Doosan Power Systems Ltd v Babcock International Group Plc & Anor

An exclusive trade mark licence defined by reference to a business carried on at a specified date is construed at a reasonable level of generality and over a reasonable period. It is not confined to the products or services supplied on that particular day. The court may take account of business capability, established activity, temporary market conditions and organic development, subject to the contractual limitation of substantial similarity.

Passing off may arise where a defendant misleadingly claims the claimant’s accumulated experience and goodwill, even though customers are not confused as to the parties’ identities. A representation which is literally true may still mislead if its presentation conveys a false impression. Initial interest confusion and erosion of distinctiveness may establish causation and damage.

The claimant, formerly part of the defendants’ Babcock group, acquired the Energy Division in 1995. A trade mark licence granted it an exclusive, perpetual right to use the Babcock name in relation to products and services in the business carried on by the Energy Division at the date of sale and any business of a substantially similar nature.

The defendants later acquired and developed a substantial civil nuclear business and used the Babcock name in that field. The claimant alleged breach of the licence and passing off. The issues were the scope of the licensed business, whether the defendants’ use infringed the licence, and whether their marketing misrepresented the claimant’s experience and goodwill as their own.

1. Construction of the licence. The definition of “Business” required a factual inquiry into the business actually carried on at 28 September 1995. That inquiry had to be conducted at a reasonable level of generality and over a reasonable time frame. The court should not take a snapshot of only the products or services supplied on that date.
2. The expressions “from time to time” and “any business of a substantially similar nature” allowed for reasonable development and evolution. A business temporarily in abeyance because of market conditions could remain part of the relevant business where the company retained the intention and resources to resume it. The licence covered the whole identifiable business, subject to insignificant or insubstantial activities.
3. The Energy Division carried on an identifiable civil nuclear business in 1995. It included new plant design, supply and installation, engineering, technical and site services, repair and maintenance, and decommissioning, subject to exclusions concerning turbine generators, the reactor core and the fuel route. The modern civil nuclear decommissioning market had developed organically from the business carried on in 1995 and was therefore substantially similar.
4. The claimant’s alternative case succeeded. The defendants’ admitted use of the Babcock name in overlapping civil nuclear activities infringed the exclusive licence. The claimant was prima facie entitled to an injunction and an inquiry as to damages.
5. Passing off. Applying the requirements stated in Reckitt & Colman Products Ltd v Borden [1990] R.P.C. 341 (HL), the claimant had goodwill in the Babcock name and its civil nuclear business. The defendants’ website misleadingly claimed the claimant’s historical expertise and technical capability as Babcock’s accumulated experience. Sophisticated customers could nevertheless be influenced at the stage of deciding whether to enter negotiations.
6. A representation may be misleading despite being literally true if it conveys a false impression. The misrepresentation caused damage by eroding the distinctiveness of the claimant’s goodwill. The passing off claim therefore succeeded, but only on the specific website representation pleaded.