Fearns (t/a Autopaint International) v Anglo-Dutch Paint and Chemical Co. Ltd & Ors

Consent to use a trade mark or make direct sales is construed by reference to its agreed scope and commercial purpose. Permission to supply branded goods where the brand owner cannot supply does not authorise competing sales where supply remains possible, general solicitation of customers, or attempts to secure their long-term custom. Passing off requires goodwill, a misrepresentation likely to deceive, and damage. Switch selling branded goods, and supplying substitute goods for branded orders, may constitute passing off. The tort of intentional infliction of economic harm by unlawful means requires both causation and an intention to cause the relevant harm; foreseeability is insufficient. Industrially produced paint tins are not printed matter of a primarily literary or artistic character for copyright purposes.

The claimant operated an automotive paint business under the AUTOPAINT INTERNATIONAL brand and supplied franchisees. The defendants were the manufacturer and distributor of relevant paint products. The claimant alleged trade mark infringement, passing off, malicious falsehood, copyright infringement, breach of contract and intentional infliction of economic harm by unlawful means. The defendants relied principally on consent to direct sales and counterclaimed for unpaid invoices.

The central issues were the scope of any agreement permitting direct sales to franchisees, whether subsequent conduct exceeded that permission, and whether the individual causes of action were established.

The court found that an oral agreement was reached in late May 2004 permitting direct sales to franchisees where Autopaint was unable to supply the relevant product. The agreement did not authorise sales where Autopaint could supply, sales of ancillary products in those circumstances, or a general campaign to obtain the franchisees’ long-term custom.

1. Trade mark infringement and standard passing off. The defendants’ consent defence succeeded only within the agreed limits. Use of the AUTOPAINT mark for products which Autopaint could supply was unauthorised. The precise boundary between authorised and unauthorised sales required an inquiry.
2. Other passing off claims. The alleged false representation of status was not established. Switch selling to the trade was established where De Beer or Octoral goods were supplied in response to orders for Autopaint goods. Switch selling to the public was also established: customers buying Autopaint-branded tins were led to believe that the contents were authorised by the claimant, and the defendants went beyond mere facilitation by insisting that dealers sell the goods as Autopaint.
3. Malicious falsehood. The pleaded statements were not proved to have been published. The copyright claim failed because the relevant articles were paint tins, not printed matter primarily of a literary or artistic character.
4. Contracts. Permission to supply Autopaint-branded tins was limited to supply to the claimant. No term requiring approval of a change of manufacturer was implied because it was not necessary. The Australian royalty was 3%, and the Malta agreement was continuing rather than limited to one order.
5. Economic harm. The defendants’ June 2005 conduct was unauthorised and intended to harm the claimant’s distributor network, but it was not proved to have caused the loss. The claim for intentional infliction of economic harm by unlawful means therefore failed.

The claims succeeded or failed in accordance with those findings. The court reserved the precise consequential order for agreement or further argument.