Woolley & Anor v Ultimate Products Ltd & Anor

Passing off requires goodwill, misrepresentation and damage. Mere confusion is insufficient: the claimant must show an operative, non-transitory misrepresentation leading purchasers to believe that the defendant’s goods emanate from the claimant. The inquiry is qualitative as well as quantitative and concerns a substantial number of people in the relevant market. Reverse misrepresentation does not suffice.

A trial judge may evaluate the totality of the evidence using common sense and experience. Clear similarities between products, presentation, marketing, outlets and price may justify an inference of actual deception despite limited direct evidence. Concurrent goodwill in another field is no defence. Damage may be inferred from lost sales; it need not be substantial, and proof under one head is sufficient.

The respondents, Mr Woolley and Timesource Limited, sold watches under the name HENLEY. Ultimate Products Limited and Henleys Clothing Limited sold watches under HENLEYS. The appellants had previously operated under a licence which was terminated in 2009.

The Deputy High Court Judge found passing off in relation to watches and granted an injunction, while rejecting the claim in relation to jewellery and bags. The trademark claims were stayed. The appellants appealed from the decision reported at [2012] EWHC 339 (Ch), challenging the findings of misrepresentation and damage. The central issues were whether the evidence established substantial, operative misrepresentation in the correct direction and whether damage could properly be inferred.

The Court of Appeal unanimously dismissed the appeal. Lady Justice Arden gave the leading judgment, with Lady Justice Black and Lord Justice Pill agreeing.

1. Elements of passing off. The tort requires goodwill, misrepresentation and damage. Goodwill in the respondents’ watch business was accepted.
2. Misrepresentation. Purchasers must be led to believe that the defendant’s goods emanate from the claimant. Mere confusion is insufficient, and an initial misunderstanding which is dispelled before any material step is not operative. Reverse misrepresentation, where the claimant’s goods are mistaken for the defendant’s goods, does not establish passing off. These principles were reflected in Reckitt & Colman Products Ltd v Borden Inc [1990] RPC 341 and Cadbury-Schweppes Pty Ltd v Pub Squash [1981] 1 WLR 193.
3. Evaluation of evidence. The trial judge was entitled to assess the totality of the evidence and to use common sense and experience as a member of the public. Limited direct evidence did not prevent a finding of misrepresentation where the remaining evidence was compelling. The judge was entitled to give substantial weight to the similarities between the names, watch dials, presentation, marketing, outlets and prices. An appellate court should not interfere with that evaluative conclusion unless it was plainly wrong.
4. Substantiality and concurrent goodwill. Substantiality is relative to the product and market and requires qualitative as well as quantitative assessment. The near identity of HENLEY and HENLEYS, together with the market similarities, justified the conclusion that a substantial number of purchasers would be deceived in the proper direction. Concurrent goodwill in HENLEYS clothing did not provide a defence because the appellants had not established equivalent goodwill in watches.
5. Licence and damage. The licence evidence was finely balanced, and the judge was entitled to leave it out of account. Damage could be inferred from lost sales, including the effect of retailers altering their presentation to avoid confusion. There was no absolute requirement that damage be substantial, and proof of damage under one head was sufficient. The rejection of damage by erosion of goodwill did not undermine the finding of lost sales.

• Court of Appeal (Civil Division): The appeal was dismissed. [2012] EWCA Civ 1038.
• High Court of Justice (Chancery Division): The Deputy Judge found passing off in relation to watches and granted relief. [2012] EWHC 339 (Ch).