Trade Marks and Passing Off - easyGroup Ltd v Easy Live (Services) Ltd
 |
| Author Anthony Majanlahti Licence CC BY 2.0 Deed Source Wikimedia Commons |
Court of Appeal (Lords Justices Lewison and Arnold and Lady Justice Falk) easyGroup Ltd v Easy Live (Services) Ltd and others (Rev1) [2023] EWCA Civ 1508 (20 Dec 2023)
This was an appeal by the claimant, easyGroup Ltd. ("easyGroup"), against the dismissal by Sir Anthony Mann of its claim for passing off against the defendants, Easy Live Services Ltd. and its shareholders and directors Achilleas Achilleous and Jonathan Burnside, for the reasons set out in Sir Anthony's judgment in Easygroup Ltd v Easy Live (Services) Ltd and others [2022] EWHC 3327 (Ch) (21 Dec 2022). easyGroup also appealed against a declaration that the defendants' use of certain signs did not infringe various trade marks owned by easyGroup. The appeal came on before Lords Justices Lewison and Arnold and Lady Justice Falk on 13 Dec 2023. By their judgment of 20 Dec 2023, they unanimously allowed the appeal (see easyGroup Ltd v Easy Live (Services) Ltd and others (Rev1) [2023] EWCA Civ 1508 (20 Dec 2023)).
The Trial
easyGroup owns a large portfolio of registered trade marks including the following:
It objected to the defendants' use of the following signs:
The Appeal
By a respondents' notice, the defendants challenged the deputy judge's finding that there had been a misrepresentation. Their first ground was that the allegation of intention to mislead had not been pleaded adequately. In that regard, they referred to para [232] of Sir Anthony's judgment where he said that that point had not been explicitly pleaded. Their second ground was that the judge's finding that the third defendant was not dishonest was inconsistent with any finding of an intention to deceive. This appears to allude to para [233] of the judgment:
"… It is unnecessary to brand [the third defendant] as dishonest for these purposes, and I do not do so, but his deliberate acts fit with the principles in [Australian Woollen Mills]. "
The third ground arose from Sir Anthony's finding of a link between signed 2A, 2B and 3 and the claimant's marks in para [214]. His lordship said that the third defendant "probably intended, in a manner he would describe as 'cheeky' (his word to characterize his other references to branding), to 'call to mind' the easyJet branding, to use the phrase appearing in the authorities." The defendants argued that if there was no intention to deceive then the state of mind that Sir Anthony described at para [214] of his judgment could not amount to an intention to misrepresent.
Intention
Lord Justice Arnold, who delivered the lead judgment, dealt with the respondents' notice first. He noted that the three strands of the respondents' notice were interrelated and concerned the defendants' intention. That led him to consider the law relating to intention in passing off.
Though the House of Lords had held in A G Spalding & Bros v A W Gamage Ltd (1915) 32 RPC 273 that even an innocent misrepresentation could give rise to an action for passing off, Lord Justice Arnold said that intention can still be relevant. His lordship quoted the following passage from Lord Justice Lindley's judgment in Slazenger & Sons v Feltham & Co (1889) 6 RPC 531 at 538:
Though the House of Lords had held in A G Spalding & Bros v A W Gamage Ltd (1915) 32 RPC 273 that even an innocent misrepresentation could give rise to an action for passing off, Lord Justice Arnold said that intention can still be relevant. His lordship quoted the following passage from Lord Justice Lindley's judgment in Slazenger & Sons v Feltham & Co (1889) 6 RPC 531 at 538:
He also quoted Lord Loreburn LC in Claudius Ash Ltd v Invicta Manufacturing Co Ltd (1912) 29 RPC 465 at 475:
"It is said in this case that the Defendants intended to deceive – not that the goods were calculated even innocently to deceive – but that there was a fraudulent intention on the part of the Defendants. That is a material fact which would be weighed duly and to which doubt great weight would be attached by any Court if it were established, because 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 still it is 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 an opportunity of rebutting the accusation of intent. The second is that it must be proved by evidence."
He referred to the judgments of Mr Justice Dixon and Mr Justice McTiernan for the rationale of the doctrine in Australian Woollen Mills Ltd v F S Walton & Co Ltd (1937) 58 CLR 641 at 657:
"The rule that if a mark or get-up for goods is adopted for the purpose of appropriating part of the trade or reputation of a rival, it should be presumed to be fitted for the purpose and therefore likely to deceive or confuse, no doubt, is as just in principle as it is wholesome in tendency. In a question how possible or prospective buyers will be impressed by a given picture, word or appearance, the instinct and judgment of traders is not to be lightly rejected, and when a dishonest trader fashions an implement or weapon for the purpose of misleading potential customers he at least provides a reliable and expert opinion on the question whether what he has done is in fact likely to deceive. Moreover, he can blame no one but himself, even if the conclusion be mistaken that his trade mark or the get-up of his goods will confuse and mislead the public."
"The rule that if a mark or get-up for goods is adopted for the purpose of appropriating part of the trade or reputation of a rival, it should be presumed to be fitted for the purpose and therefore likely to deceive or confuse, no doubt, is as just in principle as it is wholesome in tendency. In a question how possible or prospective buyers will be impressed by a given picture, word or appearance, the instinct and judgment of traders is not to be lightly rejected, and when a dishonest trader fashions an implement or weapon for the purpose of misleading potential customers he at least provides a reliable and expert opinion on the question whether what he has done is in fact likely to deceive. Moreover, he can blame no one but himself, even if the conclusion be mistaken that his trade mark or the get-up of his goods will confuse and mislead the public."
Similarly, he mentioned Lord Simmons's speech in Office Cleaning Services Ltd v Westminster Window and General Cleaners Ltd (1946) 63 RPC 39 at 42:
"… if the intention to deceive is found, it will readily be inferred that deception will result. Who knows better than the trader the mysteries of his trade?"
However, Lord Justice Arnold noted that the law drew a distinction between "living dangerously" and setting out to deceive which Lord Justice Robert Walker noted in United Biscuits (UK) Ltd v Asda Stores Ltd [1997] RPC 513, 531:
"… it seems to me likely that [Asda's representatives] were, under advice, seeking to make only such changes as were needed to avoid what they judged to be an unacceptable risk of being attacked for copying while maintaining Puffin's position as an obvious competitor and parody, and (they hoped) a 'brand-beater'. I cannot escape the conclusion that, while aiming to avoid what the law would characterise as deception, they were taking a conscious decision to live dangerously. That is not in my judgment something that the court is bound to disregard."
Lord Justice Kitchin discussed the expression in Specsavers International Healthcare Ltd v Asda Stores Ltd [2012] EWCA Civ 24, [2012] FSR 19:
"[114] Finally, I come to the 'living dangerously' point. Mr Mellor submitted that if a trader takes a decision to live dangerously he recognises a risk of a successful legal action and so also recognises a likelihood that his activity will deceive some people. This submission was founded upon an observation of Robert Walker J …
[115] In my judgment it is important to distinguish between a defendant who takes a conscious decision to live dangerously and one who intends to cause deception and deliberately seeks to take the benefit of another trader's goodwill. It has long been established that if it is shown that a defendant has deliberately sought to take the benefit of a claimant'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' … A trader who has taken the decision to live dangerously is in a different position, however. He has appreciated the risk of confusion and has endeavoured to adopt a sign which is a safe distance away. All must depend upon the facts of the particular case. Further, it must be kept firmly in mind that the ultimate question whether or not the similarity between the trade mark and the sign is such that there exists a likelihood of confusion is one for the court to determine in the light of its global assessment of all material factors, of which the intention of the defendant, as a person who knows the market in which he is offering his goods or services, is only one.
[116] In the present [case], the judge carried out precisely this assessment …. The judge considered that the evidence of Asda 'living dangerously' did not, in the circumstances of this case, amount to evidence of an intention to confuse. Asda had no wish for consumer to confuse one business for another and so the judge held its intention and conduct could not be relied upon as evidence of a propensity to confuse. I am entirely satisfied that the judge was entitled to reach this conclusion … "
Lord Justice Arnold referred to his previous judgment in Specsavers in Glaxo Wellcome UK Ltd v Sandoz Ltd [2019] EWHC 2545, [2019] RPC 27 at [188]:
"Kitchin LJ was careful in this passage not to say that a conscious decision on the part of the defendant to live dangerously could never support a claim for passing off. Counsel for Glaxo submitted that the relevance of such a state of mind was that it showed that the defendant, as a person who knew the relevant market, was aware of the risk of deception and proceeded recklessly in the sense of not taking care to avoid that risk materialising. Counsel for the Defendants submitted that, if the defendant showed that he did not want his customers to be deceived, that was probative of a lack of a likelihood of deception. In my judgment this is precisely why Kitchin LJ said that it all depended on the facts of the case. If it is proved that the defendant was aware of the risk of deception and proceeded recklessly, then that is capable of supporting the conclusion that deception was likely even if the defendant did not intend to deceive. If, however, what is proved is that the defendant was aware of the risk, but thought that he had done sufficient to avoid it materialising, then that is not supportive of the conclusion that deception was likely, but rather of the reverse."
"Kitchin LJ was careful in this passage not to say that a conscious decision on the part of the defendant to live dangerously could never support a claim for passing off. Counsel for Glaxo submitted that the relevance of such a state of mind was that it showed that the defendant, as a person who knew the relevant market, was aware of the risk of deception and proceeded recklessly in the sense of not taking care to avoid that risk materialising. Counsel for the Defendants submitted that, if the defendant showed that he did not want his customers to be deceived, that was probative of a lack of a likelihood of deception. In my judgment this is precisely why Kitchin LJ said that it all depended on the facts of the case. If it is proved that the defendant was aware of the risk of deception and proceeded recklessly, then that is capable of supporting the conclusion that deception was likely even if the defendant did not intend to deceive. If, however, what is proved is that the defendant was aware of the risk, but thought that he had done sufficient to avoid it materialising, then that is not supportive of the conclusion that deception was likely, but rather of the reverse."
Ground 1: Whether an Intention to Deceive had been pleaded
In answer to the allegation that an intention to deceive had not been pleaded, Lord Justice Arnold referred to para 48.3 of the Particulars of Claim:
"The Claimant enjoys an excellent reputation based on the high standards of the services provided by and/or licensed by the Claimant under the Registered Marks and, in particular, the easyJet Marks. Consumers who are aware of the easyJet Mark reputation and/or the 'Easy' Family Mark Reputation will have formed a positive view of the Claimant and/or its goods and services. By wrongly creating a link with the Claimant, the Defendants benefit from an association with that positive view. Such benefit is unfair because it arises from the Defendants' deliberate acts of infringement."
"The Claimant enjoys an excellent reputation based on the high standards of the services provided by and/or licensed by the Claimant under the Registered Marks and, in particular, the easyJet Marks. Consumers who are aware of the easyJet Mark reputation and/or the 'Easy' Family Mark Reputation will have formed a positive view of the Claimant and/or its goods and services. By wrongly creating a link with the Claimant, the Defendants benefit from an association with that positive view. Such benefit is unfair because it arises from the Defendants' deliberate acts of infringement."
He added at para [28] of his judgment that while the last sentence was not as clear as it might have been, it had been enough to give the defendants notice that easyGroup was alleging that they were deliberately seeking to benefit from consumers associating their services with the reputation of easyJet and the "easy" family of businesses. The point had been put to the third defendant in cross-examination. There was no procedural unfairness in the judge making findings about the defendants' intentions.
Ground 2: Alleged Inconsistency between the Finding that the Third Defendant was not Dishonest and a Finding of an Intention to Deceive
Ground 3: Could there be a Misrepresentation without an Intention to Deceive?
This ground raised two related questions:
- What amounts to an actionable misrepresentation for the purposes of passing off? and
- What evidence is capable of supporting a finding of misrepresentation?
Damage
Having disposed of the respondents' notice for the above reasons the learned Lord Justice turned to the notice of appeal. He began by observing at [35] that It is extremely rare for a passing-off claim to fail on the ground that, although the claimant owns goodwill and the defendant has made an actionable misrepresentation, the claimant has not suffered any damage.
Sir Anthony had held that there could not have been a realistic suggestion of a diversion of trade because of the lack of overlap between the businesses of easyGroup's licensees and the first defendant. He had also held that there was no real likelihood of damage to the reputation of easyGroup's brands. easyGroup had claimed the loss of a licence fee for the use of signs 2A, 2B and 3 but the deputy judge did not believe that such a revenue stream was available. It was not clear whether he had doubted that such revenues were available as a matter of law or on the particular facts of the case.
Lord Justice Arnold said that if Sir Anthony had believed that such licensing revenues were not available as a matter of law he would have been mistaken. His lordship referred to Mr Justice Laddie's judgment in Edmund Irvine Tidswell Ltd. v Talksport Ltd. [2002] FSR 60, [2002] WLR 2355, (2002) 25(6) IPD 25039, [2002] EWHC 367, [2002] 2 All ER 414, [2002] EWHC 367 (Ch), [2002] 1 WLR 2355, [2002] EMLR 32:
"[38]. … If someone acquires a valuable reputation or goodwill, the law of passing off will protect it from unlicensed use by other parties. Such use will frequently be damaging in the direct sense that it will involve selling inferior goods or services under the guise that they are from the claimant. But the action is not restricted to protecting against that sort of damage. The law will vindicate the claimant's exclusive right to the reputation or goodwill. It will not allow others to so use goodwill as to reduce, blur or diminish its exclusivity. It follows that it is not necessary to show that the claimant and the defendant share a common field of activity or that sales of products or services will be diminished either substantially or directly, at least in the short term. Of course there is still a need to demonstrate a misrepresentation because it is that misrepresentation which enables the defendant to make use or take advantage of the claimant's reputation.
[39] Not only has the law of passing off expanded over the years, but the commercial environment in which it operates is in a constant state of flux. Even without the evidence given at the trial in this action, the court can take judicial notice of the fact that it is common for famous people to exploit their names and images by way of endorsement. They do it not only in their own field of expertise but, depending on the extent of their fame or notoriety, wider afield also. It is common knowledge that for many sportsmen, for example, income received from endorsing a variety of products and services represents a very substantial part of their total income. The reason large sums are paid for endorsement is because … those in business have reason to believe that the lustre of a famous personality, if attached to their goods or services, will enhance the attractiveness of those goods or services to their target market. In this respect, the endorsee is taking the benefit of the attractive force which is the reputation or goodwill of the famous person."
In that case, a radio station had manipulated a photo of the racing driver Eddie Irvine in which he had held a mobile phone by inserting a radio which was supposedly tuned to the defendant's programme. Mr Irvine had already made a number of sponsorship deals in which he had endorsed articles of clothing, helmets, sunglasses and footwear. He sued for passing off and was awarded £2,000. That sum was increased to £25,000 by the Court of Appeal in Irvine and others v Talksport Ltd. [2003] 2 All ER 881, [2003] 2 All ER (Comm) 141, [2003] EMLR 26, [2003] FSR 35, [2003] EWCA Civ 423, [2003] 1 WLR 1576, (2003) 26(5) IPD 26029. Referring also to Fine & Country Ltd v Okotoks Ltd [2013] EWCA Civ 672, [2014] FSR 11 and Fenty v Arcadia Group Brands Ltd [2015] WLR 3291, [2015] EMLR 12, [2015] FSR 14, [2015] EWCA Civ 3, [2015] 1 WLR 3291, Lord Justice Arnold concluded at para [45] of his judgment that it was clear from those cases that, in principle, a claimant in a passing off action could claim damages on the footing that it has lost licensing income as a result of the misrepresentation.
easyGroup had complained that the defendants had deprived it of a licence fee for the use of signs 2A, 2B and 3 and had undermined its bargaining position with third parties. Sir Anthony had not considered either of those points. The defendants argued that that reasoning was circular:
"A claimant would only be entitled to charge a defendant a licence fee if the defendant's acts would amount to passing off, but those acts would only amount to passing off because the claimant had been deprived of the licence fee."
Lord Justice Arnold had two answers to that argument. First, the court was bound by the above-mentioned authorities. Secondly, an award of damages was justified as a matter of principle. He explained in para [49]:
"This is because it was established by the decision of the House of Lords in Spalding v Gamage, and has subsequently been confirmed by the decisions of the House of Lords in Erven Warnink BV v J. Townend & Sons (Hull) Ltd [1979] AC 731 and Reckitt & Colman (cited above) and of the Supreme Court in Starbucks (UK) Ltd v British Sky Broadcasting Group plc [2015] UKSC 31, [2015] 1 WLR 2628, that a claim for passing off protects the 'property in the business or goodwill likely to be injured by the misrepresentation' (Lord Parker in Spalding at 284). Given that the juridical basis of the action is invasion of property, it naturally follows that damages assessed according to the user principle should be available. This also explains why the alternative remedy of an account of profits is available."
"This is because it was established by the decision of the House of Lords in Spalding v Gamage, and has subsequently been confirmed by the decisions of the House of Lords in Erven Warnink BV v J. Townend & Sons (Hull) Ltd [1979] AC 731 and Reckitt & Colman (cited above) and of the Supreme Court in Starbucks (UK) Ltd v British Sky Broadcasting Group plc [2015] UKSC 31, [2015] 1 WLR 2628, that a claim for passing off protects the 'property in the business or goodwill likely to be injured by the misrepresentation' (Lord Parker in Spalding at 284). Given that the juridical basis of the action is invasion of property, it naturally follows that damages assessed according to the user principle should be available. This also explains why the alternative remedy of an account of profits is available."
He added at [51]:
"It appears to me that the current state of the law is that the way in which these two principles are to be reconciled is as follows: a claimant who has no existing or prospective endorsement or licensing business cannot rely solely upon the loss of the fee that it would have charged for consenting to the acts complained of as completing its cause of action; but a claimant which does have an existing endorsement or licensing business can in principle rely upon the loss of that fee for that purpose even if the acts complained of are not of precisely the same kind as the claimant has previously endorsed or licensed; and the same may be true of a claimant which has a prospective endorsement or licensing business (e.g. a celebrity who has not yet started such a business but is at the point where they could do so)."
"It appears to me that the current state of the law is that the way in which these two principles are to be reconciled is as follows: a claimant who has no existing or prospective endorsement or licensing business cannot rely solely upon the loss of the fee that it would have charged for consenting to the acts complained of as completing its cause of action; but a claimant which does have an existing endorsement or licensing business can in principle rely upon the loss of that fee for that purpose even if the acts complained of are not of precisely the same kind as the claimant has previously endorsed or licensed; and the same may be true of a claimant which has a prospective endorsement or licensing business (e.g. a celebrity who has not yet started such a business but is at the point where they could do so)."
The Declaration
By paragraphs 2 and 3 of his order of 9 Feb Sir Anthony declared that the use of the following did not infringe any of the trade marks relied upon by easyGroup in these proceedings: (a) Sign 1; (b) Sign 4; (c) "the words 'EASY LIVE AUCTION' and/or 'EASYLIVEAUCTION' in plain text without more in non-stylised, non-logo form"; and (d) "the domain name easyliveauction.com". easyJet argued that there had been no counterclaim for such a declaration though it did not press the point as it had suggested a declaration or proviso to mitigate the width of the injunction. It objected to paras (c) and (d) on the grounds that there had been no finding in the judgment to support that part of the declaration. Thirdly it contended that para (c) was too uncertain as it did not address pantones or fonts. Lord Justice Arnold decided that the uncertainty could be avoided by adding the words "in any non-stylised, non-logo form used by the First Defendant before 13 October 2022."
Comment
Lord Justice Arnold observed at [54] that it was uncertain whether the finding of passing off would make any serious difference to the remedies to which easyJet was entitled as its claim for trade mark infringement under s.10 (3) had already succeeded. The appeal on the declaration resulted in the addition of a short phrase. It is hard to see how the gains could have justified the costs of the appeal. Be that as it may, there is some useful analysis of the law on intention and entitlement to licensing damages.
Anyone wishing to discuss this article may call me on 020 7404 5252 during office hours or send me a message through my contact form.
Anyone wishing to discuss this article may call me on 020 7404 5252 during office hours or send me a message through my contact form.
Comments