England and Wales Court of Appeal (Civil Division) Decisions
You are here:
BAILII >>
Databases >>
England and Wales Court of Appeal (Civil Division) Decisions >>
British Telecommunications Plc & Ors v One In A Million Ltd & Ors [1998] EWCA Civ 1272 (23 July 1998)
URL: http://www.bailii.org/ew/cases/EWCA/Civ/1998/1272.html
Cite as:
[1999] WLR 903,
[1999] 1 ETMR 61,
[1997-98] Info TLR 423,
[1998] EWCA Civ 1272,
[2001] EBLR 2,
[1999] FSR 1,
[1998] ITCLR 146,
[1999] ETMR 61,
[1998] Masons CLR 165,
[1998] 4 All ER 476,
[1999] 1 WLR 903
[
New search]
[
Printable RTF version]
[Buy ICLR report:
[1999] 1 WLR 903]
[
Help]
IN
THE SUPREME COURT OF JUDICATURE
CHANI
98/0025/B
IN
THE COURT OF APPEAL (CIVIL DIVISION
) 98/0092-95/B
ON
APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY
DIVISION
(MR
JONATHAN SUMPTION QC
)
Sitting
as a Deputy Judge of the High Court
Thursday
23rd July 1998
B
e f o r e
LORD
JUSTICE STUART-SMITH
LORD
JUSTICE SWINTON THOMAS
LORD
JUSTICE ALDOUS
(1)
BRITISH
TELECOMMUNICATIONS PLC
(2)
VIRGIN
ENTERPRISES LTD
(3)
J
SAINSBURY PLC
(4)
MARKS
& SPENCER PLC
(5)
LADBROKE
GROUP PLC
Respondents
v.
ONE
IN A MILLION LTD AND OTHERS
Appellants
(Handed
down transcript of
Smith
Bernal Reporting Limited, 180 Fleet Street
London
EC4A 2HD Tel: 0171 421 4040
Official
Shorthand Writers to the Court)
MR
ALASTAIR WILSON QC and MR MICHAEL HICKS (instructed by Messrs Finers, London
W1N 6LS) appeared on behalf of the Appellants (Defendants).
MR
GEOFFREY HOBBS QC and MR MALCOLM CHAPPLE (instructed by Messrs Alan Whitfield,
London EC1A 7AJ) appeared on behalf of the BT and Cellnet).
MR
GEOFFREY HOBBS QC and MR JAMES MELLOR (instructed by S.J. Berwin & Co,
London WC1X 8HB) appeared on behalf of Marks & Spencers, Ladbroke and
Sainsbury and (instructed by Messrs Harbottle & Lewis, London W1R 0BE)
appeared on behalf of Virgin.
J
U D G M E N T
(As
approved by the court)
©Crown
Copyright
LORD
JUSTICE ALDOUS: There are before this Court appeals in five actions. Those
actions came before Mr Jonathan Sumption QC sitting as a deputy judge of the
High Court. On 28 November l997 he granted summary judgment under O.l4 as the
defendants had threatened to pass off and infringe the registered trade marks
of the plaintiffs (1998) FSR 265.
In
each case the first defendant was One In A Million Limited, a company owned and
controlled by its two directors, Mr Conway and Mr Nicholson. They are the
second and third defendants. The fourth defendant, Global Media, and fifth
defendant, Junic, are firms through which Mr Conway and Mr Nicholson trade.
Each of the defendants has done acts alleged to infringe the rights of a
plaintiff, but resolution of the issues in this appeal does not depend upon the
identity of any particular defendant. I will refer to them generally as the
appellants except where it is necessary to differentiate between them.
The
appellants are dealers in Internet domain names. They register them and sell
them. They have made a speciality of registering domain names for use on the
Internet comprising well-known names and trade marks without the consent of the
person or company owning the goodwill in the name or trade mark. Examples are
the registration and subsequent offer for sale to Burger King by the second
defendant of the domain name burgerking.co.uk for £25,000 plus VAT and of
bt.org to British Telecommunications for £4,700 plus VAT.
The
plaintiffs Marks & Spencer Plc, J Sainsbury Plc, Virgin Enterprises Ltd,
British Telecommunications Plc, Telecom Securior Cellular Radio Ltd, Ladbrokes
Plc are well-known companies. In the actions brought by them, they allege that
the activities of the appellants amount to passing-off, to infringement of
their well-known registered trade marks, to threats of passing-off and
infringement, and to wrongful acts such as to entitle them to injunctive
relief. Their complaints stem from the registration by One In A Million Ltd of
ladbrokes.com;sainsbury.com; sainsburys.com; j-sainsbury.com;
marksandspencer.com; cellnet.net; bt.org and virgin.org: by Global Media
Communications of marksandspencer.co.uk; britishtelecom.co.uk;
britishtelecom.net; and by Junic of britishtelecom.com.
At
its simplest the Internet is a collection of computers which are connected
through the telephone network to communicate with each other. As explained by
the judge:
"The
Internet is increasingly used by commercial organisations to promote themselves
and their products and in some cases to buy and sell. For these purposes they
need a domain name identifying the computer which they are using. A domain
name comprises groups of alphanumeric characters separated by dots. A first
group commonly comprises the name of the enterprise or a brand name or trading
name associated with it, followed by a "top level" name identifying the nature
and sometimes the location of the organisation. Marks & Spencer, for
example, have a number of domain names, including
marks-and-spencer.co.uk,
marks-and-spencer.com
and
stmichael.com.
The domain name
marks-and-spencer.co.uk,
for example, will enable them to have an e-mail address in the form
johnsmith@marks-and-spencer.co.uk
and a web site address in the form
http:/www.marks-and-spencer.co.uk.
The top level suffix
co.uk
indicates a United Kingdom company. Other top level names bear conventional
meanings as follows:
.com International
commercial organisations
.edu Educational
organisation
.gov Government
organisation
.org Miscellaneous
organisations
There
is an argument, which does not matter, about whether this last designation is
confined to non-profit-making organisations.
There
is no central authority regulating the Internet, which is almost entirely
governed by convention. But registration services in respect of domain names
are provided by a number of organisations. Network Solutions Inc. of Virginia
in the United States is the organisation generally recognised as responsible
for allocating domain names with the top level suffixes "com" and "edu". In
the United Kingdom a company called Nominet UK provides a registration service
in respect of domain names ending with the geographical suffix
uk
preceded by functional suffixes such as
co,
org, gov
or
edu."
Nominet
UK applied to intervene in this appeal. It is a "not-for-profit" limited
company which is registered with the Internet Assigned Numbers Authority. It
operates what is known as the Register Database which contains the domain names
and IP addresses for .co.uk, .net.uk, .ltd.uk and plc.uk and full details of
the registrant of the domain name and its registration agent. It charges a fee
for its service. From time to time (eg every two hours or so) the information
on the data base is extracted to a number of Domain Name Servers. Domain Name
Servers are computers which hold the index of names which map to particular
numbers used in intercomputer transactions. For example, if I wanted to
contact Marks & Spencer Plc, I can use the domain name
marks-and-spencer.co.uk. The Domain Name Server will recognise the domain name
and provide the appropriate sequence of numbers, called the IP address. It is
that address which identifies the computer owned by Marks & Spencer Plc,
thereby enabling my computer to contact that owned by Marks & Spencer Plc.
As
part of its service Nominet offers a "Whois" service to the public. Thus the
public can type in a domain name on Nominet's website and press the appropriate
button to execute the "Whois" search. The answer sets out the recorded
information on the organisation or person who has registered the domain name.
This is useful if, for example, a person wishes to contact the owner of a
domain name.
Members
of the public would not ordinarily have a domain name. They would subscribe to
a Service Provider and have an e-mail address. That enables a subscriber to
send messages to another computer through the Service Provider which forwards
the message when requested to the appropriate computer. The subscriber can
also browse around the world wide web and seek web pages associated with a
particular domain name. Thus if he transmits a domain name to his Service
Provider, it will contact the domain name and the web pages sought and provide
the information obtained.
Web
sites are used for many activities such as advertising, selling, requesting
information, criticism, and the promotion of hobbies.
The
Judgment
The
judge referred to
Singer
Manufacturing Co v Loog
(1880) 18 ChD 395 and
Reddaway
v Banham
(1896) AC 199 as two cases which set out the principles upon which the law of
passing-off depends. He then considered
Direct
Line Group Ltd v Direct Line Estate Agency
(1997) FSR 374 and
Glaxo
Plc v Glaxowellcome
Ltd
(1996) FSR 388. Those were cases where interlocutory relief was granted which
prevented use of company names that had been registered with, it seems, either
an intention of trading upon the plaintiff's reputation or transferring the
name to another who might.
The
judge held at page 271:
"The
mere creation of an "instrument of deception", without either using it for
deception or putting it into the hands of someone else to do so, is not
passing-off. There is no such tort as going equipped for passing-off. It
follows that the mere registration of a deceptive company name or a deceptive
Internet domain name is not passing-off. In both of these cases the court
granted what amounted to a
quia
timet
injunction to restrain a threatened rather than an actual tort. In both cases,
the injunctions were interlocutory rather than final, and the threat is no
doubt easier to establish in that context. But even a final injunction does
not require proof that damage will certainly occur. It is enough that what is
going on is calculated to infringe the plaintiff's rights in future.
In
the case of Marks & Spencer, it is in my judgment beyond dispute that what
is going on is calculated to infringe the plaintiff's rights in future. The
name
marksandspencer
could not have been chosen for any other reason than that it was associated
with the well-known retailing group. There is only one possible reason why
anyone who was not part of the Marks & Spencer Plc group should wish to use
such a domain address, and that is to pass himself off as part of that group or
his products off as theirs. Where the value of a name consists solely in its
resemblance to the name or trade mark of another enterprise, the court will
normally assume that the public is likely to be deceived, for why else would
the defendants choose it? In the present case, the assumption is plainly
justified. As a matter of common sense, these names were registered and are
available for sale for eventual use. Someone seeking or coming upon a website
called
http://marksandspencer.co.uk
would naturally assume that it was that of the plaintiffs."
The
judge considered the main plank of the defence which was that registration of
the particular domain names did not constitute passing-off as the names had not
been used and there was no threat to use them in a manner which would amount to
passing-off. In particular, the domain names could be used in a way that
would not constitute passing-off, for example, retention to block registration
by Marks & Spencer Plc. He rejected those submissions. He said at page 271:
"The
point is that the names are only saleable to Marks & Spencer and blocking
their use by Marks & Spencer is only a useful negotiating tactic on the
footing that they are names which it is dangerous for Marks & Spencer to
allow to remain out of their control. The danger arises from the risk of
deception which their existence necessarily presents. The allegation that this
was the defendants' object in this case is fairly made, supported by
overwhelming evidence, and is left wholly unanswered by the defendants'
affidavits. Any person who deliberately registers a domain name on account of
its similarity to the name, brand name or trade mark of an unconnected
commercial organisation must expect to find himself on the receiving end of an
injunction to restrain the threat of passing-off, and the injunction will be in
terms which will make the name commercially useless to the dealer."
The
judge also held that the causes of action based on trade mark infringement
succeeded. He analysed section 10(3) of the Trade Marks Act l994. He held
that the appellants were dealers in domain names and that the use of a trade
mark in the course of the business of a professional dealer for the purpose of
making domain names more valuable and extracting money from the trade mark
owner amounted to "use in the course of trade". Further, if the subsection
required there to be a likelihood of confusion it was clear that the
respondents had established it.
The
judge concluded that the facts relevant to the other respondents were
substantially the same as that which he had arrived at in the Marks &
Spencer Plc action and decided that there should be the same result. He
concluded at page 273 in this way:
"The
history of the defendants' activities shows a deliberate practice followed over
a substantial period of time of registering domain names which are chosen to
resemble the names and marks of other people and are plainly intended to
deceive. The threat of passing-off and trade mark infringement, and the
likelihood of confusion arising from the infringement of the mark are made out
beyond argument in this case, even in which (sic) it is possible to imagine
other cases in which the issue would be more nicely balanced.The result is that
the plaintiffs in all five actions are entitled to final injunctions "quia
timet"."
Passing-Off
- The Law
It
is important, when considering cases decided before l938, to have in mind that
prior to the Trade Marks Act l938 actions for infringement of unregistered
trade marks and for passing-off were both possible.
Prior
to l875 there was no Trade Marks Act, and there existed two forms of action,
sometimes elided, one for infringement of trade mark and the other for
passing-off. The right to restrain infringement of a trade mark depended, not
upon reputation, but upon use. As stated by Lawrence LJ in the
Bass Nicholson
case (l93l) 48 RPC 227 at page 253:
"The
cases to which I have referred (and there are others to the like effect) show
that it was firmly established at the time when the Act of l875 was passed that
a trader acquired a right of property in a distinctive mark merely by using it
upon or in connection with his goods irrespective of the length of such user
and of the extent of his trade and that such right of property would be
protected by an injunction restraining any other person from using the mark."
The
Act of l875 did not alter the common law rule that a mark did not become a
trade mark until it had been publicly used. It provided for the establishment
of a register of trade marks. In order to persuade proprietors of trade marks
to register them, the Act contained a "carrot" and a "stick". Registration
provided proof of title, and owners of registrable trade marks were prevented
from instituting proceedings for infringement until they were registered.
Section
1 of the 1876 Act (in provisions carried forward by Section 77 of the 1883 Act)
relaxed the prohibition against proceedings for infringement of unregistered
trade marks in relation to trade marks in use before l3 August l876. The
effect of this was described by Lord Blackburn in
Orr
Ewing v Registrar of Trade Marks
(1879)
4 App Cas 479 at 498:
"...
if the proprietor of a trade mark in use before the passing of the principal
Act has been refused registration, he may, notwithstanding such refusal,
institute proceedings either for prevention of or damages for the infringement
of such trade mark ...".
The
Trade Marks Act 1905 for the first time made registration the source of title
to the exclusive right provided by registration as opposed to evidence of a
title acquired under the common law. It also enabled registration of unused
marks. However owners of trade marks in use before l3 August l875 could still
assert the right to sue for "infringement" if registration of their trade marks
had been sought and refused under the 1905 Act (see Section 42). Section 2 of
the l938 Act brought that to an end, but in terms, recognised (as Section 45 of
the 1905 Act had recognised) the continued existence of passing-off. It stated:
"2.
No person shall be entitled to institute any proceedings to prevent, or to
recover damages for, the infringement of an unregistered trade mark, but
nothing in this Act shall be deemed to affect rights of action against any
person for passing-off goods as the goods of another person or the remedies in
respect thereof."
The
action for passing-off is old. Lord Halsbury LC in
Magnolia
Metal Co v Tandem Smelting Syndicate Ltd
(1900) 17 RPC 477 at 484 pointed out:
"My
Lords, that cause of action is, as I have said, a very old and a very familiar
one. 250 years ago, in the case of
Southern
v How
,
reported in
Popham's
Reports at page 144,
Doderidge
J, quoting a case earlier in point of date, namely in the 22nd of Elizabeth,
says,
'An
action upon the case was brought in the Common Pleas by a clothier, that
whereas he had gained great reputation for his making of his cloth, and by
reason whereof he had great utterance to his great benefit and profit, and that
he used to set his mark to the cloth whereby it should be known to be his
cloth, and another clothier perceiving it, used the same mark to his ill-made
cloth on purpose to deceive him, it was resolved that an action did well lie'.
Going
back, therefore, as far as the reign of Elizabeth the form of action which this
Statement of Claim adopts has undoubtedly been a form of action in which if the
right of a man to have the reputation of selling that which is his manufacture
as his manufacture, the right to prevent other people fraudulently stating that
it is their manufacture when it is not - if that right is infringed there is a
remedy. That has, as I have said, ever since the reign of Elizabeth, been
established in our Courts as being a right of action upon which anybody may sue
who has a ground for doing so."
The
principles upon which actions for passing-off were founded at the turn of the
century were identified by Lord Parker in his well-known speech in
A
G Spalding & Bros v A W Gamage Ltd
(1915) 32 RPC 273 at 283:
"This
principle is stated by Lord Justice Turner in
Burgess
v Burgess
(LR 14 CD p. 748) and by Lord Halsbury in
Reddaway
v Banham
(LR (1906) AC at page 204), in the proposition that nobody has any right to
represent his goods as the goods of somebody else. It is also sometimes stated
in the proposition that nobody has the right to pass off his goods as the goods
of somebody else. I prefer the former statement, for whatever doubts may be
suggested in the earlier authorities, it has long been settled that actual
passing-off of a defendant's goods for the plaintiff's need not be proved as a
condition precedent to relief in Equity either by way of an inunction or of an
inquiry as to profits or damages (
Edelsten
v Edelsten
1 De G., J & S 185 and
Iron-Ox
Remedy Company Ld v Co-operative Wholesale Society Ld
24 RPC 425). Nor need the representation be fraudulently made. It is enough
that it has in fact been made, whether fraudulently or otherwise, and that
damages may probably ensue, though the complete innocence of the party making
it may be a reason for limiting the account of profits to the period subsequent
to the date at which he becomes aware of the true facts. The representation is
in fact treated as the invasion of a right giving rise at any rate to nominal
damages, the inquiry being granted at the plaintiff's risk if he might probably
have suffered more than nominal damages."
Lord
Parker also identified the basis of the cause of action and the property right
which was damaged. He said:
"My
Lords, the basis of a passing-off action being a false representation by the
defendant, it must be proved in each case as a fact that the false
representation was made. It may, of course, have been made in express words,
but cases of express misrepresentation of this sort are rare. The more common
case is, where the representation is implied in the use or imitation of a mark,
trade name, or get-up with which the goods of another are associated in the
minds of the public, or of a particular class of the public. In such cases the
point to be decided is whether, having regard to all the circumstances of the
case, the use by the defendant in connection with the goods of the mark, name,
or get-up in question impliedly represents such goods to be the goods of the
plaintiff, or the goods of the plaintiff of a particular class or quality, or,
as it is sometimes put, whether the defendant's use of such mark, name, or
get-up is calculated to deceive. It would, however, be impossible to enumerate
or classify all the possible ways in which a man may make the false
representation relied on.
There
appears to be considerable diversity of opinion as to the nature of the right,
the invasion of which is the subject of what are known as passing-off actions.
The more general opinion appears to be that the right is a right of property.
This view naturally demands an answer to the question - property in what? Some
authorities say property in the mark, name, or get-up improperly used by the
defendant. Others say, property in the business or goodwill likely to be
injured by the misrepresentation. Lord Herschell in
Reddaway
v Banham
(LR (1906) AC 139) expressly dissents from the former view; and if the right
invaded is a right of property at all, there are, I think, strong reasons for
preferring the latter view. In the first place, cases of misrepresentation by
the use of a mark, name, or get-up do not exhaust all possible cases of
misrepresentation. If A says falsely, "These goods I am selling are B's
goods," there is no mark, name or get-up infringed unless it be B's name, and
if he falsely says, "These are B's "goods of a particular quality," where the
goods are in fact B's goods, there is no name that is infringed at all."
Goddard
LJ in
Draper
v Trist
(1939) 56 RPC 429 at 442 explained why an action for passing-off can be
maintained without proof of actual damage. He said:
"
The action is one of that class which is known as an action on the case, akin
to an action of deceit. In an action on the case, the cause of action is the
wrongful act or default of the defendant. The right to bring the action depends
on the happening of damage to the plaintiff. A man, for instance, may be
negligent: and the consequences of his negligence may not cause damage for
twelve months. The cause of action is the breach of duty: the right to bring
the action depends upon the happening of the damage. But this class of case
forms an exception, or an apparent exception, to the ordinary action of deceit;
because, in an ordinary action of deceit, the plaintiff's cause of action is
false representation, but he cannot bring the action until the damage has
accrued to him by reason of that false representation.
But,
in passing-off cases, the true basis of the action is that the passing-off by
the defendant of his goods as the goods of the plaintiff injures the right of
property in the plaintiff, that right of property being his right to the
goodwill of his business. The law assumes, or presumes, that if the goodwill
of a man's business has been interfered with by the passing-off of goods,
damage results therefrom. He need not wait to show that damage has resulted,
he can bring his action as soon as he can prove the passing-off; because it is
one of the class of cases in which the law presumes that the Plaintiff has
suffered damage."
Lord
Diplock in
Warnink
v Townend
(1980) RPC 31 at 93 identified, from the cases decided before l980, five
characteristics which had to be present. He said:
"My
Lords,
Spalding
v Gamage
and the later cases make it possible to identify five characteristics which
must be present in order to create a valid cause of action for passing off: (1)
a misrepresentation (2) made by a trader in the course of trade (3) to
prospective customers of his or ultimate consumers of goods or services
supplied by him, (4) which is calculated to injure the business or goodwill of
another trader (in the sense that this is a reasonably foreseeable consequence)
and (5) which causes actual damage to a business or goodwill of the trader by
whom the action is brought or (in a
quia
timet
action) will probably do so."
The
cause of action called passing-off is of ancient origin. It has developed over
time. As Lord Diplock pointed out in the
Warnink
case, Parliament has over the years progressively intervened in the interests
of consumers and traders so as to impose standards of conduct and to ensure
commercial honesty. It is therefore not surprising that the courts have
recognised that the common law, in that particular field, should proceed upon a
parallel course rather than a diverging one. Lord Diplock explained how the
cause of action had moved from the classical form over the years. His five
characteristics were those he identified in 1980 from previously decided cases,
but I do not believe that he was thereby confining for ever the cause of action
to every detail of such characteristics, as to do so would prevent the common
law evolving to meet changes in methods of trade and communication as it had in
the past.
It
was not suggested by the respondents that relief was appropriate on the basis
that the appellants' actions rendered them joint tortfeasors with others who
would or had passed off. However it was the respondents' case that there was
passing-off or at least a threat to pass-off. Further, despite the conclusion
of the judge that the creation of an instrument of deception was not actionable
without a threat to actually cause deception, the respondents submitted that
the law enables a plaintiff to prevent another trader equipping himself or
others with a name, the use of which would be likely to give rise to a false
representation that such trader is the plaintiff or is associated or connected
with him. In short, the court will not stand by and allow, what can be
graphically called, an "instrument of fraud" to remain in the hands of a
trader, if it is likely the name could result in passing-off.
Mr
Hobbs QC, who appeared for all the respondents, submitted that the principles
upon which a court acted to prevent creation and use of instruments of fraud
were long established in cases going back over a hundred years. He submitted
that the basis of the jurisdiction was "knowing assistance" of passing-off and
sought to draw an analogy with the law of constructive trusts as explained in
Royal
Brunei Airlines v Tan
(1995) 2 AC 378. For myself I believe that to seek to draw that analogy could
mislead. However he is right that for many years the courts have granted
injunctions to prevent the creation and disposal of instruments of fraud.
Recourse to those cases is necessary to ascertain why and in what circumstances
an injunction should be granted, bearing in mind that prior to l938 there were
two causes of action, one for infringement of trade mark and one for
passing-off. Both actions were used to protect property; the former being to
protect property represented by the right to the mark and the latter to prevent
damage to goodwill associated with the name or mark.
Mr
Wilson QC, who appeared for the appellants, accepted that where a name was
inherently deceptive, in the sense that use by a trader was bound to cause
passing-off unless special remedial measures were taken, injunctive relief was
appropriate despite the fact that the name had not actually been used to
pass-off. Such a name was a true instrument of fraud and injunctive relief was
appropriate to prevent threatened use and dissemination. But if the name could
be used for a legitimate purpose, it was not a vehicle of fraud and injunctive
relief would not be granted unless it was established that the defendant either
threatened to pass-off or was, with another, part of a common design to
pass-off. He submitted that the jurisdiction depended upon the plaintiff
establishing that the name was of such a character that the trader would be a
joint tortfeasor when carrying out the threatened use or that the trader would
be identified as the person who had performed the passing-off.
The
difference between the parties' submissions can be illustrated by assuming the
appellants registered the name "virgin.co.uk". Their case was that such a
registration was not an instrument of fraud, restrainable at the suit of Virgin
Enterprises Ltd, as the name was not inherently deceptive in that there are
other companies, having no connection with Virgin Enterprises Ltd, which might
use the name Virgin. They submitted that injunctive relief would not be
appropriate, even if it was their intention to sell the registration to another
company which would, to their knowledge, pass-off, as that would not make them
joint tortfeasors: mere assistance not being sufficient (see
Credit
Lyonnais Bank Nederland NV v Export Credit Guarantee Department
(1998) 1 LlR 19) and they would not be identified as the party who did the
passing-off.
The
respondents' case was that "virgin.co.uk" as a business name was distinctive of
themselves and therefore use by another would be deceptive. It followed that
registration of the name provided the registrant with an instrument of fraud
and injunctive relief was appropriate to require the name to be relinquished
and to prevent use or sale. Even if that was not established, such injunctive
relief was appropriate as the name was registered with a view to fraudulent use
and was of a nature which lent itself to the fraud.
Against
that background I turn to the cases to which we were referred, some of them
being cases where the defendant had produced goods which would or could be used
by another to pass-off and others where the defendant had equipped himself with
means of identification similar to that of the plaintiff.
Guinness
v Ullmer
(1847) l0 LT (OS) 127 was a case concerning labels similar to those used by the
plaintiffs that had been printed by a Mr Taylor from blocks manufactured by the
defendants. An injunction was granted preventing the defendants producing or
selling blocks or plates adapted to print labels similar to those of the
plaintiff. The report of the judgment is short and it seems likely that the
action was for infringement of trade mark. If so it is of little assistance to
the issues in this case as the production of the printing blocks would have
been an infringement.
Trade
mark infringement and passing-off was alleged in
Farina
v Silverlock
(1855) 1 K & J 509. At page 5l5 Sir William Page Wood VC explained the law
on trade marks and passing-off. He went on to point out that the defendants,
when they sold the offending Eau de Cologne labels, had made it clear to the
purchasing retailers that they were produced by them and not by the plaintiff.
Thus no misrepresentation was made to the retailers; they were not deceived.
However an injunction was granted against the defendants. The Vice-Chancellor
said:
"But
if it be stated that the Defendant is manufacturing that which is known to be
the trade mark which the Plaintiff alone has the right to use, and the use of
which on the goods of a third party would be a fraud upon the Plaintiff; and
that the Defendant is selling such labels to anyone who asks for them, and is
thus scattering over the world the means of enabling parties to commit frauds
upon the Plaintiff, and that such frauds have been committed; that is, I think,
a sufficient averment to entitle the Plaintiff to an injunction. The ground of
the jurisdiction being fraud, if the Defendant be committing fraud, either by
selling goods under the Plaintiff's trade mark, or enabling others to do so by
distributing the means of doing so, it cannot be said that this Court has no
power to interfere by injunction to arrest the evil at its source, without
compelling the Plaintiff to wait until the whole fraud is brought to a
completion by the sale of the goods."
The
defendant might have been a joint tortfeasor with the retailers, but the
Vice-Chancellor indicated that an injunction was appropriate even where the
fraud was to be committed by another person. He said the jurisdiction was
based on fraud and an injunction would be granted to
inter
alia
prevent the defendant from enabling passing-off.
The
injunction in
Farina
was dissolved on appeal, but was followed by a trial at which the jury found
for the plaintiff. The plaintiff renewed his application for an injunction
before the Vice-Chancellor and the injunction was granted in its original form.
In
Singer
v Loog
(1882) 8 App Cas l5, the plaintiffs established that the name
Singer
denoted their machines. The defendants, wholesalers, imported from Germany
sewing machines which they sold using documents which referred to the machines
as using the Singer system. All the retailers who purchased the machines from
the defendants knew that they were not made by the plaintiffs. The main issue
in the House of Lords was whether an injunction should be granted. Lord
Selborne LC said at page 21:
"It
was contended, that the acts of the defendant enabled his wholesale customers
to shew these documents to their own retail customers, for the purpose of
passing off the goods bought from the defendant as the plaintiffs' manufacture.
The answer is, that, unless the documents were fabricated with a view to such a
fraudulent use of them, or unless they were in themselves of such a nature as
to suggest, or readily and easily lend themselves to, such a fraud, (which in
my opinion they were not), the supposed consequence is too remote, speculative,
and improbable to be imputed to the defendant, or to be a ground for the
interference of a court of justice with the course of the defendant's business.
There is no evidence that, in point of fact, any such use was ever made of
them. The "directions for use" spoke unmistakably of "Frister and Rossmann's
shuttle sewing machine;" and no one, however careless, could read, in that
document, the words "on Singer's improved system" without seeing and
understanding their context."
The
Lord Chancellor contemplated that even when a party is not himself passing-off
an injunction would be granted in two circumstances; first, when fraudulent use
was intended; second, when the name was inherently deceptive, and the name
readily and easily lent itself to such a fraud.
John
Jamieson & Son Ltd v R S Johnston & Co Ltd
(1901) l8 RPC 259 and
John
De Kuyper & Son v W & G Baird Ltd
(1903) 20 RPC 581 were cases where printers of labels were restrained. Those
cases throw no light on the issues as the plaintiffs were proprietors of
registered trade marks and the printing was an infringement.
Chitty
J in
Lever
v Goodwin
(1887) 4 RPC 492 at 498 referred to two classes of cases when relief was
appropriate for passing-off. The second class he referred to in this way:
"In
the second class of cases which I am considering, the trade is not deceived. I
am speaking from my large experience in these matters. The retail buyers know
from whom they are buying, and, if there is anything like a fraudulent device,
such as I am referring to, they are not taken in, they are not deceived. But
what is done by the manufacturer is this - he puts an instrument of fraud into
their hands. It has been said more than once in this case, in substance, that
the manufacturer ought not to be held liable for the fraud of the ultimate
seller, that is, the shop-keeper, or the shop-keeper's assistant. But that is
not the right view of the case. Have the Defendants in this case, or not,
knowingly put into the hands of the shopman, who is more or less scrupulous or
unscrupulous, the means of deceiving the ultimate purchaser? That is the
question which I have to try, and that is a question of fact, and nothing
else."
I
believe, when Chitty J referred to the "means of deceiving the ultimate
purchaser", he had in mind a name or a get-up which made a false
representation. That was the instrument of fraud. He could not have
contemplated that a manufacturer of goods which did not themselves make a false
representation was liable for the fraud of a retailer. For example a wine
producer cannot be liable for passing-off if a waiter covers a bottle with a
cloth and serves it as champagne when it is not. In any case, the suggestion
that a manufacturer of goods, which did not by their get-up make a false
representation, would be liable for the passing-off was rejected in
Payton
& Co Limited v Snelling, Lampard & Co Ltd
[(901) AC 308 and in subsequent cases.
In
more recent times the courts have prevented traders from equipping others with
instruments of fraud. Foster J in
John
Walker & Sons Ltd v Henry Ost & Co Ltd
(1970) RPC 489 granted an injunction against suppliers of bottles and labels
used for the purpose of passing-off in Ecuador. Foster J cited these passages
from
Singer
v Loog
in the Court of Appeal:
"I
have often endeavoured to express what I am going to express now (and probably
I have said it in the same words, because it is very difficult to find other
words in which to express it); that is, that no man is entitled to represent
his goods as being the goods of another man; and no man is permitted to use any
mark, sign or symbol, device or other means, whereby, without making a direct
false representation himself to a purchaser who purchases from him, he enables
such a person to tell a lie or to make a false representation to somebody else
who is the ultimate customer." (per James LJ at page 412.)
But
it was urged ... that it might be used as an instrument of deception by the
purchasers from the defendant when they were selling again. In my opinion, if
a man does that, the natural consequence of which (although it does not deceive
the person with whom he deals, and is therefore no misrepresentation to him) is
to enable that other person to deceive and pass off his goods as somebody
else's, for that he is answerable. But this is confined to those things which
in their necessary or natural uses accompany the things sold. For instance,
the corks of champagne bottles marked 'Moet and Chandon' must be in the bottles
sold and must accompany the bottles. They must necessarily accompany the thing
to the retail buyer, and so must labels to be put on the bottles. The very
reason for their existence is that they must be put on the bottles and if they
are deceptive and fraudulent, then the person who prepares them is answerable
for it. Such things must not be used if their natural and legitimate
consequence is, not to deceive the person to whom they are sold, but to enable
the seller to pass off the goods as being the goods of other persons." (per
Cotton LJ at page 422)
Foster
J then said:
"I
would be slow to decide that if a trader in England sells goods and labels
which are true and has no knowledge of any improper use of those goods in a
foreign country, such trader has committed a tort in England. But when I have
already held as a fact that Mr Jindrich Ost, the proprietor of the first
defendant, not only knew that the second defendant was going to add cane spirit
and sell it as Scotch Whisky but intended that the whisky which was supplied
should be admixed, bottled and have the labels put on the bottle describing it
as Scotch Whisky, then in my judgment the first defendant's acts in selling
those instruments amount to tortious acts done in England."
Nourse
J in
White
Horse Distillers Ltd v Gregson Associates Ltd
(1984) RPC 6l, having referred to the judgment of Foster J in the
John
Walker
case (supra) came to the submission made by Counsel for the defendants at page
75:
"He
submitted that there can never be a tort where the English exporter exports
nothing but the malt whisky, that being something which is susceptible of being
used innocently in the foreign country. It seems to me that Mr Cochrane's
submission cannot be correct. Suppose, for example, a case where the English
exporter has told the foreign importer exactly how to set up deceptive sales of
the admixture. It cannot be the law that the English exporter will escape
liability simply because he does nothing except export the Scotch Whisky. If
he exports it with the intention that the admixture shall be sold in a
deceptive manner, it is immaterial that he has been responsible neither for the
printing and production of the deceptive labels and cartons, nor for their
actual implication in the sale of the liquor in the foreign country. In that
state of affairs the whisky, being intended to facilitate the deceptive sales,
is itself, if you like, an inchoate instrument of deception."
The
conclusion reached by Nourse J in the
White
Horse Distillers
case was probably based upon his view that the defendants were part of a common
design to pass-off and therefore were joint tortfeasors. It would be wrong to
hold that the whisky as such was an instrument of fraud and therefore its sale
to Ecuador could be restrained.
The
cases where trading names have been registered which encroach upon the goodwill
of a plaintiff are in my view particularly pertinent to the issues in this
case. In
Panhard
et Levassor v Panhard Levassor Motor Company Ltd
(1901) 2 Ch 513, the plaintiffs were French motor manufacturers who had a
reputation in this country. The defendants were formed by an English company.
They said that their object was not to annex the plaintiffs' goodwill, but to
block the plaintiffs from entering this country. Farwell J granted injunctions
preventing the defendants from trading and requiring the company's name to be
changed. As to the first injunction, the judge said:
"The
question of the plaintiffs' right to an injunction is covered by
Collins
Co v Brown
;
but, apart from that authority, I should have thought it was plain that in a
case such as I have stated this court would certainly interfere to protect a
foreign trader who has a market in England, in the way I have specified, from
having the benefit of his name annexed by a trader in England who assumes that
name without any sort of justification."
The
second injunction was granted because the persons who formed the company had
fraudulently and wrongfully conspired together to form the company.
Farwell
J did not in his judgment explicitly state that the jurisdiction being
exercised was based upon fraud, but that appears clear from what he said during
argument. He concluded that the defendants had, by taking the plaintiffs'
name, dishonestly appropriated the goodwill of the plaintiffs. The name in
anybody's hands other than those of the plaintiffs was an instrument of fraud.
Similar
relief was granted by Plowman J upon motion for interlocutory relief in
Suhner
& Co AG v
Suhner
Ltd
(1967) RPC 336. In that case the defendants did not suggest that they had any
justification for using the word "Suhner" as part of their name. The formation
of the company was a manoeuvre to try to stop the plaintiffs trading in this
country under their own name. That they claimed they were entitled to do. The
judge held that they were not, and following
Panhard
et Levassor
granted an injunction requiring the name to be changed.
Fletcher
Challenge Ltd v Fletcher Challenge Pty Ltd
(1982) FSR 1 was decided by Powell J in the Supreme Court of New South Wales.
The plaintiffs were a company formed as a result of an amalgamation of three
well-known New Zealand companies. The defendants were formed in anticipation
that they could be sold to the plaintiffs at a substantial profit. At the
hearing, Counsel for the defendants told the judge that the defendants had not
traded and offered undertakings that they would not trade without making it
clear that they were not associated with the plaintiffs. It followed that the
defendants would not make a misrepresentation which was the basis of a
passing-off action.
The
judge considered each of the characteristics of passing-off set out in the
Warnink
case. He went on to hold that, if the defendants started trading, they would
be associated with or treated as part of the plaintiffs and that could affect
the plaintiffs' reputation. He granted injunctions preventing passing-off and
requiring the name to be changed. In so doing he must have concluded that the
name of the company was an instrument of fraud as its use would mean that
passing-off would result.
Glaxo
Plc v Glaxowellcome Ltd
(1996) FSR 388 was a similar case. The second and third defendants formed the
first defendant in anticipation of the merger of Glaxo and Wellcome. The idea
was to require the plaintiffs to pay £100,000 for the name. Lightman J
held that the defendants had acted dishonestly. It was, in his view, a
dishonest scheme to appropriate the goodwill of the plaintiff and to extort a
substantial sum as the price for not damaging the plaintiffs' goodwill. He
said at page 391:
"The
court will not countenance any such pre-emptive strike of registering companies
with names where others have the goodwill in those names and the registering
party then demanding a price for changing the names. It is an abuse of the
system of registration of company names. The right to choose the name with
which a company is registered is not given for that purpose."
Direct
Line Group Limited v Direct Line Estate Agency Ltd
(1997) FSR 374 was another case where a company was formed with a view to
either selling the company to the plaintiffs or to a third party. Laddie J
made it clear that the courts would not permit such a course of conduct and
granted injunctive relief pending trial despite the fact that it seemed that
the defendants had not traded.
The
ability to restrain dissemination of an instrument of fraud was recognised by
the Court of Appeal in
Norwich
Pharmacal Co v Customs and Excise Commissioners
(1974) AC 133. That was an action in which the plaintiffs sought discovery of
the names of patent infringers. The plaintiffs submitted, by analogy to trade
mark and passing-off cases, that the Customs could be ordered to give discovery
of the names. The most pertinent passage to the issue in this case is in the
judgment of Buckley LJ at page 145:
"If
a man has in his possession or control goods the dissemination of which,
whether in the way of trade or, possibly, merely by way of gifts (see
Upmann
v Forester
(1883) 24 ChD 231) will infringe another's patent or trade mark, he becomes, as
soon as he is aware of this fact, subject to a duty, an equitable duty, not to
allow those goods to pass out of his possession or control at any rate in
circumstances in which the proprietor of the patent or mark might be injured by
infringement ensuing. The man having the goods in his possession or control
must not aid the infringement by letting the goods get into the hands of those
who may use them or deal with them in a way which will invade the proprietor's
rights. Even though by doing so he might not himself infringe the patent or
trade mark, he would be in dereliction of his duty to the proprietor. This
duty is one which will, if necessary, be enforced in equity by way of
injunction: see
Upmann
v Elkan
(1871) LR 12 Eq 140 (1871) 7 Ch App 130. The man having possession or control
may also be under a duty to give information in relation to the goods to the
proprietor of the patent or mark:
Upmann
v Elkan
."
In
my view there can be discerned from the cases a jurisdiction to grant
injunctive relief where a defendant is equipped with or is intending to equip
another with an instrument of fraud. Whether any name is an instrument of
fraud will depend upon all the circumstances. A name which will, by reason of
its similarity to the name of another, inherently lead to passing-off is such
an instrument. If it would not inherently lead to passing-off, it does not
follow that it is not an instrument of fraud. The court should consider the
similarity of the names, the intention of the defendant, the type of trade and
all the surrounding circumstances. If it be the intention of the defendant to
appropriate the goodwill of another or enable others to do so, I can see no
reason why the court should not infer that it will happen, even if there is a
possibility that such an appropriation would not take place. If, taking all
the circumstances into account the court should conclude that the name was
produced to enable passing-off, is adapted to be used for passing-off and, if
used, is likely to be fraudulently used, an injunction will be appropriate.
It
follows that a court will intervene by way of injunction in passing-off cases
in three types of case. First, where there is passing-off established or it is
threatened. Second, where the defendant is a joint tortfeasor with another in
passing-off either actual or threatened. Third, where the defendant has
equipped himself with or intends to equip another with an instrument of fraud.
This third type is probably mere
quia
timet
action.
The
Facts
The
basic facts are not in dispute. The appellants accept that the trade names
Marks & Spencer, Ladbroke, Sainsbury, Virgin, BT and Cellnet are well-known
brand names used by the respective respondents in the course of their
businesses. Their use in this country is such that the respondents have built
up and own a substantial goodwill attaching to them. The appellants also
accept that the respondents are the registered proprietors of the pleaded trade
marks which embody the trade names and that such trade marks are valid and
subsisting. The dispute concerns the liability of the appellants for what they
have done and whether they have threatened to do anything which is unlawful.
The
appellants are dealers in internet domain names and as part of their business,
they secure registrations of prestigious names as domain names without the
consent of the enterprise owning the goodwill in those names. Their case is
that they register the domain names with a view to making a profit either by
selling them to the owners of the goodwill, using the blocking effect of the
registration to obtain a reasonable price, or, in some cases, selling them to
collectors or to other persons who could have a legitimate reason for using
them. That, they submitted, could not amount to passing-off or a threat to
pass-off or render them liable as joint tortfeasors or as being persons
equipped with or who are likely to equip others with instruments of fraud.
The
true attitude of the appellants can be seen from what they have said and done
in the past. In l996, British Telecommunications Plc became aware of the
activities of Mr Conway who had registered domain names which included the
word, britishtelecom. They wrote threatening proceedings. The dispute between
them and Mr Conway was settled upon Mr Conway giving written undertakings in a
document dated 3 November l996. The first two undertakings were in this form:
"1.
To immediately cease all use of the domain names britishtelecom.co.uk and
britishtelecom.net and forthwith to take all necessary steps to have the
registrations of these domain names transferred to the ownership and control of
BT by the relevant registration authority in each case.
2.
Not at any time in the future to register on the internet any domain name or
to host or operate on the internet any site using a domain name containing the
words "British Telecom" or the letters "BT" (where the use of the letters might
reasonably be taken to refer to BT) or any name containing any confusingly
similar variation of those words, whether or not in conjunction with any other
letters, numbers or symbols."
Pursuant
to the first undertaking Mr Conway cancelled the domain names and they were
transferred by re-registration at the cost of British Telecommunications Plc.
Despite
Mr Conway's capitulation and the provision of undertakings at the end of l996,
the domain name britishtelecom.com was registered by Junic, the firm name used
by Mr Nicholson on 20 March l997. On l6 May l997 BT wrote to Mr Nicholson
complaining about the registration. That did not end the matter. One In A
Million Ltd, the company owned and controlled by Mr Nicholson and Mr Conway
registered bt.org on 28 May l997. BT complained about this in their letter of
12 August l997. The reply dated l8 August l997 accepted that the domain name
had been registered by One In A Million. It stated:
"The
domain name bt.org was registered on behalf of a client of One In A Million
Limited, who requires the domain for his personal use, with his initials being
BT.
....
As
a computer and telecommunications consultant and journalist myself, I am fully
aware that British Telecommunications Plc have a habit of suddenly requiring
domain names that are already registered to third parties. This is despite the
fact that British Telecommunications Plc has had ample opportunity to register
such domain names previously had they required use of them.
Should
you take up your threats of legal action then this will be most welcome as it
will make the situation substantially more appealing to the media.
Additionally,
if the sale to my client of the bt.org domain is hindered in any way due to any
actions you may have taken, or will take in the future, then we shall
immediately be taking all necessary and appropriate action against British
Telecommunications Plc for the resulting loss of business."
The
threat to involve the media was typical of the tactics used by the appellants.
The
reference to the name being registered on behalf of a client of One In A
Million Ltd may be a reference to a private investigator hired by British
Telecommunications Plc who posed as an interested purchaser and was offered the
domain name.
On
l9 September l997 British Telecommunications Plc wrote again to One In A
Million Ltd stating that unless they were given appropriate undertakings by 25
September l997 they intended to take legal proceedings. In the reply dated 25
September l997, One In A Million offered to sell the domain name for the sum of
£4,700 plus VAT together with the domain name cellnet.net for $100.
In
September l997, British Telecommunications Plc downloaded the information on
Global Media's web site. They found that Global Media were advertising that
they had "Prestigious Domain Names In-Stock" thereby offering this for sale to
anybody interested. Such names included "virgin.org". A page on the site
stated:
"Your
company name, its identity and the way in which it presents itself to the
outside world is very important. Many companies have not taken the prospect of
the Internet seriously and have failed to recognise the need to register,
protect and maintain their unique name and corporate identity.
Don't
join the list of the many companies that have been too late to act. Talk to
Global Media, and we'll help you to register and protect your company name
(domain name), its brand names and other corporate entities in not just one
way, but in every way possible, and both in the UK and internationally.
Our
clients include many blue-chip companies including British Telecommunications
Plc for whom we registered the domain names britishtelecom.co.uk and
britishtelecom.net, and News International Plc for whom we registered the
domain names thetimes.co.uk and sundaytimes.co.uk."
Mr
Wilson submitted that the statement that British Telecommunications Plc was a
client of Global Media was correct. He relied upon the transfer by deletion
and re-registration that was carried out pursuant to the undertakings given on
3 November l996. In my view Mr Wilson's submission is totally unacceptable.
To refer to British Telecommunications Plc as a client of any of the defendants
was misleading and Mr Conway must have realised that it misrepresented the
relationship between Global Media and British Telecommunications Plc.
Another
example of the activities of the appellants is the registration of
burgerking.co.uk and the letter written in September l996 by Mr Conway to
Burger King:
"Further
to our telephone conversation earlier this evening, I confirm that I own the
domain name burgerking.co.uk.
I
would be willing to sell the domain name for the sum of £25,000 plus VAT.
In
answer to your question regarding as to what we would do with the domain name
should you decide not to purchase it -the domain name would be available for
sale to any other interested party.
..."
Here
the threat to sell a name which was inherently deceptive to a person not
connected or associated with the goodwill attaching to the name was made
explicitly.
Global
Communications also registered tandy.co.uk and in a letter dated l7 September
l996 to Intertan UK Limited stated:
"Further
to our telephone conversation on Friday, l3 September l996, I confirm that I
have the domain name tandy.co.uk available for sale or hire. Additionally, I
have also the other following domain names that may interest you:
intertan.co.uk
tandy.net
intertan.net
tandyuk.com
intertanuk.com
As
discussed, I would like these domain names to go to Tandy, as we have a mutual
business relationship in the past.
I
would be willing to offer you all six domain names for the sum of £15,000
plus VAT. This is a small one-off price to pay for a unique corporate identity
on a medium that is the fastest growing information service in the world, the
Internet.
...."
Again,
the letter contained, this time by implication, a threat to sell to another
person.
J
Sainsbury Plc also complained to One in a Million Ltd about registration of
domain names using the mark Sainsbury. The reply dated 26 September l997
accepted that the registrations had been completed and made it quite clear that
they would not be relinquished.
It
said:
"We
are not trading under the name Sainsbury nor do we intend to trade under the
name Sainsbury. We have merely purchased the Internet domain names
j-sainsbury.com, sainsbury.com and sainsburys.com as part of our personal
collection."
In
my view there was clear evidence of systematic registration by the appellants
of well-known trade names as blocking registrations and a threat to sell them
to others. No doubt the primary purpose of registration was to block
registration by the owner of the goodwill. There was, according to Mr Wilson
nothing unlawful in doing that. The truth is different. The registration only
blocks registration of the identical domain name and therefore does not act as
a block to registration of a domain name that can be used by the owner of the
goodwill in the name. The purpose of the so-called blocking registration was
to extract money from the owners of the goodwill in the name chosen. Its
ability to do so was in the main dependent upon the threat, expressed or
implied, that the appellants would exploit the goodwill by either trading under
the name or equipping another with the name so he could do so.
The
judge rightly analysed the position in his judgment. He said:
"For
a dealer in Internet domain names there are in principle only four uses to
which the names can be put. The first and most obvious is that it may be sold
to the enterprise whose name or trade mark has been used, which may be prepared
to pay a high price to avoid the inconvenience of there being a domain name
comprising its own name or trade mark which is not under its control.
Secondly, it may be sold to a third party unconnected with the name, so that he
may try to sell it to the company whose name is being used, or else use it for
purposes of deception. Thirdly, it may be sold to someone with a distinct
interest of his own in the name, for example a solicitor by the name of John
Sainsbury or the Government of the British Virgin Islands, with a view to its
use by him. Fourthly, it may be retained by the dealer unused and unsold, in
which case it serves only to block the use of that name as a registered domain
name by others, including those whose name or trade mark it comprises."
In
my view there was evidence that the appellants registered the domain names in
issue in this case with all those forms of use in mind.
Conclusion
- Passing-Off
The
judge considered first the action brought by Marks & Spencer Plc and then
went on to deal with the other actions. I will adopt the same approach as the
Marks & Spencer case raises slightly different issues to those raised in
the other cases.
It
is accepted that the name Marks & Spencer denotes Marks & Spencer Plc
and nobody else. Thus anybody seeing or hearing the name realises that what is
being referred to is the business of Marks & Spencer Plc. It follows that
registration by the appellants of a domain name including the name Marks &
Spencer makes a false representation that they are associated or connected with
Marks & Spencer Plc. This can be demonstrated by considering the reaction
of a person who taps into his computer the domain name marksandspencer.co.uk
and presses a button to execute a “whois” search. He will be told
that the registrant is One In A Million Limited. A substantial number of
persons will conclude that One In A Million Limited must be connected or
associated with Marks & Spencer Plc. That amounts to a false
representation which constitutes passing-off.
Mr
Wilson submitted that mere registration did not amount to passing-off.
Further, Marks & Spencer Plc had not established any damage or likelihood
of damage. I cannot accept those submissions. The placing on a register of a
distinctive name such as marksandspencer makes a representation to persons who
consult the register that the registrant is connected or associated with the
name registered and thus the owner of the goodwill in the name. Such persons
would not know of One In A Million Limited and would believe that they were
connected or associated with the owner of the goodwill in the domain name they
had registered. Further, registration of the domain name including the words
Marks & Spencer is an erosion of the exclusive goodwill in the name which
damages or is likely to damage Marks & Spencer Plc.
Mr
Wilson also submitted that it was not right to conclude that there was any
threat by the appellants to use or dispose of any domain name including the
words Marks & Spencer. He submitted that the appellants, Mr Conway and Mr
Nicholson, were two rather silly young men who hoped to make money from the
likes of the respondents by selling domain names to them for as much as they
could get. They may be silly, but their letters and activities make it clear
that they intended to do more than just retain the names. Their purpose was to
threaten use and disposal sometimes explicitly and on other occasions
implicitly. The judge was right to grant
quia
timet
relief to prevent the threat becoming reality.
I
also believe that domain names comprising the name Marks & Spencer are
instruments of fraud. Any realistic use of them as domain names would result
in passing-off and there was ample evidence to justify the injunctive relief
granted by the judge to prevent them being used for a fraudulent purpose and to
prevent them being transferred to others.
The
other cases are slightly different. Mr Wilson pointed to the fact that there
are people called Sainsbury and Ladbroke and companies, other than Virgin
Enterprises Ltd, who have as part of their name the word Virgin and also people
or firms whose initials would be BT. He went on to submit that it followed
that the domain names which the appellants had registered were not inherently
deceptive. They were not instruments of fraud. Further there had been no
passing-off and none was threatened and a transfer to a third party would not
result in the appellants becoming joint tortfeasors in any passing-off carried
out by the person to whom the registrations were transferred. Thus, he
submitted, there was no foundation for the injunctive relief in the actions
brought by four of the respondents.
I
believe that, for the same reasons I have expressed in relation to the Marks
& Spencer Plc action, passing-off and threatened passing-off has been
demonstrated. The judge was right to conclude (page 273):
"The
history of the defendants' activities shows a deliberate practice followed over
a substantial period of time of registering domain names which are chosen to
resemble the names and marks of other people and are plainly intended to
deceive. The threat of passing-off and trade mark infringement, and the
likelihood of confusion arising from the infringement of the mark are made out
beyond argument in this case, even if it is possible to imagine other cases in
which the issue would be more nicely balanced."
I
also believe that the names registered by the appellants were instruments of
fraud and that injunctive relief was appropriate upon this basis as well. The
trade names were well-known "household names" denoting in ordinary usage the
respective respondent. The appellants registered them without any
distinguishing word because of the goodwill attaching to those names. It was
the value of that goodwill, not the fact that they could perhaps be used in
some way by a third party without deception, which caused them to register the
names. The motive of the appellants was to use that goodwill and threaten to
sell it to another who might use it for passing-off to obtain money from the
respondents. The value of the names lay in the threat that they would be used
in a fraudulent way. The registrations were made with the purpose of
appropriating the respondents' property, their goodwill, and with an intention
of threatening dishonest use by them or another. The registrations were
instruments of fraud and injunctive relief was appropriate just as much as it
was in those cases where persons registered company names for a similar purpose.
Trade
Mark Infringement
British
Telecommunications Plc did not press their claim that the appellants had
infringed their trade marks by carrying out acts falling within Section 10(1)
of the Trade marks Act l994. The case of the respondents was that the acts of
the appellants were threats of acts falling within Section 10(3) of the l994
Act and therefore injunctive relief was appropriate.
Section
1 of the l994 Act defines a trade mark as
"any
sign capable of being represented graphically which is capable of
distinguishing goods or services of one undertaking from those of other
undertakings."
Section
9(1) states:
"(1)
the proprietor of a registered trade mark has
exclusive
rights in the trade mark which are infringed by use of the trade mark in the
United Kingdom without his consent.
The
acts amounting to infringement, if done without the consent of the proprietor,
are specified in section 10."
Section
10(3) is in these terms:
"(3)
A person infringes a registered trade mark if he uses, in the course of trade
a sign which -
(a)
is identical with or similar to the trade mark, and
(b)
is used in relation to goods or services which are not similar to those for
which the trade mark is registered,
where
the trade mark has a reputation in the United Kingdom and the use of the sign,
being without due cause, takes unfair advantage of, or is detrimental to, the
distinctive character or the repute of the trade mark."
Mr
Wilson submitted that to infringe there had to be use of the trade mark as a
trade mark and that the use had to be a trade mark use in relation to goods or
services, in the sense that it had to denote origin. He also submitted that
the use had to be confusing use.
I
am not satisfied that Section 10(3) does require the use to be trade mark use
nor that it must be confusing use, but I am prepared to assume that it does.
Upon that basis I am of the view that threats to infringe have been
established. The appellants seek to sell the domain names which are
confusingly similar to registered trade marks. The domain names indicate
origin. That is the purpose for which they were registered. Further they will
be used in relation to the services provided by the registrant who trades in
domain names.
Mr
Wilson also submitted that it had not been established that the contemplated
use would take unfair advantage of, or was detrimental to the distinctive
character or reputation of the respondents' trade marks. He is wrong. The
domain names were registered to take advantage of the distinctive character and
reputation of the marks. That is unfair and detrimental.
I
conclude that the judge came to the right conclusion on this part of the case
for the right reasons.
I
have had in mind that this was an appeal against an order giving summary
judgment and that such judgment should only be given in plain cases. This is
such a case. Such issues of fact as there are can be resolved from the
documents emanating from the appellants.
For
the reasons given I would dismiss this appeal.
LORD
JUSTICE SWINTON THOMAS: I agree.
LORD
JUSTICE STUART-SMITH: I also agree.
Order: Appeal
dismissed with costs, to be taxed
if
not agreed; application for leave to
appeal
to the House of Lords refused.