Protecting IP rights under English Common Law and European Continental Law: 'Passing Off' and 'Unfair Competition' compared: London Legal Training 2008/Annual IP Conference, London 30 October 2008.

Blackshaw, Ian

Introductory Remarks

Unfair competition--in a business and an economic sense--takes many forms. Perhaps one of its more common and traditional forms is so-called 'Passing Off ' where one trader or business organisation 'passes off' its goods and services as those of another rival trader or business organisation. In other words, tries to take unfair advantage of and cash in on the rival's fame, reputation and goodwill that it has established in the market place.

'Passing Off ' under English law is a doctrine which has been established and refined over the years in the Courts through the application of the Common Law principle of judicial precedent (stare decisis), whereby, generally speaking, decisions rendered in previous cases tend to be followed in similar cases (in consimili casu) in the future, unless they can be 'distinguished', in which case they are not followed. The whole system procedures under the legal fiction that Judges do not create new law but merely interpret and apply existing law!

By contrast, under the European Continental Civil Law system, judicial precedent, generally speaking, is only one of the 'sources of the law'--and not necessarily an important one at that! However, a separate 'tort'- civil wrong--of 'Unfair Competition' has grown up and, as such, this tends to provide more legal certainty than under the Common Law system, where, again generally speaking, there is more room for interpretation and less rigidity.

In this Paper, we will examine and compare the two legal approaches using some sports personality rights examples. (1) Before doing so, we will define the concept of 'Passing Off ' under English Common Law, which also applies in the so-called Anglo-Saxon jurisdictions, such as the United States of America and other former English colonies.

The Common Law Doctrine of 'Passing Off'

(i) Concept

As mentioned, 'Passing Off ' has as its objective the protection of the 'goodwill' that the claimant has built up in his field of business, and the resulting reputation enjoyed in the market place. And 'goodwill' has been defined as "the attractive force which brings in custom". (2)

Goodwill is an intangible property right, whose legal nature has been judicially described as follows:

"A man who engages in commercial activities may acquire a valuable reputation in respect of the goods in which he deals, or the services which he performs, or of his business as an entity. The law regards reputation as an incorporeal piece of property, the integrity o which the owner is entitled to protect." (3)

The claimant must show that there has been misrepresentation and the public has been deceived into believing that the goods or services of the trader or business organization are those of the claimant. Damage as a result of the 'Passing Off ' must also be established. (4)

These three elements required to constitute a case of 'Passing Off ', namely:

1 reputation or goodwill acquired by the claimant in his goods, services, name or mark;

2 misrepresentation by the defendant leading to confusion (or deception); causing

3 damage to the claimant

have been well described as "the classical trinity". (5) In other words: three in one and one in three!

It should be noted, however, that there is no legal requirement for the misrepresentation to be intentional or deliberate. In other words, innocence is no defence to a claim of 'Passing Off'. (6)

(ii) Some Examples

As mentioned above, 'Passing Off ' provides a rather limited--and, to a certain extent, rather technical--form of legal protection and the extent will depend upon the facts and circumstances of each particular case. Very much a matter, to use the old adage, of 'circumstances altering cases'!

For example, to take an early case (7), a children's radio personality, 'Uncle Mac', was unable to stop a cereal manufacturer from using his name on their product, because there was no 'common field of activity' between the claimant and the manufacturer. 'Uncle Mac' was not in the business of manufacturing and selling cereals; he was purely a radio presenter. So there was no risk of confusion to consumers. Likewise, in a more recent case (8), the former 'Spice Girl', Geri Halliwell, suffered the same fate when she tried to sue in 'Passing Off the Italian company, Panini, the manufacturer of stickers bearing her name and likeness. She was an entertainer and not in the business of manufacturing, selling or endorsing stickers. Again, there was no 'common field of activity'. And so consumers would not be misled! Incidentally, Panini were not successful in a later case brought against them by the English Premier League in respect of an unofficial and unauthorized sticker album and collection which included Premier League players bearing the logos of their Clubs and also the League. (9)

Again, in the well-known case of the street trader Matthew Reed, which went to the European Court of Justice and back to the English High Court and on to the Court of Appeal, selling 'unauthorised' football souvenirs bearing the registered trademarks of the Arsenal Football Club outside their ground, Arsenal failed in their claim of 'Passing Off ' because Reed's stall contained a 'disclaimer' notice that the goods were not official Arsenal merchandise, or endorsed by them. Thus, Arsenal fans would not be misled by Reed's activities one of the key requirements for establishing 'Passing Off '. However, the Court of Appeal did uphold Arsenal's other claim that Reed had infringed their registered trademarks, even though Reed claimed quite persuasively, I would add--that they were being used "as a badge of support loyalty or affiliation to those to whom they were directed". (10) That is, Arsenal's fans and supporters! The Court of Appeal held that, whilst being considered 'badges of allegiance', all the evidence suggests that the trademarks also designate origin of the goods to a substantial number of consumers. And that is the primary function of a trademark--a badge of origin!

However, the rather strict line taken by the English Courts in such cases as 'Uncle Mac' and Geri Halliwell, has been softened in the subsequent High Court decision in the case of Irvine v Talksport Limited (11)--generally regarded as representing a 'breakthrough' in the field. In that case, the Court unequivocally recognised--for the first time--that a well-known sports personality, Eddie Irvine, the former Formula One driver, can prevent third parties from exploiting their name or image in circumstances where members of the public will be confused into thinking the sports personality concerned has endorsed or in some way authorised/licensed such use by that party, when such was not, in fact, the case. And the Court also assumed that, because Irvine was a 'celebrity', he was in the habit of exploiting his notoriety by licensing his name, likeness and image, from time to time, in respect of various goods and services, but not necessarily in the radio field. In paragraph 6 of his judgement, Mr Justice Laddie ditched the idea of the hitherto 'common field of activity' requirement in 'Passing Off' cases in the following terms:

"6. I should make it clear that I am only considering a case in which the Claimants are in the business of endorsing products. As I explained in my judgment, Mr Irvine was, at the time of the events of which complaint was made, probably the premier Formula One racing driver from Britain. He made a significant part of his income from endorsing products. He was, therefore, in a real sense in the business of giving endorsements. It is not suggested that he has ever given an endorsement for a radio station or done anything similar to that, but nevertheless in general terms he was in the business of using his fame as a basis for earning money through endorsements. Although that was an important source of income for him, it is not suggested that the activities of the defendant deterred anybody else from seeking Mr Irvine's endorsement, whether for a radio station or anything else."

Again, in certain Commonwealth jurisdictions, such as Australia, the Courts are more relaxed in making the connection between the personality and the unauthorized products. Thus, in the case of Hogan v Pacific Dunlop, (12) the actor, Paul Hogan, who played 'Crocodile Dundee', successfully sued the defendants in 'Passing Off ' for using the 'knife scene' from the film 'Crocodile Dundee' to advertise their shoes. The Court held that there was a misrepresentation because the 'Dundee' character was seen sponsoring the shoes even though no authorization to do so had, in fact, been given by him.

The European Civil Law Doctrine of 'Unfair Competition' (i) Concept

Under European Continental Civil Law, these kinds of cases and claims are, relatively speaking, easier to resolve, because there is a general 'tort' of Unfair Competition, which protects claimants, especially in relation to trademarks--whether registered or unregistered. This general legal protection supplements the legal protections afforded by trademarks for goods and services and also for individuals. This is part of a general Civil Law principle that anyone who inflicts harm on another must make good that harm.

In certain jurisdictions, the principles of Unfair Competition have been codified in the country's Civil Code or in separate Unfair Competition Acts. For example, in Greece, there is an Unfair Competition Law (13), article 1 of which (in translation) provides as follows:

"Any act which is contrary to good morals and which is made with the purpose of competition in the commercial, industrial or agricultural business is forbidden."

The concept of 'good morals' ('bonos mores') also figures in the Austrian Unfair Competition Act, which in a so-called 'blanket provision' protects good practice in trade and secures the functioning of competition. (14) Of course, what constitutes 'good morals' is a matter for interpretation.

Again, in Switzerland, article 28 of the Swiss Civil Code provides (in translation) as follows:

"1. When anyone is injured in his person by an illegal act, he can apply to the judge for his protection from any person who takes an active part in effecting the injury.

2. Any injury is illegal where it is not justified by the injured person's consent, by a predominantly private or public interest or by the law."

In Italy, article 10 of the Italian Civil Code establishes the general principle that, if an image is displayed or published except where permitted by law, or its display causes prejudice to the dignity and the reputation of the persons concerned, the Italian Courts may issue a cease and desist order and also award damages.

(ii) Some Examples

A good example of how intellectual property rights are protected concerned the case of the German National Team goalkeeper, Oliver Kahn, whose name, likeness and image was used in a computer game without his specific consent. The International Professional Players' Association, Fifpro, had given consent, but this was not sufficient. The Hamburg District Court held that his personality right, which is protected under German law, including articles 1(1) and 2(1) of the German Constitution (Grundgesetz), had been infringed and awarded him damages accordingly. (15) The German Law does not require the claimant to prove a 'common field of activity' or a 'valuable reputation or goodwill in his name, goods, services or mark' as is generally required under the English doctrine of 'Passing Off '.

Again, in France, Eric Cantona, the well-known former professional French footballer, was awarded damages for the unauthorized publication of his name and image in a special edition of the French Magazine 'BUT' entitled 'Special Cantona'. (16) The Court held that Cantona had suffered "moral harm" through the use of his name and image in such circumstances as were comparable to a commercial deal in which the public might believe he had voluntarily taken part, which was not, in fact, the case. Shades of the English case of Tolley v Fry. (17) In that case, Tolley, an amateur golfer, was depicted in an advertisement for Fry's chocolate with a bar of chocolate sticking out of his pocket. This advertisement, the Court held, implied that Tolley had endorsed the product and compromised his amateur sportsman status. (18)

In the Netherlands, the case of Bovenlander en Leomill BV v Denor Sportfashion BV (19) provides an interesting example of unfair competition. The Leomill Company launched a hockey shoe under the name of 'Bovenlander'; the shoe being named after Floris Jan Bovenlander, a very well-known hockey international. Leomill's competitor, Denor, subsequently brought out a new hockey shoe under the trademark, Cruyff Sports, and advertised with the slogan 'Floris Johan Cruyff '. Bovenlander began an action because he took the view that the use of his first name was unlawful and harmful to himself and Leomill, to whom he was under contract. The Court ruled that Bovenlander had not consented to the use of his first name. Nevertheless by using this first name in the advertisements, the impression was wrongly created that Bovenlander had given his cooperation to the product. As this was not, in fact, the case, the Court ruled this to be unlawful and a cease and desist order and damages were awarded.

Conclusions

The English Common Law Doctrine of 'Passing Off ' and the European Continental Civil Law Doctrine of 'Unfair Competition' are similar in concept and nature--not least in the elements of misrepresentation and lack of consent--but different in the practice. The latter being more user friendly than the former.

For some time, IP legal practitioners have had to grapple with the vagaries of the English Common Law Doctrine of 'Passing Off ' with--at times--hit and miss results for their clients. So, it is probably high time that this concept were give a decent burial and replaced with a general statutory right of unfair competition similar to the law and practice in the rest of Europe.

When it comes to protecting the images and privacy of 'celebrities', there is also a need for a statutory right of personality, as well as a right of privacy, which the English Courts have got close to recognizing but have not yet created--that being a matter for Parliament. (20)

Of course, with other legal issues competing for Parliamentary time in the UK, such measures are not likely to be high on the political agenda of the present or any foreseeable future British Government!

(1) See generally on this subject: Blackshaw, Ian S, and Siekmann, Robert C R (Eds), 'Sports Image Rights in Europe' 2005, TMC Asser Press: The Hague, The Netherlands.

(2) See IRC v Muller & Co's Margarine Ltd [1901] AC 217.

(3) Per Buckley, LJ in Bulmer Ltd v Bollinger SA [1978] RPC 79.

(4) See the judgement of Lord Oliver in Reckitt & Coleman Products v Borden Inc [1990] RPC 341, at p. 406.

(5) Per Nourse LJ in the Parma Ham case: [1991] RPC 351, at p. 368.

(6) Parker-Knoll v Knoll International Ltd [1962] RPC 265.

(7) McCullogh v May [1946] 65 RPC 58.

(8) Halliwell & Ors v Pannini & Ors, 6 June, 1997 (unreported).

(9) FA Premier League Ltd & Ors v Panini UK Ltd, Times Law Reports, 17 July, 2003 (Court of Appeal).

(10) Arsenal Football Club plc v Matthew Reed (Case C-206/01) [2003] 3 ALL ER 865.

(11) [2002] 1 WLR 2355.

(12) [1989] 21 IPR 225.

(13) Law 146/1914.

(14) Section 1 of the Austrian UWG (Gesetz gegen den unlauteren Wettbewerb).

(15) Oliver Kahan v EA-Sports, 25 April, 2003.

(16) Judgement of the Court of Nanterre of 6 April, 1994.

(17) [1931] AC 333.

(18) See also the case of an Australian footballer, who was photographed naked in the shower and such photograph was published in the Press without his consent: Ettingshausen v Australian Consolidated Press [1991] 23 NSWLR 443. In that case, the footballer successfully argued that the taking and publication of the photograph in a magazine would lead ordinary members of the public into thinking less of him if they thought that he was the kind of person who do that sort of thing!

(19) Den Bosch District Court, 18 November, 1997, KG 1997, 390.

(20) See Douglas and others v Hello! Ltd, [2001] FSR 732.

by Ian Blackshaw *

* Ian Blackshaw is an international Sports Lawyer and Honorary Fellow of the ASSER International Sports Law Centre, the Hague, The Netherlands.