness box, her behaviour was equally consistent with a rather foolish willingness to "live dangerously" by choosing a name close to the Claimant's. Whether or not she was right on that issue was immaterial for the following reason.

 Has C suffered Damage in Consequence of D's Acts complained of?

Although there had been confusion up to now, that was probably because D had been trading on a very small scale. The recorder observed at [41]:

"Looking at the documents before me, it seems to me that the differences between the parties' respective goods, whether of theme or price point, would not be obvious to the average consumer and would not help a consumer to distinguish between the two businesses."

She added at [46]

"Overall, taking into account all of the factors and evidence discussed above, I have no doubt that the Defendant's use of such highly similar signs to the Claimant's Signs, in relation to essentially identical goods sold in very similar ways, amounts to a misrepresentation, and would be likely to lead to confusion and deception."

She concluded at [48]:

"Moreover, it appears to me that this is a case where it follows that such misrepresentations will lead to damage or the likelihood of substantial damage to the Claimant's property in its goodwill by reason of the Defendant's use of the Defendant's Signs."

It followed that the claim succeeded.

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